EXHIBIT 1
POWER INTEGRATIONS, INC.
AND
BANKBOSTON, N.A.
Rights Agent
RIGHTS AGREEMENT
Dated as of February 24, 1999
TABLE OF CONTENTS
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Page
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1. Certain Definitions........................................................... 1
2. Appointment of Rights Agent................................................... 5
3. Issuance of Right Certificates................................................ 6
4. Form of Right Certificates.................................................... 7
5. Countersignature and Registration............................................. 8
6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates....................... 9
7. Exercise of Rights; Purchase Price; Expiration Date of Rights................. 10
8. Cancellation and Destruction of Right Certificates............................ 11
9. Reservation and Availability of Shares of Preferred Stock..................... 11
10. Preferred Stock Record Date................................................... 12
11. Adjustments to Number and Kind of Shares, Number of Rights or Purchase Price.. 13
12. Certification of Adjustments.................................................. 22
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.......... 22
14. Fractional Rights and Fractional Shares....................................... 26
15. Rights of Action.............................................................. 27
16. Agreement of Right Holders.................................................... 27
17. Right Certificate Holder Not Deemed a Stockholder............................. 28
18. Concerning the Rights Agent................................................... 28
19. Merger or Consolidation or Changed Name of Rights Agent....................... 29
20. Duties of Rights Agent........................................................ 29
21. Change of Rights Agent........................................................ 32
22. Issuance of New Right Certificates............................................ 32
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TABLE OF CONTENTS
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(continued)
Page
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23. Redemption.................................................................... 33
24. Exchange of Rights for Common Stock........................................... 34
25. Notice of Proposed Actions.................................................... 35
26. Notices....................................................................... 36
27. Supplements and Amendments.................................................... 37
28. Successors.................................................................... 37
29. Benefits of this Rights Agreement............................................. 37
30. Governing Law................................................................. 37
31. Counterparts.................................................................. 37
32. Descriptive Headings.......................................................... 38
33. Severability.................................................................. 38
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RIGHTS AGREEMENT
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This Rights Agreement ("Rights Agreement"), is dated as of February 24,
1999, between Power Integrations, Inc., a Delaware corporation (the "Company"),
and BankBoston, N.A., a national banking association (the "Rights Agent").
W I T N E S S E T H:
- - - - - - - - - --
WHEREAS, the Board of Directors of the Company on February 24, 1999 (i)
authorized the issuance and declared a dividend of one right ("Right") for each
share of the common stock of the Company ("Common Stock") outstanding as of the
Close of Business (as such term is hereinafter defined) on March 12, 1999 (the
"Record Date"), each Right representing the right to purchase one one-thousandth
of a share of Series A Preferred Stock of the Company having the rights, powers
and preferences set forth in the form of Certificate of Designation attached
hereto as Exhibit A upon the terms and subject to the conditions hereinafter set
forth, and (ii) further authorized the issuance of one Right with respect to
each share of Common Stock of the Company that shall become outstanding between
March 12, 1999, and the Distribution Date (as such term is hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties agree as follows:
1. Certain Definitions. For purposes of this Agreement the following
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terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term
is hereinafter defined) and Associates (as such term is hereinafter defined)
of such Person, without the prior approval of the Board of Directors, shall be
the Beneficial Owner (as such term is hereinafter defined) of fifteen percent
(15%) or more of the outstanding Common Stock; provided, however, that in no
event shall a Person who or which, together with all Affiliates and Associates
of such Person, is the Beneficial Owner of less than 15% of the Company's
outstanding shares of Common Stock, become an Acquiring Person solely as a
result of a reduction of the number of shares of outstanding Common Stock,
including repurchases of outstanding shares of Common Stock by the Company,
which reduction increases the percentage of outstanding shares of Common Stock
beneficially owned by such Person, provided, however, that if a Person shall
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become the Beneficial Owner of 15% or more of the Company's outstanding shares
of Common Stock then outstanding solely by reason of a reduction of the number
of shares of outstanding Common Stock, and shall thereafter become the
Beneficial Owner of any additional shares of Common Stock of the Company, then
such Person shall be deemed to be an "Acquiring Person" unless upon the
consummation of the acquisition of such additional shares of Common Stock such
person does not own fifteen percent (15%) or more of the shares of Common
Stock then
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outstanding, and provided further, that an Acquiring Person shall not include
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an Exempt Person (as such term is hereinafter defined). Notwithstanding the
foregoing, if the Board of Directors of the Company determines in good faith
that a Person who would otherwise be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph (a), has become such
inadvertently (including, without limitation, because (i) such Person was
unaware that it beneficially owned a percentage of Common Stock that would
otherwise cause such Person to be an "Acquiring Person" or (ii) such Person
was aware of the extent of its Beneficial Ownership but had no actual
knowledge of the consequences of such Beneficial Ownership under this
Agreement) and without any intention of changing or influencing control of the
Company, and such Person divests as promptly as practicable a sufficient
number of shares of Common Stock so that such Person would no longer be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be or to have become
an "Acquiring Person" for any purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended ("Exchange
Act"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of any
securities
(i) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has (A) the right to acquire (whether
such right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities), whether or not in
writing, or upon the exercise of conversion rights, exchange rights, rights
(other than the Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," securities tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange; or (B) the
right to vote or dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange
Act, or any comparable or successor rule), including pursuant to any
agreement, arrangement or understanding (whether or not in writing); provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own", any securities if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable proxy
or consent given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations of
the Exchange Act and (2) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor report);
or
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(iii) which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such Person's Affiliates
or Associates has any agreement, arrangement or understanding (whether or not
in writing) for the purpose of acquiring, holding, voting except as described
in clause (B) of subparagraph (ii) of this Section 1(c) or disposing of
any securities of the Company; provided, however, that no Person who is an
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officer, director or employee of an Exempt Person shall be deemed, solely by
reason of such Person's status or authority as such, to be the "Beneficial
Owner" of, to have "Beneficial Ownership" of or to "beneficially own" any
securities that are "beneficially owned" (as defined in this Section 1(c)),
including, without limitation, in a fiduciary capacity, by an Exempt Person or
by any other such officer, director or employee of an Exempt Person.
