EXHIBIT 99.1
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NORTH AMERICAN SCIENTIFIC, INC.
AND
U.S. STOCK TRANSFER CORPORATION
RIGHTS AGREEMENT
DATED AS OF OCTOBER 12, 1998
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TABLE OF CONTENTS
PAGE
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RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . . 4
Section 3. Issue of Right Certificates . . . . . . . . . . . . . . . . 5
Section 4. Form of Right Certificates. . . . . . . . . . . . . . . . . 6
Section 5. Countersignature and Registration . . . . . . . . . . . . . 6
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. . . . . . . . . . . . . . . . . . . . . . . . 7
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 8. Cancellation and Destruction of Right Certificates. . . . . 9
Section 9. Company Covenants Concerning Securities and Rights. . . . . 9
Section 10. Record Date . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 11. Adjustment of Purchase Price, Number and Kind of Securities
or Number of Rights . . . . . . . . . . . . . . . . . . . . 11
Section 12. Certificate of Adjusted Purchase Price or Number of
Securities. . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power . . . . . . . . . . . . . . . . . . . . . . . 18
Section 14. Fractional Rights and Fractional Securities . . . . . . . . 21
Section 15. Rights of Action. . . . . . . . . . . . . . . . . . . . . . 22
Section 16. Agreement of Rights Holders . . . . . . . . . . . . . . . . 22
Section 17. Right Certificate Holder Not Deemed a Shareholder . . . . . 23
Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . 23
Section 19. Merger or Consolidation or Change of Name of Rights Agent . 24
Section 20. Duties of Rights Agent. . . . . . . . . . . . . . . . . . . 24
Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . . 26
Section 22. Issuance of New Right Certificates . . . . . . . . . . . . 27
Section 23. Redemption. . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 24. Notice of Certain Events. . . . . . . . . . . . . . . . . . 28
Section 25. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 26. Supplements and Amendments. . . . . . . . . . . . . . . . . 30
Section 27. Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 28. Successors; Certain Covenants . . . . . . . . . . . . . . . 31
Section 29. Benefits of this Agreement. . . . . . . . . . . . . . . . . 31
Section 30. Determinations and Actions by the Board of Directors,
etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 31. Severability. . . . . . . . . . . . . . . . . . . . . . . . 32
Section 32. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 32
Section 33. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 32
Section 34. Descriptive Headings. . . . . . . . . . . . . . . . . . . . 32
Exhibit A Form of Right Certificate . . . . . . . . . . . . . . . . . A-1
Exhibit B Summary of Rights to Purchase Common Shares . . . . . . . . B-1
RIGHTS AGREEMENT
This RIGHTS AGREEMENT, dated as of October 14, 1998 (this "Agreement"),
is made and entered into by and between North American Scientific, Inc., a
Delaware corporation (the "Company"), and U.S. Stock Transfer Corporation, a
California corporation (the "Rights Agent").
RECITALS
WHEREAS, on October 12, 1998, the Board of Directors of the Company
authorized and declared a dividend distribution of one right ("Right") for
each share of Common Stock, par value $.01 per share, of the Company (a
"Common Share") outstanding as of the Close of Business (as hereinafter
defined) on October 22, 1998, (the "Record Date"), each Right initially
representing the right to purchase one Common Share, upon the terms and
subject to the conditions herein set forth, and further authorized and
directed the issuance of one Right with respect to each Common Share issued
or delivered by the Company (whether originally issued or delivered from the
Company's treasury) after the Record Date but prior to the earlier of the
Distribution Date (as hereinafter defined) and the Expiration Date (as
hereinafter defined).
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 indicated:
(a) "Acquiring Person" shall mean any Person (other than the Company
or any Subsidiary of the Company or any employee benefit or stock ownership
plan of the Company or of any Subsidiary of the Company or any entity holding
Common Shares for or pursuant to the terms of any such plan) who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the Common Shares then outstanding.
(b) A Person shall be deemed the "Beneficial Owner" of, and to
"beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding (whether or not in writing),
or upon the exercise of conversion rights, exchange rights, rights, warrants
or options, or otherwise (in each case, other than upon exercise or exchange
of the Rights); provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, securities tendered pursuant to
a tender or exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange; or
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(ii) which such Person or any of such Person's Affiliates or
associates, directly or indirectly, has the right to vote or dispose of,
including pursuant to any agreement, arrangement or understanding whether or
not in writing); or
(iii) of which any other Person is the Beneficial Owner if such Person
or any of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) with such other
Person (or any of such other Person's Affiliates or Associates) with respect
to acquiring, holding, voting or disposing of any securities of the Company;
provided, however, that a Person shall not be deemed the Beneficial Owner of,
or to beneficially own, any security (A) if such Person has the right to vote
such security pursuant to an agreement, arrangement or understanding (whether
or not in writing) which (1) arises solely from a revocable proxy given to
such Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations of
the Exchange Act and (2) is not also then reportable on Schedule 13D under
the Exchange Act (or any comparable or successor report), or (B) if such
beneficial ownership arises solely as a result of such Person's status as a
"clearing agency", as defined in Section 3(a)(23) of the Exchange Act; and
provided, further, that nothing in this paragraph (b) shall cause a Person
engaged in business as an underwriter of securities to be the Beneficial
Owner of, or to beneficially own, any securities acquired through such
Person's participation in good faith in an underwriting syndicate until the
expiration of 40 calendar days after the date of such acquisition, or such
later date as the Board of Directors of the Company may determine in any
specific case.
(c) "Business Day" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in the State of California (or such
other state in which the principal office of the Rights Agent is located) are
authorized or obligated by law or executive order to close.
(d) "Close of Business" on any given date shall mean 5:00 P.M.,
Pacific time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Pacific time, on the next succeeding
Business Day.
(e) "Common Shares" when used with reference to the Company shall
mean the Common Stock, par value $.01 per share, of the Company; provided,
however, that, if the Company is the continuing or surviving corporation in a
transaction described in Section 11(a)(ii) or Section 13(a)(ii) hereof,
"Common Shares" when used with reference to the Company shall mean the
capital stock or equity security with the greatest aggregate voting power of
the Company. "Common Shares" when used with reference to any corporation or
other legal entity, other than the Company, including an Issuer, shall mean
the capital stock or equity security with the greatest aggregate voting power
of such corporation or other legal entity.
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(f) "Company" shall mean North American Scientific, Inc., a Delaware
corporation.
(g) "Distribution Date" shall mean the earliest of: (i) the Close of
Business on the tenth calendar day (or, unless the Distribution Date shall
have previously occurred, such later date as may be specified by the Board of
Directors of the Company) after the Share Acquisition Date, (ii) the Close of
Business on the tenth Business Day (or, unless the Distribution Date shall
have previously occurred, such later date as may be specified by the Board of
Directors of the Company) after the date of the commencement of a tender or
exchange offer by any Person (other than the Company or any Subsidiary of the
Company or any employee benefit or stock ownership plan of the Company or of
any Subsidiary of the Company or any entity holding Common Shares for or
pursuant to the terms of any such plan), if upon the consummation thereof
such Person would be the Beneficial Owner of 15% or more of the outstanding
Common Shares, and (iii) the Close of Business on the tenth calendar day
after the first date of public announcement by the Company or an Acquiring
Person (by press release, filing made with the Securities and Exchange
Commission or otherwise) of the first occurrence of a Triggering Event;
provided, however, that if the earliest of such dates would otherwise occur
prior to the Record Date, the Distribution Date shall mean the Close of
Business on the Record Date.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(i) "Expiration Date" shall mean the earliest of (i) the Close of
Business on the Final Expiration Date, (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof, and (iii) the time at which all
exercisable Rights are exchanged as provided in Section 27 hereof.
(j) "Final Expiration Date" shall mean the tenth anniversary of the
Record Date.
(k) "Flip-in Event" shall mean any event described in clauses (A),
(B) or (C) of Section 11(a)(ii) hereof.
(l) "Flip-over Event" shall mean any event described in subsections
(i), (ii) or (iii) of Section 13(a) hereof.
(m) "Issuer" shall have the meaning set forth in Section 13(b)
hereof.
(n) "NASDAQ" shall mean the National Association of Securities
Dealers, Inc. Automated Quotation System.
(o) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company, trust or other legal entity, and
shall include any successor (by merger or otherwise) of such entity.
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(p) "Purchase Price" shall mean initially $80.00 per Common Share and
shall be subject to adjustment from time to time as provided in this
Agreement.
(q) "Redemption Price" shall mean $0.001 per Right, subject to
adjustment by resolution of the Board of Directors of the Company to reflect
any stock split, stock dividend or similar transaction occurring after the
date hereof.
