EXHIBIT 4.1
RIGHTS AGREEMENT
by and between
TECHNICAL COMMUNICATIONS CORPORATION
and
AMERICAN STOCK TRANSFER & TRUST COMPANY, as Rights Agent
Dated as of
August 6, 2004
TABLE OF CONTENTS
Section Page
------- ----
Section 1. Certain Definitions....................................................................... 1
Section 2. Appointment of Rights Agent............................................................... 6
Section 3. Issuance of Right Certificates............................................................ 6
Section 4. Form of Right Certificates................................................................ 8
Section 5. Countersignature and Registration......................................................... 9
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates.............................................. 9
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights; Invalidation of
Certain Rights............................................................................ 10
Section 8. Cancellation and Destruction of Right Certificates........................................ 12
Section 9. Reservation and Availability of Shares of Common Stock.................................... 13
Section 10. Stock Record Date......................................................................... 14
Section 11. Adjustment of Exercise Price or Number of Shares.......................................... 14
Section 12. Certification of Adjusted Exercise Price or Number of Shares.............................. 20
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power...................... 20
Section 14. Fractional Rights and Fractional Shares................................................... 24
Section 15. Rights of Action.......................................................................... 25
Section 16. Agreement of Right Holders................................................................ 25
Section 17. Right Certificate Holder Not Deemed a Stockholder......................................... 26
Section 18. Concerning the Rights Agent............................................................... 26
Section 19. Merger or Consolidation of, or Change in Name of, the Rights Agent........................ 27
Section 20. Duties of Rights Agent.................................................................... 27
TABLE OF CONTENTS
(cont'd)
Section Page
------- ----
Section 21. Change of Rights Agent.................................................................... 30
Section 22. Issuance of New Right Certificates........................................................ 31
Section 23. Redemption................................................................................ 31
Section 24. Notice of Proposed Actions................................................................ 32
Section 25. Notices................................................................................... 33
Section 26. Supplements and Amendments................................................................ 33
Section 27. Exchange.................................................................................. 34
Section 28. Successors................................................................................ 35
Section 29. Benefits of the Agreement................................................................. 35
Section 30. Massachusetts Contract.................................................................... 35
Section 31. Counterparts.............................................................................. 35
Section 32. Descriptive Headings...................................................................... 35
Section 33. Severability.............................................................................. 35
Section 34. Determinations and Actions by the Board of Directors...................................... 36
Exhibit A -Summary of Rights
Exhibit B -Form of Right Certificate
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RIGHTS AGREEMENT
Rights Agreement (this "AGREEMENT"), dated as of August 6, 2004, by and
between TECHNICAL COMMUNICATIONS CORPORATION, a Massachusetts corporation (the
"CORPORATION"), and AMERICAN STOCK TRANSFER & TRUST COMPANY, a New York
corporation (the "RIGHTS AGENT").
W I T N E S S E T H
WHEREAS, on August 5, 2004 the Board of Directors of the Corporation
authorized the issuance of, and declared, a dividend payable in one right (a
"RIGHT") for each share of common stock, $.10 par value per share ("COMMON
STOCK"), of the Corporation outstanding as of close of business on August 13,
2004 (the "RECORD DATE"), each such Right representing the right to purchase one
share of Common Stock of the Corporation, upon the terms and subject to the
conditions hereinafter set forth; and
WHEREAS, on such date, the Board of Directors of the Corporation further
authorized the issuance of one Right (subject to adjustment) with respect to
each share of Common Stock which may be issued between the Record Date and the
earliest to occur of the Distribution Date, the Expiration Date or the Final
Expiration Date (as such terms are hereinafter defined); provided, however, that
Rights may be issued with respect to shares of Common Stock that shall become
outstanding after the Distribution Date and prior to the Expiration Date in
accordance with Section 22 hereof;
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 shall have the meanings provided by this Section 1, any
capitalized term defined in this Section 1 and used in the following definitions
having the meaning provided by this Section 1:
(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 Voting Stock then outstanding; provided,
however, that an Acquiring Person shall not include: (i) an Exempt Person;
or (ii) any Person who or which, together with all Affiliates and
Associates of such Person, would be an Acquiring Person solely by reason
of (A) being the Beneficial Owner of shares of Voting Stock, the
Beneficial Ownership of which was acquired by such Person (together with
all Affiliates and Associates of such Person) pursuant to any action or
transaction or series of related actions or transactions approved by the
Board of Directors of the Corporation before such Person (together with
all Affiliates and Associates of such Person) otherwise became an
Acquiring Person or (B) a reduction in the number of issued and
outstanding shares of Voting Stock pursuant to a transaction or a series
of related transactions approved by the Board of Directors of the
Corporation; provided, further, that in the event a Person described in
this clause (ii) does not become an Acquiring Person by reason of
subclause (A) or (B) of this clause (ii), such Person nonetheless shall
become an Acquiring Person in the event such Person
(together with all Affiliates and Associates of such Person) thereafter
acquires Beneficial Ownership of an additional 1% or more of the Voting
Stock, unless the acquisition of such additional Voting Stock would not
result in such Person becoming an Acquiring Person by reason of subclause
(A) or (B) of this clause (ii). Notwithstanding the foregoing, if the
Board of Directors of the Corporation determines in good faith that a
Person who would otherwise be an "Acquiring Person" as defined pursuant to
the foregoing provisions of this paragraph (a) has become such
inadvertently, and, within 10 Business Days of being requested by the
Corporation to advise it regarding the same, certifies to the Corporation
that such Person acquired shares of Common Stock in excess of 14.9%
inadvertently or without knowledge of the terms of the Rights, and who,
together with all Affiliates and Associates, thereafter does not acquire
additional shares of Common Stock while the Beneficial Owner of 15% of
more of the shares of Common Stock then outstanding, and such Person
divests as promptly as practicable (as determined in good faith by the
Board of Directors of the Corporation) a sufficient number of shares of
Voting Stock so that such Person would no longer be an "Acquiring Person"
as defined pursuant to the foregoing provisions of this paragraph (a),
then such Person shall not be deemed an "Acquiring Person" for any
purposes of this Agreement; provided, however, that if the Person
requested to so certify fails to do so within 10 Business Days, then such
Person shall become an Acquiring Person immediately after such
10-Business-Day period.
(b) "AFFILIATE" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as in
effect on the date of this Agreement.
(c) "ASSOCIATE" of a Person shall mean (i) with respect to a
corporation, any officer or director thereof or any Associate of any
Subsidiary thereof, or any Beneficial Owner of 10% or more of any class of
equity security thereof, (ii) with respect to an association, any officer
or director thereof or any Associate of a Subsidiary thereof, (iii) with
respect to a partnership, any general partner thereof or any limited
partner thereof who is, directly or indirectly, the Beneficial Owner of a
10% or greater ownership interest therein, and any Associate of any
Subsidiary thereof, (iv) with respect to a limited liability company, any
manager or managing member thereof and any Beneficial Owner of 10% or more
or any class of membership interest therein or other equity security
thereof, and any Associate of any Subsidiary thereof, (v) with respect to
a business trust, any officer or trustee thereof or any Associate of any
Subsidiary thereof, (vi) with respect to any other trust or an estate, any
trustee, executor or similar fiduciary and any Person who has a 15% or
greater interest as a beneficiary in the income from or principal of such
trust or estate, (vii) with respect to a natural person, the parents and
children thereof and any spouse or relative thereof, or any relative of
such spouse, who has the same home as such person, and (viii) any
Affiliate of such Person.
(d) A person shall be deemed the "BENEFICIAL OWNER" of, or to
"BENEFICIALLY OWN", any securities (and correlative terms shall have
correlative meanings):
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(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, for purposes
of Section 13(d) of the Exchange Act and Regulations 13D and 13G
thereunder, in each case as in effect on the date of this Agreement;
or
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time or the
fulfillment of a condition or both) pursuant to any agreement,
arrangement or understanding (whether or not in writing), or upon
the exercise of conversion rights, exchange rights, other rights
(other than the Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "Beneficially Own", securities tendered pursuant to
a tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange or (B) the right to vote, alone or
in concert with others, pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to
"Beneficially Own", any securities if the agreement, arrangement or
understanding to vote such security (1) arises solely from a
revocable proxy or consent given in response to a proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations under the Exchange Act and (2) is
not at the time reportable by such Person on a Schedule 13D report
under the Exchange Act (or any comparable or successor report),
other than by reference to a proxy or consent solicitation being
conducted by such Person; or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except as described in clause (B) of
subparagraph (ii) of this paragraph (d)) or disposing of any
securities of the Corporation; provided, however, that for purposes
of determining Beneficial Ownership of securities under this
Agreement, officers and directors of the Corporation solely by
reason of their status as such shall not constitute a group
(notwithstanding that they may be Associates of one another or may
be deemed to constitute a group for purposes of Section 13(d) of the
Exchange Act) and shall not be deemed to own shares owned by another
officer or director of the Corporation.
Notwithstanding anything in this paragraph (d) to the contrary, a
Person engaged in the business of underwriting securities shall not be deemed
the "Beneficial Owner" of, or to "Beneficially Own," any securities acquired or
otherwise beneficially owned in good faith in a firm commitment underwriting
until the expiration of 40 days after the date of the sale of securities to the
public pursuant to such firm commitment underwriting.
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(e) "BUSINESS DAY" shall mean any day other than Saturday, Sunday,
or a day on which banking institutions in the State of New York or the
state in which the principal office of the Rights Agent are authorized or
obligated by law or executive order to close.
(f) "CLOSE OF BUSINESS" on any given date shall mean 5:00 P.M., New
York City time, on such a date; provided, however, that if such a date is
not a Business Day, it shall mean 5:00 P.M., New York City time, on the
next succeeding Business Day.
(g) "COMMON STOCK" when used with reference to the Corporation shall
collectively mean the Common Stock of the Corporation as defined in the
first recital hereof and any other common stock of the Corporation into or
for which it is changed, converted or exchanged. "COMMON STOCK" when used
with reference to any Person other than the Corporation which shall be
organized in corporate form shall mean the capital shares or other equity
security having of all classes of capital shares or equity securities of
such corporation the greatest aggregate voting power in the election of
directors. "COMMON STOCK" when used with reference to any Person which
shall not be organized in corporate form shall mean units of beneficial
interest in the profits or losses of such Person or other equity security
of such Person having of all classes of equity securities of such Person
the greatest aggregate voting power in the election of the directors,
trustees, managers or other Persons performing like governance functions
for such Person.
(h) "CORPORATION," shall have the meaning provided at the beginning
hereof; provided, however, that "Corporation" shall also include any
successors to the Corporation as provided by Section 28 hereof and shall
mean a Principal Party as provided by Section 13(a) and 13(b) hereof.
(i) "DISTRIBUTION DATE" shall have the meaning set forth in Section
3(b) hereof.
(j) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
(k) "EXCHANGE RATIO" shall have the meaning set forth in Section 27
hereof.
(1) "EXEMPT PERSON" shall mean (i) the Corporation, (ii) any
subsidiary of the Corporation, or (iii) any employee benefit plan or
employee stock plan of the Corporation or any Subsidiary of the
Corporation or any trust or other entity organized, appointed, established
or holding Voting Stock for or pursuant to the terms of any such plan.