For all purposes of this Agreement, any calculation of the number of shares
of Common Stock outstanding at any particular time, including any calculation
for purposes of determining the particular percentage of such outstanding shares
of Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act as in effect on the date hereof.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in The Commonwealth of
Massachusetts are authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M.,
Eastern time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Eastern time, on the next succeeding
Business Day.
(f) "Common Stock" when used with reference to the Company shall
mean the common stock of the Company. "Common Stock" when used with reference
to any Person other than the Company which shall be organized in corporate
form shall mean the capital stock or other equity security with the greatest
per share voting power of such Person or, if such Person is a Subsidiary of or
is controlled by another Person, the Person which ultimately controls such
first-mentioned Person. "Common Stock" when used with reference to any Person
other than the Company which shall not be organized in corporate form shall
mean units of beneficial interest which shall represent the right to
participate in profits, losses, deductions and credits of such Person and
which shall be entitled to exercise the greatest voting power per unit of such
Person.
(g) "Common Stock Equivalents" shall have the meaning set forth
in Section 11(a)(c) hereof.
(h) "Current Market Price" shall have the meaning set forth in
Section 11(d) hereof.
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(i) "Current Value" shall have the meaning set forth in Section
11(a)(c) hereof.
(j) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(k) "Equivalent Preferred Stock" shall have the meaning set
forth in Section 11(b) hereof.
(l) "Exchange Act" shall have the meaning set forth in Section
1(b) hereof.
(m) "Exempt Person" shall mean the Company or any Subsidiary of
the Company, including, without limitation, in its fiduciary capacity, any
employee benefit plan or employee stock plan of the Company or of any
Subsidiary of the Company, or any Person, organized, appointed, established or
holding Common Stock for or pursuant to the terms of any such plan or any
Person funding other employee benefits for employees of the Company or any
Subsidiary of the Company.
(n) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(o) "Flip-In Event" shall mean any event described in Section
11(a)(ii)(A), 11(a)(ii)(B) or 11(a)(ii)(C) hereof.
(p) "Flip-In Exercise Payment" shall have the meaning set forth
in Section 11(a)(ii) hereof.
(q) "Flip-In Trigger Date" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(r) "Flip-Over Event" shall mean any event described in clause
(x), (y) or (z) of Section 13(a) hereof.
(s) "Flip-Over Exercise Payment" shall have the meaning set
forth in Section 13(a) hereof.
(t) "NASDAQ" shall have the meaning set forth in Section 9(b)
hereof.
(u) "NYSE" shall have the meaning set forth in Section 9(b)
hereof.
(v) "Person" shall mean any individual, firm, corporation,
partnership, trust or other entity.
(w) "Preferred Stock" shall mean the Series A Preferred Stock,
$.001 par value, of the Company having the rights, powers and preferences set
forth in Exhibit A hereto,
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and, to the extent that there is not a sufficient number of shares of Series A
Preferred Stock authorized to permit the full exercise of the Rights, any
other series of Preferred Stock, $.001 par value, of the Company designated
for such purpose containing terms substantially similar to the terms of the
Series A Preferred Stock.
(x) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(y) "Purchase Price" shall have the meaning set forth in Section
4(a) hereof.
(z) "Record Date" shall have the meaning set forth in the
WHEREAS clause at the beginning of the Agreement.
(aa) "Redemption Date" shall have the meaning set forth in
Section 7(a) hereof.
(bb) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(cc) "Right Certificate" shall have the meaning set forth in
Section 3(a) hereof.
(dd) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(ee) "Stock Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person
has become such or such earlier date as a majority of the directors shall
become aware of the existence of an Acquiring Person.
(ff) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(gg) "Subsidiary" of a Person shall mean any corporation or other
entity of which securities or other ownership interests having ordinary voting
power sufficient to elect a majority of the board of directors or other
persons performing similar functions are beneficially owned, directly or
indirectly, by such Person and any corporation or other entity that is
otherwise controlled by such Person.
(hh) "Summary of Rights" shall have the meaning set forth in
Section 3(b) hereof.
(ii) "Trading Day" shall have the meaning set forth in Section
11(d) hereof.
(jj) "Triggering Event" shall mean any event described in Section
11(a)(ii)(A), 11(a)(ii)(B) or 11(a)(ii)(C) or Section 13 hereof.
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(kk) "Voting Power" shall mean the voting power of all securities
of the Company then outstanding and generally entitled to vote for the
election of directors of the Company.
Any determination required by the definitions contained in this Section 1
shall be made by the Board of Directors of the Company in its good faith
judgment, which determination shall be binding on the Rights Agent and the
holders of the Rights.
2. Appointment of Rights Agent. The Company hereby appoints the
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Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable, upon ten (10) days' prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and shall in no event
be liable for, the acts or omissions of any such co-Rights Agent. In the event
the Company appoints one or more Co-Rights Agents, the respective duties of
the Rights Agents and any Co-Rights Agents shall be as the Company shall
determine.
