Exhibit 4.1
RIGHTS AGREEMENT
by and between
PORTAL SOFTWARE, INC.
and
EQUISERVE TRUST COMPANY, N.A.
as Rights Agent
Dated as of
August 16, 2002
TABLE OF CONTENTS
Page
Section 1. Certain Definitions ............................................................... 1
Section 2. Appointment of Rights Agent ....................................................... 5
Section 3. Issue of Rights Certificates ...................................................... 5
Section 4. Form of Rights Certificates ....................................................... 7
Section 5. Countersignature and Registration ................................................. 8
Section 6. Transfer, Split-Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates .......................... 8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights ..................... 9
Section 8. Cancellation and Destruction of Rights Certificates ............................... 11
Section 9. Reservation and Availability of Preferred Stock ................................... 11
Section 10. Preferred Stock Record Date ....................................................... 12
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights ................ 13
Section 12. Certificate of Adjusted Purchase Price or Number of Shares ........................ 21
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power .............. 21
Section 14. Fractional Rights and Fractional Shares ........................................... 24
Section 15. Rights of Action .................................................................. 25
Section 16. Agreement of Rights Holders ....................................................... 25
Section 17. Rights Certificate Holder Not Deemed a Stockholder ................................ 26
Section 18. Concerning the Rights Agent ....................................................... 26
Section 19. Merger or Consolidation or Change of Name of Rights Agent. ........................ 26
Section 20. Duties of Rights Agent ............................................................ 27
Section 21. Change of Rights Agent ............................................................ 29
Section 22. Issuance of New Rights Certificates ............................................... 30
Section 23. Redemption and Termination ........................................................ 30
i.
Section 24. Exchange .......................................................................... 31
Section 25. Notice of Certain Events .......................................................... 32
Section 26. Notices ........................................................................... 33
Section 27. Supplements and Amendments ........................................................ 34
Section 28. Successors ........................................................................ 34
Section 29. Determinations and Actions by the Board of Directors .............................. 34
Section 30. Benefits of This Agreement ........................................................ 35
Section 31. Severability ...................................................................... 35
Section 32. Governing Law ..................................................................... 35
Section 33. Counterparts ...................................................................... 35
Section 34. Descriptive Headings .............................................................. 35
EXHIBITS
Exhibit A Form of Certificate of Designation of Series A Junior Participating Preferred Stock
Exhibit B Form of Rights Certificate
Exhibit C Summary of Rights to Purchase Shares of Series A Preferred Stock
ii.
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of August 16, 2002 (the
"Agreement"), by and between Portal Software, Inc., a Delaware corporation (the
"Company"), and Equiserve Trust Company, N.A., a national banking association
(the "Rights Agent").
WHEREAS, effective August 16, 2002 (the "Rights Dividend
Declaration Date"), the board of directors of the Company authorized and
declared a distribution of one Right (each, a "Right") for each share of Common
Stock (as hereinafter defined) of the Company outstanding as of the Close of
Business (as hereinafter defined) on August 26, 2002 (the "Record Date"), each
Right initially representing the right to purchase one one-thousandth of a share
(a "Unit") of Preferred Stock (as hereinafter defined) upon the terms and
subject to the conditions herein set forth, and has further authorized and
directed the issuance of one Right with respect to each share of Common Stock of
the Company that shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date and the Final Expiration
Date (as such terms are hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements herein set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
"Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 15% or more of the shares of
Common Stock of the Company then outstanding, but shall not include the Company,
any Subsidiary (as such term is hereinafter defined) of the Company, any
employee benefit plan of the Company or any Subsidiary of the Company, or any
entity holding shares of Common Stock of the Company for or pursuant to the
terms of any such plan. Notwithstanding the foregoing:
(i) no Person shall become an "Acquiring Person" as the
result of an acquisition of shares of Common Stock by the Company
which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15%
or more of the shares of Common Stock of the Company then outstanding;
provided, however, that if a Person shall become the Beneficial Owner
of 15% or more of the shares of Common Stock of the Company then
outstanding as a result of any such acquisition of shares of Common
Stock by the Company and shall, after such acquisition of shares by the
Company, become the Beneficial Owner of any additional shares of Common
Stock of the Company (other than as a result of a stock dividend, stock
split or similar transaction effected by the Company in which all
holders of Common Stock of the Company are treated equally), then such
Person shall be deemed to be an "Acquiring Person" hereunder;
1.
(ii) if the board of directors of the Company determines in
good faith that a Person who would otherwise be an "Acquiring Person"
as defined pursuant to the provisions of subparagraph (i), has become
such inadvertently, and such Person divests as promptly as practicable
a sufficient number of shares of Common Stock of the Company so that
such Person would no longer be an "Acquiring Person, then such Person
shall not be deemed to be an "Acquiring Person" for any purpose of this
Agreement; and
(iii) Xxxx X. Xxxxxx, together with his spouse, lineal
descendants (whether by blood or adoption) and any Persons (whether now
or hereafter existing) formed primarily for Mr. Little's or his
spouse's or his lineal descendants' estate planning purposes, shall not
be deemed an Acquiring Person with respect to (x) shares beneficially
owned as of the date of this Agreement or (y) additional shares as to
which Mr. Little, his spouse, any such lineal descendants or any other
such Person acquires Beneficial Ownership after the date of this
Agreement, provided that if the aggregate amount of additional shares
of Common Stock of the Company acquired pursuant to clause (y) exceeds
5% of the shares of Common Stock outstanding at the first such
acquisition described in clause (y) of additional shares of Common
Stock of the Company (as such amount may be appropriately adjusted for
such events as stock splits, stock dividends and recapitalizations with
respect to shares of Common Stock of the Company), then all shares
described in (x) and (y) shall be included for purposes of determining
whether or not Mr. Little, his spouse, any such lineal descendants or
any other such Person is an Acquiring Person.
"Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii).
"Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the Exchange Act Regulations
(as hereinafter defined) as in effect on the date of this Agreement.
A Person shall be deemed the "Beneficial Owner" of, and shall
be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, for purposes of
Section 13(d) of the Exchange Act (as hereinafter defined) and Rule
13d-3 thereunder (or any comparable or successor law or regulation); or
(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, contingently or only
after the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing, other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights (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
or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted
2.
for purchase or exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided further, however,
that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (ii) as a
result of an agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding: (x) arises
solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the Exchange Act and the Exchange Act
Regulations, and (y) is not 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 (or any Affiliate or Associate thereof) with which
such Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing,
other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), for the purpose of acquiring, holding, voting (except to
the extent contemplated by the proviso to clause (B) of subparagraph
(ii) above) or disposing of any securities of the Company; provided,
however, that in no case shall an officer or director of the Company be
deemed (A) the Beneficial Owner of any securities beneficially owned by
another officer or director of the Company solely by reason of actions
undertaken by such persons in their capacity as officers or directors
of the Company or (B) the Beneficial Owner of securities held of record
by the trustee of any employee benefit plan of the Company or any
Subsidiary of the Company for the benefit of any employee of the
Company or any Subsidiary of the Company, other than such officer or
director, by reason of any influence that such officer or director may
have over the voting of the securities held in the plan;
Notwithstanding anything in this definition of "Beneficial Owner" and
"beneficially own" to the contrary, the phrase "then outstanding," when used
with reference to a Person who is the Beneficial Owner of securities of the
Company, shall mean the number of such securities then issued and outstanding
together with the number of such securities not then actually issued and
outstanding which such Person would be deemed to beneficially own hereunder.
"Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to close.
"Close of Business" on any given date shall mean 5:00 p.m.,
New York City time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 p.m., New York City time, on the next succeeding
Business Day.
"Common Stock" when used with reference to the Company shall
mean the shares of common stock, par value $0.001, of the Company. "Common
Stock" when used with reference to any Person other than the Company shall mean
the capital stock (or other equity interest) with the greatest voting power of
such other Person or, if such other Person is a Subsidiary of another Person,
the Person or Persons which ultimately control such first-mentioned Person.
3.
"Company" shall have the meaning set forth in the forepart of
this Agreement.
"Current Per Share Market Price" shall have the meaning set
forth in Section 11(d)(i).
"Current Value" shall have the meaning set forth in Section
11(a)(iii).
"Distribution Date" shall have the meaning set forth in
Section 3(a).
"Equivalent Preferred Stock" shall have the meaning set forth
in Section 11(b).
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any successor statute.
"Exchange Act Regulations" shall mean the Rules and
Regulations under the Exchange Act, as amended from time to time (including any
successor rules).
"Expiration Date" shall have the meaning set forth in Section
7(a).
"Final Expiration Date" shall have the meaning set forth in
Section 7(a).
"NASDAQ" shall have the meaning set forth in Section 11(d).
"Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such entity.
"Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, par value $0.001, of the Company having the
rights and preferences set forth in the Form of Certificate of Designation
attached to this Agreement as Exhibit A.
"Preferred Stock Equivalents" shall have the meaning set forth
in Section 11(a)(iii).
"Principal Party" shall have the meaning set forth in Section
13.
"Purchase Price" shall have the meaning set forth in Section
7(b).
"Record Date" shall have the meaning set forth in the recitals
to this Agreement.
"Redemption Date" shall have the meaning set forth in Section
7(a).
"Redemption Price" shall have the meaning set forth in Section
23(a).
"Right" shall have the meaning set forth in the recitals to
this Agreement.
"Rights Agent" shall have the meaning set forth in the
forepart of this Agreement and shall include any Person that shall become a
successor Rights Agent pursuant to the terms of this Agreement.