(r) "Right" shall have the meaning set forth in the Recitals to this
Agreement.
(s) "Right Certificates" shall mean certificates evidencing the
Rights, in substantially the form of Exhibit A attached hereto.
(t) "Rights Agent" shall mean U.S. Stock Transfer Corporation unless
and until a successor Rights Agent shall have become such pursuant to the
terms of this Agreement, and thereafter, "Rights Agent" shall mean such
successor Rights Agent.
(u) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(v) "Share Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person (by press release, filing
made with the Securities and Exchange Commission or otherwise) that an
Acquiring Person has become such.
(w) "Subsidiary" when used with reference to any Person shall mean
any corporation or other legal entity of which a majority of the voting power
of the voting equity securities or equity interests is owned, directly or
indirectly, by such Person; provided, however, that for purposes of Section
13(b) hereof, "Subsidiary" when used with reference to any Person shall mean
any corporation or other legal entity of which at least 20% of the voting
power of the voting equity securities or equity interests is owned, directly
or indirectly, by such Person.
(x) "Summary of Rights" shall mean the Summary of Rights to Purchase
Common Shares, in substantially the form of Exhibit B attached hereto.
(y) "Trading Day" shall mean any day on which the principal national
securities exchange on which the Common Shares are listed or admitted to
trading is open for the transaction of business or, if the Common Shares are
not listed or admitted to trading on any national securities exchange, a
Business Day.
(z) "Triggering Event" shall mean any Flip-in Event or Flip-over
Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3 hereof, shall also be, prior to the
Distribution Date, the holders of the Common Shares) in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time act as Co-Rights Agent or
appoint such Co-Rights Agents as it may deem necessary or
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desirable. Any actions which may be taken by the Rights Agent pursuant to the
terms of this Agreement may be taken by any such Co-Rights Agent. To the
extent that any Co-Rights Agent takes any action pursuant to this Agreement,
such Co-Rights Agent shall be entitled to all of the rights and protections
of, and subject to all of the applicable duties and obligations imposed upon,
the Rights Agent pursuant to the terms of this Agreement.
Section 3. Issue of Right Certificates.
(a) Until the Distribution Date, (i) the Rights shall be evidenced by
the certificates representing Common Shares registered in the names of the
record holders thereof (which certificates representing Common Shares shall
also be deemed to be Right Certificates), together with a copy of the Summary
of Rights, (ii) the Rights shall be transferable only in connection with the
transfer of the underlying Common Shares, and (iii) the surrender for
transfer of any certificates evidencing Common Shares in respect of which
Rights have been issued, with or without a copy of the Summary of Rights,
shall also constitute the transfer of the Rights associated with the Common
Shares evidenced by such certificates.
(b) As promptly as practicable after the Record Date, the Company
shall send a copy of the Summary of Rights by first-class, postage prepaid
mail, to each record holder of Common Shares as of the close of business on
the Record Date, at the address of such holder shown on the records of the
Company as of such date.
(c) Rights shall be issued by the Company in respect of all Common
Shares (other than Common Shares issued upon the exercise or exchange of any
Right) issued or delivered by the Company (whether originally issued or
delivered from the Company's treasury) after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date. Certificates
evidencing such Common Shares shall have stamped on, impressed on, printed
on, written on or otherwise affixed to them the following legend or such
similar legend as the Company may deem appropriate and as is not inconsistent
with the provisions of this Agreement, or as may be required to comply with
any applicable law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange or transaction reporting
system on which the Common Shares may from time to time be listed or quoted,
or to conform to usage:
This Certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement between North American
Scientific, Inc. (the "Company") and U.S. Stock Transfer Corporation dated
as of October 12, 1998 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file at
the principal executive offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights may be
redeemed, may expire, may be amended or may be evidenced by separate
certificates and no longer be evidenced by this Certificate. The Company
will mail to the holder of this Certificate a copy of the Rights Agreement
without charge promptly after receipt of a written request therefor. Under
certain
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circumstances as set forth in the Rights Agreement, Rights beneficially
owned by an Acquiring Person or any Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement) may
become null and void.
(d) As promptly as practicable after the Distribution Date, the
Company shall prepare and execute, the Rights Agent will countersign and the
Company shall send or cause to be sent (and the Rights Agent shall, if
requested, send), by first-class, insured, postage prepaid mail, to each
record holder of Common Shares as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Right Certificate, evidencing one Right for each Common Share so
held, subject to adjustment. As of and after the Distribution Date, the
Rights shall be evidenced solely by such Right Certificates.
Section 4. Form of Right Certificates. The Right Certificates (and
the form of election to purchase and form of assignment to be printed on the
reverse thereof) shall be substantially in the form set forth as Exhibit A
hereto with such changes, marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange or transaction reporting system on which the Rights may
from time to time be listed or quoted, or to conform to usage. Subject to the
provisions of Section 22 hereof, the Right Certificates, whenever issued, on
their face shall entitle the holders thereof to purchase such number of
Common Shares as shall be set forth therein at the Purchase Price set forth
therein, but the Purchase Price, the number and kind of securities issuable
upon exercise of each Right and the number of Rights outstanding shall be
subject to adjustment as provided herein.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the Company
by its Chief Executive Officer, Chief Financial Officer or any Vice
President, either manually or by facsimile signature, and shall be attested
by the Secretary or an Assistant Secretary of the Company, either manually or
by facsimile signature. The Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company who shall have
signed any of the Right Certificates shall cease to be such officer of the
Company before counter-signature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent, and issued and delivered by the Company
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date
of the execution of this Rights Agreement any such person was not such an
officer.
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(b) Following the Distribution Date, the Rights Agent shall keep or
cause to be kept, at the principal office of the Rights Agent designated for
such purpose and at such other offices as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange or any transaction reporting
system on which the Rights may from time to time be listed or quoted, 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 7(d) and 14 hereof, at any
time after the Close of Business on the Distribution Date and prior to the
Expiration Date, any Right Certificate or Right Certificates representing
exercisable Rights may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates, entitling the registered
holder to purchase a like number of Common Shares (or other securities, as
the case may be) as the Right Certificate or Right Certificates surrendered
then entitled such holder (or former holder in the case of a transfer) to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any such Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate or
Right Certificates to be transferred, split up, combined or exchanged at the
principal office of the Rights Agent designated for such purpose. Thereupon
or as promptly as practicable thereafter, subject to the provisions of
Sections 7(d) and 14 hereof, the Company shall prepare, execute and deliver
to the Rights Agent, and the Rights Agent shall countersign and deliver a
Right Certificate or Right Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Company shall prepare, execute and deliver a
new Right Certificate of like tenor to the Rights Agent and the Rights Agent
shall countersign and deliver such new Right Certificate to the registered
holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time
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after the Distribution Date and prior to the Expiration Date, upon surrender
of the Right Certificate, with the form of election to purchase on the
reverse side thereof duly executed, to the Rights Agent at the office or
offices of the Rights Agent designated for such purpose, together with
payment in cash, in lawful money of the United States of America by certified
check or bank draft payable to the order of the Company equal to the sum of
(i) the exercise price for the total number of securities as to which such
surrendered Rights are exercised and (ii) an amount equal to any applicable
transfer tax required to be paid by the holder of such Right Certificate in
accordance with the provisions of Section 9 hereof. In lieu of the cash
payment referred to in the immediately preceding sentence, following the
occurrence of a Triggering Event the registered holder of a Right Certificate
may exercise the Rights evidenced thereby (except as otherwise provided
herein) in whole or in part upon surrender of the Right Certificate as
described above together with an election to exercise such Rights without
payment of cash on the reverse side thereof duly completed. With respect to
any Rights as to which such an election is made, the holder shall receive a
number of Common Shares or other securities having a value equal to the
difference between (i) the value of the Common Shares or other securities
that would have been issuable upon payment of the cash amount as described
above, and (ii) the amount of such cash payment. For purposes of this Section
7(a), the value of any Common Share or other security shall be the current
per share market price of a Common Share (determined pursuant to Section
11(d) hereof) on the Trading Day immediately preceding the date of the first
occurrence of a Triggering Event.
