VIDEOLAN TECHNOLOGIES, INC.
and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
Rights Agent
__________
Rights Agreement
Dated as of January 29, 1997
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of January 29, 1997 (the
"Agreement"), between Videolan Technologies, Inc., a Delaware
corporation (the "Company"), and Continental Stock Transfer & Trust
Company (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on January 29, 1997 (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company authorized and declared
a dividend distribution of one right for each share of common stock
of the Company (the "Common Stock") outstanding at the close of
business on February 8, 1997 (the "Record Date"), and has authorized
the issuance of one Right (as such number may hereinafter be adjusted
pursuant to the provisions of Section 11(p) hereof) for each share of
Common Stock of the Company issued between the Record Date (whether
originally issued or delivered from the Company's treasury) and the
earlier of the Distribution Date or the Expiration Date, each Right
initially representing the right to purchase one one-hundredth of a
share of Junior Participating Preferred Stock of the Company having
the rights, powers and preferences set forth in the form of
Certificate of Designation attached hereto as Exhibit A, upon the
terms and subject to the conditions hereinafter set forth (the
"Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be
the Beneficial Owner of 15% or more of the shares of Common Stock
then outstanding but shall not include the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms
of any such plan, provided, however, that (i) if the Board of
Directors of the Company determines in good faith that a Person who
would otherwise be an "Acquiring Person" became such inadvertently
(including, without limitation, because (A) such Person was unaware
that it beneficially owned a percentage of Common Stock that would
otherwise cause such Person to be an "Acquiring Person" or (B) such
Person was aware of the extent of its Beneficial Ownership of Common
Stock but had no actual knowledge of the consequences of such
Beneficial Ownership under this Agreement) and without any intention
of changing or influencing control of the Company, and if such Person
as promptly as practicable divested or divests itself of Beneficial
Ownership of a sufficient number of shares of Common Stock so that
such person would no longer be an "Acquiring Person," then such
person shall not be deemed to be or to have become an "Acquiring
Person" for any purposes of this Agreement; (ii) if, as of the date
hereof, any Person is the Beneficial Owner of 15% or more of the
shares of Common Stock outstanding, such Person shall not be or
become an "Acquiring Person' unless and until such time as such
Person shall become the Beneficial Owner of additional shares of
Common Stock (other than pursuant to a dividend or distribution paid
or made by the Company on the outstanding Common Stock in shares of
Common Stock or pursuant to a split or subdivision of the outstanding
Common Stock), unless, upon becoming the Beneficial Owner of such
additional shares of Common Stock, such Person is not then the
Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding; and (iii) 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 of Common Stock
beneficially owned by such Person to 15% or more of the shares of
Common Stock then outstanding, provided, however, that if a Person
shall become the Beneficial Owner of 15% or more of the shares of
Common Stock then outstanding by reason of such share acquisitions by
the Company and shall thereafter become the Beneficial Owner of any
additional shares of Common Stock (other than pursuant to a dividend
or distribution paid or made by the Company on the outstanding Common
Stock in shares of Common Stock or pursuant to a split or subdivision
of the outstanding Common Stock), then such Person shall be deemed to
be an "Acquiring Person" unless upon becoming the Beneficial Owner of
such additional shares of Common Stock such Person does not
beneficially own 15% or more of the shares of Common Stock then
outstanding. For all purposes of this Agreement, any calculation of
the number of shares of Common Stock outstanding at any particular
time, including for purposes of determining the particular percentage
of such outstanding shares of Common Stock of which any Person is the
Beneficial Owner, shall be made in accordance with the last sentence
of Rule 13d-3(d)(l)(i) of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
in effect on the date hereof.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as amended
and in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of,
and shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such
Person's Affiliates or Associates, directly or indi-
rectly, has the right to acquire (whether such right is
exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or under-
standing (whether or not in writing) or upon the exercise
of conversion rights, exchange rights, rights, warrants
or options, or otherwise; provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or
to "beneficially own," (A) securities tendered pursuant
to a tender offer or exchange offer made by such Person
or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or
exchange, or (B) securities issuable upon exercise of
Rights at any time before the occurrence of a Triggering
Event, or (C) securities issuable upon exercise of Rights
from and after the occurrence of a Triggering Event which
Rights were acquired by such Person or any of such
Person's Affiliates or Associates before the Distribution
Date or pursuant to Section 3(a) or Section 22 hereof
(the "Original Rights") or pursuant to Section 11(i)
hereof in connection with an adjustment made with respect
to any Original Rights;
(ii) which such Person or any of such
Person's Affiliates or Associates, directly or indirectly, has
the right to vote or dispose of or has "beneficial ownership"
of (as determined pursuant to Rule 13d-3 of the General Rules
and Regulations under the Exchange Act), including pursuant to
any agreement, arrangement or understanding, whether or not in
writing; provided, however, that a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own," any security
under this subparagraph (ii) as a result of an agreement, arrangement
or understanding to vote such security if such agreement, arrangement
or understanding: (A) 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 General
Rules and Regulations under the Exchange Act, and (B) is not also then
reportable by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (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), for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to subparagraph
(ii) of this paragraph (c)) or disposing of any voting securities of the
Company; provided, however, that nothing in this paragraph (c) shall cause
a person engaged in business as an underwriter of securities to be the
"Beneficial Owner" of, or to "beneficially own," any securities acquired
through such person's participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of such
acquisition;
provided, however, that no Person who is an officer,
director or employee of an Exempt Person shall be deemed,
solely by reason of such Person's status or authority as
such, to be the "Beneficial Owner" of, to have
"Beneficial Ownership" of or to "beneficially own" any
securities that are "beneficially owned" (as defined in
this Section 1(c)), including, without limitation, in a
fiduciary capacity, by an Exempt Person or by any other
such officer, director or employee of an Exempt Person.
(d) "Business Day" shall mean any day other
than a Saturday, Sunday or a day on which banking
institutions in the State of New York are authorized or
obligated by law or executive order to close.
(e) "Close of business" on any given date
shall mean 5:00 P.M., Eastern standard time, on such
date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Eastern standard
time, on the next succeeding Business Day.
(f) "Common Stock" shall mean the common stock
of the Company. "Common Stock" when used with reference
to any Person other than the Company shall mean the
common stock (or, in the case of an unincorporated
entity, the equivalent equity interest) with the greatest
voting power of such other Person or, if such other
Person is subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned
person.
(g) "Common stock equivalents" shall have the
meaning set forth in Section 11(a)(iii) hereof.
(h) "Continuing Director" shall mean (i) any
member of the Board of Directors of the Company, while
such Person is a member of the Board, who is not an
Acquiring Person or an Affiliate or Associate of any such
Person, or a representative of any such Person, Affiliate
or Associate, and was a member of the Board before the
date an Acquiring Person became such, or (ii) any Person
who subsequently becomes a member of the Board, while
such Person is a member of the Board, who is not an
Acquiring Person or an Affiliate or Associate of any such
Person, or a representative of any such Person, Affiliate
or Associate, if such Person's nomination for election or
election to the Board is recommended or approved by a
majority of the Continuing Directors.
(i) "Current market price" shall have the
meaning set forth in Section 11(d)(i) hereof.
(j) "Current Value" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(k) "Distribution Date" shall have the meaning
set forth in Section 3(a) hereof.
(l) "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
(m) "Expiration Date" shall have the meaning
set forth in Section 7(a) hereof.
(n) "Final Expiration Date" shall have the
meaning set forth in Section 7(a) hereof.
(o) "Person" shall mean any individual, firm,
corporation, partnership or other entity.
(p) "Preferred Stock" shall mean shares of
Junior Participating Preferred Stock of the Company, and
to the extent that there are not a sufficient number of
shares of Junior Participating Preferred Stock authorized
to permit the full exercise of the Rights, any other
series of Preferred Stock of the Company designated for
such purpose containing terms substantially similar to
the terms of the Junior Participating Preferred Stock.
(q) "Principal Party" shall have the meaning
set forth in Section 13(b) hereof.
(r) "Purchase Price" shall have the meaning
set forth in Section 4(a) hereof.
(s) "Redemption Price" shall have the meaning
set forth in Section 23(a) hereof.
(t) "Rights" shall have the meaning set forth
in the WHEREAS clause at the beginning of this Agreement.
(u) "Rights Certificates" shall have the
meaning set forth in Section 3(a) hereof.
(v) "Section 11(a)(ii) Event" shall mean an
event described in Section 11(a)(ii) hereof.
(w) "Section 11(a)(ii) Trigger Date" shall
have the meaning set forth in Section 11(a)(iii) hereof.
(x) "Section 13 Event" shall mean any event
described in clauses (x), (y) or (z) of Section 13(a)
hereof.
(y) "Spread" shall have the meaning set forth
in Section 11(a)(iii) hereof.
(z) "Stock 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) under the Exchange
Act) by the Company or an Acquiring Person that an
Acquiring Person has become such.
(aa) "Subsidiary" shall mean, with reference to
any Person, any corporation of which an amount of voting
securities sufficient to elect at least a majority of the
directors of such corporation is beneficially owned,
directly or indirectly, by such Person or otherwise
controlled by such Person.
(bb) "Substitution Period" shall have the
meaning set forth in Section 11(a)(iii) hereof.
(cc) "Trading Day" shall have the meaning set
forth in Section 11(d)(i) hereof.
(dd) "Triggering Event" shall mean any Section
11(a)(ii) Event or Section 13 Event.
(ee) "Exempt Person" shall mean the Company,
any Subsidiary of the Company, any employee benefit plan
of the Company or of any Subsidiary of the Company, or
any Person or entity organized, appointed or established
by the Company for or pursuant to the terms of any such
plan.