(m) "EXERCISE PRICE" shall have the meaning set forth in Section 4
hereof.
(n) "EXPIRATION DATE" shall have the meaning set forth in Section
7(a) hereof.
(o) "FAIR MARKET VALUE" of any property shall mean fair market value
of such property as determined in accordance with Section 11(b) hereof.
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(p) "FINAL EXPIRATION DATE" shall have the meaning set forth in
Section 7(a) hereof.
(q) "NASDAQ" shall have the meaning set forth in Section 11(b)
hereof.
(r) "PERSON" shall mean any individual, company, firm, corporation
or other entity.
(s) "PRINCIPAL PARTY" shall have the meaning set forth in Section
13(b) hereof.
(t) "REDEMPTION PRICE" shall have the meaning set forth in Section
23(a) hereof.
(u) "RIGHT CERTIFICATE" shall have the meaning set forth in Section
3(d) hereof.
(v) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
(w) "SPREAD" shall mean the excess of (1) the Fair Market Value of
Common Stock issuable upon the exercise of a Right in accordance with
Section 11(a)(ii) over (2) the Exercise Price in effect at the time of
determination of the Spread.
(x) "STOCK ACQUISITION DATE" shall mean the first date in which
there will shall be a public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) by the Corporation or an Acquiring
Person that an Acquiring Person has become such or such earlier date as a
majority of the Board of Directors of the Corporation shall become aware
of the existence of an Acquiring Person as confirmed by action of the
Board of Directors of the Corporation taken by the affirmative vote of a
majority of the Board of Directors of the Corporation.
(y) "SUBSIDIARY" of a Person shall mean any corporation or other
entity of which securities or other ownership interests having ordinary
voting power sufficient to elect a majority of the board of directors of
such corporation or other entity or other persons performing similar
functions are beneficially owned, directly or indirectly, by such Person
or by any corporation or other entity that is otherwise controlled by such
Person.
(z) "SUMMARY OF RIGHTS" shall have the meaning set forth in Section
3(a) hereof.
(aa) "TRADING DAY" shall have the meaning set forth in Section 11(b)
hereof.
(bb) "TRANSFER TAX" shall mean any tax or charge, including any
documentary stamp tax, imposed or collected by any governmental or
regulatory authority in respect of any transfer of any security,
instrument or right, including the Rights and shares of the Common Stock.
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(cc) "VOTING STOCK" shall mean (i) the Common Stock of the
Corporation and (ii) any other shares of capital stock of the Corporation
entitled to vote generally in the election of directors or entitled
generally to vote together with the Common Stock in respect of a merger,
consolidation, sale of all or substantially all of the Corporation's
assets, liquidation, dissolution or winding up. For purposes of this
Agreement, a stated percentage of the Voting Stock shall mean a number of
shares of the Voting Stock as shall equal in voting power that stated
percentage of the total voting power of the then outstanding shares of
Voting Stock in the election of a majority of the Board of Directors of
the Corporation or in respect of a merger, consolidation, sale of all or
substantially all of the Corporation's assets, liquidation, dissolution or
winding up.
Any determination required to be made by the Board of Directors of
the Corporation for purposes of applying the definitions contained in this
Section 1 shall be made by a majority of the Board of Directors of the
Corporation in its good faith judgment, which determination shall be binding on
the Rights Agent and the holders of the Rights.
Section 2. Appointment of Rights Agent. The Corporation hereby appoints
the Rights Agent to act as the agent for the Corporation and the holders of the
Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date be the holders of Common Stock) in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Corporation may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable, upon 10 days prior written notice to the Rights Agent.
The Rights Agent shall have no duty to supervise, and shall in no event be
liable for, the acts or omissions of any such Co-Rights Agent.
Section 3. Issuance of Right Certificates.
(a) On the Record Date (or as soon as practical thereafter), the
Corporation or the Rights Agent shall send a copy of a Summary of Rights,
in substantially the form attached hereto as Exhibit A (the "SUMMARY OF
RIGHTS"), by first class mail, postage prepaid, to each record holder of
the Common Stock as of the Record Date, at the address of such holder
shown on the records of the Corporation.
(b) Until the Close of Business on the day which is the earlier of
(i) the tenth Business Day after the Stock Acquisition Date and (ii) the
tenth Business Day (or such later date as may be determined by action of
the Board of Directors of the Corporation prior to such time as any Person
becomes an Acquiring Person) after the date of the commencement (within
the meaning of Rule 14d-2(a) of the General Rules and Regulations under
the Exchange Act) by any Person (other than an Exempt Person) of a tender
or exchange offer upon the successful consummation of which such Person,
or any Affiliate or Associate of such Person, would be an Acquiring Person
(including any such date which is after the date of this Agreement and
prior to the issuance of the Rights; the earlier of such dates being
herein referred to as the "DISTRIBUTION DATE"), (x) the Rights shall be
evidenced by the certificates for Common Stock (or in the case of
uncertificated shares of Common Stock, by the book-entry account that
evidences record ownership for such shares) registered in the names of the
holders of Common Stock (together with, in
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the case of certificates for Common Stock outstanding as of the Record
Date, the Summary of Rights) and not by separate Right certificates and
the record holders of such certificates (or such book-entry accounts) for
Common Stock shall be the record holders of the Rights represented thereby
and (y) each Right shall be transferable only simultaneously and together
with the transfer of a share of Common Stock (subject to adjustment as
hereinafter provided). Until the Distribution Date (or, if earlier, the
Expiration Date or Final Expiration Date), the surrender for transfer of
any certificate for Common Stock (or the effectuation of a book-entry
transfer of shares of Common Stock) shall constitute the surrender for
transfer of the Right or Rights associated with the Common Stock evidenced
thereby, whether or not accompanied by a copy of the Summary of Rights.
(c) Rights shall be issued in respect of all shares of Common Stock
that become outstanding after the Record Date but prior to the earliest of
the Distribution Date, the Expiration Date or the Final Expiration Date.
Certificates for Common Stock (including, without limitation, certificates
issued upon original issuance, disposition from the Corporation's treasury
or transfer or exchange of Common Stock) after the Record Date but prior
to the earliest of the Distribution Date, the Expiration Date or the Final
Expiration Date shall have impressed, printed, written or stamped thereon
or otherwise affixed thereto the following legend:
This certificate also evidences and entitles the holder hereof
to the same number of Rights (subject to adjustment) as the number
of shares of Common Stock represented by this certificate, such
Rights being on the terms provided under the Rights Agreement by and
between Technical Communications Corporation (the "Corporation") and
American Stock Transfer & Trust Company (the "Rights Agent"), dated
as of August 6, 2004, as it may be amended from time to time (the
"Agreement"), the terms of which are incorporated herein by
reference and a copy of which is on file at the principal executive
offices of the Corporation. Under certain circumstances, as set
forth in the Agreement, such Rights shall be evidenced by separate
certificates and shall no longer be evidenced by this certificate.
The Corporation shall mail to the registered holder of this
certificate a copy of the Agreement without charge within five days
after receipt of a written request therefor. Under certain
circumstances set forth in the Agreement, Rights issued to or
Beneficially Owned by any Person who is, was or becomes an Acquiring
Person or any Affiliate or Associate thereof (as such terms are
defined in the Agreement), whether currently held by or on behalf of
such Person or by any subsequent holder of such Rights, may become
null and void.
With respect to such certificates containing the foregoing legend, until
the earlier of the Distribution Date, the Expiration Date or the Final
Expiration Date, the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any such certificate, except as otherwise provided herein, shall
also constitute the transfer of the Rights associated with the Common Stock
represented thereby.
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In the event that the Corporation purchases or otherwise acquires any Common
Stock after the Record Date but prior to the Distribution Date, any Rights
associated with such Common Stock shall be deemed canceled and retired so that
the Corporation shall not be entitled to exercise any Rights associated with the
Common Stock which are no longer outstanding. 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.
(d) As soon as practicable after the Distribution Date, the
Corporation will prepare and execute, the Rights Agent will countersign,
and the Corporation will send or cause to be sent (and the Rights Agent
will, if requested, send), by first class mail, postage prepaid, to each
record holder of the Common Stock as of the Close of Business on the
Distribution Date, as shown by the records of the Corporation, at the
address of such holder shown on such records, a certificate in the form
provided by Section 4 hereof (a "Right Certificate"), evidencing one Right
(subject to adjustment as provided herein) for each share of Common Stock
so held. As of and after the Distribution Date, the Rights shall be
evidenced solely by Right Certificates and may be transferred by the
transfer of the Right Certificate as permitted hereby, separately and
apart from any transfer of one or more shares of Common Stock.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase
shares, certificate and assignment to be printed on the reverse thereof),
when, as and if issued shall be substantially in the form set forth in
Exhibit B hereto and may have such marks of identification or designation
and such legends, summaries or endorsements printed thereon as may be
required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on
which the Common Stock or the Rights may from time to time be listed or as
the Corporation may deem appropriate to conform to usage or otherwise and
as are not inconsistent with the provisions of this Agreement. Subject to
the provisions of Section 22 hereof, Right Certificates evidencing Rights
whenever issued, (i) shall be dated as of the date of issuance of the
Rights they represent and (ii) subject to adjustment from time to time as
provided herein, on their face shall entitle the holders thereof to
purchase such number of shares of Common Stock as shall be set forth
thereon at the price per share of Common Stock payable upon exercise of a
Right provided by Section 7(b) hereof, as the same may from time to time
be adjusted as provided herein (the "EXERCISE PRICE").
(b) Any Right Certificate issued pursuant to Section 3(a), Section
11(f) or Section 22 hereof that represents Rights beneficially owned by:
(i) an Acquiring Person or an Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee after the Acquiring Person becomes such, or (iii)
a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any
Person with whom such Acquiring Person has any continuing
8
agreement, arrangement or understanding regarding the transferred Rights
or (B) a transfer which the Board has determined is part of a plan,
arrangement or understanding which has a primary purpose or effect
avoidance of Section 7(e) hereof, and any Right Certificate issued
pursuant to Section 6 or Section 11 hereof upon transfer, exchange,
replacement or adjustment of any other Right Certificate referred to in
this sentence, shall contain (to the extent feasible) the following
legend:
The Rights represented by this Right Certificate 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 Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of the Agreement.
Section 5. Countersignature and Registration.
(a) Each Right Certificate shall be executed on behalf of the
Corporation by its Chairman of the Board, President or any Vice President,
either manually or by facsimile signature, and have affixed thereto the
Corporation's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Corporation, either manually or
by facsimile signature. Each Right Certificate shall be countersigned by
the Rights Agent either manually or by facsimile signature and shall not
be valid for any purpose unless so countersigned. In case any officer of
the Corporation who shall have signed any Right Certificate shall cease to
be such officer of the Corporation before countersignature by the Rights
Agent and issuance and delivery of the certificate by the Corporation,
such Right Certificate, nevertheless, may be countersigned by the Rights
Agent and issued and delivered with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such
officer of the Corporation. Any Right Certificate may be signed on behalf
of the Corporation by any person who, on the date of the execution of such
Right Certificate, shall be a proper officer of the Corporation to sign
such Right Certificate, although at the date of the execution of this
Agreement any such person was not such an officer.