(b) Upon receipt of a Right Certificate representing exercisable
Rights with the form of election to purchase duly executed, accompanied by
either payment as described above or a duly completed election to exercise
without payment of cash, the Rights Agent shall promptly (i) requisition from
any transfer agent of the Common Shares (or make available, if the Rights
Agent is the transfer agent) certificates representing the number of Common
Shares to be purchased (and the Company hereby irrevocably authorizes and
directs its transfer agent to comply with all such requests), (ii) after
receipt of such 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, (iii) when appropriate,
requisition from the Company or any transfer agent therefor (or make
available, if the Rights Agent is the transfer agent) certificates
representing the number of equivalent common shares to be issued in lieu of
the issuance of Common Shares in accordance with the provisions of Section
11(a)(iii) hereof, (iv) when appropriate, after receipt of such 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, (v) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of the issuance of fractional shares in
accordance with the provisions of Section 14 hereof or in lieu of the
issuance of Common Shares in accordance with the provisions of Section
11(a)(iii) hereof, (vi) when appropriate, after receipt, deliver such cash to
or upon the order of the registered holder of such Right Certificate, and
(vii) when appropriate, deliver any due xxxx or other instrument provided to
the Rights Agent by the Company for delivery to the registered holder of such
Right Certificate as provided by Section 11(l) hereof.
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(c) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, the Company shall
prepare, execute and deliver a new Right Certificate evidencing Rights
equivalent to the Rights remaining unexercised and the Rights Agent shall
countersign and deliver such new Right Certificate to the registered holder
of such Right Certificate or to his duly authorized assigns, subject to the
provisions of Section 14 hereof.
(d) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to any purported transfer, split up, combination or
exchange of any Right Certificate pursuant to Section 6 hereof or exercise of
a Right Certificate as set forth in this Section 7 unless the registered
holder of such Right Certificate shall have (i) completed and signed the
certificate following the form of assignment or form of election to purchase,
as applicable, set forth on the reverse side of the Right Certificate
surrendered for such transfer, split up, combination, exchange or exercise,
and (ii) provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the
Company shall have reasonably requested.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its stock transfer 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 this Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Right Certificate purchased or acquired by
the Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Right Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Right Certificates,
and in such case shall deliver a certificate of destruction thereof to the
Company.
Section 9. Company Covenants Concerning Securities and Rights. The
Company covenants and agrees that:
(a) So long as the Common Shares issuable upon the exercise of the
Rights may be listed on a national securities exchange or automated quotation
system, it shall endeavor to cause, from and after such time as the Rights
become exercisable, all securities reserved for issuance upon the exercise of
Rights to be listed on such exchange or automated quotation system upon
official notice of issuance.
(b) It shall take all such action as may be necessary to ensure that
all Common Shares and/or other securities delivered upon exercise of Rights,
at the time of delivery of the certificates for such securities shall be
(subject to payment of the Purchase Price) duly and validly authorized and
issued, fully paid and nonassessable securities.
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(c) It shall pay when due and payable any and all federal and state
transfer taxes and charges that may be payable in respect of the issuance or
delivery of the Right Certificates and of any certificates representing
securities issued upon the exercise of Rights; provided, however, that the
Company shall not be required to pay any transfer tax or charge which may be
payable in respect of any transfer or delivery of Right Certificates to a
person other than, or the issuance or delivery of certificates representing
securities issued upon the exercise of Rights in a name other than that of,
the registered holder of the Right Certificate evidencing Rights surrendered
for exercise, or to issue or deliver any certificates representing securities
issued upon the exercise of any Rights until any such tax or charge shall
have been paid (any such tax or charge being payable by the holder of such
Right Certificate at the time of surrender) or until it has been established
to the Company's reasonable satisfaction that no such tax is due.
(d) It shall use its best efforts (i) to file on an appropriate form,
as soon as practicable following the later of the first occurrence of a
Triggering Event or the Distribution Date, a registration statement under the
Securities Act with respect to the securities issuable upon exercise of the
Rights, (ii) to cause such registration statement to become effective as soon
as practicable after such filing, and (iii) to cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities and (B) the Expiration
Date. The Company shall also take such action as may be appropriate under, or
to ensure compliance with, the securities or "blue sky" laws of the various
states in connection with the exercisability of the Rights. The Company may
temporarily suspend, for a period of time after the date set forth in clause
(i) of the first sentence of this Section 9(d), the exercisability of the
Rights in order to prepare and file such registration statement and to permit
it to become effective. Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. In addition, if the Company shall
determine that a registration statement should be filed under the Securities
Act or any state securities laws following the Distribution Date, the Company
may temporarily suspend the exercisability of the Rights in each relevant
jurisdiction until such time as a registration statement has been declared
effective and, upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. Notwithstanding anything in this Agreement
to the contrary, the Rights shall not be exercisable in any jurisdiction if
the requisite registration or qualification in such jurisdiction shall not
have been effected or the exercise of the Rights shall not be permitted under
applicable law.
(e) Notwithstanding anything in this Agreement to the contrary, after
the Distribution Date it shall not, except as permitted by Section 23 or
Section 26 hereof, take (or permit any Subsidiary to take) any action if at
the time such action is taken it is reasonably foreseeable that such action
will eliminate or otherwise diminish the benefits intended to be afforded by
the Rights.
10
(f) In the event that the Company is obligated to issue other
securities of the Company and/or pay cash pursuant to Sections 11, 13 or 14
hereof, it shall make all arrangements necessary so that such other
securities and/or cash are available for distribution by the Rights Agent, if
and when appropriate.
Section 10. Record Date. Each Person in whose name any certificate
representing Common Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Common
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered
and payment of the Purchase Price (and all applicable transfer taxes) was
made; provided, however, that if the date of such surrender and payment is a
date upon which the Common Shares transfer books of the Company are closed,
such Person shall be deemed to have become the record holder of such
securities on, and such certificate shall be dated, the next succeeding
Business Day on which the Common Shares transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Right Certificate shall not be entitled to any rights of a shareholder of the
Company with respect to securities for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or
other distributions or to exercise any preemptive rights, and shall not be
entitled to receive any notice of any proceedings of the Company, except as
provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Securities
or Number of Rights. The Purchase Price, the number and kind of securities
issuable upon exercise of each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event that the Company shall at any time after
date of this Agreement (A) declare a dividend on the Common Shares payable in
Common Shares, (B) subdivide the outstanding Common Shares, (C) combine the
outstanding Common Shares into a smaller number of shares or (D) issue any
shares of its capital stock in a reclassification of the Common Shares
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), the
Purchase Price in effect at the time of the record date for such dividend or
of the effective date of such subdivision, combination or reclassification,
and/or the number and/or kind of shares of capital stock issuable on such
date upon exercise of a Right, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive
upon payment of the Purchase Price then in effect the aggregate number and
kind of shares of capital stock which, if such Right had been exercised
immediately prior to such date and at a time when the Common Shares transfer
books of the Company were open, the holder of such Right would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii)
hereof or Section 13 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) or Section 13 hereof.