Section 2. Appointment of Rights Agent. The
Company hereby appoints the Rights Agent to act as agent
for the Company and the holders of the Rights (who, in
accordance with Section 3 hereof, shall before the
Distribution Date also be the holders of the Common
Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint
such Co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the close of
business on the tenth business day after the Stock
Acquisition Date or (ii) the close of business on the
tenth Business Day after the date that a tender offer 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
Person or entity organized, appointed or established by
the Company for or pursuant to the terms of any such
plan) is first published or sent or given with the
meaning of Rule 14d-2(a) of the General Rules and Regu-
lations under the Exchange Act, if upon consummation
thereof, such Person would be the Beneficial Owner of 15%
or more of the shares of Common Stock then outstanding,
(the earlier of (i) and (ii) being herein referred to as
the "Distribution Date") (provided, however, that if
either of such dates occurs after the date of this
Agreement and on or prior to the Record Date, then the
Distribution Date shall be the Record Date), (x) the
Rights will be evidenced (subject to the provisions of
paragraph (b) of this Section 3) by the certificates for
the Common Stock registered in the names of the holders
of the Common Stock (which certificates for Common Stock
shall be deemed also to be certificates for Rights) and
not by separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer
to the Company). As soon as practicable after the
Distribution Date, the Rights Agent will send by first-class,
insured, postage prepaid mail, to each record holder of the
Common Stock as of the close of business on the Distribution
Date, at the address of such holder shown on the records of
the Company, one or more rights certificates, in substantially
the form of Exhibit B hereto (the "Rights Certificates"), evidencing
one Right for each share of Common Stock so held, subject to
adjustment as provided herein. If an adjustment in the
number of Rights per share of Common Stock has been made
pursuant to Section 11(p) hereof, at the time of
distribution of the Rights Certificates, the Company
shall make the necessary and appropriate rounding adjust-
ments (in accordance with Section 14(a) hereof) so that
Rights Certificates representing only whole numbers of
Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution
Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) As promptly as practicable following the
Record Date, the Company will send a copy of a Summary of
Rights, in substantially the form attached hereto as
Exhibit C (the "Summary of Rights"), by first-class,
postage prepaid mail, to each record holder of the Common
Stock as of the close of business on the Record Date, at
the address of such holder shown on the records of the
Company. With respect to certificates for the Common
Stock outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such
certificates for the Common Stock together with the
Summary of Rights and the registered holders of the
Common Stock shall also be the registered holders of the
associated Rights. Until the earlier of the Distribution
Date or the Expiration Date (as such term is defined in
Section 7 hereof), the transfer of any certificates
representing shares of Common Stock in respect of which
Rights have been issued shall also constitute the
transfer of the Rights associated with such shares of
Common Stock.
(c) Rights shall be issued in respect of all
shares of Common Stock which are issued (whether
originally issued or from the Company's treasury, if any)
after the Record Date but before the earlier of the
Distribution Date or the Expiration Date. Certificates
representing such shares of Common Stock shall also be
deemed to be certificates for Rights, and all
certificates issued for newly issued shares or transfers
of Common Stock after the Record Date shall bear the
following legend:
This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in the
Rights Agreement between VideoLan Technologies, Inc. (the
"Company") and Continental Stock Transfer & Trust Company
(the "Rights Agent") dated as of January 29, 1997 (the
"Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is
on file at the principal offices of the Company. Under
certain circumstances, as set forth in the Rights Agree-
ment, such Rights will be evidenced by separate certifi-
xxxxx and will no longer be evidenced by this certifi-
cate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect
on the date of mailing, without charge promptly after
receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was or becomes
an Acquiring Person or any Affiliate or Associate thereof
(as such terms are 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.
With respect to such certificates containing the foregoing legend,
until the earlier of (i) the Distribution Date or (ii) the Expira-
tion Date, the Rights associated with the Common Stock represented
by such certificates shall be evidenced by such certificates alone
and registered holders of Common Stock shall also be the registered
holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
Notwithstanding this paragraph (c), the omission of a legend
shall not affect the enforceability of any part of this Agreement
or the rights of any holder of the Rights.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election
to purchase and of assignment to be printed on the reverse thereof)
shall each be substantially in the form set forth in Exhibit B
hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with
any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on
which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 11 and Section 22
hereof, the Rights Certificates, whenever distributed, shall be
dated as of the Record Date and on their face shall entitle the
holders thereof to purchase such number of one one-hundredths of a
share of Preferred Stock as shall be set forth therein at the price
set forth therein (such exercise price per one one-hundredth of a
share, the "Purchase Price"), but the amount and type of securities
purchasable upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section
3(a) or Section 22 hereof 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
such Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee before 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) hereof, and any Rights Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement
or adjustment of any other Rights Certificate referred to in this
sentence, shall contain (to the extent feasible) the following
legend:
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 thereof (as
such terms are defined in the Rights Agreement).
Accordingly, this Rights Certificate and the Rights
represented hereby have become null and void in the
circumstances and with the effect specified in Section
7(e) of such Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf
of the Company by its Chairman of the Board and President, or any
Vice President of the Company, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be countersigned manually
by the Rights Agent and shall not be valid for any purpose unless
so countersigned. In case any officer of the Company who shall
have signed any of the 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; and any Rights
Certificates 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 the execution of this
Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at its principal office or offices
designated as the appropriate place for surrender of Rights Cer-
tificates upon exercise or transfer, books for registration and
transfer of the Rights Certificates issued hereunder. 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 certificate number 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 Section 4(b), Section
7(e), Section 14 and Section 24 hereof, at any time after the close
of business on the Distribution Date, and at or before the close of
business on the Expiration Date, any Rights Certificate or Certifi-
xxxxx may be transferred, split up, combined or exchanged for
another Rights Certificate or Certificates, entitling the regis-
tered holder to purchase a like number of one one-hundredths of a
share of Preferred Stock (or, following a Triggering Event, Common
Stock, other securities, cash or other assets, as the case may be)
as the Rights Certificate or Certificates surrendered then entitled
such holder (or former holder in the case of a transfer) to pur-
chase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Certificates shall
make such request in writing delivered to the Rights Agent, and
shall surrender the Rights Certificate or Certificates to be trans-
ferred, split up, combined or exchanged at the principal office or
offices of the Rights Agent designated for such purpose. Neither
the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrend-
ered Rights Certificate until the registered holder shall have com-
pleted and signed the certificate contained in the form of assign-
ment 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 Section 4(b), Section 7(e) and
Section 14 hereof, 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, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will execute and deliver a
new Rights Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of
the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.
(a) Subject to Section 7(e) hereof, the registered
holder of any Rights Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein including, without
limitation, the restrictions on exercisability set forth in Section
9(c), Section 11 (a)(iii) and Section 23(a) hereof) 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
certificate on the reverse side thereof duly executed, to the
Rights Agent at the principal office or offices of the Rights Agent
designated for such purpose, together with payment of the aggregate
Purchase Price with respect to the total number of one one-hun-
dredths of a share of Preferred Stock (or other securities, cash or
other assets, as the case may be) as to which such surrendered
Rights are then exercisable, at or before the earliest of (i) the
close of business on February 8, 2007 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as provided
in Section 23 hereof or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof (the earlier of (i) and
(ii) and (iii) being herein referred to as the "Expiration Date").
(b) The Purchase Price for each one one-hundredths of a
share of Preferred Stock pursuant to the exercise of a Right shall
initially be $19.00, and shall be subject to adjustment from time
to time as provided in Sections 11 and 13(a) hereof and shall be
payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate on the reverse side thereof duly executed, accompanied
by payment, with respect to each right so exercised, of the Pur-
chase Price per one one-hundredth of a share of Preferred Stock (or
other shares, securities, cash or other assets, as the case may be)
to be purchased as set forth below and an amount equal to any
applicable transfer tax, the Rights Agent shall, subject to Section
20(k) hereof, thereupon promptly (i) (A) requisition from any
transfer agent of the shares of Preferred Stock (or make available,
if the Rights Agent is the transfer agent for such shares) certifi-
xxxxx for the total number of one one-hundredths of a share of
Preferred Stock to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or
(B) if the Company shall have elected to deposit the total number
of shares of Preferred Stock issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of one one-hun-
dredths of a share of Preferred Stock as are to be purchased (in
which case certificates for the shares of Preferred Stock repre-
sented by such receipts shall be deposited by the transfer agent
with the depositary agent) and the Company will direct the deposi-
tary agent to comply with such request, (ii) requisition from the
Company the amount of cash, if any, to be paid in lieu of frac-
tional shares in accordance with Section 14 hereof, (iii) after
receipt of such certificates or depositary receipts, cause the same
to be delivered to or upon the order of the registered holder of
such Rights Certificate, registered in such name or names as may be
designated by such holder, and (iv) after receipt thereof, deliver
such cash, if any, to or upon the order of the registered holder of
such Rights Certificate. The payment of the Purchase Price (as
such amount may be reduced pursuant to Section 11(a)(iii) hereof)
may be made in cash or by certified bank check or bank draft pay-
able to the order of the Company. If the Company is obligated to
issue other securities (including Common Stock) of the Company, pay
cash and/or distribute other property pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary so that
such other securities, cash and/or other property are available for
distribution by the Rights Agent, if and when appropriate. The
Company reserves the right to require before the occurrence of a
Triggering Event that, upon any exercise of Rights, a number of
Rights be exercised so that only whole shares of Preferred Stock
would be issued.
(d) In case the registered holder of any Rights Cer-
tificate shall exercise less than all the Rights evidenced thereby,
a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and
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, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section
11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring
Person, or an Associate or Affiliate of an Acquiring Person, (ii)
a direct or indirect 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 direct or indirect
transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee before 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 a primary purpose or effect the avoidance
of this Section 7(e), 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, whether under any provision
of this Agreement or otherwise. The Company shall use all
reasonable efforts to insure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but shall
have no liability to any holder of Rights Certificates or other
Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or
transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obli-
gated 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 Bene-
ficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certifi-
xxxxx. All Rights Certificates surrendered for the purpose of
exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or any of its agents, be delivered to
the Rights Agent for cancellation or in canceled form, or, if
surrendered to the Rights Agent, shall be canceled by it, and no
Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement.
The Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any
other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Rights Certificates to the Company, or shall,
at the written request of the Company, destroy such canceled Rights
Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause
to be reserved and kept available out of its authorized and unis-
sued shares of Preferred Stock (and, following the occurrence of a
Triggering Event, out of its authorized and unissued shares of
Common Stock and/or other securities or out of its authorized and
issued shares held in its treasury), the number of shares of Pre-
ferred Stock (and, following the occurrence of a Triggering Event,
Common Stock and/or other securities) that, as provided in this
Agreement, including Section 11(a)(iii) hereof, will be sufficient
to permit the exercise in full of all outstanding Rights.
(b) So long as the shares of Preferred Stock (and, fol-
lowing the occurrence of a Triggering Event, Common Stock and/or
other securities) issuable and deliverable upon the exercise of the
Rights may be traded on any national securities exchange, the Com-
pany shall use its best efforts to cause, from and after such time
as the Rights become exercisable, all shares reserved for such
issuance to be traded on such exchange 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 first occurrence of a Section
11(a)(ii) Event, or, if applicable, as soon as practicable follow-
ing the earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered by the
Company upon the exercise of the Rights has been determined in
accordance with Section 11(a)(iii) hereof, a registration statement
on an appropriate form under the Securities Act of 1933 (the
"Act"), with respect to the securities purchasable upon exercise of
the Rights, (ii) cause such registration statement to become effec-
tive as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at
all times meeting the requirements of the Act) until the earlier of
(A) the date as of which the Rights are no longer exercisable for
such securities, and (B) the date of the expiration of the Rights.
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. The Company may temporarily suspend, for a period of time
not to exceed ninety (90) days after the date set forth in clause
(i) of the first sentence of this Section 9(c), the exercisability
of the Rights in order to prepare and file such registration state-
ment and permit it to become effective. Upon any such suspension,
the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no
longer in effect. In addition, if the Company shall determine that
a registration statement is required following the Distribution
Date, the Company may temporarily suspend the exercisability of the
Rights until such time as a registration statement has been de-
clared effective. Notwithstanding any provision of this Agreement
to the contrary, the Rights shall not be exercisable in any juris-
diction if the requisite qualification in such jurisdiction shall
not have been obtained, the exercise thereof shall not be permitted
under applicable law or a registration statement shall not have
been declared effective.
(d) The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all one one-hundredths
of a share of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) delivered upon
exercise of Rights shall, at the time of delivery of the certificates
for such shares (subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it
will pay when due and payable any and all federal and state trans-
fer taxes and charges which may be payable in respect of the is-
suance or delivery of the Rights Certificates and of any certifi-
xxxxx for a number of one one-hundredths of a share of Preferred
Stock (or Common Stock and/or other securities, as the case may be)
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 a number of one one-hundredths
of a share of Preferred Stock (or Common Stock and/or other securi-
ties, as the case may be) in respect of a name other than that of,
the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates
for a number of one one-hundredths of a share of Preferred Stock
(or Common Stock and/or other securities, as the case may be) in a
name other than that of the registered holder upon the exercise of
any Rights until 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
satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in
whose name any certificate for a number of one one-hundredths of a
share of Preferred Stock (or Common Stock and/or other securities,
as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of such
fractional shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certifi-
cate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and all applicable transfer taxes) was made; pro-
vided, however, that if the date of such surrender and payment is
a date upon which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are
closed, such Person shall be deemed to have become the record
holder of such shares (fractional or otherwise) on, and such cer-
tificate shall be dated, the next succeeding Business Day on which
the Preferred Stock (or Common Stock and/or other securities, as
the case may be) transfer books of the Company are open. Before
the exercise of the Rights evidenced thereby, the holder of a
Rights Certificate, as such, shall not be entitled to any rights of
a stockholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as
provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights. The Purchase Price, the number and
kind of shares covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided
in this Section 11.
(a)(i) If 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
Preferred Stock, (C) combine the outstanding Preferred Stock into
a smaller number of shares, 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) and Section 7(e)
hereof, the Purchase Price in effect at the time of the record date
for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares
of Preferred Stock or capital stock, as the case may be, issuable
on such date, shall be proportionately adjusted so that the holder
of any Right exercised after such time shall be entitled to
receive, upon payment of the Purchase Price then in effect, the
aggregate number and kind of shares of Preferred Stock or capital
stock, as the case may be, which, if such Right had been exercised
immediately before such date and at a time when the Preferred Stock
transfer books of the Company were open, he would have owned upon
such exercise and been entitled to receive by virtue of such divi-
dend, subdivision, combination or reclassification. If an event
occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for
in this Section 11(a)(i) shall be in addition to, and shall be made
before, any adjustment required pursuant to Section 11(a)(ii)
hereof.
(ii) Subject to Section 24 of this Agreement, in the
event 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 Person or entity organized,
appointed or established by the Company for or pursuant to the
terms of any such plan), alone or together with its Affiliates and
Associates, shall, at any time after the Rights Dividend
Declaration Date, becomes an Acquiring Person, then promptly
following the first occurrence of a Section 11(a)(ii) Event, proper
provision shall be made so that each holder of a Right (except as
provided below and in Section 7(e) hereof) shall thereafter have
the right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, in
lieu of a number of one one-hundredths of a share of Preferred
Stock, such number of shares of Common Stock of the Company as
shall equal the result obtained by (x) multiplying the then current
Purchase Price by the then number of one one-hundredths of a share
of Preferred Stock for which a Right was exercisable immediately
before the first occurrence of a Section 11(a)(ii) Event whether or
not such Right was then exercisable, and (y) dividing that product
(which, following such first occurrence, shall thereafter be
referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by 50% of the current market price (as
determined pursuant to Section 11(d)(i) hereof) per share of Common
Stock on the date of such first occurrence (such number of shares,
the "Adjustment Shares").
(iii) If the number of shares of Common 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 exer-
cise in full of the Rights in accordance with the foregoing sub-
paragraph (ii) of this Section 11(a), the Company shall, to the
extent permitted by applicable law and regulation: (A) determine
the excess of (l) the value of the Adjustment Shares issuable upon
the exercise of a Right (the "Current Value") over (2) the Purchase
Price (such excess, the "Spread"), and (B) with respect to each
Right, make adequate provision to substitute for the Adjustment
Shares, upon payment of the applicable Purchase Price, (1) cash,
(2) a reduction in the Purchase Price, (3) Common Stock or other
equity securities of the Company (including, without limitation,
shares, or units of shares, of preferred stock which the Board of
Directors of the Company has deemed to have the same value as
shares of Common Stock (such shares of preferred stock, "common
stock equivalents")), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing, having an aggre-
gate value equal to the Current Value, where such aggregate has
been determined by the Board of Directors of the Company based upon
the advice of an investment banking firm selected by the Board of
Directors of the Company; provided, however, if the Company shall
not have made adequate provision to deliver value pursuant to
clause (B) above within thirty (30) days following the later of (x)
the first occurrence of a Section 11(a)(ii) Event and (y) the date
on which the Company's rights of redemption pursuant to Section
23(a) expires (the later of (x) and (y) being referred to herein as
the "Section 11(a)(ii) Trigger Date"), then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right
and without requiring payment of the Purchase Price, shares of
Common Stock (to the extent available) and then, if necessary,
cash, which shares and/or cash have an aggregate value equal to the
Spread. If the Board of Directors of the Company shall determine
in good faith that it is likely that sufficient additional shares
of Common Stock could be authorized for issuance upon exercise in
full of the Rights, the thirty (30) day period set forth above may
be extended to the extent necessary, but not more than ninety (90)
days after the Section 11(a)(ii) Trigger Date, in order that the
Company may seek shareholder approval for the authorization of such
additional shares (such period, as it may be extended, the "Substi-
tution Period"). To the extent that the Company determines that
some action need be taken pursuant to the first and/or second sen-
tences of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 7(e) hereof, that such action shall apply uni-
formly to all outstanding Rights, and (y) may suspend the exercis-
ability of the Rights until the expiration of the Substitution
Period in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution to be made
pursuant to such first sentence and to determine the value thereof.
In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of the Common Stock shall be
the current market price (as determined pursuant to Section 11(d)
hereof) per share of the Common Stock on the Section 11(a)(ii)
Trigger Date and the value of any "common stock equivalent" shall
be deemed to have the same value as the Common Stock on such date.
(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 to subscribe for or purchase (for a period
expiring within forty-five (45) calendar days after such record
date) Preferred Stock (or shares having the same rights, privileges
and preferences as the shares of Preferred Stock ("equivalent pre-
ferred stock")) or securities convertible into Preferred Stock or
equivalent preferred stock at a price per share of Preferred Stock
or per share of equivalent preferred stock (or having a conversion
price per share, if a security convertible into Preferred Stock or
equivalent preferred stock) less than the current market price (as
determined pursuant to Section 11(d) hereof) per share of Preferred
Stock on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase
Price in effect immediately before such record date by a fraction,
the numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of shares of
Preferred Stock which the aggregate offering price of the total
number of shares of Preferred Stock and/or equivalent preferred
stock so to be offered (and/or the aggregate initial conversion
price of the convertible securities so to be offered) would pur-
chase at such current market price, and the denominator of which
shall be the number of shares of Preferred Stock outstanding on
such record date, plus the number of additional shares of Preferred
Stock and/or equivalent preferred stock to be offered for subscrip-
tion or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription
price may be paid by delivery of consideration part or all of which
may be in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. Shares of Preferred Stock
owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjust-
ment shall be made successively whenever such a record date is
fixed, and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase
Price which would then be in effect if such record date had not
been fixed.
(c) If the Company shall fix a record date for a distri-
bution to all holders of Preferred Stock (including any such dis-
tribution made in connection with a consolidation or merger in
which the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend
out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Preferred Stock, but including
any dividend payable in stock other than Preferred Stock) or sub-
scription rights or warrants (excluding those referred to in Sec-
tion 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price
in effect immediately before such record date by a fraction, the
numerator of which shall be the current market price (as determined
pursuant to Section 11(d) hereof) per share of 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 Rights Agent) of
the portion of the cash, assets or evidences of indebtedness so to
be distributed or of such subscription rights or warrants applic-
able to a share of Preferred Stock and the denominator of which
shall be such current market price (as determined pursuant to Sec-
tion 11(d) hereof) per share of Preferred Stock. Such adjustments
shall be made successively whenever such a record date is fixed,
and if such distribution is not so made, the Purchase Price shall
be adjusted to be the Purchase Price which would have been in
effect if such record date has not been fixed.