3. Issuance of Right Certificates.
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(a) Until the earlier of (i) the tenth day after the Stock
Acquisition Date (or, if the tenth day after the Stock Acquisition Date occurs
before the Record Date, the Close of Business on the Record Date) or (ii) the
tenth business day (or such later date as may be determined by action of the
Board of Directors prior to such time as any Person becomes an Acquiring
Person) after the date of the commencement by any Person (other than an Exempt
Person) of, or of the first public announcement of the intent of any Person
(other than an Exempt Person) to commence (which intention to commence remains
in effect for five business days after such announcement), a tender or
exchange offer upon the successful consummation of which such Person, together
with its Affiliates and Associates, would be the Beneficial Owner of 15% or
more of the outstanding Common Stock (irrespective of whether any shares are
actually purchased pursuant to any such offer) (including any such date which
is after the date of this Agreement and prior to the issuance of the Rights;
the earlier of such dates being herein referred to as the "Distribution
Date"), (x) the Rights will be evidenced (subject to the provisions of Section
3(c) hereof) by the certificates for the Common Stock registered in the
names of the holders of the Common Stock and not by separate Right
Certificates, and (y) each Right will be transferable only in connection with
the transfer of a share (subject to adjustment as hereinafter provided) of
Common Stock. As soon as practicable after the Distribution Date, the Rights
Agent will mail, at the expense of the Company, by first-class, postage
prepaid mail, to each record holder of the Common Stock as of the Close of
Business on the Distribution Date, as shown by the records of the Company, to
the address of such holder shown on such records, a Right certificate in
substantially the form of Exhibit B hereto ("Right Certificate") evidencing
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one Right for each share of Common Stock so held. As of and after the
Distribution Date the Rights will be evidenced solely by such Right
Certificates.
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(b) On the Record Date, or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase Preferred
Stock, substantially in the form attached hereto as Exhibit C ("Summary of
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Rights"), by first-class, postage prepaid mail, to each record holder of
Common Stock as of the Close of Business on the Record Date, at the address of
such holder shown on the records of the Company.
(c) Rights shall be issued in respect of all shares of Common
Stock that are issued (either as an original issuance or from the Company's
treasury) after the Record Date prior to the earlier of the Distribution Date
or the Expiration Date. With respect to certificates representing such shares
of Common Stock, the Rights will be evidenced by such certificates for Common
Stock registered in the names of the holders thereof together with the Summary
of Rights. Until the Distribution Date (or, if earlier, the Expiration Date),
the surrender for transfer of any certificate for Common Stock outstanding on
the Record Date (with or without a copy of the Summary of Rights attached
thereto), shall also constitute the surrender for transfer of the Rights
associated with the Common Stock represented thereby.
(d) Certificates issued for Common Stock (including, without
limitation, certificates issued upon transfer or exchange of Common Stock)
after the Record Date but prior to the earlier of the Distribution Date or the
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between Power Integrations,
Inc. and BankBoston, N.A., as Rights Agent, dated as of February 24, 1999,
as the same may be amended from time to time (the "Rights Agreement"), the
terms of which are incorporated herein by reference and a copy of which is
on file at the principal executive office of Power Integrations, Inc. Under
certain circumstances, as set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and will no longer be evidenced
by this certificate. Power Integrations, Inc. will mail to the holder of
this certificate a copy of the Rights Agreement without charge after
receipt by it of a written request therefor. Under certain circumstances
as provided in the Rights Agreement, Rights issued to, beneficially owned
by or transferred to any person who is or becomes an Acquiring Person (as
defined in the Rights Agreement) or an Associate or Affiliate (as defined
in the Rights Agreement) thereof and certain transferees thereof will be
null and void and will no longer be transferable.
With respect to such certificates containing the foregoing legend, the Rights
associated with the Common Stock represented by such certificates shall, until
the Distribution Date, be evidenced by such certificates alone, and registered
holders of Common Stock shall also be the registered holders of the associated
Rights, and the surrender for transfer of any such certificate shall also
constitute the surrender for transfer of the Rights associated with the Common
Stock represented thereby. In the event that the Company purchases or acquires
any shares of Common Stock after the Record Date but prior to the earlier of the
Distribution Date, the Redemption Date or the
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Expiration Date, any Rights associated with such shares of Common Stock shall
be deemed canceled and retired so that the Company shall not be entitled to
exercise any Rights associated with the shares of Common Stock no longer
outstanding.
Notwithstanding this paragraph (d), the omission of a legend shall not
affect the enforceability of any part of this Agreement or the rights of any
holder of the Rights.
4. Form of Right Certificates.
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(a) The Right Certificates (and the forms of election to
purchase shares and of assignment to be printed on the reverse thereof), when,
as and if issued, shall be substantially in the form set forth in Exhibit B
---------
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Rights
Agreement, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Sections 11, 13 and 22 hereof, the Right
Certificates evidencing the Rights issued on the Record Date whenever such
certificates are issued, shall be dated as of the Record Date and the Right
Certificates evidencing Rights to holders of record of Common Stock issued
after the Record Date shall be dated as of the Record Date but shall also be
dated to reflect the date of issuance of such Right Certificate. On their
face, Right Certificates shall entitle the holders thereof to purchase, for
each Right, one one-thousandth of a share of Preferred Stock, or other
securities or property as provided herein, as the same may from time to time
be adjusted as provided herein, at the price per one one-thousandth of a share
of Preferred Stock of $150.00, as the same may from time to time be adjusted
as provided herein (the "Purchase Price").
(b) Notwithstanding any other provision of this Rights
Agreement, any Right Certificate that represents Rights that are or were at
any time on or after the earlier of the Stock Acquisition Date or the
Distribution Date beneficially owned by an Acquiring Person or any Affiliate
or Associate thereof (or any transferee of such Rights) shall have impressed
on, printed on, written on or otherwise affixed to it (if the Company or the
Rights Agent has knowledge that such Person is an Acquiring Person or an
Associate or Affiliate thereof or transferee of such Persons or a nominee of
any of the foregoing) the following legend:
The beneficial owner of the Rights represented by this Right Certificate is
an Acquiring Person or an Affiliate or Associate (as defined in the Rights
Agreement) of an Acquiring Person or a subsequent holder of such Right
Certificates beneficially owned by such Persons. Accordingly, this Right
Certificate and the Rights represented hereby are null and void and will no
longer be transferable as provided in the Rights Agreement.
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The provisions of Section 11(a)(ii) and Section 24 of this Rights Agreement
shall be operative whether or not the foregoing legend is contained on any such
Right Certificates.