11
(ii) Subject to the provisions of Section 27 hereof, in the event
that:
(A) any Acquiring Person or any Affiliate or Associate of any
Acquiring Person, at any time after the date of this Agreement, directly or
indirectly, shall (1) merge into the Company or otherwise combine with the
Company and the Company shall be the continuing or surviving corporation of
such merger or combination (other than in a transaction subject to Section
13 hereof), (2) merge or otherwise combine with any Subsidiary of the
Company, (3) in one or more transactions (other than in connection with the
exercise or exchange of Rights or the exercise or conversion of securities
exercisable for or convertible into shares of any class of capital stock of
the Company or any of its Subsidiaries) transfer any assets to the Company
or any of its Subsidiaries in exchange (in whole or in part) for shares of
any class of capital stock of the Company or any of its Subsidiaries or for
securities exercisable for or convertible into shares of any class of
capital stock of the Company or any of its Subsidiaries, or otherwise
obtain from the Company or any of its Subsidiaries, with or without
consideration, any additional shares of any class of capital stock of the
Company or any of its Subsidiaries or securities exercisable for or
convertible into shares of any class of capital stock of the Company or any
of its Subsidiaries (other than as part of a pro rata distribution to all
holders of such shares of any class of capital stock of the Company, or any
of its Subsidiaries), (4) sell, purchase, lease, exchange, mortgage,
pledge, transfer or otherwise dispose (in one or more transactions), to,
from, with or of, as the case may be, the Company or any of its
Subsidiaries (other than in a transaction subject to Section 13 hereof),
assets, including securities, on terms and conditions less favorable to the
Company than the Company would be able to obtain in arm's-length
negotiation with an unaffiliated third party, (5) receive any compensation
from the Company or any of its Subsidiaries other than compensation as a
director or for full-time employment as a regular employee, in either case,
at rates in accordance with the Company's (or its Subsidiaries') past
practices, or (6) receive the benefit, directly or indirectly (except
proportionately as a shareholder), of any loans, advances, guarantees,
pledges or other financial assistance or any tax credits or other tax
advantage provided by the Company or any of its Subsidiaries; or
(B) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any reverse stock
split), or recapitalization of the Company, or any merger or consolidation
of the Company with any of its Subsidiaries or any other transaction or
series of transactions involving the Company or any of its Subsidiaries
(whether or not with or into or otherwise involving an Acquiring Person),
other than a transaction subject to Section 13 hereof, which has the
effect, directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity
securities or of securities exercisable for or convertible into equity
securities of the Company or any of its Subsidiaries of which an Acquiring
Person or any Affiliate or Associate of any Acquiring Person, is the
Beneficial Owner; or
12
(C) any Person (other than the Company or any Subsidiary of the
Company or any employee benefit or stock ownership plan of the Company or
of any Subsidiary of the Company or any entity holding Common Shares for or
pursuant to the terms of any such plan) who or which, together with all
Affiliates and Associates of such Person, shall at any time after the date
of this Agreement, become the Beneficial Owner of 20% or more of the Common
Shares then outstanding (other than pursuant to any transaction set forth
in Section 13(a) hereof); provided, however, that a Person shall not be
deemed to have become the Beneficial Owner of 20% or more of the Common
Shares then outstanding for the purposes of this Section 11(a)(ii)(C)
solely as a result of a reduction in the number of Common Shares
outstanding unless and until such time as (1) such Person or any Affiliate
or Associate of such Person shall thereafter become the Beneficial Owner of
any additional Common Shares other than as a result of a stock dividend,
stock split or similar transaction effected by the Company in which all
holders of Common Shares are treated equally, or (2) any other Person who
is the Beneficial Owner of any Common Shares shall thereafter become an
Affiliate or Associate of such Person,
then, and in each such case, proper provision shall be made so that
each holder of a Right, except as provided below, shall thereafter have a
right to receive, upon exercise thereof in accordance with the terms of
this Agreement at an exercise price per Right equal to the product of the
then-current Purchase Price multiplied by the number of Common Shares for
which a Right was exercisable immediately prior to the first occurrence of
a Triggering Event, such number of Common Shares as shall equal the result
obtained by (x) multiplying the then-current Purchase Price by the number
of Common Shares for which a Right was exercisable immediately prior to the
first occurrence of a Triggering Event, and dividing that product by (y)
50% of the current per share market price of the Common Shares (determined
pursuant to Section 11(d) hereof) on the date of the first occurrence of a
Triggering Event. Notwithstanding anything in this Agreement to the
contrary, from and after the later of the Distribution Date and the first
occurrence of a Flip-in Event, (1) any Rights that are or were acquired or
beneficially owned by any Acquiring Person (or any Affiliate or Associate
of such Acquiring Person) shall be void and any holder of such Rights shall
thereafter have no right to exercise such Rights under any provision of
this Agreement, (2) no Right Certificate shall be issued pursuant to this
Agreement that represents Rights beneficially owned by an Acquiring Person
or any Affiliate or Associate thereof, (3) no Right Certificate shall be
issued at any time upon the transfer of any Rights to an Acquiring Person
or any Affiliate or Associate thereof or to any nominee of such Acquiring
Person or Affiliate or Associate thereof, and (4) any Right Certificate
delivered to the Rights Agent for transfer to an Acquiring Person or any
Affiliate or Associate thereof shall be cancelled.
(iii) Upon the occurrence of a Flip-in Event, if there shall not be
sufficient Common Shares authorized but unissued or issued but not outstanding
to permit the
13
issuance of all the Common Shares issuable in accordance with subsection (ii)
hereof upon the exercise of a Right, the Board of Directors of the Company
shall use its best efforts promptly to authorize and, subject to the
provisions of Section 9(d) hereof, make available for issuance additional
Common Shares or other equity securities of the Company having equivalent
voting rights and an equivalent value (as determined in good faith by the
Board of Directors of the Company) to the Common Shares (for purposes of this
Section 11(a)(iii), "equivalent common shares"). In the event that equivalent
common shares are so authorized, upon the exercise of a Right in accordance
with the provisions of Section 7 hereof, the registered holder shall be
entitled to receive (A) Common Shares, to the extent any are available and
(B) a number of equivalent common shares, which the Board of Directors of the
Company shall have determined in good faith to have a value equivalent to the
excess of (x) the aggregate current per share market value of all the Common
Shares issuable in accordance with subsection (ii) hereof upon the exercise
of a Right (the "Exercise Value") over (y) the aggregate current per share
market value of any Common Shares available for issuance upon the exercise of
such Right; provided, however, that if at any time after 90 calendar days
after the first occurrence of a Flip-in Event, there shall not be sufficient
Common Shares and/or equivalent common shares available for issuance upon the
exercise of a Right, then the Company shall be obligated to deliver, upon the
surrender of such Right and without requiring payment of the Purchase Price,
Common Shares (to the extent available), equivalent common shares (to the
extent available) and then cash (to the extent permitted by applicable law
and any agreements or instruments to which the Company is a party in effect
immediately prior to the first occurrence of any Flip-in Event), which
securities and cash shall have an aggregate value equal to the excess of (1)
the Exercise Value over (2) the product of the then-current Purchase Price
multiplied by the number of Common Shares for which a Right was exercisable
immediately prior to the first occurrence of a Triggering Event. To the
extent that any legal or contractual restrictions prevent the Company from
paying the full amount of cash payable in accordance with the foregoing
sentence, the Company shall pay to holders of the Rights as to which such
payments are being made all amounts which are not then restricted on a pro
rata basis and shall continue to make payments on a pro rata basis as funds
become available until the full amount due to each such Rights holder has
been paid.
(b) In the event that the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Common Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Common Shares (or securities having
equivalent rights, privileges and preferences as the Common Shares (for purposes
of this Section 11(b), "equivalent common shares")) or securities convertible
into Common Shares or equivalent common shares at a price per Common Share or
equivalent common share (or having a conversion price per share, if a security
convertible into Common Shares or equivalent common shares) less than the
current per share market price of the Common Shares (determined pursuant to
Section 11(d) hereof) on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of Common Shares outstanding on such record date plus
the number of Common Shares which the aggregate
14
offering price of the total number of Common Shares and/or equivalent common
shares so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current per
share market price and the denominator of which shall be the number of Common
Shares outstanding on such record date plus the number of additional Common
Shares and/or equivalent common shares 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 other than cash, the
value of such consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent. Common Shares owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants
are not so issued, the Purchase Price shall be adjusted to be the Purchase
Price which would then be in effect if such record date had not been fixed.
(c) In the event that the Company shall fix a record date for the
making of a distribution to all holders of Common Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend), assets,
stock (other than a dividend payable in Common Shares) or subscription
rights, options or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the current
per share market price of the Common Shares (as determined pursuant to
Section 11(d) hereof) on such record date or, if earlier, the date on which
Common Shares begin to trade on an ex-dividend or when-issued basis for such
distribution, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent) of the portion of the evidences of
indebtedness, cash, assets or stock so to be distributed or of such
subscription rights, options or warrants applicable to one Common Share, and
the denominator of which shall be such current per share market price of the
Common Shares. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution is not so made,
the Purchase Price shall again be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, the "current per
share market price" of Common Shares on any date shall be deemed to be the
average of the daily closing prices per share of such Common Shares for the
30 consecutive Trading Days immediately prior to such date; provided,
however, that in the event that the current per share market price of the
Common Shares is determined during a period following the announcement by the
issuer of such Common Shares of (i) a dividend or distribution on such Common
Shares payable in such Common Shares or securities convertible into such
Common Shares (other than the Rights) or (ii) any subdivision, combination or
reclassification of such Common Shares, and prior to the expiration of 30
Trading Days
15
after the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then, and in each
such case, the current per share market price shall be appropriately adjusted
to take into account ex-dividend trading or to reflect the current per share
market price per Common Share equivalent. The closing price for each day
shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on
the New York Stock Exchange or, if the Common Shares are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Common Shares are listed or admitted to trading or, if the Common Shares are
not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by NASDAQ or such
other system then in use, or, if on any such date the Common Shares are not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Common Shares selected by the Board of Directors of the Company. If the
Common Shares are not publicly held or not so listed or traded, or not the
subject of available bid and asked quotes, "current per share market price"
shall mean the fair value per share as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent.
(e) Except as set forth below, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or
decrease of at least 1% in such price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent or
to the nearest one ten-thousandth of a Common Share or other security, as the
case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which requires
such adjustment and (ii) the Expiration Date.