(b) Following the Distribution Date the Rights Agent will keep or
cause to be kept, at its principal office or one or more offices
designated as the appropriate place for surrender of Right Certificates
upon exercise or transfer, and in such other locations as may be required
by law, books for registration and transfer of the Right Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of Rights
evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e), 7(f) and 14
hereof, at any time after the Close of Business on the Distribution Date,
and at or prior to the Close of
9
Business on the earlier of the Expiration Date or the Final Expiration
Date, any Right Certificate, may be (i) transferred or (ii) split up,
combined or exchanged for one or more other Right Certificates, entitling
the registered holder (or former holder in the case of a transfer) to
purchase a like number of shares of Common Stock as the Right Certificate
or Right Certificates surrendered then entitled such holder to purchase.
Any registered holder desiring to transfer, split up, combine or exchange
any Right Certificate shall surrender the Right Certificate at the office
of the Rights Agent designated for the surrender of Right Certificates
with the form of certificate and assignment on the reverse side thereof
duly endorsed (or enclose with such Right Certificate a written instrument
of transfer in form satisfactory to the Corporation and the Rights Agent),
duly executed by the registered holder thereof or his attorney duly
authorized in writing, and with such signature duly guaranteed, 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 Corporation shall reasonably request. Any registered holder desiring
to split up, combine or exchange any Right Certificate shall make such
request in writing delivered to the Rights Agent, and shall surrender the
Right Certificate to be split up, combined or exchanged at the office of
the Rights Agent designated therefore. Thereupon, the Rights Agent shall,
subject to Sections 4(b), 7(e), 7(f), 14 and 27 hereof, countersign and
deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Corporation may
require payment of a sum sufficient to cover any Transfer Tax that may be
imposed in connection with any transfer, split up, combination or exchange
of any Right Certificates.
(b) Subject to the provisions of Sections 7(e), 7(f) and 14 hereof,
at any time after the Distribution Date and prior to the Expiration Date,
upon receipt by the Corporation and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them and,
if requested by the Corporation, reimbursement to the Corporation and the
Rights Agent of all reasonable expenses incidental thereto, or upon
surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Corporation shall cause a new Right Certificate of like
tenor to be issued and delivered to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights;
Invalidation of Certain Rights.
(a) The Rights shall not be exercisable until, and shall become
exercisable on, the Distribution Date (unless otherwise provided herein,
including, without limitation, the restrictions on exercisability set
forth in Sections 7(c), 7(e), 23(a) and 27(b) hereof). Except as otherwise
provided herein, the Rights may be exercised in whole or in part, at any
time commencing with the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase and certificate on the
reverse side thereof duly executed (with signatures duly guaranteed), to
the Rights Agent at the designated office of the Rights Agent in New York,
together with payment of the Exercise Price for each Right exercised (as
the same may have been adjusted as hereinafter provided), at or prior
10
to the Close of Business on the earlier of (i) August 5, 2014 (the "FINAL
EXPIRATION DATE") or (ii) the date on which the Rights are redeemed as
provided in Section 23 hereof or the date on which the Rights are
exchanged as provided in Section 27 hereof (such earlier date being herein
referred to as the "EXPIRATION DATE").
(b) The Exercise Price shall initially be $25 for each share of
Common Stock issued pursuant to the exercise of a Right. The Exercise
Price and the number of shares of Common Stock or other securities or
property to be acquired upon exercise of a Right shall be subject to
adjustment from time to time as provided in Sections 11 and 13 hereof. The
Exercise Price shall be payable in lawful money of the United States of
America, in accordance with paragraph (c) below.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights with the form of election to
purchase and certificate duly executed, accompanied by payment by
certified check, cashier's check, bank draft or money order payable to the
Corporation or the Rights Agent of the Exercise Price for the shares of
Common Stock to be purchased and an amount equal to any applicable
Transfer Tax required to be paid by the holder of the Right Certificate in
accordance with Section 9(e) hereof, the Rights Agent shall thereupon
promptly (i) requisition from any transfer agent of the Common Stock of
the Corporation (or make available, if the Rights Agent is the transfer
agent for such shares) one or more certificates representing the number of
shares of Common Stock to be so purchased, and the Corporation hereby
authorizes and directs such transfer agent to comply with all such
requests, (ii) requisition from the Corporation the amount of cash to be
paid in lieu of the issuance of fractional shares in accordance with
Section 14(b) hereof, (iii) after receipt of such Common Stock
certificates, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or
names as may be designated by such holder and (iv) when appropriate, after
receipt, promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate; provided, however, that in the case of a
purchase of securities other than Common Stock, pursuant to Section 13
hereof, the Rights Agent shall promptly take the appropriate actions
corresponding in such case to that referred to in the foregoing clauses
(i) through (iv) of this Section 7(c). Notwithstanding the foregoing
provisions of this Section 7(c), the Corporation may suspend the issuance
of shares of Common Stock and other securities upon exercise of a Right
for a reasonable period, not in excess of 90 days, during which the
Corporation seeks to register under the Securities Act, and any applicable
securities law of any other jurisdiction, the shares of Common Stock or
other securities to be issued pursuant to the Rights; provided, however,
that nothing contained in this Section 7(c) shall relieve the Corporation
of its obligations under Section 9(d) hereof. Upon any such suspension,
the Corporation 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.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the Registered
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holder of such Right Certificate or his assign, subject to the provisions
of Section 14(b) hereof. The Corporation reserves the right to require
prior to the occurrence of an event described in Sections 11(a)(ii) or
13(a), that, upon any exercise of Rights, a number of Rights be exercised
so that only whole shares of Common Stock would be issued.
(e) Notwithstanding any provision of this Agreement to the contrary,
from and after the time when any Person first becomes an Acquiring Person
(the "INVALIDATION TIME"), any Rights that are Beneficially Owned by (x)
such Acquiring Person (or any Associate or Affiliate of such Acquiring
Person), (y) a transferee of such Acquiring Person (or any such Associate
or Affiliate) who becomes a transferee after the invalidation time or (z)
a transferee of such Acquiring Person (or any such Associate or Affiliate)
who becomes a transferee prior to or concurrently with the invalidation
time pursuant to either (I) a transfer from the Acquiring Person (or any
such Associate or Affiliate) to holders of its equity securities or to any
Person with whom it has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (II) a transfer which
the Board of Directors of the Corporation has determined is part of a
plan, arrangement or understanding which has the purpose or effect of
avoiding the provisions of this Section 7(e), and subsequent transferees
of such Persons referred to in clause (y) and (z) above, shall be null and
void without any further action and any holder of such Rights shall
thereafter have no rights whatsoever with respect to such Rights under any
provision of this Agreement or otherwise. The Corporation shall use all
reasonable efforts to ensure that the provisions of this Section 7(e) and
Section 4(b) are complied with, but it shall have no liability to any
holder of Right Certificates or any other Person as a result of its
failure to make any determination 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 Corporation shall be obligated to
undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7 unless
such registered holder shall have (i) completed and signed the certificate
following the form of election to purchase set forth on the reverse side
of the Right Certificate surrendered for such exercise and (ii) provided
such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof and such
other information as the Corporation or the Rights Agent shall reasonably
request.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Corporation or to any of
its agents be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Agreement. The Corporation shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall cancel
and retire, any Right Certificate purchased or acquired by the Corporation
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Corporation, or shall, at the written
12
request of the Corporation, destroy such cancelled Right Certificates, and in
such case shall deliver a certificate of destruction thereof to the Corporation.
Section 9. Reservation and Availability of Shares of Common Stock.
(a) The Corporation covenants and agrees that it will cause to be
reserved and kept available out of the authorized and unissued shares of
Common Stock or out of authorized and issued shares of Common Stock held
in its treasury, such number of shares of Common Stock as will from time
to time be sufficient to permit the exercise in full of all outstanding
Rights.
(b) The Corporation shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares of Common
Stock issued or reserved for issuance in accordance with this Agreement to
be listed, upon official notice of issuance, upon the principal national
securities exchange, if any, upon which the Common Stock is listed or, if
the principal market for the Common Stock is not on any national
securities exchange, to be eligible for quotation in the National
Association of Securities Dealers' Automated Quotation System or any
successor thereto or other comparable quotation system.
(c) The Corporation covenants and agrees that it will take all such
action as may be necessary to endure that all shares of Common Stock
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Exercise Price in
respect thereof), be duly and validly authorized and issued and dully paid
and nonassessable shares.
(d) The Corporation shall use its best efforts to (i) file, as soon
as practicable following the occurrence of the event described in Section
11(a)(ii), or as soon as is required by law following the Distribution
Date, as the case may be, a registration statement under the Securities
Act, with respect to the shares of Common Stock purchasable upon exercise
of the Rights on an appropriate form, (ii) cause such registration
statement to become effective 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 Securities Act)
until the earlier of (a) the date as of which the Rights are no longer
exercisable for Common Stock and (b) the earlier of the Expiration Date
and the Final Expiration Date. The Corporation may temporarily suspend,
for a period of time not to exceed 90 days, the issuance of shares of
Common Stock upon exercise of a Right in order to prepare and file a
registration statement under the Securities Act and permit it to become
effective. The Corporation will also take such action as may be
appropriate under, or to ensure compliance with, the securities or "blue
sky" laws of the various states in connection with the exercisability of
the Rights. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless
the requisite qualification in such jurisdiction shall have been obtained
and such exercise shall be permitted under applicable law, and until a
registration statement under the Securities Act (if required) shall have
been declared effective.
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(e) The Corporation covenants and agrees that, except as set forth
in Section 6(a) hereof or in this Section 9(e), it will pay when due and
payable any and all United States federal and state Transfer Taxes which
may be payable in respect of the issuance or delivery of the Right
Certificates or of any shares of Common Stock issued or delivered upon the
exercise of Rights. The Corporation shall not, however, be required to pay
any Transfer Tax which may be payable in respect of any transfer or
delivery of a Right Certificate to a Person other than, or the issuance or
delivery of certificates for Common Stock upon exercise of Rights in a
name other than that of, the registered holder of the Right Certificate,
and the Corporation shall not be required to issue or deliver a Right
Certificate or certificate for Common Stock to a Person other than such
registered holder until any such Transfer Tax shall have been paid (any
such Transfer Tax being payable by the holder of such Right Certificate at
the time of surrender) or until it has been established to the
Corporation's satisfaction that no such Transfer Tax is due.
Section 10. Stock Record Date. Each Person in whose name any certificate
for shares of Common Stock is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the Common Stock
represented thereby on, and such certificate shall be dated as of, the date upon
which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Exercise Price (and any applicable Transfer Taxes) was made;
provided, however, that, if the date of such surrender and payment is a date
upon which the stock transfer books of the Corporation are closed, such Person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated as of, the next succeeding Business Day on which
stock transfer books of the Corporation are open. Prior to the exercise of the
Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a stockholder of the Corporation 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 Corporation, except as provided herein.
Section 11. Adjustment of Exercise Price or Number of Shares. The Exercise
Price and the number of shares of Common Stock which may be purchased upon
exercise of a Right are subject to adjustment from time to time as provided in
this Section 11.