4.
"Rights Certificate" shall have the meaning set forth in
Section 3(a).
"Rights Dividend Declaration Date" shall have the meaning set
forth in the recitals to this Agreement.
"Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii)(A), (B) or (C).
"Section 11(a)(iii) Trigger Date" shall have the meaning set
forth in Section 11(a)(iii).
"Section 13 Event" shall have the meaning set forth in Section
13.
"Section 24(a) Exchange Ratio" shall have the meaning set
forth in Section 24(a).
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor statute.
"Share Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such.
"Spread" shall have the meaning set forth in Section
11(a)(iii).
"Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
"Summary of Rights" shall have the meaning set forth in
Section 3(b).
"Trading Day" shall have the meaning set forth in Section
11(d)(i).
"Triggering Event" shall mean any Section 11(a)(ii) Event or
any Section 13 Event.
"Unit" shall have the meaning set forth in the recitals to
this Agreement.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with the
terms and conditions of this Agreement, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint co-Rights Agents as it
may deem necessary or desirable upon ten days prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and shall in no event
be liable for, the acts or omissions of any such co-Rights Agent.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the Close of Business on the
tenth day after the Share Acquisition Date and (ii) the Close of Business on the
tenth Business Day (or such later
5.
date as may be determined by action of the Company's board of directors prior to
such time as any Person becomes an Acquiring Person and of which the Company
will give the Rights Agent prompt written notice) after the date that a tender
or exchange offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company or any entity holding shares of Common Stock for or pursuant to the
terms of any such plan) is commenced within the meaning of Rule 14d-2(a) of the
Exchange Act Regulations or of the first public announcement of the intention of
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any entity
holding shares of Common Stock for or pursuant to the terms of any such plan) to
commence a tender or exchange offer, if upon consummation thereof such Person
would be the Beneficial Owner of 15% or more of the shares of Common Stock of
the Company then outstanding (the earlier of (i) and (ii) above being the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of Section 3(b)) by the certificates for shares of Common Stock of
the Company registered in the names of the holders thereof (which certificates
shall also be deemed to be Rights Certificates) and not by separate Rights
Certificates, and (y) the right to receive Rights Certificates will be
transferable only in connection with the transfer of shares of Common Stock of
the Company. As soon as practicable after the Distribution Date, the Company
will notify the Rights Agent of the occurrence of the Distribution Date and the
Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will, if requested,
send) by first-class, insured, postage-prepaid mail, to each record holder of
shares of Common Stock of the Company as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Rights Certificate, in substantially the form of Exhibit B (a "Rights
Certificate"), evidencing one Right for each share of Common Stock so held. From
and after the Distribution Date, the Rights will be evidenced solely by such
Rights 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, in
substantially the form of Exhibit C (the "Summary of Rights"), by first-class,
postage-prepaid mail, to each record holder of shares of Common Stock of the
Company as of the Close of Business on the Record Date, at the address of such
holder shown on the records of the Company. Until the Distribution Date (or the
Expiration Date), the surrender for transfer of any certificate for shares of
Common Stock of the Company outstanding on the Record Date shall also constitute
the transfer of the Rights associated with the shares of Common Stock
represented thereby.
(c) Certificates evidencing shares of Common Stock which become
outstanding (whether originally issued or delivered from the Company's treasury)
after the Record Date but prior to the earlier of the Distribution Date and the
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend (or such other legend as the Company may
deem appropriate that is not inconsistent with the provisions of this
Agreement):
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between Portal
Software, Inc., and Equiserve, dated as of August 16, 2002 (the
"Rights Agreement"), the terms of which are hereby incorporated
6.
herein by reference and a copy of which is on file at the
principal executive offices of Portal Software, 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. Portal
Software, Inc. will mail to the holder of this certificate a
copy of the Rights Agreement without charge after receipt of a
written request therefor. Under certain circumstances, as set
forth in the Rights Agreement, Rights issued to any Person who
becomes an Acquiring Person (as defined in the Rights
Agreement), whether currently held by or on behalf of such
person or by any subsequent holder, may become null and void.
If the Company purchases or acquires any shares of Common Stock of the Company
after the Record Date but prior to the Distribution Date, any Rights associated
with such shares of Common Stock of the Company shall be deemed cancelled and
retired so that the Company shall not be entitled to exercise any Rights
associated with any shares of Common Stock of the Company which are no longer
outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase
Units of Preferred Stock and of assignment to be printed on the reverse thereof)
shall be substantially the same as Exhibit B and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange or transaction reporting system on
which the Rights may from time to time be listed or traded, or to conform to
usage. Subject to the provisions of Sections 11 and 22, the Rights Certificates
shall entitle the holders thereof to purchase the number of Units of Preferred
Stock as shall be set forth therein at the price per Unit of Preferred Stock set
forth therein, but the number of such Units of Preferred Stock and the Purchase
Price shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to this Agreement that
represents Rights beneficially owned by: (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person; (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such; or (iii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom such Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the board of directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect avoidance
of Section 7(e); shall in each case contain (to the extent feasible) the
following legend:
7.
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement by and between
Portal Software, Inc. and Equiserve, as Rights Agent, dated as
of August 16, 2002 (the "Rights Agreement")). Accordingly,
this Rights Certificate and the Rights represented hereby may
become null and void in the circumstances specified in Section
7(e) of the Rights Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the
Company by any officer of the Company, either manually or by facsimile
signature, shall have affixed thereto the Company's seal or a facsimile thereof,
and shall be attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Rights Certificates shall be
countersigned by the Rights Agent and shall not be valid for any purpose unless
countersigned. In case any officer of the Company who shall have signed any of
the Rights Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Rights Certificates had not ceased to be such officer
of the Company. Any Rights Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Rights Certificate,
shall be a proper officer of the Company to sign such Rights Certificate,
although at the date of this Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office designated for such purpose, books for
registration and transfer of the Rights Certificates issued under this
Agreement. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e) and 14, at
any time after the Close of Business on the Distribution Date, and at or prior
to the Close of Business on the Expiration Date, any Rights Certificate or
Rights Certificates may be transferred, split up, combined or exchanged for
another Rights Certificate or Rights Certificates evidencing exercisable Rights,
entitling the registered holder to purchase a like number of Units of Preferred
Stock (or, following a Triggering Event, other securities, cash or other assets,
as the case may be) as the Rights Certificate or Rights Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Rights Certificate or Rights
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Rights Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such purpose. Neither the Rights
8.
Agent nor the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Rights Certificate until the
registered holder shall have completed and signed the certificate contained in
the form of assignment on the reverse side of such Rights Certificate and shall
have provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject to Sections
4(b), 7(e) and 14, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and of indemnity or security reasonably satisfactory to
them, and, at the Company's request, reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Rights Certificate if mutilated, the
Company will make and deliver a new Rights Certificate of like tenor to the
Rights Agent for delivery to the registered holder in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Prior to the Distribution Date, none of the Rights shall be
exercisable. The registered holder of any Rights Certificate evidencing
exercisable Rights may exercise the Rights evidenced thereby (except as
otherwise provided in this Agreement) in whole or in part at any time after the
Distribution Date upon surrender of the Rights Certificate, with the form of
election to purchase and the related certification duly executed, to the Rights
Agent at the office of the Rights Agent designated for such purpose, together
with payment of the Purchase Price for each Right being exercised (as such
amount may be reduced (including to zero) pursuant to Section 11(a)(iii)) and an
amount equal to any applicable transfer tax required to be paid by the holder of
such Rights Certificate in accordance with Section 9 in cash, or by certified
check, wire transfer or bank draft payable to the order of the Company), at or
prior to the earliest of (i) the Close of Business on the tenth anniversary
hereof (the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 (the "Redemption Date"), and (iii) the time
at which such Rights are exchanged as provided in Section 24 (the earliest of
(i), (ii) and (iii) being the "Expiration Date").
(b) The Purchase Price for each Unit of Preferred Stock pursuant
to the exercise of a Right shall initially be $14.00 and shall be subject to
adjustment from time to time as provided in Sections 11 and 13 and shall be
payable in lawful money of the United States of America in accordance with
paragraph (c) below.
(c) Upon receipt of a Rights Certificate evidencing exercisable
Rights (with the form of election to purchase duly executed) accompanied by
payment as provided in Section 7(a), the Rights Agent shall, subject to Section
20(k), thereupon promptly (i) (A) requisition from any transfer agent of the
Preferred Stock a certificate or certificates for the number of Units of
Preferred Stock to be purchased and the Company hereby irrevocably authorizes
its transfer
9.
agent to comply with all such requests or (B) if the Company shall have elected
to deposit the total number of Units of Preferred Stock issuable upon exercise
of the Rights hereunder with a depositary agent, requisition from the depositary
agent of a depositary receipt or depositary receipts representing such number of
Units of Preferred Stock as are to be purchased (in which case certificates for
the Units of Preferred Stock represented by such receipt or receipts shall be
deposited by the transfer agent with the depositary agent) and the Company
hereby directs the depositary agent to comply with such request; (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14; (iii) after
receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder; and (iv) when appropriate, after receipt thereof, deliver such cash to
or upon the order of the registered holder of such Rights Certificate. If the
Company is obligated to issue other securities of the Company, pay cash and/or
distribute other property pursuant to Section 11(a), 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) If the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing a number of Rights equivalent to the number of Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of such
Rights Certificate or to such registered holder's duly authorized assigns,
subject to Section 14.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Triggering Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person; (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such; (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
the Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the board of directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this Section 7(e); or
(iv) any subsequent transferee of those described under numbers (i) through
(iii) above shall become null and void without any further action and no holder
of such Rights shall have any rights whatsoever with respect to such Rights or
any Rights Certificate which formerly evidenced such Rights, and neither the
Company nor the Rights Agent shall have any obligations whatsoever with respect
to such Rights or any Rights Certificate, whether under any provision of this
Agreement or otherwise. The Company shall use all requisite commercially
reasonable efforts to ensure that the provisions of Section 4(b) and this
Section 7(e) are complied with, but shall have no liability to any holder of
Rights Certificates or to any other Person as a result of its making or failing
to make any determinations with respect to an Acquiring Person or any of such
Acquiring Person's Affiliates, Associates or transferees or taking or failing to
take any actions with respect any Rights or Rights Certificates of any such
Person.