(f) 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 securities of the Company other than Common Shares, thereafter
the number of such other securities so receivable upon exercise of any Right
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Common
Shares contained in this Section 11, and the provisions of Sections 7, 9, 10
and 13 hereof with respect to the Common Shares shall apply on like terms to
any such other securities.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Common Shares
issuable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
16
(h) Unless the Company shall have exercised its election as provided
in Section 11(i) hereof, upon each adjustment of the Purchase Price as a
result of the calculations made in Section 11(b) and Section 11(c) hereof
made with respect to a distribution of subscription rights, options or
warrants applicable to Common Shares, each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of Common Shares
(calculated to the nearest one-thousandth a Common Share) obtained by (i)
multiplying (x) the number of Common Shares issuable upon exercise of a Right
immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price, and (ii) dividing
the product so obtained by the Purchase Price in effect immediately after
such adjustment of the Purchase Price.
(i) The Company may elect, on or after the date of any adjustment of
the Purchase Price, to adjust the number of Rights in substitution for any
adjustment in the number of Common Shares issuable 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 Common Shares for which a Right
was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment
of the Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Right Certificates have been
issued, shall be at least 10 calendar days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of
Right Certificates on such record date Right Certificates evidencing, subject
to the provisions of Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option
of the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof if required by
the Company, new Right Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record
of Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number or kind of securities issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number and kind of securities which were
expressed in the initial Right Certificate issued hereunder.
17
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the Common Shares or
other securities issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable Common Shares or such other securities at such adjusted
Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record
date the number of Common Shares or other securities of the Company, if any,
issuable upon such exercise over and above the number of Common Shares or
other securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such
additional Common Shares or other securities upon the occurrence of the event
requiring such adjustment.
(m) Notwithstanding anything in this Agreement to the contrary, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and
to the extent that in its good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation
or subdivision of the Common Shares, (ii) issuance wholly for cash of Common
Shares at less than the current per share market price therefor, (iii)
issuance wholly for cash of Common Shares or securities which by their terms
are convertible into or exchangeable for Common Shares, (iv) stock dividends,
or (v) issuance of rights, options or warrants referred to in this Section
11, hereafter made by the Company to holders of its Common Shares shall not
be taxable to such shareholders.
Section 12. Certificate of Adjusted Purchase Price or Number of
Securities. Whenever an adjustment is made as provided in Section 11 or
Section 13 hereof, the Company shall promptly (a) prepare a certificate
setting forth such adjustment and a brief statement of the facts accounting
for such adjustment, (b) file with the Rights Agent and with each transfer
agent for the Common Shares, a copy of such certificate, and (c) if such
adjustment is made after the Distribution Date, mail a brief summary of such
adjustment to each holder of a Right Certificate in accordance with Section
25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following the Share Acquisition Date, directly
or indirectly:
18
(i) the Company shall consolidate with, or merge with or into, any
other Person and the Company shall not be the continuing or surviving
corporation of such consolidation or merger; or
(ii) any Person shall consolidate with the Company, or merge with or
into the Company and the Company shall be the continuing or surviving
corporation of such merger or consolidation and, in connection with such
merger or consolidation, all or part of the Common Shares shall be changed
into or exchanged for stock or other securities of any other Person or cash
or any other property; or
(iii) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power (including, without limitation,
securities creating any obligation on the part of the Company and/or any of
its Subsidiaries) representing in the aggregate more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to
any Person or Persons,
then, and in each such case, proper provision shall be made so that (A)
each holder of a Right (except as otherwise provided herein) shall thereafter
have the right to receive, upon the exercise thereof in accordance with the
terms of this Agreement at an exercise price per Right equal to the product
of the then-current Purchase Price multiplied by the number of Common Shares
for which a Right was exercisable immediately prior to the first occurrence
of a Triggering Event, such number of validly authorized and issued, fully
paid, nonassessable and freely tradable Common Shares of the Issuer, free and
clear of any liens, encumbrances and other adverse claims and not subject to
any rights of call or first refusal, as shall be equal to the result obtained
by (x) multiplying the then-current Purchase Price by the number of Common
Shares for which a Right is exercisable immediately prior to the first
occurrence of a Triggering Event and dividing that product by (y) 50% of the
current per share market price of the Common Shares of the Issuer (determined
pursuant to Section 11(d) hereof), on the date of consummation of such
Flip-over Event; (B) the Issuer shall thereafter be liable for, and shall
assume, by virtue of the consummation of such Flip-over Event, all the
obligations and duties of the Company pursuant to this Agreement; (C) the
term "Company" shall thereafter be deemed to refer to the Issuer; and (D) the
Issuer shall take such steps (including, without limitation, the reservation
of a sufficient number of its Common Shares to permit the exercise of all
outstanding Rights) 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 possible, in relation to its Common Shares
thereafter deliverable upon the exercise of the Rights.
(b) For purposes of this Section 13, "Issuer" shall mean (i) in the
case of any Flip-over Event described in Sections 13(a) (i) or (ii) above, the
Person that is the continuing, surviving, resulting or acquiring Person
(including the Company as the continuing or surviving corporation of a
transaction described in Section 13(a)(ii) above), and (ii) in the case of any
Flip-over Event described in Section 13(a)(iii) above, the Person that is the
party receiving the greatest portion of the assets or earning power
19
(including, without limitation, securities creating any obligation on the
part of the Company and/or any of its Subsidiaries) transferred pursuant to
such transaction or transactions; provided, however, that, in any such case,
(A) if (1) no class of equity security of such Person is, at the time of such
merger, consolidation or transaction and has been continuously over the
preceding 12-month period, registered pursuant to Section 12 of the Exchange
Act, and (2) such Person is a Subsidiary, directly or indirectly, of another
Person, a class of equity security of which is and has been so registered,
the term "Issuer" shall mean such other Person; and (B) in case such Person
is a Subsidiary, directly or indirectly, of more than one Person, a class of
equity security of two or more of which are and have been so registered, the
term "Issuer" shall mean whichever of such Persons is the issuer of the
equity security having the greatest aggregate market value. Notwithstanding
the foregoing, if the Issuer in any of the Flip-over Events listed above is
not a corporation or other legal entity having outstanding equity securities,
then, and in each such case, (x) if the Issuer is directly or indirectly
wholly owned by a corporation or other legal entity having outstanding equity
securities, then all references to Common Shares of the Issuer shall be
deemed to be references to the Common Shares of the corporation or other
legal entity having outstanding equity securities which ultimately controls
the Issuer, and (y) if there is no such corporation or other legal entity
having outstanding equity securities, (I) proper provision shall be made so
that the Issuer shall create or otherwise make available for purposes of the
exercise of the Rights in accordance with the terms of this Agreement, a kind
or kinds of security or securities having a fair market value at least equal
to the economic value of the Common Shares which each holder of a Right would
have been entitled to receive if the Issuer had been a corporation or other
legal entity having outstanding equity securities; and (II) all other
provisions of this Agreement shall apply to the issuer of such securities as
if such securities were Common Shares.
(c) The Company shall not consummate any Flip-over Event, unless the
Issuer shall have a sufficient number of authorized Common Shares (or other
securities as contemplated in Section 13(b) above) which have not been issued
or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior to such consummation the
Company and the Issuer shall have executed and delivered to the Rights Agent
a supplemental agreement providing for the terms set forth in subsections (a)
and (b) of this Section 13 and further providing that as promptly as
practicable after the consummation of any Flip-over Event, the Issuer shall:
(i) prepare and file a registration statement under the Securities
Act, with respect to the Rights and the securities issuable upon exercise of
the Rights on an appropriate form, and shall use its best efforts to cause
such registration statement to (A) become effective as soon as practicable
after such filing and (B) remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the Expiration Date;
(ii) take all 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; and
20
(iii) deliver to holders of the Rights historical financial statements
for the Issuer and each of its Affiliates which comply in all respects with
the requirements for registration on Form 10 under the Exchange Act.
(d) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the
event that a Flip-over Event occurs at any time after the occurrence of a
Flip-in Event, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section 13(a)
hereof.
Section 14. Fractional Rights and Fractional Securities.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, the Company shall pay as promptly as practicable to
the registered holders of the Right Certificates with regard to which such
fractional Rights otherwise would be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Right. For the purposes
of this Section 14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the date
on which such fractional Rights otherwise would have been issuable. The
closing price for any day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the Rights are
not listed or admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by NASDAQ or such other system
then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
a professional market maker making a market in the Rights selected by the
Board of Directors of the Company. If on any such date no such market maker
is making a market in the Rights the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the Company shall be
used.