5. Countersignature and Registration.
---------------------------------
(a) The Right Certificates shall be executed on behalf of the
Company by its Chief Executive Officer, its President or any Vice President,
either manually or by facsimile signature, and have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile
signature. The Right Certificates shall be countersigned, either manually or
by facsimile, by the Rights Agent and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company who shall have
signed any of the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery
by the Company, such Right Certificates, nevertheless, may be countersigned by
the Rights Agent, issued and delivered with the same force and effect as
though the person who signed such Right Certificates had not ceased to be such
officer of the Company; and any Right Certificate may be signed on behalf of
the Company by any person who, at the actual date of the execution of such
Right Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement
any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at one of its offices designated for such purposes,
records for registration and transfer of the Right Certificates issued
hereunder. Such records shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights evidenced on its face
by each of the Right Certificates, the date of each of the Right Certificates
and the certificate numbers for each of the Right Certificates.
6. Transfer, Split Up, Combination and Exchange of Right Certificates;
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Mutilated, Destroyed, Lost or Stolen Right Certificates.
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(a) Subject to the provisions of Sections 7(e), 11(a)(ii)
and 14 hereof, at any time after the Close of Business on the Distribution
Date and at or prior to the Close of Business on the Expiration Date, any
Right Certificate or Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or that
have been exchanged pursuant to Section 14 hereof) may be (i) transferred or
(ii) split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of
shares of Preferred Stock or other securities as the Right Certificate or
Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer any Right Certificate shall surrender
the Right Certificate at the office of the Rights Agent designated for such
purposes with the form of assignment on the reverse side thereof duly endorsed
(or enclose with such Right Certificate a written instrument of transfer in
form satisfactory to the Company and the Rights Agent), duly executed by the
registered holder
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thereof or his attorney duly authorized in writing, and with such signature
guaranteed by a member of a securities approved medallion program. Any
registered holder desiring to split up, combine or exchange any Right
Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be split
up, combined or exchanged at the principal office of the Rights Agent.
Thereupon the Rights Agent shall, subject to Sections 4(b), 7(e), 11 and
14 hereof, countersign (by manual or facsimile signature) and deliver to the
person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient
to cover any tax or governmental charge that may be imposed in connection with
any transfer, split up, combination or exchange of Right Certificates.
(b) Subject to the provisions of Section 11(a)(ii) hereof,
upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, if requested by the Company,
reimbursement to the Company of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Company will execute and deliver a new Right
Certificate of like tenor to the Rights Agent for delivery to the registered
owner in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
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(a) Subject to Section 11(a)(ii) hereof, the Rights shall
become exercisable, and may be exercised to purchase Preferred Stock, except
as otherwise provided herein, in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed (with such
signature duly guaranteed), to the Rights Agent at BankBoston N.A., 000 Xxxxxx
Xxxxxx, Xxxxxx, XX 00000, together with payment of the Purchase Price with
respect to each Right exercised, subject to adjustment as hereinafter
provided, at or prior to the Close of Business on the earlier of (i) February
23, 2009 (the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (such date being herein referred to
as the "Redemption Date") or (iii) the time at which all such Rights are
exchanged as provided in Section 24 hereof (the earliest of (i), (ii) and
(iii) being herein referred to as the "Expiration Date").
(b) The Purchase Price and the number of shares of Preferred
Stock or other securities or consideration to be acquired upon exercise of a
Right shall be subject to adjustment from time to time as provided in Sections
11 and 13 hereof. The Purchase Price shall be payable in lawful money of the
United States of America, in accordance with Section 7(c) hereof.
(c) Except as provided in Section 11(a)(ii) hereof, upon
receipt of a Right Certificate with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price (as such amount may be
reduced pursuant to Section 11(a)(iii) hereof) or so much
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thereof as is necessary for the shares to be purchased and an amount equal to
any applicable transfer tax, by cash, certified check or official bank check
payable to the order of the Company or the Rights Agent, the Rights Agent
shall, subject to Section 20(k), thereupon promptly (i) requisition from any
transfer agent of the Preferred Stock (or make available if the Rights Agent
is the transfer agent) certificates for the number of shares of Preferred
Stock so elected to be purchased and the Company will comply and hereby
authorizes and directs such transfer agent to comply with all such requests,
(ii) requisition from the Company the amount of cash to be paid in lieu of
issuance of fractional shares in accordance with Section 14(b) hereof, and
(iii) promptly after receipt of such Preferred Stock certificates cause the
same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by
such holder, and, when appropriate, after receipt promptly deliver such cash
to or upon the order of the registered holder of such Right Certificate. In
the event of a purchase of securities, other than Preferred Stock, pursuant to
Section 11(a) or Section 13 hereof, the Rights Agent shall promptly take the
appropriate actions corresponding to the foregoing clauses (i) through (iii).
In the event that the Company is obligated to issue other securities of the
Company, pay cash and/or distribute other property pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate.
(d) Except as otherwise provided herein, in case the registered
holder of any Right Certificate shall exercise less than all the Rights
evidenced thereby, a new Right Certificate evidencing Rights equivalent to the
Rights remaining unexercised shall be issued by the Rights Agent to the
registered holder of such Right Certificate or to his duly authorized assigns,
subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the
form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall reasonably request.
8. Cancellation and Destruction of Right Certificates. All Right
--------------------------------------------------
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights
11
Agent shall deliver all canceled Right Certificates to the Company, or shall,
at the written request of the Company, destroy such canceled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
9. Reservation and Availability of Shares of Preferred Stock.
---------------------------------------------------------
(a) The Company covenants and agrees that at all times it will
cause to be reserved and kept available, out of and to the extent of its
authorized and unissued shares of Preferred Stock not reserved for another
purpose (and, following the occurrence of a Triggering Event, other
securities) or held in its treasury, the number of shares of Preferred Stock
(and, following the occurrence of a Triggering Event, other securities) that,
as provided in this Agreement, including Section 11(a)(iii) hereof, will be
sufficient to permit the exercise in full of all outstanding Rights, provided,
--------
however, that the Company shall not be required to reserve and keep available
shares of Preferred Stock or other securities sufficient to permit the
exercise in full of all outstanding Rights pursuant to the adjustments set
forth in Section 11(a)(ii), Section 11(a)(iii) or Section 13 hereof unless,
and only to the extent that, the Rights become exercisable pursuant to such
adjustments.