(d)(i) For the purpose of any computation hereunder,
other than computations made pursuant to Section 11(a)(iii) hereof,
the "current market price" per share of Common Stock on any date
shall be deemed to be the average of the daily closing prices per
share of such Common Stock for the thirty (30) consecutive Trading
Days (as such term is hereinafter defined) immediately before such
date, and for purposes of computations made pursuant to Section
11(a)(iii) hereof, the "current market price" per share of Common
Stock on any date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the ten (10)
consecutive Trading Days immediately following such date; provided,
however, that if the current market price per share of the Common
Stock is determined during a period following the announcement by
the issuer of such Common Stock of (A) a dividend or distribution
on such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock (other than
the Rights), or (B) any subdivision, combination or
reclassification of such Common Stock, and the ex-dividend date for
such dividend or distribution, or the record date for such sub-
division, combination or reclassification shall not have occurred
before the commencement of the requisite thirty (30) Trading Day or
ten (10) Trading Day period, as set forth above, then, and in each
such case, the "current market price" shall be properly adjusted to
take into account ex-dividend trading. The closing price for each
day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the prin-
cipal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Ex-
change or, if the shares of Common Stock are not listed or admitted
to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading
or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use, or, if on any such
date the shares of Common Stock are not quoted by any such organi-
zation, the average of the closing bid and asked prices as fur-
nished by a professional market maker making a market in the Common
Stock selected by the Board of Directors of the Company. If on any
such date no market maker is making a market in the Common Stock,
the fair value of such shares on such date as determined in good
faith by the Board of Directors of the Company shall be used. The
term "Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed
or admitted to trading is open for the transaction of business or,
if the shares of Common Stock are not listed or admitted to trading
on any national securities exchange, a Business Day. If the Common
Stock is not publicly held or not so listed or traded, "current
market price" per share shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder,
the "current market price" per share of Preferred Stock shall be
determined in the same manner as set forth above for the Common
Stock in clause (i) of this Section 11(d) (other than the last
sentence thereof). If the current market price per share of Pre-
ferred Stock cannot be determined in the manner provided above or
if the Preferred Stock is not publicly held or listed or traded in
a manner described in clause (i) of this Section 11(d), the "cur-
rent market price" per share of Preferred Stock shall be conclu-
sively deemed to be an amount equal to 100 (as such number may be
appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock
occurring after the date of this Agreement) multiplied by the
current market price per share of the Common Stock. If neither the
Common Stock nor the Preferred Stock is publicly held or so listed
or traded, "current market price" per share 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 for all purposes. For all purposes of this Agreement,
the "current market price" of one one-hundredth of a share of
Preferred Stock shall be equal to the "current market price" of one
share of Preferred Stock divided by 100.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one
percent (1%) in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required
to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest ten-thousandth
of a share of Common Stock or other share or one-millionth of a
share of Preferred Stock, as the case may be. Notwithstanding the
first sentence of this Section 11(e), any adjustment required by
this Section 11 shall be made no later than the earlier of (i)
three (3) years from the date of the transaction which mandates
such adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a)(ii) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares of
capital stock other than Preferred Stock, thereafter the number of
such other shares so receivable upon exercise of any Right and the
Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Preferred Stock contained in
Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and
the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect
to the Preferred Stock shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company subse-
quent to any adjustment made to the Purchase Price hereunder shall
evidence the right to purchase, at the adjusted Purchase Price, the
number of one one-hundredths of a share of Preferred Stock purchas-
able from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election
as provided in Section 11(i), upon each adjustment of the Purchase
Price as a result of the calculations made in Sections 11(b) and
(c), each Right outstanding immediately before the making of such
adjustment shall thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of one one-hundredths of a
share of Preferred Stock (calculated to the nearest one-millionth)
obtained by (i) multiplying (x) the number of one one-hundredths of
a share covered by a Right immediately before this adjustment, by
(y) the Purchase Price in effect immediately before such adjustment
of the Purchase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
lieu of any adjustment in the number of one one-hundredths of a
share of Preferred Stock purchasable upon the exercise of a Right.
Each of the Rights outstanding after the adjustment in the number
of Rights shall be exercisable for the number of one one-hundredths
of a share of Preferred Stock for which a Right was exercisable
immediately before such adjustment. Each Right held of record
before such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the Purchase Price in effect immediately
before 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 adjust-
ment, 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 (10) 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 Sec-
tion 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of
record in substitution and replacement for the Rights Certificates
held by such holders before the date of adjustment, and upon sur-
render 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 so to be distributed
shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the ad-
justed Purchase Price) 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 one one-hundredths of a share 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 one one-hundredth of a share and
the number of one one-hundredths of a share which were expressed in
the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjust-
ment reducing the Purchase Price below the then stated value, if
any, of the number of one one-hundredths of a share 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 such number of one one-hundredths of
a share of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuance to the holder of
any Right exercised after such record date the number of one one-hundredths
of a share of Preferred Stock and other capital stock or securities of
the Company, if any, issuable upon such exercise over and above the
number of one one-hundredths of a share 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 before 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) or
securities upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary not-
withstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that in their
good faith judgment the Board of Directors of the Company shall
determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash
of any shares of Preferred Stock at less than the current market
price, (iii) issuance wholly for cash of shares of Preferred Stock
or securities which by their terms are convertible into or
exchangeable for shares of Preferred Stock, (iv) stock dividends or
(v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Prefer-
red Stock shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not,
at any time after the Distribution Date, (i) consolidate with any
other Person (other than a Subsidiary of the Company in a transac-
tion which complies with Section 11(o) hereof), (ii) merge with or
into any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in
one transaction, or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies
with Section 11(o) thereof), if (x) at the time of or immediately
after such consolidation, merger or sale there are any rights, war-
rants 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) before,
simultaneously with or immediately after such consolidation, merger
or sale, the shareholders of the Person who constitutes, or would
constitute, the "Principal Party" for purposes of Section 13(a)
hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23
or Section 27 hereof, take (or permit any Subsidiary to take) any
action if at the time such action is taken it is reasonably fore-
seeable that such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary not-
withstanding, if the Company shall at any time after the Rights
Dividend Declaration Date and before the Distribution Date (i)
declare a dividend on the outstanding shares of Common Stock pay-
able in shares of Common Stock, or (ii) subdivide the outstanding
shares of Common Stock, or (iii) combine the outstanding shares of
Common Stock into a smaller number of shares, the number of Rights
associated with each share of Common Stock then outstanding, or
issued or delivered hereafter but before the Distribution Date,
shall be proportionately adjusted so that the number of Rights
thereafter associated with each share of Common Stock following any
such event shall equal the result obtained by multiplying the
number of Rights associated with each share of Common Stock immedi-
ately before such event by a fraction the numerator of which shall
be the total number of shares of Common Stock outstanding immedi-
ately before the occurrence of the event and the denominator of
which shall be the total number of shares of Common Stock outstand-
ing immediately following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Section
11 and Section 13 hereof, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of
the facts accounting for such adjustment, (b) promptly file with
the Rights Agent, and with each transfer agent for the Preferred
Stock and the Common Stock, a copy of such certificate, and (c)
mail a brief summary thereof to each holder of a Rights Certificate
(or, if before the Distribution Date, to each holder of a certifi-
cate representing shares of Common Stock) in accordance with Sec-
tion 26 hereof. The Rights Agent shall be fully protected in rely-
ing on any such certificate and on any adjustment therein contained
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) If, following the Stock 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) hereof),
and the Company shall not be the continuing or surviving corpora-
tion of such consolidation or merger, (y) any Person (other than a
Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof) shall consolidate with, or merge with or
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
outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash
or any other property, or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or other-
wise transfer), in one transaction or a series of related trans-
actions, 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 Person or Persons (other than the Company or any
Subsidiary of the Company in one or more transactions each of which
complies with Section 11(o) hereof), then, and in each such case
proper provision shall be made so that: (i) each holder of a
Right, except as provided in Section 7(e) hereof, shall thereafter
have the right to receive, upon the exercise thereof at the then
current Purchase Price in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully
paid, non-assessable and freely tradeable shares of Common Stock of
the Principal Party (as such term is hereinafter defined), not
subject to any liens, encumbrances, rights of first refusal or
other adverse claims, as shall be equal to the result obtained by
(1) multiplying the then current Purchase Price by the number of
one one-hundredths of a share of Preferred Stock for which a Right
is exercisable immediately before the first occurrence of Section
13 Event (or, if a Section 11(a)(ii) Event has occurred before the
first occurrence of a Section 13 Event, multiplying the number of
such one one-hundredths of a share of Preferred Stock for which a
Right was exercisable immediately before the first occurrence of a
Section 11(a)(ii) Event by the Purchase Price in effect immediately
before such first occurrence), and dividing that product (which,
following the first occurrence of a Section 13 Event, shall be
referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by (2) 50% of the current market price
(determined pursuant to Section 11(d)(i) hereof) per share of the
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 thereafter be deemed
to refer to such Principal Party, it being specifically intended
that the provisions of Section 11 hereof 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 assure that the
provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) hereof shall be of no 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), the Person that is
the issuer of any securities into which shares
of Common Stock of the Company are converted
in such merger or consolidation, and if no
securities are so issued, the Person that is
the other party to such merger or consolida-
tion; 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 greatest portion of the assets
or earning power transferred pursuant to such
transaction or transactions;
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 (12) month period registered under Sec-
tion 12 of the Exchange Act, and such Person is a direct or indi-
rect Subsidiary of another Person the Common Stock of which is and
has been so registered, "Principal Party" shall refer to such other
Person; and (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Stocks of two or
more of which are and have been so registered, "Principal Party"
shall refer to whichever of such Persons is the issuer of the
Common Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such xxxxxxx-
dation, 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, as soon as
practicable after the date of any consolidation, merger or sale of
assets mentioned in paragraph (a) of this Section 13, the Principal
Party will
(i) prepare and file a registration
statement under the Act, with respect to the
Rights and securities purchasable upon exer-
cise of the Rights on an appropriate form, and
will use its best efforts to cause such regis-
tration statement to (A) become effective as
soon as practicable after such filing and (B)
remain effective (with a prospectus at all
times meeting the requirements of the Act)
until the Expiration Date; and
(ii) will 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 require-
ments for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to suc-
cessive mergers or consolidations or sales or other transfers. If
a Section 13 Event shall occur at any time after the occurrence of
a Section 11(a)(ii) Event, the Rights which have not theretofore
been exercised shall thereafter become exercisable in the manner
described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions
of Rights, except before the Distribution Date as provided in Sec-
tion 11(p) hereof, or to distribute Rights Certificates which evi-
dence 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 cur-
rent market value of a whole Right. For purposes of this Section
14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately before
the date on which such fractional Rights would have been otherwise
issuable. The closing price of the Rights for any day shall be the
last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regu-
lar way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the
Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or
admitted to trading, or if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or
such other system then in use or, if on any such date the Rights
are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker
making a market in the Rights selected by the Board of Directors
of the Company. If on any such date no such market maker is making
a market in the Rights, the fair value of the Rights on such date
as determined in good faith by the Board of Directors of the
Company shall be used.