10.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless 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 Rights Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other
Rights Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Rights
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Stock.
(a) The Company covenants and agrees that it will use its best
efforts to cause to be reserved and kept available out of, and to the extent of,
its authorized and unissued Preferred Stock not reserved for another purpose a
number of shares that will be sufficient to permit the exercise in full of all
outstanding Rights. Upon the occurrence of any events resulting in an increase
in the aggregate number of shares of Preferred Stock (or other equity securities
of the Company) issuable upon exercise of all outstanding Rights above the
number then reserved, the Company shall make appropriate increases in the number
of shares so reserved.
(b) If the Units of Preferred Stock to be issued and delivered
upon the exercise of the Rights are at any time listed on a national securities
exchange or included for quotation on any transaction reporting system, the
Company shall during the period from the Distribution Date to the Expiration
Date use its best efforts to cause all shares reserved for such issuance to be
listed on such exchange or included for quotation on any such transaction
reporting system upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event in which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section
11(a)(iii), or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Securities Act, with respect
to the securities purchasable upon exercise of the Rights on an appropriate
form, (ii) cause such registration statement to become effective as soon as
reasonably practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of (A) the date as of
which the Rights are
11.
no longer exercisable for such securities and (B) the Expiration Date. The
Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. Notwithstanding any provision
of this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction, unless the requisite qualification of the offering made upon
exercise of the Rights in such jurisdiction shall have been obtained, or an
exemption therefrom shall be available and until a registration statement has
been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Units of Preferred Stock (and,
following the occurrence of a Triggering Event, any other securities that may be
delivered upon exercise of Rights) shall, at the time of delivery of the
certificates for such Units of Preferred Stock (and, following the occurrence of
a Triggering Event, any other securities that may be delivered upon exercise of
Rights) and subject to payment of the Purchase Price, be duly and validly
authorized and issued and fully paid and non-assessable.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Rights Certificates
or of any Units of Preferred Stock (and, following the occurrence of a
Triggering Event, any other securities that may be delivered upon exercise of
Rights) upon the exercise of Rights. The Company shall not, however, be required
to pay any transfer tax which may be payable in respect of any transfer or
delivery of Rights Certificates to a person other than, or the issuance or
delivery of certificates or depositary receipts for Units of Preferred Stock in
a name other than that of, the registered holder of the Rights Certificate
evidencing Rights surrendered for exercise or to issue or to deliver any
certificates or depositary receipts for Units of Preferred Stock (and, following
the occurrence of a Triggering Event, any other securities that may be delivered
upon exercise of Rights) upon the exercise of any Rights until any such tax
shall have been paid (any such tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to the
Company's reasonable satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose name any
certificate for Units of Preferred Stock (or, following the occurrence of a
Triggering Event, other securities that may be delivered upon exercise of
Rights) is issued upon the exercise of Rights shall for all purposes be deemed
to have become the holder of record of the Units of Preferred Stock (or,
following the occurrence of a Triggering Event, other securities that may be
delivered upon exercise of Rights) represented thereby on, and such certificate
shall be dated, at the Close of Business on the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Stock (or, following the occurrence of a Triggering Event, other
securities that may be delivered upon exercise of Rights) transfer books of the
Company are closed, such person shall be deemed to have become the record holder
of such shares at the Close of Business on, and such certificate shall be dated,
the next succeeding Business Day on which such transfer books are open; provided
further, however, that if delivery of Units of Preferred Stock (or such other
securities that may be delivered upon exercise of Rights) is delayed pursuant to
Section 9(c), such Persons shall be deemed to have become the record holders of
such Units of Preferred
12.
Stock (or such other securities that may be delivered upon exercise of Rights)
only when such Units first become deliverable. Prior to the exercise of the
Rights evidenced thereby, the holder of a Rights Certificate shall not be
entitled to any rights of a stockholder of the Company with respect to
securities for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as expressly provided in this
Agreement.
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number and kinds of securities covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after
the date of this Agreement (A) declare a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding shares
of Preferred Stock, (C) combine the outstanding Preferred Stock into a
smaller number of shares 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 capital stock for which the Rights shall be exercisable,
shall be proportionately adjusted so that the holder of any Rights
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 which, if such Rights had been exercised immediately
prior to such date and at a time when the applicable transfer books were
open, such holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock issuable upon exercise
of one Right. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii), the adjustment provided
for in this Section 11(a)(i) shall be in addition, and shall be made
prior, to any adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 24, if:
(A) any Person shall become an Acquiring Person, unless the
event causing the Person to become an Acquiring Person is a
transaction to which the provisions of Section 13(a) apply;
(B) any Acquiring Person or any Associate or Affiliate of
any Acquiring Person, at any time after the date of this Agreement,
directly or indirectly, shall (1) merge into the Company or otherwise
combine with the Company and the Company shall be the continuing or
surviving corporation of such merger or combination and shares of
Common Stock of the Company shall remain outstanding and unchanged,
13.
(2) in one transaction or a series of transactions, transfer any
assets to the Company or any of its Subsidiaries in exchange (in whole
or in part) for shares of Common Stock of the Company, for other
equity securities of the Company or any of its Subsidiaries, or for
securities exercisable for or convertible into shares of equity
securities of the Company or any of its Subsidiaries (whether shares
of Common Stock of the Company or otherwise) or otherwise obtain from
the Company or any of its Subsidiaries, with or without consideration,
any additional shares of such equity securities or securities
exercisable for or convertible into such equity securities (other than
pursuant to a pro rata distribution to all holders of shares of Common
Stock of the Company), (3) sell, purchase, lease, exchange, mortgage,
pledge, transfer or otherwise acquire or dispose of, in one
transaction or a series of transactions, to, from or with the Company
or any of its Subsidiaries or any employee benefit plan maintained by
the Company or any of its Subsidiaries or any trustee or fiduciary
with respect to such plan acting in such capacity, assets (including
securities) on terms and conditions less favorable to the Company or
such Subsidiary or plan than those that could have been obtained in
arm's-length negotiations with an unaffiliated third party, other than
pursuant to a transaction set forth in Section 13(a), (4) sell,
purchase, lease, exchange, mortgage, pledge, transfer or otherwise
acquire or dispose of, in one transaction or a series of transactions,
to, from or with the Company or any of its Subsidiaries or any
employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such plan
acting in such capacity (other than transactions, if any, consistent
with those engaged in, as of the date hereof, by the Company and such
Acquiring Person or such Associate or Affiliate), assets (including
securities or intangible assets) having an aggregate fair market value
of more than $5,000,000, other than pursuant to a transaction set
forth in Section 13(a), (5) receive, or any designee, agent or
representative of such Acquiring Person or any Affiliate or Associate
of such Acquiring Person shall receive, any compensation from the
Company or any of its Subsidiaries other than compensation for
full-time employment as a regular employee at rates in accordance with
the Company's (or its Subsidiaries') past practices, or (6) receive
the benefit, directly or indirectly (except proportionately as a
holder of shares of Common Stock of the Company or as required by law
or governmental regulation), of any loans, advances, guarantees,
pledges or other financial assistance or any tax credits or other tax
advantages provided by the Company or any of its Subsidiaries or any
employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such plan
acting in such capacity; or
(C) during such time as there is an Acquiring Person, there shall
be any reclassification of securities (including any reverse stock
split), or 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, other than a transaction or transactions to which
the provisions of Section 13(a) apply (whether or not with or into or
otherwise involving an Acquiring Person), which has the effect,
directly or indirectly, of increasing by more than one percent the
proportionate share of the outstanding shares of any class of equity
securities of the Company or any of its Subsidiaries that is directly
or
14.
indirectly beneficially owned by any Acquiring Person or any Person
or any Associate or Affiliate of any Acquiring Person;
then promptly following the occurrence of an event described in
Section 11(a)(ii)(A), (B) or (C) (a "Section 11(a)(ii) Event"), proper
provision shall be made so that each holder of a Right, except as
otherwise provided in Section 7(e), shall thereafter have the right to
receive for each Right, upon exercise thereof in accordance with the
terms of this Agreement and payment of the then-current Purchase
Price, in lieu of the number of Units of Preferred Stock for which a
Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event, such number of Units of Preferred Stock as
shall equal the result obtained by multiplying the then-current
Purchase Price by the then number of Units of Preferred Stock for
which a Right was exercisable (or would have been exercisable if the
Distribution Date had occurred) immediately prior to the first
occurrence of a Triggering Event, and dividing that product by 50% of
the Current Per Share Market Price for shares of Common Stock on the
date of occurrence of the Triggering Event (such number of Units of
Preferred Stock being hereinafter referred to as the "Adjustment
Shares"). Upon the occurrence of a Section 13 Event, any Rights that
shall not have been previously exercised pursuant to this Section
11(a)(ii) shall thereafter be exercisable only pursuant to Section 13
and not pursuant to this Section 11(a)(ii).