(b) The Company shall (i) use its best efforts to cause, from
and after such time as the Rights become exercisable, the Rights and all
shares of Preferred Stock (and following the occurrence of a Triggering Event,
other securities) issued or reserved for issuance upon exercise thereof to be
reported by the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ"), or such other system then in use, and if the
Preferred Stock shall become listed on any national securities exchange, to
cause, from and after such time as the Rights become exercisable, the Rights
and all shares of Preferred Stock (and, following the occurrence of a
Triggering Event, other securities) issued or reserved for issuance upon
exercise thereof to be listed on such exchange upon official notice of
issuance upon such exercise and (ii) if then necessary, to permit the offer
and issuance of such shares of Preferred Stock (and, following the occurrence
of a Triggering Event, other securities), register and qualify such share of
Preferred Stock (and, following the occurrence of a Triggering Event, other
securities) under the Securities Act and any applicable state securities or
"blue sky" laws (to the extent exemptions therefrom are not available), cause
such registration statement and qualifications to become effective as soon as
possible after such filing and keep such registration and qualifications
effective until the Expiration Date of the Rights. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days, the
exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained and
12
until a registration statement under the Securities Act (if required) shall
have been declared effective.
(c) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock (and
following the occurrence of a Triggering Event, other securities) delivered
upon exercise of Rights shall, at the time of delivery of the certificates for
such shares (subject to payment of the Purchase Price in respect thereof), be
duly and validly authorized and issued and fully paid and nonassessable shares
in accordance with applicable law.
(d) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any shares of Preferred Stock (or other securities, as the case may be) upon
the exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Right Certificates to a Person other than, or the issuance or delivery of
certificates for Preferred Stock (or other securities, as the case may be)
upon exercise of Rights in a name other than that of, the registered holder of
the Right Certificate, and the Company shall not be required to issue or
deliver a Right Certificate or certificate for Preferred Stock (or other
securities, as the case may be) to a person other than such registered holder
until any such tax shall have been paid (any such tax being payable by the
holder of such Right Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.
10. Preferred Stock Record Date. Each Person in whose name any
---------------------------
certificate for shares of Preferred Stock (or other securities, as the case
may be) is issued upon the exercise of Rights shall for all purposes be deemed
to have become the holder of record of the shares of Preferred Stock (or other
securities, as the case may be) represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate, as such, shall not be
entitled to any rights of a stockholder of the Company with respect to the
shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or
to exercise any preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.
11. Adjustments to Number and Kind of Shares, Number of Rights or
-------------------------------------------------------------
Purchase Price. The number and kind of shares subject to purchase upon the
--------------
exercise of each Right, the number of Rights outstanding and the Purchase
Price are subject to adjustment from time to time as provided in this Section
11.
(a) (i) In the event the Company shall at any time after the
date of this Rights Agreement (A) declare or pay any dividend on Preferred
Stock payable in shares of Preferred Stock, (B) subdivide or split the
outstanding shares of Preferred Stock into a greater
13
number of shares, (C) combine or consolidate the outstanding shares of
Preferred Stock into a smaller number of shares or effect a reverse split of
the outstanding shares of Preferred Stock, or (D) issue any shares of its
capital stock in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of
the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of
shares of Preferred Stock or capital stock, as the case may be, issuable on
such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares of
capital stock or other securities which, if such Right had been exercised
immediately prior to such date, the holder thereof would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii).
(ii) Subject to Section 24, in the event
(A) any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after the date of this
Agreement, directly or indirectly, (1) shall consolidate with or merge with
and into the Company or any of its Subsidiaries or otherwise combine with the
Company or any of its Subsidiaries and the Company or such Subsidiary shall be
the continuing or surviving corporation of such consolidation, merger or
combination and the Common Stock of the Company shall remain outstanding and
no shares thereof shall be changed into or exchanged for stock or other
securities of the Company or of any other Person or cash or any other
property, or (2) shall, in one or more transactions, other than in connection
with the exercise of a Right or Rights and other than in connection with the
exercise or conversion of securities exercisable for or convertible into
securities of the Company or of any Subsidiary of the Company, transfer any
assets or property to the Company or any of its Subsidiaries in exchange (in
whole or in part) for any shares of any class of capital stock of the Company
or any of its Subsidiaries or any securities exercisable for or convertible
into shares of any class of capital stock of the Company or any of its
Subsidiaries, or otherwise obtain from the Company or any of its Subsidiaries,
with or without consideration, any additional shares of any class of capital
stock of the Company or any of its Subsidiaries or any securities exercisable
for or convertible into shares of any class of capital stock of the Company or
any of its Subsidiaries (other than as part of a pro rata offer or
distribution by the Company or such Subsidiary to all holders of such shares),
or (3) shall sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise acquire (other than as a pro rata dividend) or dispose, to, from or
with, as the case may be, in one transaction or a series of transactions, the
Company or any of its Subsidiaries, assets (including securities) on terms and
conditions less favorable to the Company or such Subsidiary than the Company
or such Subsidiary would be able to obtain in arm's-length negotiation with an
14
unaffiliated third party, or (4) shall receive any compensation from the
Company or any of its Subsidiaries for services other than compensation for
employment as a regular or part-time employee, or fees for serving as a
director, at rates in accordance with the Company's (or its Subsidiary's) past
practices, or (5) shall receive the benefit, directly or indirectly (except
proportionately as a stockholder), of any loans, advances, guarantees, pledges
or other financial assistance or any tax credits or tax advantage provided by
the Company or any of its Subsidiaries, or (6) shall engage in any transaction
with the Company (or any of its Subsidiaries) involving the sale, license,
transfer or grant of any right in, or disclosure of, any patents, copyrights,
trade secrets, trademarks, know-how or any other intellectual or industrial
property rights recognized under any country's intellectual property laws
which the Company (including its Subsidiaries) owns or has the right to use on
terms and conditions not approved by the Board; or
(B) any Person, alone or together with its
Affiliates and Associates, shall become an Acquiring Person; or
(C) during such time as there is an Acquiring
Person, there shall be any reclassification of securities (including any
reverse stock split), or any recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or any other
transaction or series of transactions involving the Company or any of its