(a) (i) In the event the Corporation shall at any time after
the date of this Agreement (A) declare or pay any dividend on Common
Stock payable in shares of Common Stock, (B) subdivide or split the
outstanding shares of Common Stock into a greater number of shares,
(C) combine or consolidate the outstanding shares of Common Stock
into a smaller number of shares or effect a reverse split of the
outstanding shares of Common Stock, or (D) issue any shares of its
capital stock in a reclassification of the Common Stock (including
any such reclassification in connection with a consolidation or
merger in which the Corporation is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a) and
Section 7(e) hereof, then and in each such event the number of
shares of Common Stock issuable upon the exercise of a Right after
the record date for such event (if one shall have been established
or, if
14
not, after the date of such event) or the effective date of such
subdivision, combination or reclassification, shall be the number of
shares of Common Stock issuable immediately prior to such event
multiplied by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately prior to such event
and the denominator of which is the number of shares of Common Stock
outstanding immediately after such event, and the Exercise Price to
be in effect after the record date for such event (if one shall have
been established or, if not, after the date of such event) or the
effective date of such subdivision, combination or reclassification,
shall be determined by multiplying the Exercise Price in effect
prior to such event by such fraction. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to any
adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 27 hereof, in the event that any
Person shall become an Acquiring Person, then, subject to the last
sentence of Section 23(a) hereof and except as otherwise provided in
this Section 11, each holder of a Right, except as provided in
Section 7(e) hereof, shall thereafter have the right to receive upon
exercise of such Right in accordance with the terms of this
Agreement and payment of the Exercise Price, such number of shares
of Common Stock as shall equal the result obtained by (1)
multiplying the then current Exercise Price by the number of share
of Common Stock for which a Right would, absent adjustment pursuant
to this Section 11(a)(ii), be then exercisable and dividing the
product by (2) 50% of the proportionate Fair Market Value of share
of the Common Stock (determined pursuant to Section 11(b) hereof) on
the Stock Acquisition Date in respect of such event; provided,
however, if the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of Section 13
hereof, then only the provisions of Section 13 hereof shall apply
and no adjustment shall be made pursuant to this Section 11(a)(ii).
(iii) In the event that the Corporation does not have
available sufficient authorized but unissued Common Stock to permit
the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Corporation shall take all such action as may
be necessary to authorize and reserve for issuance such number of
additional shares of Common Stock as may from time to time be
required to be issued upon the exercise in full of all Rights from
time to time outstanding and, if necessary, shall use its best
efforts to obtain stockholder approval thereof. In lieu of issuing
shares of Common Stock in accordance with the foregoing subparagraph
(ii), the Corporation may, if the Board of Directors of the
Corporation determines that such action is necessary or appropriate,
elect to issue or pay, upon the exercise of the Rights, cash,
property, shares of Common Stock, or any combination thereof, having
an aggregate Fair Market Value equal to the Fair Market Value of the
shares of Common Stock which otherwise would have been issuable
pursuant to Section 11(a)(ii) hereof as of the date the Board of
Directors of the Corporation makes such election (which Fair Market
Value shall be determined as provided by Section 11(b) hereof).
Subject to Section 23 hereof,
15
any such election by the Board of Directors of the Corporation must
be made and publicly announced within thirty (30) days after the
date on which the event described in Section 11(a)(ii) occurs and
shall be applicable with respect to all Rights exercised after such
public announcement. Notice of such election shall promptly be given
to the Rights Agent.
(b) For the purpose of this Agreement, the "FAIR MARKET VALUE" of
any share of Common Stock or any other stock or Right or other security or
any other property on any date shall be determined as provided in this
Section 11(b). In the case of a publicly traded (as such term is
hereinafter defined) stock or other security, the Fair Market Value
thereof on any date shall be deemed to be the average of the daily closing
prices per share of such stock or per unit of such other security for the
30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to but not including such date; provided, however, that
in the event that the Fair Market Value of any share of Common Stock is to
be determined as of a date that is within 30 Trading Days after (i) the
ex-dividend date for a dividend or distribution on the Common Stock
payable in shares of Common Stock or securities convertible into shares of
Common Stock or (ii) the effective date of any subdivision, split,
combination, consolidation, reverse stock split or reclassification of the
Common Stock, then, and in each such case, the Fair Market Value shall be
appropriately adjusted by the Board of Directors of the Corporation to
take into account such dividend, distribution, subdivision, split,
combination, consolidation, reverse stock split or reclassification. The
closing price for any day shall be the last sale price, regular way, or,
in case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way (in either case, as reported in the
applicable transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange), or, if the
securities are not listed or admitted to trading on the New York Stock
Exchange, as reported in the applicable transaction reporting system with
respect to securities listed on the principal national securities exchange
(which, if approved by the Board of Directors of the Corporation, may be a
securities exchange of a country other than the United States of America)
on which such security is listed or admitted to trading; or, if not listed
or admitted to trading on any such 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 quotation reporting system then in use in the
United States of America; or, if no bids for such security are so quoted,
the average of the closing bid and asked prices as furnished by a
professional market maker making a market in such security selected by the
Board of Directors of the Corporation. The term "TRADING DAY" shall mean a
day on which the principal national securities exchange on which such
security is listed or admitted to trading is open for the transaction of
business or, if such security is not listed or admitted to trading on any
national securities exchange, a Business Day. For purposes of this Section
11(b), a stock or other security shall be considered "PUBLICLY TRADED"
only (i) if registered under Section 12 of the Exchange Act or exempt from
such registration pursuant to Section 12(g)(2)(B), (C) or (G) of the
Exchange Act or (ii) if traded on a national securities exchange of a
country other than the United States of America approved by the Board of
Directors of the Corporation or (iii) if, in the judgment of the
16
Board of Directors of the Corporation, there is sufficient active trading
in such stock or other security that reported trading transactions therein
fairly reflect the fair market value thereof. If a security is not
publicly traded, "Fair Market Value" shall mean the fair value per share
of stock or per other unit of such other security, as determined by an
independent investment banking firm experienced in the valuation of
securities selected in good faith by the Board of Directors of the
Corporation, or, if no such investment banking firm is, in the good faith
judgment of the Board of Directors of the Corporation, available to make
such determination, as determined in good faith by the Board of Directors
of the Corporation; provided, however, that for purposes of making the
adjustment provided for by Section 11(a)(ii) hereof, the Fair Market Value
of a share of Common Stock, unless the Common Stock shall at the time be
publicly traded (in which case its Fair Market Value shall be determined
pursuant to the foregoing provisions of this Section 11(b)), shall be 100%
of the product of the Fair Market Value of a share of Common Stock
multiplied by the higher of the then Dividend Multiple or Vote Multiple
applicable to the Common Stock; provided, however, that the Board of
Directors of the Corporation may, by resolution, determine that the Fair
Market Value of a share of Common Stock shall be more than such amount but
not more than 110% of the product of the then Fair Market Value of a share
of Common Stock multiplied by the higher of the then Dividend Multiple or
Vote Multiple applicable to the Common Stock. In the case of property
other than securities, the "Fair Market Value" thereof shall be determined
in good faith by the Board of Directors of the Corporation based upon such
appraisals or valuation reports of such independent experts as the Board
of Directors of the Corporation shall in good faith determine to be
appropriate in accordance with good business practices and fair to the
interests of the holders of Rights. Any determination made by the Board of
Directors of the Corporation as provided for by this Section 11(b) shall
be described in a statement filed by the Corporation with the Rights
Agent, shall be effective thereupon and only thereupon and shall be
binding upon the Rights Agent and, as provided by Section 34 hereof, all
holders of Rights.
(c) In case the Corporation shall fix a record date for the issuance
of rights, options or warrants to all holders of Common Stock entitling
them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Common Stock or securities convertible
into Common Stock at a price per share (or having a conversion price per
share, if a security convertible into Common Stock) less than the then
current per share Fair Market Value of the Common Stock on such record
date, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior
to such record date by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on such record date plus the
number of shares of Common Stock which the aggregate offering price of the
total number of shares of Common Stock so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current Fair Market Value and the
denominator of which shall be the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of
Common Stock to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In
case such subscription price may be paid in a consideration part or all of
which shall be in a form
17
other than cash, the value of such consideration shall be as determined in
good faith by the Board of Directors of the Corporation, whose
determination shall be described in a statement filed with the Rights
Agent. Shares of Common Stock owned by or held for the account of the
Corporation shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed and in the event that such rights, options or
warrants are not so issued, the Exercise Price shall be adjusted to be the
Exercise Price which would then be in effect if such record date had not
been fixed.
(d) In case the Corporation shall fix a date for the making of a
distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in which
the Corporation is the continuing or surviving corporation) of evidences
of indebtedness of the Corporation or any of its Subsidiaries, cash (other
than a regular quarterly cash dividend not in excess of 150% of the
previous regular quarterly cash dividend), other assets (other than a
dividend payable in shares of Common Stock) or options, rights or warrants
to subscribe for shares of the Corporation or any Subsidiary (excluding
those referred to in Section 11(c) hereof), the Exercise Price to be in
effect after such record date shall be determined by multiplying the
Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the Fair Market Value of the
shares of Common Stock on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Corporation,
whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the assets or evidences of indebtedness or
options, rights or warrants so to be distributed in respect of one share
of Common Stock, and the denominator of which shall be such current Fair
Market Value of the shares of Common Stock. Such adjustment shall be made
successively whenever such a record date is fixed, and, in the event that
such distribution is not so made notwithstanding the setting of a record
date therefore, the Exercise Price shall again be adjusted to be the
Exercise Price which would then be in effect if such record date had not
been fixed.
(e) Unless the Corporation shall have exercised its election as
provided in Section 11(f), upon each adjustment of the Exercise Price as a
result of the calculations made in Section 11(c) or (d), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Exercise Price,
that number of shares of Common Stock obtained by (i) multiplying (x) the
number of shares of Common Stock that could be purchased upon exercise of
a Right immediately prior to the adjustment pursuant to this Section 11(e)
by (y) the Exercise Price in effect immediately prior to such adjustment
of the Exercise Price and (ii) dividing the product so obtained by the
Exercise Price in effect immediately after such adjustment of the Exercise
Price.
(f) The Corporation may elect, on or after the date of any
adjustment of the Exercise Price pursuant to Section 11(c) or 11(d), to
adjust the number of Rights in substitution for any adjustment pursuant to
Section 11(e) in the number of shares of Common Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment
of the number of Rights shall be exercisable for the number of
18
shares of Common Stock for which a Right was exercisable immediately prior
to such adjustment. Each Right held of record prior to such adjustment of
the number of Rights shall become that number of Rights obtained by
dividing the Exercise Price in effect immediately prior to adjustment of
the Exercise Price by the Exercise Price in effect immediately after
adjustment of the Exercise Price. The Corporation shall make a public
announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount
of the adjustment to be made. This record date may be the date on which
the Exercise Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the
date of the public announcement. If the Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this
Section 11(f), the Corporation shall, as promptly as practicable, cause to
be distributed to holders of record of Right Certificates on such record
date Right Certificates evidencing, subject to Section 14 hereof, the
additional Rights, if any, to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Corporation, shall
cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the
date of adjustment, and upon surrender thereof, if required by the
Corporation, new Right Certificates evidencing all the Rights to which
such holders shall be entitled after such adjustment. Right Certificates
so to be distributed shall be issued, executed and countersigned in the
manner provided for herein and shall be registered in the names of the
holders of record of Right Certificates on the record date specified in
the public announcement.