(iii) In the event that the number of shares of Preferred Stock
which are authorized by the Company's certificate of incorporation but
not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights are not sufficient to permit the exercise in
full of the Rights, or if any necessary regulatory approval for such
issuance has not been obtained by the Company, the Company shall, in
lieu of issuing Units of Preferred Stock in accordance with Section
11(a)(ii) hereof: (A) determine the excess of (1) the value of the
Units of Preferred Stock issuable upon the exercise of a Right (the
"Current Value") over (2) the Purchase Price (such excess being
referred to as the "Spread") and (B) with respect to each Right, make
adequate provision to substitute for such Units of Preferred Stock,
upon exercise of the Rights, (1) cash, (2) a reduction in the Purchase
Price, (3) other equity securities of the Company (including, without
limitation, Common Stock of the Company or shares or units of shares
of any series of preferred stock which the board of directors of the
Company shall have conclusively deemed to have the same value as the
Units of Preferred Stock (such shares or units of preferred stock are
herein called "Preferred Stock Equivalents")), except to the extent
that the Company has not obtained any necessary regulatory approval
for such issuance, (4) debt securities of the Company, except to the
extent that the Company has not obtained any necessary regulatory
approval for such issuance, (5) other assets, or (6) any combination
of the foregoing, having an aggregate value equal to the Current
Value, as determined by the board of directors of the Company based
upon the advice of a nationally recognized investment banking firm
selected by the board of directors of the Company (which determination
shall be described in a statement filed with the Rights Agent and
shall be conclusive and binding on the Rights Agent, the holders of
the Rights and all other persons); provided, however, if the Company
shall not have made adequate provision to deliver value pursuant to
clause (B) above within thirty days following the later of (x)
occurrence of a Section 11(a)(ii) Event, and (y) the date on which the
Company's right of redemption pursuant to Section 23(a) expires (the
later of (x) and (y)
15.
being referred to herein as the "Section 11(a)(iii) Trigger Date"),
then the Company shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Purchase
Price, Units of Preferred Stock (to the extent available), except to
the extent that the Company has not obtained any necessary regulatory
approval for such issuance, and then, if necessary, cash, having an
aggregate value equal to the Spread.
(b) If the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them
(for a period expiring within forty five calendar days after such record date)
to subscribe for or purchase Preferred Stock (or shares having the same rights,
privileges and preferences as the Preferred Stock ("Equivalent Preferred
Stock")) or securities convertible into Preferred Stock or Equivalent Preferred
Stock at a price per Unit of Preferred Stock or Equivalent Preferred Stock (or
having a conversion price per Unit, if a security convertible into Units of
Preferred Stock or Equivalent Preferred Stock) less than the then Current Per
Share Market Price (as determined pursuant to Section 11(d)) of a Unit 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 sum of the number of Units of Preferred Stock outstanding on such
record date plus the number of Units of Preferred Stock which the aggregate
offering price of the total number of Units of Preferred Stock and/or Equivalent
Preferred Stock so to be offered (and/or the aggregate initial conversion price
of the convertible securities so to be offered) would purchase at such Current
Per Share Market Price and the denominator of which shall be the sum of the
number of Units of Preferred Stock outstanding on such record date plus the
number of additional Units of Preferred Stock and/or Equivalent Preferred Stock
to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). If such subscription
price may be paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined in good
faith by the board of directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive and
binding on the Rights Agent and the holders of the Rights. Units of Preferred
Stock owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed; and if such rights,
options or warrants are not so issued, the Purchase Price shall be adjusted to
be the Purchase Price which would then be in effect if such record date had not
been fixed.
(c) If the Company shall fix a record date for a distribution to
all holders of Units of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation) of evidences of indebtedness, cash (other than a
regular quarterly cash dividend), assets (other than a dividend payable in Units
of Preferred Stock or Equivalent Preferred Stock but including any dividend
payable in equity securities other than Preferred Stock or Equivalent Preferred
Stock) or subscription rights or warrants (excluding those referred to in
Section 11(d)), the Purchase Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the then Current
Per Share Market Price (as determined pursuant to Section 11(d)) of the
Preferred Stock on such record date, less the fair market value (as determined
in good faith by the board of directors of the Company, whose determination
shall be described in a statement filed with the
16.
Rights Agent and shall be conclusive and binding on the Rights Agent and the
holders of the Rights) of the cash, assets or evidences of indebtedness to be
distributed or of such subscription rights or warrants distributable in respect
of a share of Preferred Stock, and the denominator of which shall be such
Current Per Share Market Price of a share of Preferred Stock. Such adjustments
shall be made successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the
"Current Per Share Market Price" of any security on any date shall be
deemed to be the average of the daily closing prices per share of such
security for the thirty consecutive Trading Days (as such term is
hereinafter defined) ending on and including the Trading Day immediately
prior to such date; provided, however, that in the event that the Current
Per Share Market Price of the security is determined during a period
following the announcement by the issuer of such security of (A) a
dividend or distribution on such security payable in shares of such
security or securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such security and prior
to the expiration of thirty Trading Days after and not including the
ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification, then, and in each
such case, the Current Per Share Market Price shall be appropriately
adjusted to reflect the current market price per share equivalent of such
security. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case
as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the Nasdaq
Stock Market ("NASDAQ") or, if the security is not listed or admitted to
trading on the NASDAQ, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the security is listed or
admitted to trading or, if the security is not listed or admitted to
trading on any national securities exchange, the last quoted price or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the NASDAQ or such other system
then in use, or, if on any such date the security is not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the security
selected by the board of directors of the Company. If on any such date no
market maker is making a market in the security, the Current Per Share
Market Price of such security on such date shall mean the fair value per
share or other trading unit as determined in good faith by the board of
directors of the Company as provided for above (which determination shall
be described in a statement filed with the Rights Agent and shall be
conclusive and binding on the Rights Agent, the holders of the Rights and
all other persons). The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the security is listed or
admitted to trading is open for the transaction of business or, if the
security is not listed or admitted to trading on any national securities
exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the Current Per
Share Market Price of the Preferred Stock shall be determined in
accordance with the method
17.
set forth in Section 11(d)(i). If the Current Per Share Market Price of the
Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner
described in Section 11(d)(i), the Current Per Share Market Price of the
Preferred Stock shall be conclusively deemed to be an amount equal to the
product of $1,000 (as such amount may be appropriately adjusted for such
events as stock splits, stock dividends and recapitalizations with respect
to shares of Common Stock of the Company occurring after the date of this
Agreement) multiplied by the Current Per Share Market Price of Common Stock
of the Company. If no shares of the Common Stock of the Company or the
Preferred Stock are publicly held or so listed or traded, "Current Per
Share Market Price" of the Preferred Stock 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 and binding on the Rights Agent and the
holders of the Rights. For all purposes of this Agreement, the Current Per
Share Market Price of a Unit of Preferred Stock shall be equal to the
Current Per Share Market Price of one share of Preferred Stock divided by
1,000.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one percent in the
Purchase Price; provided, however, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest one-hundred-thousandth
(1/100,000) of a share of Preferred Stock or one-hundredth (1/100) of any other
share or security as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three years from the date of the transaction which
requires such adjustment or (ii) the Expiration Date./1/
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii), the holder of any Rights thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than Units of
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of any Rights 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 Preferred Stock contained in
Sections 11(a), (b), (c), (d), (e), (g), (h), (i), (j), (k), (l) and (m), and
the provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred
Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price shall evidence the right to purchase, at
the adjusted Purchase Price, the number of Units of Preferred Stock purchasable
from time to time upon exercise of the Rights, all subject to further adjustment
as provided in this Agreement.
_________________________
/1/ Exercise caution with and double-check the math in this Agreement if you
change any numbers; consult an M&A partner form guidance.
18.
(h) Unless the Company shall have exercised its election under 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 Units of Preferred
Stock (calculated to the nearest one-millionth of a share of Preferred Stock)
obtained by dividing (i) the product obtained by multiplying (x) the number of
Units 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, by (ii) the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of Units of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of Units 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-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 Rights Certificates have been issued, shall be at least
ten days later than the date of the public announcement. If Rights 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 Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14, the additional Rights to
which such holders shall be entitled as a result of such adjustment, or, at the
option of the Company, shall cause to be distributed to such holders of record
in substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates to be so
distributed shall be issued, executed and countersigned in the manner provided
for herein and shall be registered in the names of the holders of record of
Rights 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 Units of Preferred Stock issuable upon the exercise of the Rights,
the Rights Certificates theretofore and thereafter issued may continue to
express the Purchase Price per Unit and the number of Units of Preferred Stock
which were expressed in the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value of the number of Units of Preferred
Stock issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable number of
Units of Preferred Stock at such adjusted Purchase Price.
19.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, the issuing to the holder of any Rights exercised after such record date
of that number of Units of Preferred Stock and other capital stock or securities
of the Company, if any, issuable upon such exercise over and above the Units 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 (fractional or otherwise) upon the occurrence
of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any (i) consolidation or subdivision of the Preferred Stock, (ii)
issuance wholly for cash of any Unit of Preferred Stock at less than the Current
Per Share Market Price, (iii) issuance wholly for cash of Preferred Stock or
securities which by their terms are convertible into or exchangeable for
Preferred Stock, (iv) dividends on Preferred Stock payable in Preferred Stock,
or (v) issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of Units of its Preferred Stock shall
not be taxable to such stockholders.