Subsidiaries (whether or not with or into or otherwise involving an Acquiring
Person or any Affiliate or Associate of such Acquiring Person) which has the
effect, directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity
securities of the Company or any of its Subsidiaries, or securities
exercisable for or convertible into equity securities of the Company or any of
its Subsidiaries, which is directly or indirectly beneficially owned by any
Acquiring Person or any Affiliate or Associate of any Acquiring Person (any of
(A), (B) or (C) being referred to herein as a "Flip-In Event"), then upon the
first occurrence of such Flip-In Event (A) the Purchase Price shall be
adjusted to be the Purchase Price in effect immediately prior to the Flip-In
Event multiplied by the number of one one-thousandths of a share of Preferred
Stock for which a Right was exercisable immediately prior to such Flip-In
Event, whether or not such Right was then exercisable, and (B) each holder of
a Right, except as otherwise provided in this Section 11(a)(ii) and Section
11(a)(iii) hereof, shall thereafter have the right to receive, upon exercise
thereof at a price equal to the Purchase Price (as so adjusted), in accordance
with the terms of this Agreement and in lieu of shares of Preferred Stock,
such number of shares of Common Stock as shall equal the result obtained by
dividing the Purchase Price (as so adjusted) by 50% of the Current Market
Price per share of the Common Stock (determined pursuant to Section 11(d)
hereof) on the date of such Flip-In Event; provided, however, that the
-------- -------
Purchase Price (as so adjusted) and the number of shares of Common Stock so
receivable upon the exercise of a Right shall, following the Flip-In Event, be
subject to further adjustment as appropriate in accordance with Section 11(f)
hereof. Notwithstanding anything in this Agreement to the contrary, however,
from and after the Flip-In Event, any Rights that are beneficially owned by
(x) any Acquiring Person (or any Affiliate or Associate of any
15
Acquiring Person), (y) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who becomes a transferee after the Flip-In Event or
(z) a transferee of any Acquiring Person (or any such Affiliate or Associate)
who became a transferee prior to or concurrently with the Flip-In Event
pursuant to either (I) a transfer from the Acquiring Person to holders of its
equity securities or to any Person with whom it has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (II) a
transfer which the Board of Directors has determined is part of a plan,
arrangement or understanding which has the purpose or effect of avoiding the
provisions of this paragraph, and subsequent transferees of such Persons,
shall be void without any further action and any holder of such Rights shall
thereafter have no rights whatsoever with respect to such Rights under any
provision of this Agreement. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 11(a)(ii) are complied with,
but shall have no liability to any holder of Right Certificates or other
Person as a result of its failure to make any determinations with respect to
an Acquiring Person or its Affiliates, Associates or transferees hereunder.
From and after the Flip-In Event, no Right Certificate shall be issued
pursuant to Section 3 or Section 6 hereof that represents Rights that are or
have become void pursuant to the provisions of this paragraph, and any Right
Certificate delivered to the Rights Agent that represents Rights that are or
have become void pursuant to the provisions of this paragraph shall be
canceled.
(iii) The Company may at its option substitute for a share
of Common Stock issuable upon the exercise of Rights in accordance with the
foregoing subparagraph (ii) such number or fractions of shares of Preferred
Stock having an aggregate current market value equal to the Current Market
Price of a share of Common Stock. In the event that there shall not be
sufficient shares of Common Stock issued but not outstanding or authorized but
unissued to permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii), the Board of Directors shall, to the extent
permitted by applicable law and any material agreements then in effect to
which the Company is a party (A) determine the excess (such excess, the
"Spread") of (1) the value of the shares of Common Stock issuable upon the
exercise of a Right in accordance with the foregoing subparagraph (ii) (the
"Current Value") over (2) the Purchase Price (as adjusted in accordance with
the foregoing subparagraph (ii)), and (B) with respect to each Right (other
than Rights which have become void pursuant to the foregoing subparagraph
(ii)), make adequate provision to substitute for the shares of Common Stock
issuable in accordance with the foregoing paragraph (ii) upon exercise of
the Right and payment of the Purchase Price (as adjusted in accordance
therewith), (1) cash, (2) a reduction in such Purchase Price, (3) shares of
Preferred Stock or other equity securities of the Company (including, without
limitation, shares or fractions of shares of preferred stock which, by virtue
of having dividend, voting and liquidation rights substantially comparable to
those of the shares of Common Stock, are deemed in good faith by the Board of
Directors to have substantially the same value as the shares of Common Stock
(such shares of Preferred Stock and shares or fractions of shares of preferred
stock are hereinafter referred to as "Common Stock Equivalents," (4) debt
securities of the Company, (5) other assets, or (6) any combination of the
foregoing, having a value which, when added to the value of the shares of
Common Stock actually issued
16
upon exercise of such Right, shall have an aggregate value equal to the
Current Value (less the amount of any reduction in such Purchase Price), where
such aggregate value has been determined by the Board of Directors upon the
advice of a nationally recognized investment banking firm selected in good
faith by the Board of Directors; provided, however, that if the Company shall
not make adequate provision to deliver value pursuant to clause (B) above
within thirty (30) days following the Flip-In Event (the "Flip-in Trigger
Date"), then the Company shall be obligated to deliver, to the extent
permitted by applicable law and any material agreements then in effect to
which the Company is a party, upon the surrender for exercise of a Right and
without requiring payment of such Purchase Price, shares of Common Stock (to
the extent available), and then, if necessary, such number or fractions of
shares of Preferred Stock (to the extent available) and then, if necessary,
cash, which shares and/or cash have an aggregate value equal to the Spread. If
the Board of Directors of the Company shall determine in good faith that it is
likely that sufficient additional shares of Common Stock and/or Common Stock
Equivalents could be authorized for issuance upon exercise in full of the
Rights, the thirty (30) day period set forth above may be extended to the
extent necessary, but not more than ninety (90) days after the Flip-In Trigger
Date, in order that the Company may seek stockholder approval for the
authorization of such additional shares or Common Stock Equivalents (such
thirty (30) day period, as it may be extended, is herein called the
"Substitution Period"). To the extent that the Company determines that some
action need be taken pursuant to the second and/or third sentence of this
Section 11(a)(iii), the Company (x) shall provide, subject to the last
sentence of Section 11(a)(ii) hereof, that such action shall apply uniformly
to all outstanding Rights, and (y) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to the first sentence of Section 11(a)(iii)
and to determine the value thereof. In the event of any such suspension, the
Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of the Common Stock shall be the Current Market
Price per share of the Common Stock on the Flip-In Trigger Date and the per
share or per unit value of any Common Stock Equivalent shall be deemed to
equal the Current Market Price per share of the Common Stock on such date. The
Board of Directors may, but shall not be required to, establish procedures to
allocate the right to receive Common Stock upon the exercise of the Rights
among holders of Rights pursuant to this Section 11(a)(iii).