(b) The Company shall not be required to issue fractions of Common
Shares or other securities issuable upon exercise or exchange of the Rights or
to distribute certificates which evidence any such fractional securities. In
lieu of issuing any such fractional securities, the Company may pay to any
Person to whom or which such fractional securities would otherwise be issuable
an amount in cash equal to the same fraction of the current market value of one
such security. For purposes of this Section 14(b), the current market value of a
Common Share or other security issuable upon the exercise or exchange of Rights
shall be the closing price thereof (as determined in the
21
same manner as set forth for Common Shares in the second sentence of Section
11(d) hereof) for the Trading Day immediately prior to the date of such
exercise or exchange; provided, however, that if neither the Common Shares
nor any such other securities are publicly held or listed or admitted to
trading on any national securities exchange, or the subject of available bid
and asked quotes, the current market value of one Common Share or such other
security shall be determined in good faith by the Board of Directors of the
Company.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the holder of any Common
Shares), may in his own behalf and for his own benefit enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate or Common Share 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 shall be entitled
to specific performance of the obligations under this Agreement, and
injunctive relief against actual or threatened violations of the obligations
of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) Prior to the Distribution Date, the Rights shall be transferable
only in connection with the transfer of the Common Shares;
(b) After the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer;
(c) The Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Share certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate or the associated Common Share
certificate made by anyone other than the Company or the Rights Agent) for
all purposes whatsoever, and neither the Company nor the Rights Agent shall
be affected by any notice to the contrary;
22
(d) Such holder expressly waives any right to receive any fractional
Rights and any fractional securities upon exercise or exchange of a Right,
except as otherwise provided in Section 14 hereof; and
(e) Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or other Person as a result of its inability to perform any
of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation; provided, however, that
the Company shall use its best 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 Shareholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Common Shares or any
other securities of the Company which may at any time be issuable upon the
exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder of
any Right Certificate, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in Section 24 hereof), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions of this Agreement or exchanged pursuant to the
provisions of Section 27 hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to
time, on demand of the Rights Agent, its reasonable expenses and reasonable
counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, suit, action, proceeding or
expense, incurred without gross negligence, bad faith or willful misconduct
on the part of the Rights Agent, for anything done or omitted by the Rights
Agent in connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of liability
arising therefrom, directly or indirectly.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Right Certificate
or certificate evidencing Common Shares or other securities of the Company,
instrument of assignment or transfer,
23
power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by it to
be genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business 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; and in case at
that time any of the Right Certificates shall not have been countersigned,
the Rights Agent may countersign such Right Certificates either in its prior
name or in its changed name; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates 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 Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established
24
by the Company prior to taking or suffering any action hereunder, such fact
or matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chief Executive Officer, the Chief
Financial Officer or any Vice President of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own 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 Company 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 and delivery hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Right Certificate; nor shall it be responsible for any adjustment required
under the provisions of Section 11 or Section 13 hereof (including any
adjustment which results in Rights becoming void) or responsible for the
manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after
actual notice of any such adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of stock or other securities to be issued pursuant
to this Agreement or any Right Certificate or as to whether any shares of
stock or other securities will, when issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chief Executive Officer, the Chief Financial Officer or any Vice
President of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer.
25
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof. The Rights Agent
shall not be under any duty or responsibility to insure compliance with any
applicable federal or state securities laws in connection with the issuance,
transfer or exchange of Right Certificates.
(j) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise, transfer, split up, combination or exchange, the
certificate attached to the form of assignment or form of election to
purchase, as the case may be, has either not been completed or indicates an
affirmative response to clause 1 or 2 thereof, the Rights Agent shall not
take any further action with respect to such requested exercise, transfer,
split up, combination or exchange, without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon 30 calendar days' notice in writing mailed to the Company
and to each transfer agent of the Common Shares by registered or certified
mail, and to the holders of the Right Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon 30
calendar 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
Shares by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of 30 calendar days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of
a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the registered holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of the States of
26
California or New York (or of any other state of the United States so long as
such corporation is authorized to do business as a banking institution in the
States of California or New York), in good standing, having a principal
office in the States of California or New York, which is authorized under
such laws to exercise corporate trust powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Shares, 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.
Section 22. Issuance of New Right Certificates. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price per share and the number or kind
of securities issuable upon exercise of the Rights made in accordance with
the provisions of this Agreement. In addition, in connection with the
issuance or sale by the Company of Common Shares following the Distribution
Date and prior to the Expiration Date, the Company (a) shall, with respect to
Common Shares so issued or sold pursuant to the exercise or conversion of
securities issued prior to the Distribution Date which are exercisable for,
or convertible into, Common Shares, and (b) may, in any other case, if deemed
necessary, appropriate or desirable by the Board of Directors of the Company,
issue Right Certificates representing an equivalent number of Rights as would
have been issued in respect of such Common Shares if they had been issued or
sold prior to the Distribution Date, as appropriately adjusted as provided
herein as if they had been so issued or sold; provided, however, that (i) no
such Right Certificate shall be issued if, and to the extent that, in its
good faith judgment the Board of Directors of the Company shall have
determined that the issuance of such Right Certificate could have a material
adverse tax consequence to the Company or to the Person to whom or which such
Right Certificate otherwise would be issued, and (ii) no such Right
Certificate shall be issued if, and to the extent that, appropriate
adjustment otherwise shall have been made in lieu of the issuance thereof.
Section 23. Redemption.
(a) Prior to the Expiration Date, the Board of Directors of the Company
may, at its option, redeem all but not less than all of the then-outstanding
Rights at the Redemption Price at any time prior to the Close of Business on the
later of (i) the Distribution Date and (ii) the Share Acquisition Date.
27
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, and without any further action
and without any notice, the right to exercise the Rights shall terminate and
the only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Promptly after the action of its Board of Directors
ordering the redemption of the Rights, the Company shall publicly announce
such action, and within 10 calendar days thereafter, the Company shall give
notice of such redemption to 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 Company; provided, however, that the
failure to give, or any defect in, any such notice shall not affect the
validity of the redemption of the Rights. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder
receives the notice. The notice of redemption mailed to the holders of Rights
shall state the method by which the payment of the Redemption Price will be
made. The Company may, at its option, pay the Redemption Price in cash,
Common Shares (based upon the current per share market price of the Common
Shares (determined pursuant to Section 11(d) hereof) at the time of
redemption) or any other form of consideration deemed appropriate by the
Board of Directors of the Company (based upon the fair market value of such
other consideration, determined by the Board of Directors of the Company in
good faith) or any combination thereof.
(c) At any time following the Share Acquisition Date, the Board of
Directors of the Company may relinquish the right to redeem the Rights under
this Section 23 by duly adopting a resolution to that effect. Immediately
upon adoption of such resolution, the rights of the Board of Directors of the
Company to redeem the Rights shall terminate without further action and
without any notice. Promptly after adoption of such a resolution, the Company
shall publicly announce such action; provided, however, that the failure to
give, or any defect in, any such notice shall not affect the validity of the
action of the Board of Directors of the Company.
Section 24. Notice of Certain Events.
(a) In case, after the Distribution Date, the Company shall propose
(i) to pay any dividend payable in stock of any class to the holders of
Common Shares or to make any other distribution to the holders of Common
Shares (other than a regular periodic cash dividend), (ii) to offer to the
holders of Common Shares rights, options or warrants to subscribe for or to
purchase any additional Common Shares or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of
its Common Shares (other than a reclassification involving only the
subdivision of outstanding Common Shares), (iv) to effect any consolidation
or merger into or with, or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other transfer), in one
or more transactions, of assets or earning power (including, without
limitation, securities creating any obligation on the part of the Company
and/or any of its Subsidiaries) representing more than 50% of the assets and
earning power of the Company and its Subsidiaries, taken as a whole, to any
other Person or Persons, or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of a Right Certificate, in
28
accordance with Section 25 hereof, a notice of such proposed action, which
shall specify the record date for the purposes of such stock dividend,
distribution or offering of rights, options or warrants, or the date on which
such reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares, if any such date is to be fixed,
and such notice shall be so given, in the case of any action covered by
clause (i) or (ii) above, at least 10 calendar days prior to the record date
for determining holders of the Common Shares for purposes of such action,
and, in the case of any such other action, at least 10 calendar days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of the Common Shares, whichever shall be the earlier.
(b) In case any Triggering Event shall occur, then, in any such case,
the Company shall as soon as practicable thereafter give to the Rights Agent
and each holder of a Right Certificate, in accordance with Section 25 hereof,
a notice of the occurrence of such event, which shall specify the event and
the consequences of the event to holders of Rights.