(n) The Company shall not, at any time after the Distribution Date,
(i) consolidate with any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o)), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o)), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of
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 (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(o)), if (x)
at the time of or immediately after such consolidation, merger or sale there are
any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale, the
Person which constitutes, or would constitute, the Principal Party (as defined
in Section 13(b)) shall have distributed or otherwise transferred to its
stockholders or other persons holding an equity interest in such Person, Rights
previously owned by such Person or any of its Affiliates and Associates;
provided, however, this Section 11(n) shall not affect the ability of any
Subsidiary of the Company to consolidate with, merge with or into, or sell or
transfer assets or earning power to, any other Subsidiary of the Company.
(o) After the Distribution Date, the Company shall not, except as
permitted by Section 23 or Section 26, take (or permit any of its Subsidiaries
to take) any action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or otherwise eliminate
the benefits intended to be afforded by the Rights.
20.
(p) If, at any time after the date of this Agreement and prior to
the Distribution Date, the Company shall (i) declare or pay any dividend on
outstanding shares of Common Stock of the Company payable in shares of Common
Stock of the Company or (ii) effect a subdivision, combination or consolidation
of the Common Stock of the Company (by reclassification or otherwise than by
payment of dividends in shares of Common Stock of the Company) into a greater or
lesser number of shares of Common Stock of the Company, then in any such case
the number of Units of Preferred Stock purchasable after such event upon proper
exercise of each Right shall be determined by multiplying the number of Units of
Preferred Stock so purchasable immediately prior to such event by a fraction,
the numerator of which shall be the number of shares of Common Stock of the
Company outstanding immediately before such event and the denominator of which
shall be the number of shares of Common Stock of the Company outstanding
immediately after such event. The adjustments provided for in this Section 11(p)
shall be made successively whenever such a dividend is declared or paid or such
a subdivision, combination or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 and 13, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the shares of Common Stock of
the Company or Units of Preferred Stock a copy of such certificate and (c) mail
a brief summary thereof to each holder of a Rights Certificate in accordance
with Section 25 hereof. Notwithstanding the foregoing sentence, the failure by
the Company to make such certification or give such notice shall not affect the
validity of or the force or effect of the requirement for such adjustment. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment contained therein and shall not be deemed to have knowledge of
such adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following a Share Acquisition Date, directly
or indirectly, (x) the Company shall consolidate with, or merge with and into,
any other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o)), and the Company shall not be the continuing or
surviving corporation of such consolidation or merger, (y) any Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o)) shall consolidate with the Company, or merge with and into the Company
and the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the shares of Common Stock of the Company shall be changed into
or exchanged for stock or other securities of any other Person or cash or any
other property, or (z) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer) to any Person or
Persons (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o)), in one or more transactions, directly or indirectly, assets
or earning power aggregating 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole), (any such event being a
"Section 13 Event"), then, and in each such case, proper provision shall be made
so that: (i) each holder of a Right, except as provided in
21.
Section 7(e), shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price, such number of validly authorized
and issued, fully paid and non-assessable shares of Common Stock of the
Principal Party, which shares shall not be subject to any liens, encumbrances,
rights of first refusal, transfer restrictions or other adverse claims, as shall
be equal to the product obtained by (1) multiplying the then current Purchase
Price by the number of Units of Preferred Stock for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if a
Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section
13 Event, multiplying the number of such Units of Preferred Stock for which a
Right would be exercisable hereunder but for the occurrence of such Section
11(a)(ii) Event by the Purchase Price which would be in effect hereunder but for
such first occurrence) and (2) dividing that product (which, following the first
occurrence of a Section 13 Event, shall be the "Purchase Price" for all purposes
of this Agreement) by 50% of the Current Per Share Market Price of the shares of
Common Stock of such Principal Party on the date of consummation of such Section
13 Event; (ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term "Company" shall, for all
purposes of this Agreement, thereafter be deemed to refer to such Principal
Party, it being specifically intended that the provisions of Section 11 shall
apply only to such Principal Party following the first occurrence of a Section
13 Event; (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common
Stock) in connection with the consummation of any such transaction as may be
necessary to ensure that the provisions of this Agreement shall thereafter be
applicable to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) shall be of
no further effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or (y)
of the first sentence of Section 13(a), (A) the Person that is the issuer
of any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, or, if there is more than one
such issuer, the issuer whose outstanding shares of Common Stock have the
greatest aggregate Current Per Share Market Price and (B) if no securities
are so issued, the Person that is the other party to such merger or
consolidation, or, if there is more than one such Person, the Person whose
outstanding shares of Common Stock have the greatest aggregate Current Per
Share Market Price; and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
largest 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 transferred pursuant to such transaction or transactions or
if the Person receiving the largest portion of the assets or earning power
cannot be determined, whichever Person whose outstanding shares of Common
Stock have the greatest aggregate Current Per Share Market Price; provided,
however, that in any such case, (1) if the Common Stock of such Person is
not at such time and has not been continuously over the preceding
twelve-month period registered under Section 12 of the Exchange Act
("Registered Common Stock"), or such Person is not a corporation, and
22.
such Person is a direct or indirect Subsidiary of another Person that has
Registered Common Stock outstanding, "Principal Party" shall refer to such
other Person; (2) if the Common Stock of such Person is not Registered
Common Stock or such Person is not a corporation, and such Person is a
direct or indirect Subsidiary of another Person but is not a direct or
indirect Subsidiary of another Person which has Registered Common Stock
outstanding, "Principal Party" shall refer to the ultimate parent entity of
such first-mentioned Person; (3) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and such
Person is directly or indirectly controlled by more than one Person, and
one or more of such other Persons has Registered Common Stock outstanding,
"Principal Party" shall refer to whichever of such other Persons is the
issuer of the Registered Common Stock having the highest aggregate Current
Per Share Market Price; and (4) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and such
Person is directly or indirectly controlled by more than one Person, and
none of such other Persons has Registered Common Stock outstanding,
"Principal Party" shall refer to whichever ultimate parent entity is the
corporation having the greatest stockholders' equity or, if no such
ultimate parent entity is a corporation, shall refer to whichever ultimate
parent entity is the entity having the greatest net assets.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13, and unless prior thereto the Company and such Principal
Party shall have executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in paragraphs (a) and (b) of this
Section 13 and further providing that the Principal Party will:
(i) (A) file on an appropriate form, as soon as practicable
following the execution of such agreement, a registration statement under
the Securities Act with respect to the shares of Common Stock of such
Principal Party that may be acquired upon exercise of the Rights, (B) cause
such registration statement to remain effective (and to include a
prospectus complying with the requirements of the Securities Act) until the
Expiration Date, and (C) as soon as practicable following the execution of
such agreement take such action as may be required to ensure that any
acquisition of such shares of Common Stock of such Principal Party upon the
exercise of the Rights complies with any applicable state securities or
"blue sky" laws; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply
in all respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act.
(d) 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, 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
23.
Common Stock of such Principal Party at less than the Current Per Share Market
Price or securities exercisable for, or convertible into, shares of Common Stock
of such Principal Party at less than the Current Per Share 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 shares of Common Stock of such Principal Party pursuant to the provisions of
this Section 13, then, in such event, the Company shall not consummate any such
transaction unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
that the provision in question of such Principal Party shall have been
cancelled, waived or amended, or that the authorized securities shall be
redeemed, so that the applicable provision will have no effect in connection
with, or as a consequence of, the consummation of the proposed transaction.
(e) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights that have not theretofore been exercised
shall thereafter be exercisable in the manner provided in Section 13(a).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Rights Certificates which evidence fractional Rights. In lieu
of such fractional Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the Current Per
Share Market Price of a whole Right. For purposes of this Section 14(a), the
Current Per Share Market Price of a whole Right shall be the closing price per
share of a whole Right on the Trading Day immediately prior to the date on which
such fractional Rights would have been otherwise issuable.
(b) The Company shall not be required to issue fractions of
Preferred Stock (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 Preferred Stock (other than
fractions which are integral multiples of one one-thousandth of a share of
Preferred Stock). Fractions of Preferred Stock in integral multiples of one
one-thousandth of a share of Preferred Stock may, at the election of the
Company, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it; provided,
however, that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Stock represented by such
depositary receipts. In lieu of fractional shares of Preferred Stock that are
not integral multiples of one one-thousandth of a share of Preferred Stock, the
Company shall pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the Current Per Share Market Price of one share of Preferred Stock.
(c) The holder of a Right by the acceptance of the Right expressly
waives such holder's right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above).
24.
Section 15. Rights of Action. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent under
Section 18, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
certificates representing shares of Common Stock of the Company); and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
a certificate representing shares of Common Stock of the Company), without the
consent of the Rights Agent or of the holder of any other Rights Certificate
(or, prior to the Distribution Date, of a certificate representing shares of
Common Stock of the Company), may, in such holder's own behalf and for such
holder's own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
such holder's right to exercise the Rights evidenced by such Rights Certificate
or, prior to the Distribution Date, in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations hereunder, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right,
by accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of shares of Common Stock of the Company;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer;
(c) subject to Sections 6(a) and 7(f), the Company and the Rights
Agent may deem and treat the person in whose name the Rights 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 Rights
Certificates or the associated Common Stock certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary;
(d) such holder expressly waives any right to receive any
fractional Rights and any fractional securities upon exercise or exchange of a
Right, except as otherwise provided in Section 14; and
(e) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental
25.