(b) The Company shall not be required to issue fractions
of shares of Preferred Stock (other than fractions which are inte-
gral multiples of one one-hundredth of a share of Preferred Stock)
upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Preferred Stock (other than fractions
which are integral multiples of one one-hundredth of a share of
Preferred Stock). In lieu of fractional shares of Preferred Stock
that are not integral multiples of one one-hundredth of a share of
Preferred Stock, the Company may pay to the registered holders of
Rights Certificates at the time such Rights are exercised as
herein provided an amount in cash equal to the same fraction of the
current market value of one one-hundredth of a share of Preferred
Stock. For purposes of this Section 14(b), the current market
value of one one-hundredth of a share of Preferred Stock shall be
one one-hundredth of the closing price of a share of Preferred
Stock (as determined pursuant to Section 11(d)(ii) hereof) for the
Trading Day immediately before the date of such exercise.
(c) Following the occurrence of a Triggering Event, the
Company shall not be required to issue fractions of shares of
Common Stock upon exercise of the Rights or to distribute certif-
icates which evidence fractional shares of Common Stock. In lieu
of fractional shares of Common Stock, the Company may 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 market value of one (1) share of
Common Stock. For purposes of this Section 14(c), the current
market value of one share of Common Stock shall be the closing
price of one share of Common Stock (as determined pursuant to
Section 11(d)(i) hereof) for the Trading Day immediately before the
date of such exercise.
(d) The holder of a Right by the acceptance of the
Rights expressly waives his right to receive any fractional Rights
or any fractional shares upon exercise of a Right, except as
permitted by this Section 14.
Section 15. Rights of Action. All rights of action in
respect of this Agreement, other than rights of action vested in
the Rights Agent pursuant to Section 18 hereof, are vested in the
respective registered holders of the Rights Certificates (and,
before the Distribution Date, the registered holders of the Common
Stock); and any registered holder of any Rights Certificate (or,
before the Distribution Date, of the Common Stock), without the
consent of the Rights Agent or of the holder of any other Rights
Certificate (or, before the Distribution Date, of the Common
Stock), may, in his own behalf and for his own benefit, enforce,
and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Rights Certificate
in the manner provided in such Rights Certificate and in this
Agreement. Without limiting the foregoing or any remedies avail-
able to the holders of Rights, it is specifically acknowledged that
the holders of Rights would not have an adequate remedy at law for
any breach of this Agreement and shall be entitled to specific per-
formance of the obligations hereunder and injunctive relief against
actual or threatened violations of the obligations hereunder 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) before the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates
are transferable only on the registry books of the Rights Agent if
surrendered at the principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a
proper instrument of transfer and with the appropriate forms and
certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in whose
name a Rights Certificate (or, before 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, subject to the last
sentence of Section 7(e) hereof, shall be required to be affected
by any notice to the contrary; and
(d) 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 Agree-
ment 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 com-
mission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting
or otherwise restraining performance of such obligation; provided,
however, the Company must use its best efforts to have any such
order, decree or ruling lifted or otherwise overturned as soon as
possible.
Section 17. Rights Certificate Holder Not Deemed a Stock-
holder. 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 number of one one-hundredths of a share of Pre-
ferred 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 herein 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 hereof), or to receive dividends or sub-
scription rights, or otherwise, until the Right or Rights evidenced
by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent rea-
sonable compensation for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements 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 harm-
less against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agree-
ment, including the costs and expenses of defending against any
claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur
no liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this Agree-
ment in reliance upon any Rights Certificate or certificate for
Common Stock or for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or
other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be con-
solidated, or any corporation resulting from any merger or con-
solidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any corporation succeeding to the corporate
trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on
the part of any of the parties hereto; provided, however, that such
corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency
created by this Agreement, any of the Rights Certificates shall
have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of a 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 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 under-
takes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the
holders of Rights Certificates, by their acceptance thereof, shall
be bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection to
the Rights Agent as to any action taken or omitted by it in good
faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable
that any fact or matter (including, without limitation, the iden-
tity of any Acquiring Person and the determination of "current
market price") be proved or established by the Company before
taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established
by a certificate signed by the Chairman of the Board and President,
any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company and delivered
to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for
its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in
this Agreement or in the Rights Certificates or be required to
verify the same (except as to its countersignature on such Rights
Certificates), 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 responsi-
bility in respect of the validity of this Agreement or the execu-
tion and delivery hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or execution of any
Rights Certificate (except its countersignature thereof); nor shall
it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any adjustment required under the
provisions of Section 11 or Section 13 hereof or responsible for
the manner, method or amount of any such adjustment or the ascer-
taining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced
by Rights Certificates after receipt of the certificate described
in Section 12 hereof setting forth any such adjustment); nor shall
it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of
Common Stock or Preferred Stock to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any shares of
Common Stock or Preferred Stock will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent
of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of its
duties hereunder from the Chairman of the Board and President, any
Vice President, the Secretary or any Assistant Secretary of the
Company, and to apply to such officers for advice or instructions
in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal in
any of the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may
be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the
Rights Agent shall not be answerable or accountable for any act,
default, neglect or misconduct of any such attorneys or agents or
for any loss to the Company resulting from any such act, default,
neglect or misconduct; provided, however, 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 hereun-
der or in the exercise of its rights if there shall be reasonable
grounds for believing that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Rights Certificate surren-
dered to the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to purchase,
as the case may be, has either not been completed or indicates an
affirmative response to clause 1 and/or 2 thereof, the Rights Agent
shall not take any further action with respect to such requested
exercise or transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties
under this Agreement upon thirty (30) days' notice in writing
mailed to the Company, and to each transfer agent of the Common
Stock and Preferred Stock, by registered or certified mail, and to
the holders, if any, of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor
Rights Agent upon ten (10) 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 and Preferred Stock, 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 ten
(10) days after giving notice of such removal, or within a period
of thirty (30) days 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 his Rights Certificate for inspection by the
Company), as the case may be, then any 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) a corporation organized and doing business under the laws of
the United States or of any state of the United States so long as
such corporation is in good standing, authorized under such laws to
exercise corporate trust powers, and is subject to supervision or
examination by federal or state authority and which has at the time
of its appointment as Rights Agent a combined capital and surplus
of at least $100,000,000 or (b) an affiliate of a corporation
described in clause (a) of this sentence. After appointment, the
successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the pre-
decessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed
necessary for the purpose. Not later than the effective date of
any such appointment, the Company shall file notice thereof in
writing with the predecessor Rights Agent and each transfer agent
of the Common Stock and the Preferred Stock, and mail a notice
thereof in writing to the registered holders of the Rights Certif-
icates. 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. Notwith-
standing 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 following the Distribution Date and before the redemp-
tion or expiration of the Rights, the Company (a) shall, with re-
spect to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrange-
ment, granted or awarded on or before the Distribution Date, or
upon the exercise, conversion or exchange of securities hereinafter
issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company,
issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however
that (i) no such Rights Certificate shall be issued if, and to the
extent that, the Company shall be advised by counsel that such
issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Rights
Certificate would be issued, 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 Board of Directors of the Company may, at its
option, at any time before the earlier of (i) the close of business
on the Stock Acquisition Date (or, if the Stock Acquisition Date
shall have occurred before the Record Date, the close of business
on the twentieth Business Day following the Record Date), or (ii)
the Final Expiration Date, redeem all but not less than all the
then outstanding Rights at a redemption price of $.01 per Right, as
such amount may be appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the
date hereof (such redemption price being hereinafter referred to as
the "Redemption Price"); provided, however, if the Board of
Directors of the Company authorizes redemption of the Rights on or
after the time a Person becomes an Acquiring Person, then there
must be Continuing Directors. The Company may, at its option, pay
the Redemption Price in cash, shares of Common Stock (based on the
"current market price," as defined in Section 11(d)(i) hereof, of
the Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Direc-
tors of the Company ordering the redemption of the Rights, evidence
of which shall have been filed with the Rights Agent, and without
any further action and without any notice, the right to exercise
the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for each
Right so held. Promptly after the action of the Board of Directors
ordering the redemption of the Rights, the Company shall give
notice of such redemption to the Rights Agent and the holders of
the then outstanding Rights by mailing such notice to all such
holders at each holder's last address as it appears upon the
registry books of the Rights Agent or, before the Distribution
Date, on the registry books of the Transfer Agent for the Common
Stock. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its
option, at any time and from time to time after the first occur-
rence of a Section 11(a)(ii) Event, 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 shares of Common Stock or common stock equivalents
(as defined in Section 11(a)(iii) hereof), or any combination
thereof, at an exchange ratio of one share of Common Stock, or such
number of common stock equivalents or units representing fractions
thereof as would be deemed to have the same value as one share of
Common Stock, per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after
the date hereof (such exchange ratio being hereinafter referred to
as the "Exchange Ratio"). Nothwithstanding the foregoing, the
Board of Directors shall not be empowered to effect such exchange
at any time after an Acquiring Person shall have become the
Beneficial Owner of shares of Common Stock aggregating 50% or more
of the shares of Common Stock then outstanding.