Section 25. Notices.
(a) Notices or demands authorized by this Agreement to be given or
made by the Rights Agent or by the holder of any Right Certificate to or on
the Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
North American Scientific, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxxxxxx, XX 00000
Attention: L. Xxxxxxx Xxxxxx
(b) Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the Company or by
the holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
U.S. Stock Transfer Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxx X. Xxxx
Assistant Vice President
(c) Notices or demands authorized by this Agreement to be given or made
by the Company or the Rights Agent to the holder of any Right Certificate (or,
if prior to the Distribution Date, to the holder of any certificate evidencing
Common Shares) shall be
29
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 26. Supplements and Amendments. Prior to the Distribution
Date and subject to the last sentence of this Section 26, if the Company so
directs, the Company and the Rights Agent shall supplement or amend any
provision of this Agreement without the approval of any holders of
certificates representing Common Shares. From and after the Distribution Date
and subject to the last sentence of this Section 26, if the Company so
directs, the Company and the Rights Agent shall supplement or amend this
Agreement without the approval of any holders of Right Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period hereunder, or
(iv) to supplement or amend the provisions hereunder in any manner which the
Company may deem desirable, including, without limitation, the addition of
other events requiring adjustment to the Rights under Sections 11 or 13
hereof or procedures relating to the redemption of the Rights, which
supplement or amendment shall not, in the good faith determination of the
Board of Directors of the Company, adversely affect the interests of the
holders of Right Certificates (other than an Acquiring Person or an Affiliate
or Associate of an Acquiring Person so long as the duties, liabilities and
indemnifications of the Rights Agent are not affected). Upon the delivery of
a certificate from an officer of the Company 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; provided,
however, that the failure or refusal of the Rights Agent to execute such
supplement or amendment shall not affect the validity of any supplement or
amendment adopted by the Company, any of which shall be effective in
accordance with the terms thereof. Notwithstanding anything in this Agreement
to the contrary, no supplement or amendment shall be made which decreases the
stated Redemption Price or the period of time remaining until the Final
Expiration Date or which modifies a time period relating to when the Rights
may be redeemed at such time as the Rights are not then redeemable.
Section 27. Exchange.
(a) The Board of Directors of the Company may, at its option, at any
time after the later of the Distribution Date and the first occurrence of a
Triggering Event, exchange all or part of the then-outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11(a)(ii) hereof) for Common Shares at
an exchange ratio of one Common Share per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such exchange ratio being hereinafter referred to as
the "Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or any such Subsidiary, or any entity holding Common
Shares for or pursuant to the terms of any such plan), who or which, together
with all Affiliates and Associates of such Person, becomes the Beneficial
Owner of 50% or more of the Common Shares then outstanding.
30
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to Section 27(a) hereof,
and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right with respect to such Rights
thereafter of the holder of such Rights shall be to receive that number of
Common Shares equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. Promptly after the action of the Board of
Directors of the Company ordering the exchange of any Rights pursuant to
Section 27(a) hereof, the Company shall publicly announce such action, and
within 10 calendar days thereafter shall give 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; provided, however, that the failure
to give, or any defect in, such notice shall not affect the validity of such
exchange. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of exchange shall state the method by which the exchange of the Common Shares
for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 11(a)(ii) hereof) held by
each holder of Rights.
(c) In any exchange pursuant to this Section 27, the Company, at its
option, may substitute for any Common Share exchangeable for a Right, (i)
equivalent common shares (as such term is used in Section 11(a)(iii) hereof),
(ii) cash, (iii) debt securities of the Company, (iv) other assets, or (v)
any combination of the foregoing, in any event having an aggregate value
which the Board of Directors of the Company shall have determined in good
faith to be equal to the current market value of one Common Share (determined
pursuant to Section 11(d) hereof) on the Trading Day immediately preceding
the date of exchange pursuant to this Section 27.
Section 28. Successors; Certain Covenants. All the covenants and
provisions of this Agreement by or for the benefit of the Company or the
Rights Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders
of the Right Certificates (or prior to the Distribution Date, the Common
Shares).
Section 30. Determinations and Actions by the Board of Directors, etc.
The Board of Directors of the corporation shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board, or the corporation, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the
31
provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including,
without limitation, a determination to redeem or not redeem the Rights or to
amend the Agreement, whether a Person is an Acquiring Person and whether any
proposed amendment adversely affects the interests of the holders of Right
Certificates). For all purposes of this Agreement, any calculation of the
number of Common Shares or other securities outstanding at any particular
time, including for purposes of determining the particular percentage of such
outstanding Common Shares or any other securities of which any Person is the
Beneficial Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) under the Exchange Act as in effect on the date of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to
the foregoing) which are done or made by the board in good faith, shall (x)
be final, conclusive and binding on the Corporation, the Rights Agent, the
holders of the Right Certificates and all other parties, and (y) not subject
the Board to any liability to the holders of the Right Certificates.
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
Section 32. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the internal
substantive laws of the State of Delaware and for all purposes shall be
governed by and construed in accordance with the internal substantive laws of
such State applicable to contracts to be made and performed entirely within
such State.
Section 33. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
32
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
Attest: NORTH AMERICAN SCIENTIFIC, INC.
By: /s/ Xxxx X. Xxxxxx By: /s/ L. Xxxxxxx Xxxxxx
----------------------------- ---------------------------------
Xxxx X. Xxxxxx X. Xxxxxxx Xxxxxx
Chief Financial Officer President and Chief Executive Officer
U.S. STOCK TRANSFER
Attest: CORPORATION
By: /s/ Xxxxxxx Xxxxx By: /s/ Xxxx X. Xxxx
----------------------------- ---------------------------------
Xxxxxxx Xxxxx Xxxx X. Xxxx
Senior Vice President Assistant Vice President
33
EXHIBIT A
Form of Right Certificate
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER OCTOBER 22, 2008 OR EARLIER IF REDEEMED. THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
SPECIFIED IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT) MAY BECOME NULL AND VOID.
Right Certificate
NORTH AMERICAN SCIENTIFIC, INC.
This certifies that , or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the
owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of October 12, 1998 (the "Rights Agreement"), between
North American Scientific, Inc., a Delaware corporation (the "Company"), and
U.S. Stock Transfer Corporation, a California corporation (the "Rights
Agent"), to purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to 5:00 P.M.
(Pacific time) on October 22, 2008 at the principal office or offices of the
Rights Agent designated for such purpose, one fully paid nonassessable share
of common stock, par value $.01 per share (the "Common Shares"), of the
Company, at a purchase price of $80.00 per Common Share (the "Purchase
Price"), upon presentation and surrender of this Right Certificate with the
Form of Election to Purchase and related Certificate duly executed. 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. The number of Rights evidenced
by this Right Certificate (and the number of Common Shares which may be
purchased upon exercise thereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of October 22, 1998 based
on the Common Shares as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of securities issuable upon the exercise of the Rights evidenced by
this Right Certificate are subject to adjustment upon the happening of
certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is
A-1
hereby made for a full description of the rights, limitations of rights,
obligations, duties and immunities of the Rights Agent, the Company and the
holders of the Right Certificates, which limitations of rights include the
temporary suspension of the exercisability of the Rights under the
circumstances specified in the Rights Agreement. Copies of the Rights
Agreement are on file at the above-mentioned office of the Rights Agent.
Pursuant to the Rights Agreement, from and after the later of the
Distribution Date and the first occurrence of a Flip-in Event (as such term
is defined in the Rights Agreement), (i) any Rights that are or were acquired
or beneficially owned by any Acquiring Person (or any Affiliate or Associate
of such Acquiring Person) shall be void and any holder of such Rights shall
thereafter have no right to exercise such Rights under any provision of the
Rights Agreement, (ii) no Right Certificate shall be issued pursuant to the
Rights Agreement that represents Rights beneficially owned by an Acquiring
Person or any Affiliate or Associate thereof, (iii) no Right Certificate
shall be issued at any time upon the transfer of any Rights to an Acquiring
Person or any Affiliate or Associate thereof or to any nominee of such
Acquiring Person or Affiliate or Associate thereof, and (iv) any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person
or any Affiliate or Associate thereof shall be cancelled.
This Right Certificate, with or without other Right Certificates, may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the holder to purchase a like number of Common
Shares (or other securities, as the case may be) as the Right Certificate or
Right Certificates surrendered shall have entitled such holder (or former
holder in the case of a transfer) to purchase, upon presentation and
surrender hereof at the principal office of the Rights Agent designated for
such purpose, with the Form of Assignment (if appropriate) and the related
Certificate duly executed.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a
redemption price of $0.001 per Right. The Rights Agreement may be
supplemented and amended by the Company, as provided therein.