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company shall use commercially reasonably efforts to have
any such order, decree or ruling lifted or otherwise overturned as soon as
practicable.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Units of Preferred
Stock or any other securities of the Company which may at any time be issuable
upon the exercise of the Rights represented thereby, nor shall anything
contained in this Agreement or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 25), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with this Agreement.
Section 18. Concerning the Rights Agent. The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
under this Agreement and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or expense, incurred
without gross negligence or willful misconduct on the part of the Rights Agent,
for any action taken, suffered or omitted by the Rights Agent in connection with
the execution, acceptance and administration of this Agreement and the exercise
and performance of its duties, including the costs and expenses of defending
against and appealing any claim of liability in the premises. This indemnity
shall survive the termination of this Agreement and the expiration of the
Rights. The costs and expenses incurred in enforcing this right of
indemnification shall be paid by the Company.
In the absence of gross negligence or willful misconduct, the
Rights Agent may conclusively rely upon and shall be protected and shall incur
no liability for, or in respect of any action taken, suffered or omitted by it
in connection with, its administration of this Agreement and the exercise and
performance of its duties hereunder in reliance upon any Rights Certificate or
certificate for Units of Preferred Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper person or persons, or
otherwise upon the advice of counsel as set forth in Section 20.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the stock transfer or corporate trust business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
26.
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto; provided, that such corporation must be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement any of the Rights 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 Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights 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 Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, all of which the Company and the holders of Rights Certificates, by
their acceptance thereof, shall be bound, and no implied duties or obligations
shall be read into this Agreement against the Rights Agent:
(a) Before the Rights Agent acts or refrains from acting, it may
consult with legal counsel of its choice (who may be legal counsel for the
Company), and the advice or opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken,
suffered or omitted by it in good faith and in accordance with such advice or
opinion.
(b) Whenever in the administration, exercise and performance of its
duties under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the Company prior
to taking, suffering or omitting any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by
any officer of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action
taken, suffered or omitted in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own gross negligence or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its
27.
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 liability or
responsibility in respect of the legality, validity or enforceability of this
Agreement or the execution and delivery hereof (except the due execution by the
Rights Agent) or in respect of the legality, validity or enforceability or the
execution of any Rights Certificate (except its countersignature); nor shall it
be liable or responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 11(a)(ii)) or any adjustment in the
terms of the Rights (including the manner, method or amount thereof) provided
for in Section 3, 11, 13, 23 or 24, or the ascertaining of the existence of
facts that would require any such change or adjustment (except with respect to
the exercise of Rights evidenced by Rights Certificates after receipt of the
certificate described in Section 12); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Units of Preferred Stock or other securities to be issued
upon the exercise of any Rights or as to whether any such security 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 Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the administration, exercise and performance of its
duties hereunder from any one officer of the Company, and to apply to such
officer for advice or instructions in connection with its duties, and it shall
not be responsible or liable for any action taken, suffered or omitted by it in
good faith in accordance with instructions of any such officer or for any delay
in acting while waiting for those instructions. Any application by the Rights
Agent for written instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken or omitted by the
Rights Agent under this Agreement and the date on and/or after which such action
shall be taken or such omission shall be effective. The Rights Agent shall not
be liable 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 received 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.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
28.
(i) The Rights Agent may execute and exercise any of the rights or
powers vested in it or perform any duty under this Agreement either itself or by
or through its attorneys or agents, and the Rights Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its rights
if the Rights Agent in good faith believes 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 Rights Certificate surrendered to the
Rights Agent for exercise, transfer, split up, combination or exchange, the
certification on the form of assignment or form of election to purchase, as the
case may be, that the Rights evidenced by the Rights Certificate are not owned
by an Acquiring Person, or an Affiliate or Associate thereof, has either not
been completed or in any manner indicates any other response thereto, the Rights
Agent shall not take any further action with respect to such requested exercise,
transfer, split up, combination or exchange, without first consulting with the
Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock of the Company or Preferred Stock (as to
which the Rights Agent has received prior written notice) by registered or
certified mail, and the Company shall mail notice thereof to the holders of the
Rights Certificates by first-class mail. In the event the transfer agent
relationship between the parties hereto 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. The Company may remove the
Rights Agent or any successor Rights Agent upon thirty days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Stock or Preferred Stock (as to which the
Rights Agent has received prior written notice) by registered or certified mail,
and to the holders of the Rights Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of thirty days after giving notice
of such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit such holder's Rights
Certificate for inspection by the Company), then the registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States or of any state of the United
States, in good standing, authorized under such laws to exercise corporate trust
or stock transfer powers, and 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 million. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute
29.
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 or Preferred Stock, and mail a notice thereof
in writing to the registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be.
Section 22. Issuance of New Rights Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights 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 and the number or kind or class of shares or
other securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock of the Company following the
Distribution Date and prior to the Expiration Date, the Company (a) shall, with
respect to shares of Common Stock of the Company so issued or sold pursuant to
the exercise of stock options or under any employee benefit plan or arrangement
or upon the exercise, conversion or exchange of securities of the Company
currently outstanding or issued at any time in the future by the Company and (b)
may, in any other case, if deemed necessary or appropriate by the board of
directors of the Company issue Rights Certificates representing the appropriate
number of Rights in connection with such issuance or sale; provided, however,
that (i) no such Rights Certificate shall be issued and this sentence shall be
null and void ab initio if, and to the extent that, such issuance or this
sentence would create a significant risk of or result in material adverse tax
consequences to the Company or the Person to whom such Rights Certificate would
be issued or would create a significant risk of or result in such options' or
employee plans' or arrangements' failing to qualify for otherwise available
special tax treatment and (ii) no such Rights Certificate shall be issued if,
and to the extent that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Company may, at its option, upon approval by the board of
directors, at any time on or prior to the Close of Business (or such later date
as may be determined by its board of directors) on the earlier of (i) the
Distribution Date or (ii) the Final Expiration Date redeem all but not less than
all the then outstanding Rights at a redemption price of $0.01 per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date of this Agreement (such redemption price
being hereinafter referred to as the "Redemption Price"), and the Company may,
at its option, pay the Redemption Price either in cash, shares of Common Stock
of the Company (based on the Current Per Share Market Price thereof at the time
of redemption), or any other form of consideration deemed appropriate by its
board of directors. The redemption of the Rights by the board of directors of
the Company may be made effective at such time on such basis and with such
conditions as the board of directors of the Company in its sole discretion may
establish. Any such redemption will be effective immediately upon the action of
the board of directors of the Company ordering the same, unless such action of
the board of directors of the Company expressly provides that such redemption
will be effective at a subsequent time or upon the occurrence or nonoccurrence
of one or more
30.
specified events (in which case such redemption will be effective in accordance
with the provisions of such action of the board of directors of the Company).
(b) Immediately upon the effectiveness of the redemption of the
Rights pursuant to Section 23(a), 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 the effectiveness
of the redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and 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 such manner shall be deemed given, whether or not the holder
receives the notice. Each notice of redemption will state the method by which
the payment of the Redemption Price will be made. Neither the Company nor any of
its Affiliates or Associates may redeem, acquire or purchase for value any
Rights at any time in any manner other than that specifically set forth in this
Section 23 or in Section 24 or other than in connection with the purchase of
shares of Common Stock prior to the Distribution Date.
(c) Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable pursuant to Section 7(a) at any
time when the Rights are redeemable hereunder.
Section 24. Exchange.
(a) The Company, at its option, upon approval by its board of
directors, at any time after any Person becomes an Acquiring Person, may
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section
7(e) hereof) for Units of Preferred Stock at an exchange ratio equal to, subject
to adjustment to reflect stock splits, stock dividends and similar transactions
occurring after the date hereof, that number obtained by dividing the Purchase
Price by the then Current Per Share Market Price per Unit of Preferred Stock on
the earlier of (i) the date on which any Person becomes an Acquiring Person and
(ii) the date on which a tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan maintained by
the Company or any of its Subsidiaries or any trustee or fiduciary with respect
to such plan acting in such capacity) is commenced within the meaning of Rule
14d-2(a) of the Exchange Act Regulations or any successor rule, if upon
consummation thereof such Person would be the Beneficial Owner of 15% or more of
the shares of Common Stock of the Company then outstanding (such exchange ratio
being hereinafter referred to as the "Section 24(a) Exchange Ratio").
Notwithstanding the foregoing, the Company may not effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan maintained by the Company or any of its Subsidiaries,
or any trustee or fiduciary with respect to such plan acting in such capacity),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the shares of Common Stock of the Company
then outstanding.
31.
(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 Units of Preferred Stock equal
to the number of such Rights held by such holder multiplied by the Section 24(a)
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 provided in this Agreement 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 Units of Preferred Stock
for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 7(e)) held by each holder of Rights.