(b) Immediately upon the action of the Board of Direc-
tors of the Company ordering the exchange of any Rights pursuant to
subsection (a) of this Section 24 and without any further action
and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of shares of Common Stock and/or
common stock equivalents equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Company shall
promptly give public notice of any such exchange; provided, how-
ever, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company
promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the shares of Common
Stock and/or common stock equivalents for Rights will be effected
and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which
have become void pursuant to the provisions of Section 7(e) hereof)
held by each holder of Rights.
(c) If the number of shares of Common 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 an exchange of
Rights as contemplated in accordance with this Section 24, the
Company may, at its option, take all such action as may be neces-
sary to seek to authorize additional shares of Common Stock for
issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions
of shares of Common Stock or to distribute certificates which evi-
dence fractional shares of Common Stock. In lieu of such frac-
tional shares of Common Stock, the Company shall pay to the regis-
tered holders of Rights with regard to which such fractional shares
of Common Stock would otherwise be issuable an amount in cash equal
to the same fraction of the value of a whole share of Common Stock.
For purposes of this Section 24, the value of a whole share of Com-
mon Stock shall be the closing price (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately before the date of exchange pursuant to this Section
24, and the value of any common stock equivalent shall be deemed to
have the same value as the Common Stock on such date.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after
the Distribution Date, (i) to pay any dividend payable in stock of
any class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regu-
lar quarterly cash dividend out of earnings or retained earnings of
the Company), or (ii) to offer to the holders of Preferred Stock
rights or warrants to subscribe for or to purchase any additional
share of Preferred Stock or shares of stock of any class or any
other securities, rights or options, or (iii) to effect any re-
classification of its Preferred Stock (other than a reclassifica-
tion involving only the subdivision of outstanding shares of Pre-
ferred Stock), or (iv) to effect any consolidation or merger into
or with any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof), 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 trans-
action or a series of related transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken
as a whole) to any other Person or Persons (other than the Company
and/or any of its Subsidiaries in one or more transactions each of
which complies with Section 11(o) hereof), or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in
each such case, the Company shall give to each holder of a Rights
Certificate, to the extent feasible and in accordance with Section
26 hereof, a notice of such proposed action, which shall specify
the record date for the purposes of such stock dividend, distribu-
tion of rights or warrants, or the date on which such reclassifica-
tion, consolidation, merger, sale, transfer, liquidation, dissolu-
tion, or winding up is to take place and the date of participation
therein by the holders of the 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
twenty (20) days before 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 twenty (20) days before
the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Preferred
Stock, whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur,
then, in any such case, (i) the Company shall as soon as practi-
cable thereafter give to each holder of a Rights Certificate, to
the extent feasible and in accordance with Section 26 hereof, a
notice of the occurrence of such event, which shall specify the
event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof, and (ii) all references in the preceding
paragraph to Preferred Stock shall be deemed thereafter to refer to
Common Stock and/or, if appropriate, other securities.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holders
of any Rights Certificate to or on the Company shall be suffi-
ciently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the
Rights Agent) as follows:
VIDEOLAN TECHNOLOGIES, INC.
000 Xxxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxxxx, Chief Executive Officer
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 sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in
writing with the Company) as follows:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
Two Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Compliance Dept.
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 (or, if before the Distribution Date, to the holder of
certificates representing shares of Common Stock) shall be suffi-
ciently 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. Before the Stock
Acquisition Date and subject to the penultimate sentence of this
Section 27, the Company and the Rights Agent shall, if the Company
so directs, supplement or amend any provision of this Agreement
without the approval of any holders of certificates representing
shares of Common Stock. From and after the Stock Acquisition Date
and subject to the penultimate sentence of this Section 27, the
Company and the Rights Agent shall, if the Company so directs, sup-
plement or amend this Agreement without the approval of any holders
of Rights Certificates 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 provision herein, (iii) to
shorten or lengthen any time period hereunder (which lengthening or
shortening, following the first occurrence of an event set forth in
clauses (i) or (ii) of the first proviso to Section 23(a) hereof,
shall be effective only if there are Continuing Directors and shall
require the concurrence of a majority of such Continuing Direc-
tors), 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 any such Person); provided, that, from and after
the Stock Acquisition Date, this Agreement may not be supplemented
or amended to lengthen, pursuant to clause (iii) of this sentence,
(A) a time period relating to when the Rights may be redeemed at
such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of pro-
tecting, enhancing or clarifying the rights of, and/or the benefits
to, the holders of Rights. Upon the delivery of a certificate from
an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of
this Section 27, the Rights Agent shall execute such supplement or
amendment. Notwithstanding anything contained in this Agreement to
the contrary, from and after the Stock Acquisition Date, no
supplement or amendment shall be made which changes the Redemption
Price, the Final Expiration Date, the Purchase Price or the number
of one one-hundredths of a share of Preferred Stock for which a
Right is exercisable. Before the Stock Acquisition Date, the
interests of the holders of Rights shall be deemed coincident with
the interests of the holders of Common Stock.
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 Direc-
tors, etc. For all purposes of this Agreement, any calculation of
the number of shares of Common Stock outstanding at any particular
time, including for purposes of determining the particular percent-
age of such outstanding shares of Common Stock of which any Person
is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regula-
tions under the Exchange Act as in effect of the date hereof. The
Board of Directors of the Company (with, where specifically pro-
vided for herein, the concurrence of the Continuing Directors)
shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically
granted to the Board (with, where specifically provided for herein,
the concurrence of the Continuing Directors) or to the Company, or
as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to
(i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration
of this Agreement (including, but not limited to, 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
(with, where specifically provided for herein, the concurrence of
the Continuing Directors) in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and (y) not subject
the Board (or the Continuing Directors) 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 other than the
Company, the Rights Agent and the registered holders of the Rights
Certificates (and, before the Distribution Date, registered holders
of the Common Stock) 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 regis-
tered holders of the Rights Certificates (and, before the Distri-
bution Date, registered holders of the Common Stock).
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 unenforce-
able, 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 restric-
tion 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, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the close of busi-
ness on the tenth day following the date of such determination by
the Board of Directors. Without limiting the foregoing, if any
provisions requiring that a determination be made by less than the
entire Board is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, such determination
shall then be made by the entire Board.
Section 32. Governing Law. This Agreement, each Right and
each Rights Certificate issued hereunder shall be deemed to be a
contract made under the laws of Delaware and for all purposes shall
be governed by and construed in accordance with the laws of such
State applicable to contracts made and to be performed entirely
within such State.
Section 33. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original, and all such counterparts
shall together constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of
the several Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of
any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year
first above written.
Attest: VIDEOLAN TECHNOLOGIES, INC.
By/s/ Xxxxxx X. Xxxxxxxxxx By /s/ Xxxx Xxxxxxx
Xxxxxx X. Xxxxxxxxxx Xxxx Xxxxxxx
Corporate Secretary Chairman of the Board
Attest: CONTINENTAL STOCK TRANSFER &
TRUST COMPANY
By___________________________ By
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President
Exhibit A
[FORM OF CERTIFICATE OF DESIGNATION]
CERTIFICATE OF DESIGNATION, NUMBER, POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING
OPTIONAL, AND OTHER SPECIAL RIGHTS AND THE
QUALIFICATIONS, LIMITATIONS, RESTRICTIONS,
AND OTHER DISTINGUISHING CHARACTERISTICS OF
PREFERRED STOCK
OF
VIDEOLAN TECHNOLOGIES, INC.
Xxxx Xxxxxxx and Xxxxxx X. Xxxxxxxxxx hereby certify that:
I. They are the Chief Executive Officer and Secretary,
respectively, of VideoLan Technologies, Inc., a Delaware
corporation (the "Corporation").
II. The Certificate of Incorporation of the Corporation
authorizes the issuance of 5,000,000 shares of Preferred Stock,
$.01 par value per share, and expressly vests in the Board of
Directors of the Corporation the authority provided herein to issue
any or all of said shares in one or more series and by resolution
or resolutions to establish the designation, number, full or
limited voting powers, or the denial of voting powers, preferences
and relative, participating, optional, and other special rights and
the qualifications, limitations, restrictions, and other
distinguishing characteristics of each series to be issued.
III. The Board of Directors of the Corporation, pursuant to
authority expressly vesting in it as aforesaid, has adopted the
following resolutions creating an issue of Junior Participating
Preferred Stock.
RESOLVED, that pursuant to the authority vested in the Board
of Directors of the Corporation as aforesaid, the Board of
Directors does hereby provide for issuance of a series of Preferred
Stock of the Corporation, to be designated "1997A Junior
Participating Preferred Stock" (hereinafter referred to as "1997A
Junior Participating Preferred Stock") initially consisting of
200,000 shares, and shall possess the rights and privileges set
forth below:
A. Designation. The designation of the series of the
Preferred Stock created by the Board of Directors shall be "1997A
Junior Participating Preferred Stock" (hereinafter called this
"Series") and the number of shares constituting this Series is two
hundred thousand (200,000).
B. Dividends.
1. Subject to the prior and superior
rights of the holders of any shares of any series
of Preferred Stock ranking prior and superior to
the shares of this Series with respect to
dividends, the holders of shares of this Series
shall be entitled to receive, when and as
declared by the Board of Directors out of funds
legally available for the purpose, quarterly
dividends payable in cash on March 31, June 30,
September 30 and December 31 of each year (each
such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on
the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a
share of this Series, in an amount per share
(rounded to the nearest cent) equal to the
greater of (A) $1.00 or (B) subject to the
provision for adjustment hereinafter set forth,
100 times the aggregate per share amount of all
cash dividends, and 100 times the aggregate per
share amount (payable in kind) of all non-cash
dividends or other distributions other than a
dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise),
declared on the Common Stock of the Corporation
(the "Common Stock") since the immediately
preceding Quarterly Dividend Payment Date, or,
with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any
share or fraction of a share of this Series. If
the Corporation shall at any time after January
___, 1997 (the "Rights Declaration Date") (i)
declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of
shares, then in each such case the amount to
which holders of shares of this Series were enti-
tled immediately before such event under clause
(B) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction the
numerator of which is the number of shares of
Common Stock outstanding immediately after such
event and the denominator of which is the number
of shares of Common Stock that were outstanding
immediately before such event (the "Adjustment
Ratio").