The Company is not required to issue fractional Common Shares or other
securities issuable upon the exercise of any Right or Rights evidenced
hereby. In lieu of issuing such fractional Common Shares or other securities,
the Company may make a cash payment, 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 the Common Shares
or of any other securities of the Company which may at any time be issuable upon
the exercise of the Right or Rights represented hereby, nor shall anything
contained herein or in the Rights Agreement be construed to confer upon the
holder hereof, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to
A-2
any corporate action, or to receive notice of meetings or other actions
affecting shareholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised in
accordance with the provisions of the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of , ____.
ATTEST NORTH AMERICAN SCIENTIFIC, INC.
_____________________________ By:______________________________
Title:
Assistant Secretary
[SEAL]
Countersigned:
U.S. STOCK TRANSFER CORPORATION
By:___________________________
Authorized Signature
A-3
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED, ______________________________________________
hereby sells, assigns and transfers unto_______________________________
_______________________________________________________________________
(Please print name and address of transferee)
_______________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: , __
_______________________________
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being sold, assigned, transferred, split up, combined or exchanged by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Person (as such terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: , ____
_______________________________
Signature
A-4
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate)
To North American Scientific, Inc.
The undersigned hereby irrevocably elects to exercise ____________ Rights
represented by this Right Certificate to purchase the Common Shares or other
securities issuable upon the exercise of such Rights and requests that
certificates for such securities be issued in the name of:
Please insert social security or other identifying number:
_____________________________________________________________________________
(Please print name and address)
_____________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this 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)
_____________________________________________________________________________
Optional Election to Exercise without Payment of Cash:
With respect to the exercise of ____________ of the Rights specified above,
the undersigned hereby elects to exercise such Rights without payment of cash
and to receive a number of Common Shares or other securities having a value (as
determined pursuant to the Rights Agreement) equal to the difference between (i)
the value of the Common Shares or other securities that would have been issuable
upon the exercise thereof upon payment of the cash amount as provided in the
Rights Agreement, and (ii) the amount of such cash payment.
Dated: , ____
___________________________________
Signature
Signature Guaranteed:
A-5
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ]
are not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: , ____
________________________________
Signature
NOTICE
Signatures on the foregoing Form of Assignment and Form of Election to
Purchase and in the related Certificates 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.
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
A-6
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
COMMON SHARES
The Board of Directors of North American Scientific, Inc. (the
"Company") has declared a dividend distribution of one right (a "Right") for
each outstanding share of common stock, par value $.01 per share (the "Common
Shares"), of the Company. The distribution is payable on October 22, 1998
(the "Record Date") to the shareholders of record as of the close of business
on the Record Date. Each Right entitles the registered holder to purchase
from the Company one Common Share at a price of $80.00 (the "Purchase
Price"), subject to adjustment. The description and terms of the Rights are
set forth in a Rights Agreement, dated as of October 12, 1998 (the "Rights
Agreement"), between the Company and U.S. Stock Transfer Corporation as
Rights Agent (the "Rights Agent").
Until the earliest to occur of (i) the close of business on the tenth
calendar day (or such later date as may be specified by the Board of
Directors) following a public announcement that a person or group of
affiliated or associated persons has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding Common Shares
(an "Acquiring Person"), (ii) the close of business on the tenth calendar day
following the commencement of a tender offer or exchange offer by a person or
group of affiliated or associated persons, the consummation of which would
result in beneficial ownership by such person or group of 15% or more of the
outstanding Common Shares, or (iii) the close of business on the tenth
calendar day following the first date of public announcement of the first
occurrence of a Flip-in Event or a Flip-over Event (as such terms are
hereinafter defined) (the earliest of such dates being hereinafter called the
"Distribution Date"), the Rights will be evidenced, with respect to any of
the Common Share certificates outstanding as of the Record Date, by such
Common Share certificates.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date upon transfer or new
issuance of Common Shares will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares in respect of which Rights have been issued will also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificates. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights (the "Right
Certificates") will be mailed to holders of record of the Common Shares of
the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
No Right is exercisable at any time prior to the Distribution Date. The
Rights will expire on October 22, 2008 (the "Final Expiration Date") unless
earlier redeemed or exchanged by the Company as described below. Until a
Right is exercised, the holder thereof, as such, will have no rights as a
shareholder of the Company, including without limitation the right to vote or
to receive dividends.
B-1
The Purchase Price payable, and the number of Common Shares or other
securities issuable, upon exercise of the Rights are subject to adjustment
from time to time to prevent dilution (i) in the event of a stock dividend
on, or a subdivision, combination or reclassification of, the Common Shares,
(ii) upon the grant to holders of the Common Shares of certain rights or
warrants to subscribe for or purchase Common Shares at a price, or securities
convertible into Common Shares with a conversion price, less than the then
current market price of the Common Shares or (iii) upon the distribution to
holders of the Common Shares of evidences of indebtedness or cash (excluding
regular periodic cash dividends), assets, stock (excluding dividends payable
in Common Shares) or of subscription rights or warrants (other than those
referred to above).
In the event (a "Flip-in Event") that (i) any person or group of
affiliated or associated persons becomes the beneficial owner of 20% or more
of the outstanding Common Shares, (ii) any Acquiring Person merges into or
combines with the Company and the Company is the surviving corporation or any
Acquiring Person effects certain other transactions with the Company, as
described in the Rights Agreement, or (iii) during such time as there is an
Acquiring Person, there shall be any reclassification of securities or
recapitalization or reorganization of the Company which has the effect of
increasing by more than 1% the proportionate share of the outstanding shares
of any class of equity securities of the Company or any of its subsidiaries
beneficially owned by the Acquiring Person, proper provision shall be made so
that each holder of a Right, other than Rights that are or were owned
beneficially by the Acquiring Person (which, from and after the later of the
Distribution Date and the date of the earliest of any such events, will be
void), will thereafter have the right to receive, upon exercise thereof at
the then current exercise price of the Right, that number of Common Shares
(or, under certain circumstances, an economically equivalent security or
securities of the Company) having a market value of two times the exercise
price of the Right.
To illustrate the operation of such an adjustment, at a Purchase Price
of $80.00, assuming the current market price (as determined pursuant to the
provisions of the Rights Agreement) per Common Share were $20.00, each Right
not owned beneficially by an Acquiring Person at or after the time of such an
occurrence would entitle its holder to purchase (after the Distribution Date)
from the Company 8 Common Shares (having a market value of $160.00) for
$80.00.
In the event (a "Flip-over Event") that, following the first date of
public announcement that a person has become an Acquiring Person, (i) the
Company merges with or into any person and the Company is not the surviving
corporation, (ii) any person merges with or into the Company and the Company
is the surviving corporation, but its Common Shares are changed or exchanged,
or (iii) 50% or more of the Company's assets or earning power, including
without limitation securities creating obligations of the Company, are sold,
proper provision shall be made so that each holder of a Right will thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock (or, under
certain circumstances, an economically equivalent security or securities) of
such other person which at the time of such transaction would have a market
value of two times the exercise price of the Right.
B-2
At any time after the later of the Distribution Date and the first
occurrence of a Flip-in Event or Flip-over Event and prior to the acquisition
by any person or group of affiliated or associated persons of 50% or more of
the outstanding Common Shares, the Board of Directors of the Company may
exchange the Rights (other than any Rights which have become void), in whole
or in part, at an exchange ratio of one Common Share per Right (subject to
adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment in the Purchase
Price of at least 1%. The Company is not required to issue fractional Common
Shares or other securities issuable upon the exercise of Rights. In lieu of
issuing such securities, the Company may make a cash payment, as provided in
the Rights Agreement.
The Company may redeem the Rights in whole, but not in part, at a price
of $0.001 per Right (the "Redemption Price"), at any time prior to the close
of business on the later of (i) the Distribution Date and (ii) the first date
of public announcement that a person has become an Acquiring Person.
Immediately upon any 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.
The Rights Agreement may be amended by the Company without the approval
of any holders of Right Certificates, including amendments which add other
events requiring adjustment to the purchase price payable and the number of
Common Shares or other securities issuable upon the exercise of the Rights or
which modify procedures relating to the redemption of the Rights, provided
that no amendment may be made which decreases the stated Redemption Price or
the period of time remaining until the Final Expiration Date or which
modifies a time period relating to when the Rights may be redeemed at such
time as the Rights are not then redeemable.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company.
This summary description of the Rights is as of October 12, 1998, does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is incorporated herein by this reference.
B-3