(c) In the event that the number of shares of Preferred Stock
authorized by the Company's certificate of incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights is not
sufficient 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 Preferred Stock for issuance upon exchange of the
Rights or make adequate provision to substitute (1) cash, (2) Common Stock of
the Company or other equity securities of the Company, (3) debt securities of
the Company, (4) other assets, or (5) any combination of the foregoing, having
an aggregate value equal to the aggregate Current Per Share Market Price of the
Units of Preferred Stock that would otherwise be issuable in such exchange, all
as determined by the board of directors of the Company (which determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive and binding on the Rights Agent, the holders of the Rights and all
other persons). To the extent that the Company determines that some action need
be taken pursuant to Section 24(a), the board of directors of the Company may
temporarily suspend the exercisability of the Rights for a period of up to sixty
days following the date on which the event described in Section 24(a) shall have
occurred, in order to seek any authorization of additional shares of Preferred
Stock and/or to decide the appropriate form of distribution to be made pursuant
to the above provision 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.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose (i) to pay any dividend payable
in stock of any class to the holders of its Preferred Stock or to make any other
distribution to the holders of its Preferred Stock (other than a regular
quarterly cash dividend), (ii) to offer to the holders of its Preferred Stock
rights or warrants to subscribe for or to purchase any additional Units of
Preferred Stock or shares of stock of any class or any other securities, rights
or options, (iii) to effect any reclassification of its Preferred Stock (other
than a reclassification involving only the subdivision of outstanding Preferred
Stock), (iv) to effect any consolidation or merger
32.
into or with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o)), 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 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person, (v) to effect the liquidation, dissolution or winding up of the
Company or (vi) to declare or pay any dividend on the Common Stock of the
Company payable in shares of Common Stock of the Company or to effect a
subdivision, combination or consolidation of the shares of Common Stock of the
Company (by reclassification or otherwise than by payment of dividends in shares
of Common Stock), then, in each such case, the Company shall give to each holder
of a Rights Certificate, in accordance with Section 26, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Common Stock of the Company and/or
shares 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 ten days prior to the record date for determining holders of the shares
of Preferred Stock for purposes of such action, and in the case of any such
other action, at least ten days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of the shares of
Common Stock of the Company and/or shares of Preferred Stock, whichever shall be
the earlier.
(b) In case any of the events set forth in Section 11(a)(ii) shall
occur, then the Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, in accordance with Section 26, a notice of the
occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii). In the
event any Person becomes an Acquiring Person, the Company will promptly notify
the Rights Agent thereof.
Section 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing by the Company with the Rights Agent) as follows:
Portal Software, Inc.
00000 Xxxxx XxXxxx Xxxx.
Xxxxxxxxx, XX 00000
Attention: General Counsel
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sent by registered or certified
mail and shall be deemed given upon receipt and addressed (until another address
is filed in writing by the Rights Agent with the Company) as follows:
Equiserve Trust Company, N.A.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: General Counsel
33.
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. Prior to the Distribution
Date, the Company may supplement or amend this Agreement in any respect or
terminate the Rights completely, without the approval of any holders of Rights,
by action of its board of directors. From and after the Distribution Date, the
Company may from time to time supplement or amend this Agreement without the
approval of any holders of Rights, by action of its board of directors in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder, or (iv) to change or
supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable and which shall not adversely affect the interests of the
holders of Rights Certificates (other than an Acquiring Person or an Affiliate
or Associate of an Acquiring Person), including, without limitation, to change
the Purchase Price, the Redemption Price, any time periods herein specified, and
any other term hereof, any such supplement or amendment to be evidenced by a
writing signed by the Company and the Rights Agent; provided, however, that from
and after such time as any Person becomes an Acquiring Person, this Agreement
shall not be amended in any manner which would adversely affect the interests of
the holders of Rights. Upon receipt of a certificate from an appropriate officer
of the Company that the proposed supplement or amendment is consistent with this
Section 27 and, after such time as any Person has become an Acquiring Person,
that the proposed supplement or amendment does not adversely affect the
interests of the holders of Rights, the Rights Agent shall execute such
supplement or amendment.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors. For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock of the Company outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of the Company 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
Exchange Act Regulations. The board of directors of the Company shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the board of directors, or the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including a
determination to redeem or not redeem the Rights or to amend the Agreement). All
such actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing),
which are done or made by the board of directors of the Company
34.
in good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights Certificates and all other parties and
(y) not subject the board of directors of the Company to any liability to the
holders of the Rights.
Section 30. Benefits of This Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Rights Agent and the registered holders of the Rights Certificates (and,
prior to the Distribution Date, shares of Common Stock of the Company) any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, shares of Common Stock of the Company).
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the board of
directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement and the right of redemption set forth in Section 23
shall have expired, such right shall be reinstated and shall not expire until
the tenth Business Day following the date of such determination by the board of
directors of the Company.
Section 32. Governing Law. This Agreement and each Rights Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the internal laws of the State of Delaware applicable to
contracts to be made and performed entirely within such state, without regard to
the choice-of-law or conflict-of-laws principles of any jurisdiction.
Section 33. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
sections of this Agreement are inserted or convenience only and shall not
control or affect the meaning or construction of any of the provisions of this
Agreement.
35.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested, all as of the day and year first above written.
PORTAL SOFTWARE, INC.
By:____________________________________
Name:__________________________________
Title:_________________________________
EQUISERVE TRUST COMPANY, N.A.
By: ___________________________________
Name: _________________________________
Title: ________________________________
Exhibit A
FORM
of
CERTIFICATE OF DESIGNATION
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
Portal Software, Inc.,
(Pursuant to Section 151 of the
Delaware General Corporation Law)
----------------------------------
Portal Software, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), hereby certifies that the following resolution was adopted by
the board of directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on August 16;
RESOLVED, that pursuant to the authority granted to and vested in the
board of directors of the Corporation (hereinafter the "Board") in accordance
with the provisions of the certificate of incorporation of the Corporation, as
currently in effect, the Board hereby creates a series of Preferred Stock, par
value $0.001 per share (the "Preferred Stock"), of the Corporation and hereby
states the designation and number of shares, and fixes the relative rights,
preferences, and limitations thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be One Million (1,000,000). Such number of shares may be increased
or decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(a) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the Series
A Preferred Stock with respect to
A-1
dividends, each holder of a share of Series A Preferred Stock, in preference to
the holders of shares of common stock, par value $0.001 per share (the "Common
Stock"), of the Corporation, and of any other junior stock, shall be entitled to
receive, when declared by the Board out of funds legally available for the
purpose, dividends in an amount per share (rounded to the nearest cent) equal
to, subject to the provision for adjustment hereinafter set forth, 1,000 times
the aggregate per share amount of all cash dividends, and 1,000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock. In the event the Corporation shall, at
any time after August 16, 2002 (the "Rights Declaration Date"), declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock (and
an equivalent dividend is not declared on the Series A Preferred Stock or the
Series A Preferred Stock is not similarly subdivided or combined), then in each
such case the amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the shares
of Series A Preferred Stock as provided in Section 2(a) immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); provided, however, that, in no event shall a
dividend or distribution be declared by the Board on the Common Stock for which
it does not declare and pay the dividend required to be declared on the
Preferred Stock pursuant to Section 2(a).
(c) Accrued but unpaid dividends shall not bear interest. Dividends paid on
the shares of Series A Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board may fix a record date for the determination of holders of
shares of Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than sixty
days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred Stock
shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the Corporation.
In the event the Corporation shall, at any time after the Rights Declaration
Date, declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock (and an equivalent dividend is not declared on the
Series A Preferred Stock or the Series A Preferred Stock is not
A-2
similarly subdivided or combined), then in each such case the number of votes
per share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number by
a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(b) Except as otherwise provided herein, in the Certificate of
Incorporation, in any other Certificate of Designation creating a series of
Preferred Stock or any similar stock, or by law, the holders of shares of Series
A Preferred Stock and the holders of shares of Common Stock and any other
capital stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of stockholders of the
Corporation.
(c) Except as set forth herein, or as otherwise provided by law, holders of
Series A Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the shares of Series A Preferred Stock and all
such parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock; provided, that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or winding up)
to the Series A Preferred Stock other than the repurchase of capital stock from
employees, upon termination of service with the Company, pursuant to repurchase
or similar agreements; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on a parity
with the Series A Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board) to all holders of
such shares upon such terms as the Board, after consideration of the respective
annual dividend rates and other relative rights and preferences of
A-3
the respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.
(b) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under Section 4(a), purchase or
otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designation
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up.
(a) Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (i) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock unless, prior thereto, the holders of shares of Series
A Preferred Stock shall have received the greater of (x) $1,000 per share, plus
an amount equal to accrued and unpaid dividends and distributions thereon to the
date of such payment (the "Series A Liquidation Preference") and (y) an
aggregate amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 1,000 times the aggregate amount to be distributed per share
to holders of shares of Common Stock, or (ii) to the holders of shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except distributions made ratably
on the Series A Preferred Stock and all such parity stock in proportion to the
total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall, at
any time after the Rights Declaration Date declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock (and an
equivalent dividend is not declared on the Series A Preferred Stock or the
Series A Preferred Stock is not similarly subdivided or combined), then in each
such case the aggregate amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under the proviso in clause
(i) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(b) In the event, however, that there are not sufficient assets available
to permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other series of Preferred Stock, if any, which
rank on a parity with the Series A Preferred Stock, then such
A-4
remaining assets shall be distributed ratably to the holders of Series A
Preferred Stock and such parity shares in proportion to their respective
liquidation preferences.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or converted or changed into other
stock or securities, cash and/or any other property (or into the right to
receive any of the foregoing), then in any such case each share of Series A
Preferred Stock shall at the same time be similarly exchanged, converted or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is converted, changed or
exchanged. In the event the Corporation shall, at any time after the Rights
Declaration Date declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock (and an equivalent dividend is not declared on
the Series A Preferred Stock or the Series A Preferred Stock is not similarly
subdivided or combined), then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series A
Preferred Stock shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred Stock shall not
be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series of
any other class of the Corporation's Preferred Stock.
Section 10. Amendment. The certificate of incorporation of the Corporation
shall not be amended, including any amendment through consolidation, merger,
combination or other transaction, in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least a majority of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
A-5
IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation as of _______, 2002.