2. The Corporation shall declare a
dividend or distribution on this Series as
provided in clause (A) of the preceding paragraph
(1) immediately after it declares a dividend or
distribution on the Common Stock (other than a
dividend payable in shares of Common Stock);
provided that, in the event no dividend or
distribution shall have been declared on the
Common Stock during the period between any
Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a
dividend of $1.00 per share on this Series shall
nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
3. Dividends shall begin to accrue and be
cumulative on outstanding shares of this Series
from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of
this Series unless the date of issue of such
shares is before the record date for the first
Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless
the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the
determination of holders of shares of this Series
entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin
to accrue and be cumulative from such Quarterly
Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends
paid on the shares of this Series in an amount
less than the total amount of such dividends at
the time accrued and payable on such shares shall
be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding.
The Board of Directors may fix a record date for
the determination of holders of shares of this
Series entitled to receive payment of a dividend
or distribution declared thereon, which record
date shall be no more than 30 days before the
date fixed for the payment thereof.
4. No full dividends shall be declared or
paid or set apart for payment on the Preferred
Stock of any series ranking, as to dividends, on
a parity with or junior to this Series for any
period unless full cumulative dividends have been
or contemporaneously are declared and a sum
sufficient for the payment thereof set apart for
such payment on this Series for all dividend
payment periods terminating on or prior to the
date of payment of such full cumulative
dividends. When dividends are not paid in full,
as aforesaid, upon the shares of this Series and
any other Preferred Stock ranking on a parity as
to dividends with this Series, all dividends
declared upon shares of this Series and any other
Preferred Stock ranking on a parity as to divi-
dends with this Series shall be declared pro rata
so that the amount of dividends declared per
share on this Series and such other Preferred
Stock shall in all cases bear to each other the
same ratio that accrued dividends per share on
the shares of this Series and such other
Preferred Stock bear to each other. Holders of
shares of this Series shall not be entitled to
any dividends, whether payable in cash, property
or stock, in excess of full cumulative dividends,
as herein provided, on this Series. No interest,
or sum of money in lieu of interest, shall be
payable in respect of any dividend payment of
payments on this Series which may be in arrears.
5. So long as any shares of this Series
are outstanding, no dividend (other than a
dividend in Common Stock or in any other stock
ranking junior to this Series as to dividends and
upon liquidation and other than as provided in
paragraph (4) of this Article B shall be declared
or paid or set aside for payment or other
distribution declared or made upon the Common
Stock or upon any other stock ranking junior to
or on a parity with this Series as to dividends
or upon liquidation, nor shall any Common Stock
or any other stock of the Corporation ranking
junior to or on a parity with this Series as to
dividends or upon liquidation be redeemed,
purchased or otherwise acquired for any
consideration (or any moneys be paid to or made
available for a sinking fund for the redemption
of any shares of any such stock) by the
Corporation (except by conversion into or
exchange for stock of the Corporation ranking
junior to this Series as to dividends and upon
liquidation) unless, in each case, the full
cumulative dividends on all outstanding shares of
this Series shall have been paid for all past
dividend payment periods.
C. Conversion or Exchange. The holders of shares of this
Series shall not have any rights to convert such shares into or
exchange such shares for shares of any other class or classes or of
any other series of any class or classes of capital stock of the
Corporation.
D. Voting Rights. The holders of shares of a Series 1997A
Junior Participating Preferred Stock shall have the following
voting rights:
1. Each share of Series 1997A Junior
Participating Preferred Stock shall entitle the
holder thereof to a number of votes equal to 100
multiplied by the Adjustment Ratio on all
matters submitted to a vote of the stockholders
of the Corporation.
2. Except as required by law and by
Section 10 hereof, holders of Series 1997A
Junior Participating Preferred Stock shall have
no special voting rights and their consent shall
not be required (except to the extent they are
titled to vote with holders of Common Stock as
set forth herein) for taking any corporate
action.
E. Liquidation Rights.
1. Upon the dissolution, liquidation
(voluntary or otherwise), or winding up of the
Corporation, the holders of the shares of this
Series shall be entitled to receive out of the
assets of the Corporation, before any payment of
distribution shall be made on the Common Stock,
or on any other class of stock ranking junior to
the Preferred Stock upon liquidation, the amount
of $19.00 per share, plus a sum equal to all
dividends (whether or not earned or declared) on
such shares accrued and unpaid thereon to the
date of final distribution (the "Liquidation
Preference"). Following the payment of the full
amount of the Liquidation Preference, no
additional distributions shall be made to the
holders of shares of this Series unless, prior
thereto, the holders of shares of Common Stock
shall have received an amount per share (the
"Common Adjustment") equal to the quotient
obtained by dividing (i) the Liquidation
Preference by (ii) 100 (as appropriately
adjusted as set forth in paragraph (2) below to
reflect such events as stock splits, stock divi-
dends and recapitalizations with respect to the
Common Stock) (such number in clause (ii), the
"Adjustment Number"). Following the payment of
the full amount of the Liquidation Preference
and the Common Adjustment in respect of all
outstanding shares of Junior Participating
Preferred Stock and Common Stock, respectively,
holders of this Series and holders of Common
Stock shall receive their ratable and
proportionate share of the remaining assets to
be distributed in the ratio of the Adjustment
Number to 1 with respect to such Preferred Stock
and Common Stock, on a per share basis,
respectively.
2. If the Corporation shall at any time
after the Rights Declaration Date (i) declare
any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares,
then in each such case the Adjustment Number in
effect immediately before such event shall be
adjusted by multiplying such Adjustment Number
by a fraction the numerator of which is the
number of shares of Common Stock outstanding
immediately after such event and the denominator
of which is the number of shares of Common Stock
that were outstanding immediately before such
event.
3. The sale, conveyance, exchange or
transfer (for cash, shares of stock, securities
or other consideration) of all or substantially
all the property and assets of the Corporation
shall be deemed a voluntary dissolution,
liquidation or winding up of the Corporation for
the purposes of this Article E, but the merger
or consolidation of the Corporation into or with
another corporation or the merger or
consolidation of any other corporation into or
with the Corporation, shall not be deemed to be
a dissolution, liquidation or winding up,
voluntarily or involuntarily, for the purposes
of this Article E.
4. After the payment to the holders of
the shares of this Series of the full prefer-
ential amounts provided for in this Article E,
the holders of this Series as such shall have no
right or claim to any of the remaining assets of
the Corporation.
5. If the assets of the Corporation
available for distribution to the holders of
shares of this Series upon any dissolution,
liquidation or winding up of the Corporation,
whether voluntary or involuntary, shall be
insufficient to pay in full all amounts to which
such holders are entitled pursuant to paragraph
(1) of this Article E, no such distribution
shall be made on account of any shares of any
other class or series of Preferred Stock ranking
on a parity with the shares of this Series upon
such dissolution, liquidation or winding up
unless proportionate distributive amounts shall
be paid on account of the shares of this Series,
ratably, in proportion to the full distributable
amounts for which holders of all such parity
shares are respectively entitled upon such
dissolution, liquidation or winding up. If,
however, there are not sufficient assets
available to permit payment in full of the
Common Adjustment, then such remaining assets
shall be distributed ratably to the holders of
Common Stock.
F. Priority. For purposes of this resolution, any stock of any
class or classes of the Corporation shall be deemed to rank:
1. prior to the shares of this Series,
either as to dividends or upon liquidation, if
the holders of such class or classes shall be
entitled to the receipt of dividends or of
amounts distributable upon dissolution, liqui-
dation or winding up of the Corporation, as the
case may be, in preference or priority to the
holders of shares of this Series;
2. on a parity with shares of this
Series, either as to dividends or upon liqui-
dation, whether or not the dividend rates,
dividend payment dates or redemption or liqui-
dation prices per share or sinking fund provi-
sions, if any, be different from those of this
Series, if the holders of such stock shall be
entitled to the receipt of dividends or of
amounts distributable upon dissolution, liqui-
dation or winding up of the Corporation, as the
case may be, in proportion to their respective
dividend rates or liquidation prices, without
preference or priority, one over the other, as
between the holders of such stock and the
holders of shares of this Series; and
3. junior to shares of this Series,
either as to dividends or upon liquidation, if
the holders of shares of this Series shall be
entitled to receipt of dividends or of amounts
distributable upon dissolution, liquidation or
winding up of the Corporation, as the case may
be, in preference or priority to the holders of
shares of such class or classes."
FURTHER RESOLVED, that the statements contained in the
foregoing resolutions creating and designating the said 1997A
Junior Participating Preferred Stock and fixing the number,
powers, preferences and relative, optional, participating, and
other special rights and the qualifications, limitations,
restrictions, and other distinguishing characteristics thereof
shall, upon the effective date of said series, be deemed to be
included in and be a part of the Certificate of Incorporation of
the Corporation pursuant to the provisions of the General
Corporation Law of the State of Delaware.
IV. This Certificate of Designation of the Corporation has
been duly approved by the Board of Directors.
V. The total number of outstanding shares of Common Stock
of the Corporation is 14,005,0398. The total number of
outstanding shares of Preferred Stock is 5,500. There are no
other shares of any other class of stock outstanding. No vote of
any class of stock of the Corporation is required for the adoption
and approval of this Certificate of Designation.
We further declare under penalty of perjury under the laws of
the State of Delaware that the matters set forth in this
Certificate are true and correct of our own knowledge.