(g) Anything herein to the contrary notwithstanding, no adjustment
in the Exercise Price shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in the
Exercise Price; provided, however, that any adjustments which by reason of
this Section 11(g) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations
under this Section 11 shall be made to the nearest cent. Notwithstanding
the first sentence of this Section 11(g), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three (3) years
from date of the transaction which mandates such adjustment, or (ii)
Expiration Date.
(h) Irrespective of any adjustment or change in Exercise Price or
the number of shares of Common Stock issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Exercise Price and the number of shares to be
issued upon exercise of the Rights as in the initial Right Certificates
issued hereunder but, nevertheless, shall represent the Rights as so
adjusted.
(i) Before taking any action that would cause an adjustment reducing
the Exercise Price of the number of shares of Common Stock issuable upon
exercise of the Rights below the consideration required by applicable law,
the Corporation shall use its best efforts to take any corporate action
which may, in the opinion of its counsel, be necessary in order that the
Corporation may validly and legally issue fully paid and non-assessable
shares of such Common Stock at such adjusted purchase price per share.
19
(j) Anything in this Section 11 to the contrary notwithstanding, in
the event of any reclassification of stock of the Corporation or any
recapitalization, reorganization or partial liquidation of the Corporation
or similar transaction, the Corporation shall be entitled to make such
further adjustments in the number of shares of Common Stock which may be
acquired upon exercise of the Rights, and such adjustments in the Exercise
Price therefor, in addition to those adjustments expressly required by the
other paragraphs of this Section 11, as the Board of Directors of the
Corporation shall determine to be necessary or appropriate in order for
the holders of the Rights in such event to be treated equitably and in
accordance with the purpose and intent of this Agreement or in order that
any such event shall not, but for such adjustment, in the opinion of
counsel to the Corporation, result in the stockholders of the Corporation
being subject to any United States federal income tax liability by reason
thereof.
(k) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Corporation other than the
Common Stock, thereafter the Exercise Price and the number of such other
shares so receivable upon exercise of a Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the Common Stock
contained in Sections 11(a), 11(c), 11(d), 11(e), 11(f) and 11(j) hereof,
as applicable, and the provisions of Sections 7, 9, 10, 13 and 14 hereof
with respect to the Common Stock shall apply on like terms to any such
other shares.
Section 12. Certification of Adjusted Exercise Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11, 13, 23(c) or 27
hereof, the Corporation shall (a) promptly prepare a certificate setting forth
such adjustment, and a brief statement of the facts giving rise to such
adjustment, (b) promptly file with the Rights Agent and with each transfer agent
for the Common Stock a copy of such certificate and (c) if a Distribution Date
has occurred, mail a brief summary thereof to each holder of a Right Certificate
in accordance with Section 25. Notwithstanding the foregoing sentence, the
failure of the Corporation to make such certification or give such notice shall
not affect the validity of or the force or effect of the requirement for such
adjustment. Any adjustment to be made pursuant to Section 11, 13, 23(c) or 27
hereof shall be effective as of the date of the event giving rise to such
adjustment. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall not be deemed to
have knowledge of any adjustment unless and until it shall have received such
certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, at any time after the Stock Acquisition Date,
(x) the Corporation shall, directly or indirectly, consolidate with, or
merge with and into, any other Person or Persons (other than an Exempt
Person) and the Corporation shall not be surviving or continuing
corporation of such consolidation or merger, or (y) any Person or Persons
(other than an Exempt Person) shall, directly or indirectly, consolidate
with, or merge with and into, the Corporation, and the Corporation shall
be the continuing of surviving corporation of such consolidation or merger
and, in connection with such
20
consolidation or merger, all or part of the outstanding shares of Common
Stock shall be changed or converted into or exchanged for stock or other
securities of any other Person (other than an Exempt Person) or of the
Corporation or cash or any other property, or (z) the Corporation or one
or more of its Subsidiaries shall, directly or indirectly, sell or
otherwise transfer to any other Person (other than an Exempt Person) in
one or more transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Corporation and its Subsidiaries
(taken as a whole), then, on the first occurrence of any such event,
proper provision shall be made so that: (i) each holder of record of a
Right, except as provided in Section 7(e) hereof, shall thereafter have
the right to receive, upon the exercise thereof at a price equal to the
then current Exercise Price multiplied by the number of shares of Common
Stock for which a Right is then exercisable, in accordance with the terms
of this Agreement and in lieu of shares of Common Stock, such number of
shares of validly issued, fully paid, non-assessable and freely tradeable
Common Stock of the Principal Party (as defined in Section 13(b) hereof),
not subject to any liens, encumbrances, rights of first refusal or other
adverse claims, as shall equal the result obtained by (1) multiplying the
then current Exercise Price by the number of shares of Common Stock for
which a Right is then exercisable immediately prior to the first
occurrence of an event described in this Section 13 (or, if an event
described in Section 11(a)(ii) has occurred prior to the first occurrence
of an event described in this Section 13, multiplying the number of shares
for which a Right was exercisable immediately prior to the first
occurrence of an event described in Section 11(a)(ii) by the Exercise
Price in effect immediately prior to such first occurrence), and dividing
that product by (2) 50% of the then per share Fair Market Value of the
Common Stock of the Principal Party on the date of the consummation of
such consolidation, merger, sale or transfer; provided, however, that the
Exercise Price (as adjusted) and the number of shares of Common Stock of
such Principal Party so receivable upon exercise of a Right shall be
subject to further adjustment as appropriate in accordance with Section 11
hereof to reflect any events occurring in respect of the Common Stock of
such Principal Party after the occurrence of such consolidation, merger,
sale or transfer; (ii) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Corporation pursuant to
this Agreement; (iii) the term "Corporation" for all purposes of this
Agreement shall thereafter be deemed to refer to such Principal Party;
(iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common
Stock in accordance with the provisions of Section 9 hereof applicable to
the reservation of Common Stock) in connection with such consummation as
may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its shares of
Common Stock thereafter deliverable upon the exercise of the Rights;
provided, however, that, upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all of the assets,
recapitalization, reclassification of shares, reorganization or other
extraordinary transaction in respect of such Principal Party, each holder
of a Right shall thereupon be entitled to receive, upon exercise of a
Right and payment of the Exercise Price, such cash, shares, rights,
warrants and other property which such holder would have been entitled to
receive had it, at the time of such transaction, owned the shares of
Common Stock of the Principal Party purchasable upon the exercise of a
Right, and such Principal Party shall
21
take such steps (including, but not limited to, reservation of shares of
stock) as may be necessary to permit the subsequent exercise of the Rights
in accordance with the terms hereof for such cash, shares, rights,
warrants and other property; and (v) the provisions of Section 11(a)(ii)
hereof shall be of no effect following the occurrence of any event
described in clause (x), (y) or (z) above of this Section 13(a).
(b) "PRINCIPAL PARTY" shall mean
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a) hereof: (A) the Person
that is the issuer of the securities into which shares of Common
Stock of the Corporation are changed or otherwise exchanged,
converted in such merger or consolidation, or, if there is more than
one such issuer, the issuer of the Common Stock of which has the
greatest market value or (B) if no securities are issued, (I) the
Person that is the other party to the merger or consolidation and
that survives such merger or consolidation or, if there is more than
one such Person, the Person the Common Stock of which has the
greatest market value or (II) if the Person that is the other party
to the merger or consolidation, the Person that does survive the
merger or consolidation (including the Corporation if it survives);
and
(ii) in the case if any transaction described in clause (z) of
the first sentence in 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, or, if
each Person that is a party to such transaction or transactions,
receives the same portion of the assets or earning power so
transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of such
Persons as is the issuer of Common Stock having the greatest market
value of shares outstanding;
provided, however, that in any such case, if the Common Stock of such
Person is not at such time and has not been continuously over the
preceding 12-month period registered under Section 12 of the Exchange Act,
then (1) if such Person is a direct or indirect Subsidiary of another
Person the Common Stock of which is and has been so registered, the term
"Principal Party" shall refer to such other Person, or (2) if such Person
is a Subsidiary, directly or indirectly, of more than one Person, the
Common Stocks of all of which are and have been so registered, the term
"Principal Party" shall refer to whichever of such Persons is the issuer
of the Common Stock having the greatest market value of shares
outstanding, or (3) if such Person is owned, directly or indirectly, by a
joint venture formed by two or more Persons that are not owned, directly
or indirectly, by the same Person, the rules set forth in clauses (1) and
(2) above shall apply to each of the owners having an interest in the
venture as if the Person owned by the joint venture was a Subsidiary of
both or all of such joint venturers, and the Principal Party in each such
case shall bear the obligations set forth in this Section 13 in the same
ratio as its interest in such Person bears to the total of such interests.
22
(c) The Corporation shall not consummate any consolidation, merger
or sale or transfer of assets or earning power referred to in Section
13(a) unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock that have not been issued or
reserved for issuance to permit exercise in full of all Rights in
accordance with this Section 13 and unless prior thereto the Corporation
and the Principal Party involved therein shall have executed and delivered
to the Rights Agent an agreement confirming that the Principal Party
shall, upon consummation of such consolidation, merger or sale or transfer
of assets or earning power, assume this Agreement in accordance with
Section 13(a) hereof and that all rights of first refusal or preemptive
rights in respect of the issuance of shares of Common Stock of the
Principal Party upon exercise of outstanding Rights have been waived and
that such transaction shall not result in a default by the Principal Party
under this Agreement, and further providing that, as soon as practicable
after the date of any consolidation, merger or sale or transfer of assets
or earning power referred to in Section 13(a) hereof, the Principal Party
will:
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use
its best efforts to cause such registration statement to become
effective as soon as practicable after such filing and use its best
efforts to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the
Securities Act) until the date of expiration of the Rights, and
similarly comply with applicable state securities laws;
(ii) take all such other action as may be necessary to enable
the Principal Party to issue the securities purchasable upon
exercise of the Rights, including but not limited to using its best
efforts to list (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on a national
securities exchange or to meet the eligibility requirements for
quotation on NASDAQ;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form)
under the Exchange Act; and
(iv) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Stock of the Principal
Party subject to purchase upon exercise of the outstanding Rights.
The provisions of Section 13 shall similarly apply to successive mergers
or consolidations or sales or other transfers. In the event that any of
the transactions described in Section 13 hereof shall occur at any time
after the occurrence of a transaction described in Section 11(a)(ii)
hereof, the Rights which have not theretofore been exercised shall,
subject to the provisions of Section 7(e) hereof, thereafter be
exercisable in the manner described in Section 13.