17
(b) In case the Company shall fix a record date for the issuance
of rights (other than the Rights), options or warrants to all holders of
Preferred Stock entitling them to subscribe for or purchase (for a period
expiring within forty-five calendar days after such record date) Preferred
Stock, shares having the same rights, privileges and preferences as the
Preferred Stock ("equivalent preferred stock") or securities convertible into
Preferred Stock or equivalent preferred stock at a price per share of
Preferred Stock or equivalent preferred stock (or having a conversion price
per share, if a security convertible into Preferred Stock or equivalent
preferred stock) less than the Current Market Price per share of Preferred
Stock on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock outstanding on such record
date, plus the number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred Stock and/or
equivalent preferred stock (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such Current
Market Price, and the denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date, plus the number of additional
shares of Preferred Stock and/or equivalent preferred stock to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be
paid by delivery of consideration part or all of which may be in a form other
than cash, the value of such non-cash consideration shall be as determined in
good faith by the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent. Shares of Preferred
Stock owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed, and in the event that
such rights or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness, cash,
assets (other than a dividend payable in Preferred Stock, but including any
dividend payable in stock other than Preferred Stock) or subscription rights
or warrants (excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the Current Market Price per
share of Preferred Stock on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent)
of the portion of the cash, assets or evidences of indebtedness to be
distributed or of such subscription rights or warrants applicable to a share
of Preferred Stock and the denominator of which shall be such Current Market
Price per share of Preferred Stock. Such adjustments shall be made
successively whenever such a record date is fixed, and in the event
18
that such distribution is not so made, the Purchase Price shall be adjusted to
be the Purchase Price which would have been in effect if such record date had
not been fixed.
(d) (i) For the purpose of any computation hereunder, other
than computations made pursuant to Section 11(a)(iii) hereof, the "Current
Market Price" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of the Common Stock for the
thirty consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date, and for purpose of computations made pursuant
to Section 11(a)(iii) hereof, the "Current Market Price" per share of the
Common Stock on any date shall be deemed to be the average of the daily
closing prices per share of the Common Stock for the ten consecutive Trading
Days immediately following such date; provided, however, that in the event
--------
that the Current Market Price per share of the Common Stock is determined
during a period following the announcement by the issuer of the Common Stock
of (i) any dividend or distribution on the Common Stock (other than a regular
quarterly cash dividend and other than the Rights), (ii) any subdivision,
combination or reclassification of the Common Stock, and prior to the
expiration of the requisite thirty Trading Day or ten Trading Day period, as
set forth above, after the ex-dividend date for such dividend or distribution,
or the record date for such subdivision, combination or reclassification
occurs, then, and in each such case, the Current Market Price shall be
properly adjusted to take into account ex-dividend trading. The closing price
for each day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common Stock are
not listed or admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading or, if the shares of
Common Stock are not listed or admitted to trading on any national securities
exchange, the last quoted sale price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use, or, if on any such date the shares of
Common Stock are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker
making a market in the Common Stock selected by the Board of Directors of the
Company. If on any such date no market maker is making a market in the Common
Stock, the fair value of such shares on such date as determined in good faith
by the Board of Directors of the Company shall be used and shall be binding on
the Rights Agent. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the shares of Common Stock are
listed or admitted to trading is open for the transaction of business or, if
the shares of Common Stock are not listed or admitted to trading on any
national securities exchange, a Business Day. If the Common Stock is not
publicly held or not so listed or traded, "Current Market Price" per share
shall mean the fair value per share as determined in good faith
19
by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive
for all purposes.
(ii) For the purpose of any computation hereunder, the
"Current Market Price" per share (or one one-thousandth of a share) of
Preferred Stock shall be determined in the same manner as set forth above for
the Common Stock in clause (i) of this Section 11(d) (other than the last
sentence thereof). If the Current Market Price per share (or one one-
thousandth of a share) of Preferred Stock cannot be determined in the manner
provided above or if the Preferred Stock is not publicly held or listed or
traded in a manner described in clause (i) of this Section 11(d), the
"Current Market Price" per share of Preferred Stock shall be conclusively
deemed to be an amount equal to 1,000 (as such number may be appropriately
adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring after the date of
this Agreement) multiplied by the Current Market Price per share of the Common
Stock, and the "Current Market Price" per one one-thousandth of a share of
Preferred Stock shall, be equal to the Current Market Price per share of the
Common Stock (as appropriately adjusted). If neither the Common Stock nor the
Preferred Stock is publicly held or so listed or traded, "Current Market
Price" per shall mean the fair value per share as determined in good faith by
the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all
purposes.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least one percent in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
--------
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest ten-thousandth of a share
of Common Stock or other share or one-hundred-thousandth of a share of
Preferred Stock, as the case may be. Notwithstanding the first sentence of
this Section 11(e), any adjustment required by this Section 11 shall be made
no later than the earlier of (i) three years from the date of the transaction
which mandates such adjustment, or (ii) the Expiration Date.