Date: January 29, 1997 ___________________________
Xxxx Xxxxxxx
Chief Executive Officer
_________________________
Xxxxxx X. Xxxxxxxxxx
Secretary
Exhibit B
[Form of Rights Certificate]
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER FEBRUARY 8, 2007, OR EARLIER IF REDEEMED OR
EXCHANGED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION,
AT THE OPTION OF THE COMPANY, AT $.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
(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 SECTION 7(e) OF
SUCH AGREEMENT.]
Rights Certificate
VIDEOLAN TECHNOLOGIES, 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 January 29, 1997 (the "Rights Agreement"), between VideoLan
Technologies, Inc., a Delaware corporation (the "Company"), and
Continental Stock Transfer and Trust Company (the "Rights Agent"),
to purchase from the Company at any time before 5:00 P.M. (Eastern
standard time) on February 8, 2007, at the office or offices of
the Rights Agent designated for such purpose, or its successors
as Rights Agent, one one-hundredth of a fully paid, non-assessable
share of Junior Participating Preferred Stock (the "Preferred
Stock") of the Company, at a purchase price of $19.00 per one one-
hundredth of a share (the "Purchase Price"), upon presentation and
surrender of this Rights Certificate with the Form of Election to
Purchase and related Certificate duly executed. The number of
Rights evidenced by this Rights Certificate (and the number of
shares which may be purchased upon exercise thereof) set forth
above, and the Purchase Price per share set forth above, are the
number and Purchase Price as of January ___, 1997, based on the
Preferred Stock as constituted at such date. The Company reserves
the right to require before the occurrence of a Triggering Event
(as such term is defined in the Rights Agreement) that a number
of Rights be exercised so that only whole shares of Preferred
Stock will be issued.
Upon the occurrence of a Section 11(a)(ii) Event (as such
term is defined in the Rights Agreement), if the Rights evidenced
by this Rights Certificate are beneficially owned by (i) an
Acquiring Person or an Affiliate or Associate of any such Person
(as such terms are defined in the Rights Agreement), (ii) a
transferee of any such Acquiring Person, Associate or Affiliate,
or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, after such transfer,
became an Acquiring Person or an Affiliate or Associate of any
such Person, such Rights shall become null and void and no holder
hereof shall have any right with respect to such Rights from and
after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and
the number and kind of shares of Preferred Stock or other securi-
ties which may be purchased upon the exercise of the Rights evi-
denced by this Rights Certificate are subject to modification and
adjustment upon the happening of certain events, including Trig-
xxxxxx Events (as such term is defined in the Rights Agreement).
This Rights Certificate is subject to all of the terms, pro-
visions and conditions of the Rights Agreement, which terms, pro-
visions 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,
which limitations of rights include the temporary suspension of
the exercisability of such Rights under the specific circumstances
set forth in the Rights Agreement. Copies of the Rights
Agreements are on file at the above-mentioned office of the Rights
Agent and are also available upon written request to the Rights
Agent.
This Rights Certificate, with or without other Rights Cer-
tificates, upon surrender at the principal office or offices of
the Rights Agent designated for such purpose, may be exchanged for
another Rights Certificate or Rights Certificate of like tenor and
date evidencing Rights entitling the holder to purchase a like
aggregate number of one one-hundredths of a share of 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 (i) may be redeemed by the Company
at its option at a redemption price of $.01 per Right at any time
before the earlier of the close of business on (a) the twentieth
Business Day following the Stock Acquisition Date (as such time
period may be extended pursuant to the Rights Agreement), and (b)
the Final Expiration Date or (ii) may be exchanged in whole or in
part for shares of the Company's Common Stock and/or other equity
securities of the Company deemed to have the same value as shares
of Common Stock. After the expiration of the redemption period,
the Company's right of redemption may be reinstated if an
Acquiring Person reduces his beneficial ownership to 10% or less
of the outstanding shares of Common Stock in a transaction or
series of transactions not involving the Company. Under certain
circumstances set forth in the Rights Agreement, the decision to
redeem shall require the concurrence of a majority of the
Continuing Directors.
No fractional shares of Preferred Stock will be issued upon
the exercise of any Right or Rights evidenced hereby (other than
fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock, which may, at the election of the Com-
pany, 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 shall be entitled to
vote or receive dividends or be deemed for any purpose the holder
of shares of Preferred Stock or of any other securities of the
Company which may at any time be issuable on the exercise hereof,
nor shall anything contained in the Rights Agreement or herein by
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 stock-
holders at any meeting thereof, or to give or withhold consent to
any corporate action, or, to receive notice of meetings or other
actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights
Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights
Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated:
ATTEST: VIDEOLAN TECHNOLOGIES, INC.
By_________________________ By
Xxxxxx X. Xxxxxxxxxx Xxxx Xxxxxxx
Secretary Chairman of the Board
Countersigned:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By_________________________
Authorized Officer
[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:
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of any such
Person (as such terms are defined pursuant to the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Rights Certificate from any Person who is, was or subse-
quently became, an Acquiring Person or an Affiliate or Associate
of any such Person.
Dated: ____________, ____
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this
Rights Certificate in every particular, without alteration or
enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights
Certificate.)
To: VIDEOLAN TECHNOLOGIES, INC.
The undersigned hereby irrevocably elects to exercise
_____________ Rights represented by this Rights Certificate to
purchase the shares of Preferred Stock issuable upon the exercise
of the Rights (or such other securities of the Company or of any
other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued
in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evi-
denced by this Rights Certificate, a new Rights Certificate for
the balance 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:
Certificate
The undersigned hereby certifies by checking the appro-
priate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ]
are [ ] are not being exercised by or on behalf of a Person who
is or was an Acquiring Person or an Affiliate or Associate of any
such Person (as such terms are defined pursuant to the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Rights Certificate from any Person who is, was or became
an Acquiring Person or an Affiliate or Associate of any such
Person.
Dated: _______________, ____
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Cer-
tificate must correspond to the name as written upon the face of
this Rights Certificate in every particular, without alteration
or enlargement or any change whatsoever.
IN CERTAIN CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT, THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME
NULL AND VOID.
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On January 29, 1997, the Board of Directors of VideoLan
Technologies, Inc. (the "Company") declared a dividend dis-
tribution of one Right for each outstanding share of the Company's
Common Stock, no par value (the "Common Stock"), to stockholders
of record at the close of business on February 8, 1997. Each
Right entitles the registered holder to purchase from the Company
a unit consisting of one-hundredth of a share (a "Unit") of Junior
Participating Preferred Stock (the "Preferred Stock") at a
Purchase Price of $19.00 per Unit, subject to adjustment. The
description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and
Continental Stock Transfer & Trust Company, 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) the tenth day following a public announcement that
a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding
shares of Common Stock (the "Stock Acquisition Date") or (ii) the
tenth business day 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
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 February 8, 1997, 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 before 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 February 8, 2007,
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 the 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 of Direc-
tors, only shares of Common Stock issued before the Distribution
Date will be issued with Rights.
Following any Stock Acquisition Date, each holder of a Right
will have the right to receive, upon exercise, Common 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 $20.00 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 $40.00 worth of Common Stock
based on the current market price (as defined in the Agreement)
of the Common Stock for $40.00. Assuming that the current market
price of the Common Stock is $10.00, the holder of each valid
Right would be entitled to purchase four shares of Common Stock
for $20.00.
If, at any time following the Stock Acquisition Date, (i) the
Company is acquired in a merger or other business combination
transaction in which the Company is not the surviving corporation
(other than a merger which follows an offer described in the sec-
ond preceding paragraph), or (ii) 50% or more of the Company's
assets or earning power is sold or transferred, each holder of a
Right (except Rights which previously have been voided as set
forth above) shall thereafter 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."
The Purchase Price payable, and the number of Units of Pre-
ferred Stock or other securities or property issuable, upon exer-
cise of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred
Stock, (ii) if holders of the Preferred Stock are granted certain
rights or warrants to subscribe for Preferred Stock or convertible
securities at less than the current market price of the Preferred
Stock, or (iii) upon the distribution to holders of the Preferred
Stock of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants
(other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least
1% of the Purchase Price. No fractional Units will be issued and,
in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Stock on the last trading date
before the date of exercise.
At any time until the Stock Acquisition Date, the Company may
redeem the Rights in whole, but not in part, at a price of $.01
per Right (payable in cash, Common Stock or other consideration
deemed appropriate by the Board of Directors). The decision to
redeem after the Stock Acquisition Date shall require the
concurrence of a majority of the Continuing Directors.
Immediately upon the action of the Board of Directors ordering
redemption of the Rights, with, where required, the concurrence
of the Continuing Directors, the Rights terminate and the only
right of the holders of Rights will be to receive the $.01
redemption price.
The term "Continuing Directors" means any member of the Board
of Directors of the Company who was a member of the Board before
the date an Acquiring Person became such, and any person who is
subsequently elected to the Board if such person is recommended
or approved by a majority of the Continuing Directors, but shall
not include an Acquiring Person or an affiliate or associate of
an Acquiring Person or any representative of the foregoing
entities.
At any time after the Rights become exercisable for Common
Stock (or other consideration) of the Company, the Board of
Directors may exchange the Rights (other than Rights owned by an
Acquiring Person which have become void), in whole or in part, at
an exchange ratio of one Common Share, and/or other equity
securities deemed to have the same value as one Common Share, per
Right, subject to adjustment.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends. 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 if the Rights become
exercisable for Common Stock (or other consideration) of the Com-
pany or for common stock of the acquiring company as set forth
above, or are exchanged as set forth above.
Other than those provisions relating to the principal eco-
nomic terms of the Rights, any of the provisions of the Rights
Agreement may be amended by the Board of Directors of the Company
before the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board (in
certain circumstances, with the concurrence of the Continuing
Directors) in order to cure any ambiguity, to make changes which
do not adversely affect the interests of the holders of Rights
(excluding the interests of any Acquiring Person or an affiliate
or associate of any such person), or to shorten or lengthen any
time period under the Rights Agreement; provided, however, that
no amendment to adjust the time period governing redemption shall
be made at such time as the Rights are not redeemable.
A copy of the Rights Agreement has been filed with the Secu-
rities and Exchange Commission as an Exhibit to a Registration
Statement on Form 8-A dated January 29, 1997. 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.