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its charter or By-
23
laws or other instrument governing its affairs, which provision would have
the effect of (i) causing such Principal Party to issue, in connection
with, or as a consequence of, the consummation of a transaction referred
to in this Section 13, shares of Common Stock of such Principal Party at
less than the then Fair Market Value per share (determined pursuant to
Section 11(b) hereof) or securities exercisable for, or convertible into,
Common Stock of such Principal Party at less than such then Fair Market
Value (other than to holders of Rights pursuant to this Section 13) or
(ii) providing for any special tax or similar payment in connection with
the issuance to any holder of a Right of Common Stock of such Principal
Party pursuant to the provisions of this Section 13, then, in such event,
the Corporation shall not consummate any such transaction unless prior
thereto the Corporation and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing that the
provision in question of such Principal Party shall have been canceled,
waived or amended, or that the authorized securities shall be redeemed, so
that the applicable provision will have no effect in connection with, or
as a consequence of, the consummation of the proposed transaction.
(e) The Corporation covenants and agrees that it shall not, at any
time after any Person becomes an Acquiring Person, enter into any
transaction of the type described in clauses (x) through (z) of the first
sentence of Section 13(a) hereof if (i) at the time of or immediately
after such consolidation, merger, sale, transfer or other transaction
there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights,
(ii) prior to, simultaneously with or immediately after such
consolidation, merger, sale, transfer or other transaction, the
stockholders 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 or Associates or (iii) the form or nature of organization of
the Principal Party would preclude or limit the exercisability of the
Rights.
Section 14. Fractional Rights and Fractional Shares.
(a) The Corporation shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional
Rights (i.e., Rights to acquire less than one share of Common Stock),
unless such fractional Rights result from a transaction referred to in
Section 11(a)(i) or 11(f) hereof. If the Corporation shall determine not
to issue such fractional Rights, then, in lieu of such fractional Rights,
there shall be paid to the holders of record of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable,
an amount in cash equal to the same fraction of the Fair Market Value of a
whole Right.
(b) The Corporation shall not be required to issue fractions of
shares of Common Stock upon exercise of the Rights or to distribute
certificates which evidence fractional shares. In lieu of issuing
fractions of shares of Common Stock, there shall be paid to the holders of
record of Right Certificates at the time such Right Certificates are
exercised as herein provided an amount in cash equal to the same fraction
of the Fair Market Value of a share of Common Stock.
24
(c) The holder of a Right by the acceptance of a Right expressly
waives his right to receive any fractional Right or any fractional shares
of Common Stock upon exercise of a Right.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, except the rights of action given to the Rights Agent in Section 18
hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the holders of record of the
Common Stock), and any holder of record of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Corporation to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Each holder of a Right, by
accepting the same, consents and agrees with the Corporation and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be evidenced by
the certificates for Common Stock (or in the case of uncertificated shares
of Common Stock, by the book-entry account that evidences record ownership
of such shares) registered in the name of the holders of Common Stock
(together, as applicable, with the Summary of Rights), which certificates
for Common Stock (or book-entry account) shall also constitute
certificates for Rights, and not by separate Right Certificates, and each
Right shall be transferable only simultaneously and together, with the
transfer of shares of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the office of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) the Corporation and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the Distribution
Date, the associated Common Stock certificate or, in the case of
uncertificated shares of Common Stock, the book-entry account evidencing
record ownership of such shares) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations
of ownership or writing on the Right Certificates or the associated Common
Stock certificate made by anyone other than the Corporation or the Rights
Agent) for all purposes whatsoever, and neither the Corporation nor the
Rights Agent, subject to the last
25
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 Corporation nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction of other order, decree or ruling
issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, the Corporation must use its reasonable
efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of Common Stock or any other securities
which may at any time be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as such, any of
the rights of a stockholder or other security holder of the Corporation or of a
security holder of any other Person 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 security holder
action, or to receive notice of meetings or other actions affecting stockholders
or security holders (except as provided in Section 24 hereof), or to receive
dividends or subscription rights, or otherwise, except in any such case the
rights, if any, in respect thereof provided by this Agreement, until the Right
or Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof for such stock or other security.
Section 18. Concerning the Rights Agent.
(a) The Corporation agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the administration and execution
of this Agreement and the exercise and performance of its duties
hereunder. The Corporation also agrees to indemnify the Rights Agent, its
directors, officers, employees, and agents for, and to hold each of them
harmless against, any loss, liability, or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted to be done by the Rights Agent or such
other indemnified party in connection with the acceptance and
administration of this Agreement or the performance of the Rights Agent's
duties hereunder, including the cost and expenses of defending against any
claim of liability relating to the Rights or this Agreement.
(b) The Rights Agent shall be protected against, and shall incur no
liability for or in respect of, any action taken, suffered or omitted by
it in connection with its administration of this Agreement or the
performance of the Rights Agent's duties
26
hereunder in reliance upon any Right Certificate or certificate for Common
Stock or for other securities of the Corporation, 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.
(c) The indemnity provided in this Section 18 shall survive the
expiration of the Rights, the resignation or removal of the Rights Agent
and the termination of this Agreement.
Section 19. Merger or Consolidation of, or Change in Name of, the Rights
Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto, provided that
such corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this
Agreement any of the Right Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent
may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and
in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; in all such
cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Corporation and the holders of Right
Certificates by their acceptance thereof shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be an
employee of or outside legal counsel for the Corporation or the Rights
Agent), and the advice or opinion of such counsel shall be full and
complete authorization and protection to the
27
Rights Agent as to any action taken or omitted by it in good faith and in
accordance with such advice or opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Corporation prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence
in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the
Chairman of the Board, the President or any Vice President and by the
Treasurer or any Assistant Treasurer or the Secretary or any Assistant
Secretary of the Corporation and delivered to the Rights Agent. Any such
certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Corporation only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect
of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by
the Corporation of any covenant or condition contained in this Agreement
or in any Right Certificate; nor shall it be responsible for any
adjustment required under the provisions of Section 11, 13 or 27 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after receipt of a certificate describing any such
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
shares of Common Stock or other security to be delivered pursuant to the
exercise of any Right or as to whether any shares of Common Stock or other
security will, when issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Corporation 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 the 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,
28
the President or any Vice President or the Secretary or the Treasurer of
the Corporation, 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 or for any delay in acting while waiting
for those instructions. Any application by the Rights Agent for written
instructions from the Corporation may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the
Rights Agent under this Agreement and the date on and/or after which such
action shall be taken or such omission shall be effective. The Rights
Agent shall not be liable for any action taken by, or omission of, the
Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date
shall not be less than three Business Days after the date any officer of
the Corporation actually receives such application unless any such officer
shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission),
the Rights Agent shall have received written instructions in response to
such application specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell, or deal in any of the Rights
or other securities of the Corporation or become pecuniarily interested in
any transaction in which the Corporation may be interested, or contract
with or lend money to the Corporation or otherwise act as fully and freely
as though it were not the Rights Agent under this Agreement. Nothing
herein shall preclude the Rights Agent from acting in any other capacity
for the Corporation 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 Corporation resulting
from any such act, default, neglect or misconduct, provided, however,
reasonable care was exercised by the Rights Agent in the selection and
continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the
form of assignment or the form of election to purchase set forth on the
reverse thereof, as the case may be, has not been completed to certify the
holder is not an Acquiring Person (or an Affiliate or Associate thereof),
a Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the
Corporation.
(k) The Rights Agent undertakes only the express duties and
obligations imposed on it by this Agreement and no implied duties or
obligations shall be read into this Agreement against the Rights Agent.
29
(l) Anything in this Agreement to the contrary notwithstanding, in
no event shall the Rights Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not
limited to lost profits).
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 30 days' notice in writing mailed to the Corporation and to each transfer
agent of the Common Stock by registered or certified mail, and, if such
resignation occurs after the Distribution Date, to the registered holders of the
Rights Certificates by first-class mail. In the event the Registrar, Transfer
Agency and Service Agreement between the Corporation and American Stock Transfer
& Trust Company dated March 31, 1986 terminates, the Rights Agent will be deemed
to resign automatically on the effective date of such termination; and any
required notice will be sent by the Corporation. The Corporation may remove the
Rights Agent or any successor Rights Agent (with or without cause) upon 30 days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Stock by registered or
certified mail, and, if such resignation occurs after the Distribution Date, to
the registered 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 Corporation shall appoint a successor to the Rights Agent. If the
Corporation shall fail to make such appointment within a period of 30 days after
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Corporation), then the incumbent Rights Agent or the holder of
record of any Right 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 Corporation 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
thereof, in good standing, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination in the conduct of its corporate trust or stock transfer business by
federal or state authorities and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50,000,000, (b) an
Affiliate controlled by or under common control with one or more corporations
described in clause (a) of this sentence or (c) the transfer agent for the
Common Stock of the Corporation. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed, but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Corporation shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock, and mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Notwithstanding the foregoing provisions, in the event of resignation, removal
or incapacity of the Rights Agent, the Corporation shall have the authority to
act as the Rights Agent until a successor Rights Agent shall have assumed the
duties of the Rights Agent hereunder.
30
Section 22. Issuance of New Right Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Corporation
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Exercise Price per share and the number or kind or class of shares of
stock or other securities or property purchasable under the Right Certificates
made in accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of Voting Stock following the Distribution
Date and prior to the Expiration Date, the Corporation may with respect to
shares of Voting Stock so issued or sold pursuant to (i) the exercise of stock
options, (ii) under any employee plan or arrangement, (iii) upon the exercise,
conversion or exchange of securities, notes or debentures issued by the
Corporation or (iv) a contractual obligation of the Corporation, in each case
existing prior to the Distribution Date, issue Right Certificates representing
the appropriate number of Rights in connection with such issuance or sale.
Section 23. Redemption.
(a) The Corporation may, at its option, but only by the vote of a
majority of its Board of Directors, redeem all but not less than all of
the then outstanding Rights at any time prior to the earlier of (i) the
Close of Business on the tenth Business Day following the Stock
Acquisition Date (subject to extension by the Corporation as provided in
Section 26 hereof) or (ii) the Final Expiration Date, at a redemption
price of $.001 per Right, subject to adjustment as provided in Section
23(c) hereof (the "REDEMPTION PRICE"). The redemption of the Rights by the
Board of Directors of the Corporation may be made effective at such time
after the Board's action to redeem the Rights on such basis and subject to
such conditions, as the Board of Directors of the Corporation in its sole
and absolute discretion may establish. Notwithstanding anything contained
in this Agreement to the contrary, the Rights shall not be exercisable
after the first occurrence of an event as described in Section 11(a)(ii)
until such time as the Corporation's right of redemption hereunder has
expired. The Corporation may, at its option, pay the Redemption Price in
cash, shares of Common Stock of the Corporation (based on the Fair Market
Value of the Common Stock of the Corporation at the time of redemption) or
any other form of consideration deemed appropriate by the Board of
Directors.
(b) Without any further action and without any notice, the right to
exercise the Rights will terminate effective at the time so designated by
action of the Board of Directors of the Corporation ordering the
redemption of the Rights, evidence of which shall have been filed with the
Rights Agent, and the only right thereafter of the holders of Rights shall
be to receive the Redemption Price. Within 10 days after the effective
time of the action of the Board of Directors of the Corporation ordering
the redemption of the Rights, the Corporation 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 their last addresses
as they appear upon the registry books of the Rights Agent or, prior to
the Distribution Date, on the registry books of the transfer agent for the
Common Stock. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each
notice of redemption will state the method by which the payment of the
Redemption Price will be made. At the option of
31
the Board of Directors of the Corporation, the Redemption Price may be
paid in cash to each Rights holder or by the issuance of shares (and cash
in lieu of fractions of shares) of Common Stock having a Fair Market Value
equal to such cash payment.