PORTAL SOFTWARE, INC.
By: _____________________________________
Name: _______________________________
Title: ______________________________
A-1
Exhibit B
Form of Rights Certificate
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER THE TEN YEAR ANNIVERSARY OF THE RIGHTS AGREEMENT
OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT THE OPTION OF THE COMPANY AT $0.01 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
aCCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SUCH
AGREEMENT]*
Rights Certificate
PORTAL SOFTWARE, INC.
This certifies that _____________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of August 16, 2002 (the "Rights Agreement"), between PORTAL
SOFTWARE, INC., a Delaware corporation (the "Company"), and EQUISERVE, as Rights
Agent (the "Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 p.m., New York City time, on August 16, 2012 at the office of the Rights
Agent designated for such purpose, or at the office of its successor as Rights
Agent, one one-thousandth (a "Unit") of a fully paid non-assessable share of
Series A Junior Participating Preferred Stock, par value $0.001 per share (the
"Series A Preferred Stock") of the Company, at a purchase price of $14.00 per
Unit of Series A Preferred Stock (the "Purchase Price"), upon presentation and
surrender of this Rights Certificate with the Form of Election to Purchase duly
executed. The number of Rights evidenced by this Rights Certificate (and the
number of Units of Series A Preferred Stock which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of August 26, 2002 based on the Series A Preferred Stock
as constituted at such date. As provided in the Rights
_______________________
* The bracketed language is to be inserted in place of the preceding sentence
where applicable.
B-1
Agreement, the Purchase Price and the number of Units of Series A Preferred
Stock which may be purchased upon the exercise of the Rights evidenced by this
Rights Certificate are subject to modification and adjustment upon the happening
of certain events.
This Rights Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Units of Series A Preferred Stock as the Rights evidenced by
the Rights Certificate or Rights Certificates surrendered shall have entitled
such holder to purchase. If this Rights Certificate shall be exercised in part,
the holder shall be entitled to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at a redemption
price of $0.01 per Right.
No fractional shares of Series A Preferred Stock will be issued upon
the exercise of any Rights or Rights evidenced hereby (other than fractions
which are integral multiples of one one-thousandth of a share of Series A
Preferred Stock, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Units of
Series A Preferred Stock or of any other securities of the Company which may at
any time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Rights or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
B-2
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the signature of the proper officers of the Company and its
corporate seal. Dated as of _____.
PORTAL SOFTWARE, INC.
By: _________________________________
Name: ___________________________
Title: __________________________
Countersigned:
EQUISERVE TRUST COMPANY, N.A.,
as Rights Agent
By: ___________________________________
Authorized Signatory
Name: _____________________________
Title: ____________________________
Form of Reverse Side of Rights Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED _________________________ hereby sells, assigns
and transfers
unto
________________________________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ___________ Attorney, to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.
DATED: __________________, ___
________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a participant in a Securities
Transfer Association Inc. recognized signature guarantee medallion program.
B-1
CERTIFICATE
The undersigned hereby certifies that the Rights evidenced by this
Rights Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (each as defined in the Rights Agreement).
________________________________
Signature
________________________________________
NOTICE
The signature in the foregoing Form of Assignment must conform to the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment is not completed, the Company and the Rights Agent will deem the
beneficial owner of the Rights evidenced by this Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (each as defined in the
Rights Agreement) and such Assignment will not be honored.
B-2
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights Certificate.)
To PORTAL SOFTWARE, INC.
The undersigned hereby irrevocably elects to exercise________________
Rights represented by this Rights Certificate to purchase the Units of Series A
Preferred Stock issuable upon the exercise of such Rights and requests that
certificates for such Series A Preferred Stock be issued in the name of:
Please insert social security
or other identifying number ____________________________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number ____________________________________________________
(Please print name and address)
DATED: ___________________________,___
_______________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a participant in a Securities
Transfer Association Inc. recognized signature guarantee medallion program.
B-3
CERTIFICATE
The undersigned hereby certifies that the Rights evidenced by this
Rights Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (each as defined in the Rights Agreement).
________________________________
Signature
____________________________________
NOTICE
The signature in the foregoing Form of Election to Purchase must
conform to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Election to Purchase, as the case may be, is not completed, the Company and the
Rights Agent will deem the beneficial owner of the Rights evidenced by this
Rights Certificate to be an Acquiring Person or an Affiliate or Associate
thereof (each as defined in the Rights Agreement) and such Election to Purchase
will not be honored.
B-4
Exhibit C
PORTAL SOFTWARE, INC.
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF SERIES A PREFERRED STOCK
On August 16, 2002, your board of directors declared a dividend
distribution of one right for each outstanding share of our common stock to
stockholders of record at the close of business on August 26, 2002. Each Right
entitles the registered holder to purchase from the company one one-thousandth
of a share of Series A Junior Participating preferred stock, par value $0.001
per share (the "Preferred Stock"), at a purchase price of $14.00, subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and Equiserve Trust
Company, N.A., as Rights Agent.
Initially, the Rights will be attached to all common stock
certificates representing shares then outstanding, and no separate Rights
certificates will be distributed. The Rights will separate from the common stock
and a distribution date will occur upon the earlier of (i) ten days following a
public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has (subject to certain exceptions) acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding shares of our common stock (the "Stock Acquisition Date"), other
than as a result of repurchases of stock by the Company, or (ii) ten days (or
such later date as the board shall determine) following the commencement of a
tender offer or exchange offer that would result in a person or group
beneficially owning 15% or more of such outstanding shares of our common stock.
Until the Distribution Date, (i) the Rights will be evidenced by the common
stock certificates and will be transferred with and only with such common stock
certificates, (ii) new common stock certificates issued after the record date
will contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificates for common stock
outstanding will also constitute the transfer of the Rights associated with the
common stock represented by such certificate. Pursuant to the Rights Agreement,
the company reserves the right to require prior to the occurrence of a
Triggering Event (as defined below) that, upon any exercise of Rights, a number
of Rights be exercised so that only whole shares of preferred stock will be
issued.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on August 16, 2012, unless earlier redeemed by
the Company as described below.
As soon as practicable after the Distribution Date, Rights
certificates will be mailed to holders of record of our common stock as of the
close of business on the Distribution Date and, thereafter, the separate Rights
certificates alone will represent the Rights. Except as otherwise determined by
the board, only shares of our common stock issued prior to the Distribution Date
will be issued with Rights.
In the event that an Acquiring Person becomes (subject to certain
exceptions) the beneficial owner of 15% or more of the then outstanding shares
of common stock (other than pursuant to an offer for all the outstanding shares
of common stock that our board of directors
C-1
determines to be fair to and otherwise in the best interests of the company and
its stockholders), each holder of a Right will thereafter have the right to
receive, upon exercise, Preferred Stock (or, in certain circumstances, cash,
property or other securities of the company) having a value equal to two times
the exercise price of the Right. Notwithstanding any of the foregoing, following
the occurrence of any of the events set forth in this paragraph, all Rights that
are, or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person will be null and void.
For example, at an exercise price of $100 per Right, each Right not
owned by an Acquiring Person (or by certain related parties) following an event
set forth in the preceding paragraph would entitle its holder to purchase $200
worth of Preferred Stock (or other consideration, as noted above) for $100.
Assuming that our Preferred Stock had a per share value of $25 at such time, the
holder of each valid Right would be entitled to purchase 8 shares of Preferred
Stock for $100.
In the event that, at any time following the Stock Acquisition Date,
(i) we are acquired in a merger or other business combination transaction in
which we are not the surviving corporation (other than a merger which follows an
offer described in the second preceding paragraph), or (ii) 50% or more of our
assets, cash flow or earning power is sold or transferred, each holder of a
Right (except Rights which previously have been voided) shall have the right to
receive, upon exercise, common stock of the acquiring company having a value
equal to two times the exercise price of the Right. The events set forth in this
paragraph and in the second preceding paragraph are referred to as the
"Triggering Events."
At any time after a person becomes an Acquiring Person and prior to
the acquisition by such person or group of 50% or more of the outstanding common
stock, the board may exchange the Rights (other than Rights owned by the person
or group which have become void), in whole or in part, 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 our preferred stock having equivalent
rights, preferences and privileges), per Right (subject to adjustment).
At any time until 10 days following the Stock Acquisition Date, the
board may redeem the Rights in whole, but not in part, at a price of $0.01 per
Right (payable in cash, common stock or other consideration deemed appropriate
by the board). Immediately upon the action of the board ordering redemption of
the Rights, the Rights will terminate and the only right of the holders of
Rights will be to receive the $0.01 redemption price.
Until a Right is exercised, the holder of a Right will have no rights
by virtue of ownership as a stockholder of the company, including, without
limitation, the right to vote or to receive dividends. While the distribution of
the Rights will not be taxable to stockholders or to the company, stockholders
may, depending upon the circumstances, recognize taxable income in the event
that the Rights become exercisable for Preferred Stock (or other consideration)
of the company or for common stock of the acquiring company.
Any of the provisions of the Rights Agreement may be amended by the
board prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the board in order to cure
any ambiguity, to make changes which
C-2
do not adversely affect the interests of holders of Rights, or to shorten or
lengthen any time period under the Rights Agreement; provided, however, that no
amendment may be made at such time as the Rights are not redeemable.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an exhibit to a Form 8-A. A copy of the Rights Agreement
is available free of charge from the company. This summary description of the
Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is incorporated herein by reference.
C-3