(c) In the event the Corporation shall at any time after the date of
this Agreement but before the Close of Business on the tenth Business Day
following the Stock Acquisition Date (or such extension thereof by the
Corporation as provided in Section 26 hereof) (A) pay any dividend on
Common Stock in shares of Common Stock, (B) subdivide or split the
outstanding shares of Common Stock into a greater number of shares or (C)
combine or consolidate the outstanding shares of Common Stock into a
smaller number of shares or effect a reverse split of the outstanding
shares of Common Stock and as a consequence thereof the number of Rights
outstanding shall change, then, and in each such event, the Redemption
Price may, by action of the Board of Directors of the Corporation in its
discretion, be appropriately adjusted in respect of such transaction so as
to maintain the aggregate Redemption Price of all Rights after such
transaction at the same amount, insofar as practicable, as before the
transaction.
Section 24. Notice of Proposed Actions.
(a) In case the Corporation, after the Distribution Date, shall
propose (i) to effect any of the transactions referred to in Section
11(a)(i) hereof or to pay any dividend to the holders of record of its
shares of Common Stock payable in shares of capital stock of any class or
to make any other distribution to the holders of record of its Common
Stock (other than a regular periodic cash dividend at a rate not in excess
of 150% of the rate of the last cash dividend theretofore paid), or (ii)
to offer to the holders of record of its Common Stock options, warrants,
or other rights to subscribe for or to purchase shares of Common Stock
(including any security convertible into or exchangeable for Common Stock)
or shares of stock of any class or any other securities, options,
warrants, convertible or exchangeable securities or other rights, or (iii)
to effect any reclassification of its Common Stock or any recapitalization
or reorganization of the Corporation, or (iv) to effect any consolidation
or merger with or into, or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Corporation and its Subsidiaries (taken as a whole)
to, any other Person or Persons, or (v) to effect the liquidation,
dissolution or winding up of the Corporation, then, in each such case, the
Corporation shall give to each holder of record of a Right Certificate, to
the extent feasible and in accordance with Section 25 hereof, notice of
such proposed action, which shall specify the record date for the purposes
of such transaction referred to in Section 11(a)(i) or such dividend or
distribution, or the date on which such reclassification,
recapitalization, reorganization, consolidation, merger, sale or transfer
of assets, liquidation, dissolution, or winding up is to take place and
the record date for determining participation therein by the holders of
record of Common Stock, 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 20 days prior to the record date for determining holders of record
of the Common Stock for purposes of such action, and in the case of any
such other action, at least 20 days prior to the date of the taking of
such proposed action or the date of
32
participation therein by the holders of record of Common Stock. The
failure to give notice required by this Section 24 or any defect therein
shall not affect the legality or validity of the action taken by the
Corporation or the vote upon any such action.
(b) In case the event referred to in Section 11(a)(ii) hereof shall
occur, then the Corporation shall as soon as practicable thereafter, in
accordance with Section 25 hereof, give to each holder of a Right notice
of the occurrence of such an event, which notice shall describe the event
and the consequences of the event to holders of Rights under Section
11(a)(ii) hereof.
Section 25. Notices. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of record of any Right
Certificate or Right to or on the Corporation shall be in writing and shall be
considered given upon receipt or seven Business Days after being sent by
first-class mail, postage prepaid, in any case addressed (until another address
is filed in writing with the Rights Agent) as follows:
Technical Communications Corporation
000 Xxxxxx Xxxxx
Xxxxxxx XX 00000-0000
Attention: President
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Corporation or by the holder of record of
any Right Certificate or Right to or on the Rights Agent shall be in writing and
shall be considered given upon receipt or seven Business Days after being sent
by first-class mail, postage prepaid, in any case addressed (until another
address is filed in writing with the Corporation) as follows:
American Stock Transfer & Trust Company
00 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be given or made by the
Corporation or the Rights Agent to the holder of record of any Right Certificate
or Right shall be in writing and shall be considered given upon receipt or seven
Business Days after being sent by first-class mail, postage prepaid, addressed
to such holder at the address of such holder as shown in the registry books of
the Corporation.
Section 26. Supplements and Amendments. For as long as the Rights are then
redeemable and except as provided in the penultimate sentence of this Section
26, the Corporation may, in its sole and absolute discretion, and the Rights
Agent shall if the Corporation so directs, supplement or amend any provision of
this Agreement without the approval of any holders of the Rights. At any time
when the Rights are not then redeemable and except as provided in the last
sentence of this Section 26, the Corporation may, and the Rights Agent shall if
the Corporation so directs, supplement or amend this Agreement without the
approval of any holders of Right Certificates (i) to cure any ambiguity, (ii) to
correct or
33
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein or (iii) to change or supplement the provisions
hereunder in any manner which the Corporation may deem necessary or desirable,
provided that no such supplement or amendment pursuant to this clause (iii)
shall materially adversely affect the interest of the holders of Right
Certificates (other than an Acquiring Person or any other Person in whose hands
Rights are null and void under the provisions of Section 7(e) hereof). Upon the
delivery of a certificate from an appropriate officer of the Corporation which
states that the proposed supplement or amendment is in compliance with the terms
of this Section 26, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price; it
being understood that an adjustment of the Redemption Price in accordance with
Section 23 shall not be considered a supplement or amendment of this Agreement.
In addition, notwithstanding anything in this Agreement to the contrary, no
supplement or amendment that materially changes the rights, duties or
liabilities of the Rights Agent under this Agreement shall be effective without
the consent of the Rights Agent.
Section 27. Exchange.
(a) The Board of Directors of the Corporation may, at its option at
any time after any Person becomes an Acquiring Person, exchange all or
part of the then outstanding and exercisable Rights (which shall not
include Rights that have become null and void pursuant to the provisions
of Section 7(e) hereof) by exchanging for each such Right a number of
shares of Common Stock having an aggregate Fair Market Value on the date
such Person became an Acquiring Person equal to the Spread, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such number of shares of Common Stock per
Right being hereinafter referred to as the "EXCHANGE RATIO").
Notwithstanding the foregoing, the Board of Directors of the Corporation
shall not be empowered to effect such exchange at any time after any
Person (other than an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of
the Voting Stock then outstanding. From and after the occurrence of an
event specified in Section 13(a) hereof, any Rights that theretofore have
not been exchanged pursuant to this Section 27(a) shall thereafter be
exercisable only in accordance with Section 13 and may not be exchanged
pursuant to this Section 27(a).
(b) Immediately upon the action of the Board of Directors of the
Corporation ordering the exchange of any Rights pursuant to paragraph (a)
of this Section 27 and without any further action and without any notice,
the right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number of
shares of Common Stock equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Corporation shall promptly
give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the
validity of such exchange. The Corporation 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
34
receives the notice. Each such notice of exchange will state the method by
which the exchange of the shares of Common Stock for Rights will be,
effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become null
and void pursuant to the provisions of Section 7(e) hereof) held by each
holder of Rights.
(c) The Corporation shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence
fractional shares. In lieu of such fractional shares, the Corporation
shall pay to the registered holders of the Right Certificates with regard
to which such fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of the Fair Market
Value of a whole share of Common Stock. For the purposes of this paragraph
(d), the Fair Market Value of a whole share of Common Stock shall be the
closing price of a share of Common Stock for the Trading Day immediately
prior to the date of exchange pursuant to this Section 27, or as otherwise
determined in accordance with Section 11(b) hereof.
Section 28. Successors. All of the covenants and provisions of this
Agreement by or for the benefit of the Corporation or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Corporation, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the holders of Common Stock in their capacity as holders of the Rights)
any legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Corporation, the
Rights Agent and the holders of record of the Right Certificates (and, prior to
the Distribution Date, the holders of Common Stock in their capacity as holders
of the Rights).
Section 30. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the Commonwealth of Massachusetts and for all purposes shall be governed
by and construed and enforced in accordance with the laws of such state
applicable to contracts to be made and performed entirely within such state.
Section 31. 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 32. 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.
Section 33. 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
35
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board determines in its good faith
judgment that severing the invalid language would adversely affect the purpose
or effect of this Agreement, the right of redemption set forth in Section 23
hereof shall be reinstated and shall not expire until the Close of Business on
the tenth Business Day following the date of such determination by the Board of
Directors. Without limiting the foregoing, if any provision requiring a specific
group of Directors of the Corporation to act is held by any court of competent
jurisdiction or other authority to be invalid, void or unenforceable, such
determination shall then be made by the Board of Directors in accordance with
applicable law and the Corporation's Articles of Organization and By-laws.
Section 34. Determinations and Actions by the Board of Directors. For all
purposes of this Agreement, any calculation of the number of shares of Common
Stock of the Corporation outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of the Corporation of which any Person is the Beneficial Owner,
shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act. The Board of Directors of
the Corporation shall have the exclusive power and authority to administer,
interpret and apply this Agreement and to exercise the rights and powers
specifically granted to the Board of Directors of the Corporation or to the
Corporation by this Agreement or by law and may take such action as may be
necessary or advisable in the administration of this Agreement or to amend or
supplement this Agreement in accordance with its terms, including, without
limitation, the right and power (i) to make all determinations deemed necessary
or advisable for the administration of this Agreement, (ii) to decide to redeem
the Rights and (iii) to decide to amend or supplement this Agreement. All such
actions, calculations, interpretations and determinations (including any
decision not to take any action) done or made by the Board of Directors of the
Corporation in good faith shall (x) be final, conclusive and binding on the
Corporation, the Rights Agent, the holders of the Rights, as such, and all other
Persons and (y) not subject any member of the Board of Directors of the
Corporation to any liability to the holders of Rights.
36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
TECHNICAL COMMUNICATIONS
CORPORATION
By: ________________________________
Name: Xxxx X. Guild, Jr.
Title: Chairman, President and Chief
Executive Officer
AMERICAN STOCK TRANSER & TRUST
COMPANY, as Rights Agent
By: ________________________________
Name:
Title:
37
EXHIBIT A
AS PROVIDED IN THE RIGHTS AGREEMENT (AS REFERRED
TO BELOW), RIGHTS ISSUED TO OR BENEFICIALLY OWNED
BY ACQUIRING PERSONS OR THEIR AFFILIATES OR
ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS SHALL BE NULL AND VOID AND MAY NOT
BE EXERCISED OR TRANSFERRED TO ANY PERSON.
TECHNICAL COMMUNICATIONS CORPORATION
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On August 5, 2004, the Board of Directors of Technical Communications
Corporation, a Delaware corporation (the "Corporation"), declared a dividend
distribution of one Common Stock Purchase Right for each outstanding share of
common stock, par value $.10 per share (the "Common Stock"), of the Corporation.
The distribution was made payable as of August 13, 2004 to stockholders of
record on that date (the "Record Date"). Each Right, once exercisable, entitles
the registered holder to purchase from the Corporation one share of common stock
of the Corporation, at a price of $25 per share ("Exercise Price"), subject to
certain adjustments. The description and terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement") by and between the Corporation and
American Stock Transfer and Trust Company, as Rights Agent (the "Rights Agent").
As discussed below, initially the Rights will not be exercisable,
certificates will not be sent to stockholders and the Rights will automatically
trade with the Common Stock.
The Rights, unless earlier redeemed by the Board of Directors, become
exercisable upon the close of business on the day (the "Distribution Date")
which is the earlier of (i) the tenth business day following a public
announcement that a person or group of affiliated or associated persons, with
certain exceptions set forth below, has acquired beneficial ownership of 15% or
more of the outstanding voting stock of the Corporation (an "Acquiring Person")
and (ii) the tenth business day (or such later date as may be determined by the
Board of Directors prior to such time as any person or group of affiliated or
associated persons becomes an Acquiring Person) after the date of the
commencement by any person of a tender or exchange offer, the consummation of
which would result in such person or group of affiliated or associated persons
becoming an Acquiring Person.
An Acquiring Person does not include (A) the Corporation, (B) any
subsidiary of the Corporation, (C) any employee benefit plan or employee stock
plan of the Corporation or of any subsidiary of the Corporation, or any trust or
other entity organized, appointed, established or holding voting stock for or
pursuant to the terms of any such plan or (D) any person or group of affiliated
or associated persons whose ownership of 15% or more of the shares of voting
stock of
the Corporation then outstanding results solely from (i) any action or
transaction or transactions approved by the Board of Directors before such
person or group became an Acquiring Person or (ii) a reduction in the number of
issued and outstanding shares of voting stock of the Corporation pursuant to a
transaction or transactions approved by the Board of Directors (provided that
any person or group that does not become an Acquiring Person by reason of clause
(i) or (ii) above shall become an Acquiring Person upon acquisition of an
additional 1% or more of the Corporation's voting stock unless such acquisition
of additional voting stock would not result in such person becoming an Acquiring
Person by reason of clause (i) or (ii) above).
Prior to the Distribution Date, the Rights will not be exercisable, will
not be represented by a separate certificate, and will not be transferable apart
from the Corporation's Common Stock, but will instead be evidenced, with respect
to any of the Common Stock certificates outstanding as of the Record Date, by
such Common Stock certificate with a copy of this Summary of Rights attached
thereto. Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), new Common Stock certificates issued after the Record
Date will contain a legend incorporating the Rights Agreement by reference.
Until the Distribution Date (or earlier redemption, exchange or expiration of
the Rights), the surrender for transfer of any of the Common Stock certificates
outstanding as of the Record Date, with or without a copy of this Summary of
Rights attached thereto, will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Common Stock as of the close of business on the Distribution Date, and such
separate certificates alone will evidence the Rights from and after the
Distribution Date.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on August 5, 2014, unless earlier redeemed
or exchanged by the Corporation as described below.
Shares of Common Stock purchasable upon exercise of the Rights will be
non-redeemable. The Exercise Price of the Rights and the number of shares of
Common Stock issuable upon exercise of the Rights are subject to certain
adjustments from time to time in the event of a stock dividend on, or a
subdivision or combination of, the Common Stock. The Exercise Price for the
Rights also is subject to adjustment in the event of extraordinary distributions
of cash or other property to holders of Common Stock.
Unless the Rights are earlier redeemed, in the event that a person or
group becomes an Acquiring Person, the Rights Agreement provides that proper
provisions will be made so that each holder of record of a Right (other than
Rights beneficially owned by an Acquiring Person and certain affiliates,
associates and transferees thereof, whose Rights will thereupon become null and
void), will thereafter have the right to receive, upon payment of the Exercise
Price, that number of shares of the Common Stock having a fair market value
determined in accordance with the Rights Agreement at the time of the
transaction equal to approximately two times the Exercise Price.
In addition, unless the Rights are earlier redeemed or exchanged, in the
event that, after the time that a person or group becomes an Acquiring Person,
the Corporation were to be acquired in a merger or other business combination
(in which any shares of Common Stock are
2
changed into or exchanged for other securities or assets) or more than 50% of
the assets or earning power of the Corporation and its subsidiaries (taken as a
whole) were to be sold or transferred in one or a series of related
transactions, the Rights Agreement provides that proper provision will be made
so that each holder of record of a Right (other than Rights beneficially owned
by an Acquiring Person and certain affiliates, associates and transferees
thereof, whose Rights will thereupon become null and void) will from and after
such date have the right to receive, upon payment of the Exercise Price, that
number of shares of common stock of the acquiring company having a fair market
value at the time of such transaction determined in accordance with the Rights
Agreement equal to approximately two times the Exercise Price.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding voting stock, the Board of Directors of the Corporation may exchange
the Rights (other than Rights owned by such person or group which will have
become null and void), in whole or in part, for that number of shares of the
Corporation's Common Stock having a fair market value on the date such person or
group became an Acquiring Person equal to the excess of (i) the fair market
value of Common Stock issuable upon the exercise of the Rights over (ii) the
Exercise Price of the Rights, in each case subject to anti-dilution adjustments.
The Corporation may issue cash in lieu of fractional shares of Common
Stock issuable upon exercise of Rights.
At any time prior to the close of business on the tenth business day after
there has been a public announcement that a person has become an Acquiring
Person or such earlier date as a majority of the Board of Directors of the
Corporation shall become aware of the existence of an Acquiring Person, the
Corporation may redeem the Rights in whole, but not in part, at a price of $.001
per Right (the "Redemption Price"). Immediately upon the effective time of the
action of the Board of Directors of the Corporation authorizing redemption of
the Rights, the right to exercise the Rights will terminate and the only right
of the holders of Rights will be to receive the Redemption Price.
For as long as the Rights are then redeemable, the Corporation may, except
with respect to the Redemption Price, amend the Rights in any manner, including
an amendment to extend the time period in which the Rights may be redeemed. At
any time when the Rights are not then redeemable, the Corporation may amend the
Rights in any manner that does not materially adversely affect the interests of
holders of the Rights as such.
Until a Right is exercised, the holder, as such, will have no rights as a
stockholder of the Corporation, including, without limitation, the right to vote
or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission on August 6, 2004, as an Exhibit to the Corporation's
Current Report on Form 8-K. A copy of the Rights Agreement is available free of
charge from the Corporation. 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 in this summary description herein by
reference.
3
EXHIBIT B
[Form of Right Certificate]
Certificate No. R - ______ Rights
NOT EXERCISABLE AFTER AUGUST 5, 2014 OR EARLIER IF EXCHANGED OR REDEEMED.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE CORPORATION AND
UNDER CERTAIN OTHER CIRCUMSTANCES, AT $.001 PER RIGHT (SUBJECT TO
ADJUSTMENT), ON THE TERMS SET FORTH OR REFERRED TO IN THE RIGHTS
AGREEMENT. AS PROVIDED IN THE RIGHTS AGREEMENT (AS REFERRED TO BELOW)
RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR
AFFILIATES OR ASSOCIATES OR TRANSFEREES THEREOF (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE
NULL AND VOID AND MAY NOT BE EXERCISED OR TRANSFERRED TO ANY PERSON.
Right Certificate
This certifies that _________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement dated as of August 6, 2004 (the "Rights
Agreement") by and between Technical Communications Corporation, a
Massachusetts corporation (the "Corporation"), and American Stock Transfer
& Trust Company, as Rights Agent, or its successor in interest as Rights
Agent (the "Rights Agent"), to purchase from the Corporation at any time
after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M. (Eastern time) on August 5, 2014 at the
office of the Rights Agent designated in the Rights Agreement for such
purpose, one fully paid and nonassessable share of the Corporation's
Common Stock ($.10 par value per share, the "Common Stock"), or other
securities or property in lieu thereof as provided by the Rights
Agreement, at a purchase price of $25, as the same may from time to time
be adjusted in accordance with the Rights Agreement (the "Exercise
Price"), upon presentation and surrender of this Right Certificate with
the Form of Election to Purchase attached hereto duly executed.
As provided in the Rights Agreement, the Exercise Price and the
number of shares of Common Stock which may be purchased upon the exercise
of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events and, upon
the happening of certain events, securities other than shares of Common
Stock, or other property, may be acquired upon exercise of the Rights
evidenced by this Right Certificate, as provided in the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and
conditions are incorporated herein by reference and made a part hereof and
to which Rights Agreement reference is hereby made for a full description
of the rights, limitations of rights, obligations, duties and immunities
of the Rights
Agent, the Corporation and the holders of record of Right Certificates.
Copies of the Rights Agreement are on file at the principal executive
office of the Corporation.
This Right Certificate, with or without other Right Certificates,
upon surrender at the office of the Rights Agent designated in the Rights
Agreement for such purpose, may be exchanged for another Right Certificate
or Right Certificates of like tenor and date evidencing Rights entitling
the holder of record to purchase a like aggregate number of shares of
Common Stock as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If
this Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof, another Right Certificate or
Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Corporation at its
option or under certain other circumstances at a redemption price of $.001
per Right.
No fractional shares of Common Stock are required to be issued upon
the exercise of any Right or Rights evidenced hereby, and in lieu thereof
the Corporation may cause a cash payment may be made, as provided in the
Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of
Common Stock or of any other securities of the Corporation which may at
any time be issuable on the exercise hereof, nor shall anything contained
in the Rights Agreement or herein be construed to confer upon the holder
hereof, as such, any of the rights of a stockholder of the Corporation or
any right to vote for the election of directors or upon any matter
submitted to stockholders at meeting thereof, or to give or withhold
consent to any corporate action or to receive notice of meetings or other
actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Right Certificate shall have
been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
2
WITNESS the facsimile signature of the proper officers of the
Corporation and its corporate seal. Dated as of ___________ __, 20__.
ATTEST: TECHNICAL COMMUNICATIONS
CORPORATION
____________________________ By _________________________
[Assistant] Secretary Title:
Countersigned:
________________________
By _____________________
Authorized Signature
3
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED _______________________________________________________
hereby sells, assigns and transfers unto _______________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
Rights evidenced by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint ___________
Attorney to transfer the within Right Certificate on the books of the
within-named Corporation, with full power of substitution.
Dated:_______ ___, 20____
__________________________
Signature
Signature Guaranteed:
4
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned or
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Associate or an Affiliate thereof (as such terms are defined in the Rights
Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Right Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement).
Dated:_________ ___, 20___ __________________________
Signature
NOTICE
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
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FORM OF ELECTION TO PURCHASE
(To be executed if registered holder
desires to exercise the Right Certificate.)
TO _____________________:
The undersigned hereby irrevocably elects to exercise _________________
Rights represented by this Right Certificate to purchase the shares of Common
Stock issuable upon the exercise of such Rights and requests that certificates
for such share(s) be issued in the following name:
Please insert social security
or other identifying number: __________________________________________________
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number: __________________________________________________
_______________________________________________________________________________
(Please print name and address)
Dated: ________ ___, 20____
_______________________________
Signature
(Signature must conform in all respects to
name of holder as specified on the face of
this Right Certificate)
Signature Guaranteed:
6