(f) If, as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock other
than Preferred Stock, thereafter the number of such other shares so receivable
upon exercise of any Right and the Purchase Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares of Preferred Stock
contained in Section 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m)
hereof, and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect
to the Preferred Stock shall apply on like terms to any such other shares.
(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
20
Purchase Price, the number of shares of Preferred Stock purchasable from time
to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of one one-thousandths of a share of Preferred Stock (calculated
to the nearest one-hundred-thousandth) obtained by (i) multiplying (x) the
number of one one-thousandths of a share of Preferred Stock covered by a Right
immediately prior to this adjustment, by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price, and (ii) dividing
the product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price or any adjustment to the number of shares of Preferred
Stock for which a Right may be exercised made pursuant to Sections 11(a)(i),
11(b) or 11(c), to adjust the number of Rights in lieu of any adjustment
in the number of shares of Preferred Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after the adjustment in the number of
Rights shall be exercisable for the number of shares of Preferred Stock for
which a Right was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights shall become
that number of Rights (calculated to the nearest one hundred-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least ten days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates 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.
21
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of shares of Preferred Stock issuable upon the exercise of
the Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price per share and the number of shares
which were expressed in the initial Right Certificate issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the shares of
Common Stock, Preferred Stock or other capital stock issuable upon exercise of
the Rights, the Company shall take any corporate action, including using its
best efforts to obtain any required stockholder approvals, which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock, Preferred
Stock or other capital stock at such adjusted Purchase Price. If upon any
exercise of the Rights, a holder is to receive a combination of Common Stock
and Common Stock Equivalents, a portion of the consideration paid upon such
exercise, equal to at least the then par value of a share of Common Stock of
the Company, shall be allocated as the payment for each share of Common Stock
of the Company so received.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the shares of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the shares of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
holder a due xxxx or other appropriate instrument evidencing such holder's
right to receive such additional shares of Preferred Stock and other capital
stock or securities upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price,
in addition to those adjustments expressly required by this Section 11, as and
to the extent that in their good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance for cash of any shares of
Preferred Stock at less than the Current Market Price, (iii) issuance for cash
of shares of Preferred Stock or securities which by their terms are
convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Preferred Stock
shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person, (ii)
merge with or into any other Person, or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction or a series
22
of related transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person or Persons, if (x) at the time of or immediately
after such consolidation, merger or sale there are any charter or by-law
provisions or any rights, warrants or other instruments or securities
outstanding or agreements in effect which substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale,
the stockholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of its
Affiliates and Associates. The Company shall not consummate any such
consolidation, merger or sale unless prior thereto the Company and such other
Person shall have executed and delivered to the Rights Agent a supplemental
agreement evidencing compliance with this subsection.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23, Section 24
or Section 27 hereof, take (or permit any Subsidiary to take) any action if at
the time such action is taken it is reasonably foreseeable that such action
will diminish substantially or eliminate the benefits intended to be afforded
by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding,
in the event that the Company shall at any time after the Record Date and
prior to the Distribution Date (i) declare or pay any dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock then outstanding, or
issued or delivered thereafter, shall be proportionately adjusted so that the
number of Rights thereafter associated with each share of Common Stock
following any such event equals the result obtained by multiplying the number
of Rights associated with each share of Common Stock immediately prior to such
event by a fraction, the numerator or which shall be the number of shares of
Common Stock outstanding immediately prior to the occurrence of such event and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately following the occurrence of such event.
12. Certification of Adjustments. Whenever an adjustment is made as
----------------------------
provided in Sections 11 and 13 hereof, the Company shall (a) promptly prepare a
certificate signed by its Chief Executive Officer, its President or any Vice
President and by the Treasurer or any Assistant Treasurer or the Secretary or
any Assistant Secretary of the Company setting forth such adjustment and a brief
statement of the facts giving rise to such adjustment, (b) promptly file with
the Rights Agent and with each transfer agent for the Preferred Stock and the
Common Stock a copy of such certificate and (c) mail a brief summary thereof to
each holder of a Right Certificate (or, if prior to the Distribution Date, to
each holder of a certificate representing shares of Common Stock) in accordance
with Section 26 hereof. Notwithstanding the foregoing
23
sentence, the failure of the Company to give such notice shall not affect the
validity of or the force or effect of or the requirement for such adjustment.
The Rights Agent shall be fully protected in relying on any certificate
prepared by the Company pursuant to Sections 11 and 13 and on any adjustment
therein contained and shall not be responsible or obligated for calculating
any adjustment and shall not be deemed to have knowledge of any such
adjustment unless and until it shall have received such certificate. Any
adjustment to be made pursuant to Sections 11 and 13 of this Rights Agreement
shall be effective as of the date of the event giving rise to such adjustment.
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.
--------------------------------------------------------------------
(a) In the event that following the first occurrence of a Flip-
In Event, directly or indirectly, (x) the Company shall consolidate with, or
merge with and into, any other Person or Persons and the Company shall not be
the surviving or continuing corporation of such consolidation or merger, or
(y) any Person or Persons shall consolidate with, or merge with and into, the
Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other Person or of the
Company or cash or any other property other than, in the case of the
transactions described in subparagraphs (x) or (y), a merger or consolidation
which would result in all of the Voting Power represented by the securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into securities of the
surviving entity) all of the Voting Power represented by the securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation and the holders of such securities not having changed as a
result of such transactions), or (z) the Company or one or more of its
Subsidiaries shall sell, mortgage or otherwise transfer to any other Person or
any Affiliate or Associate of such Person, in one transaction, or a series of
related transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole), then, on the first occurrence of any such event (a "Flip-Over Event"),
proper provision shall be made so that (i) each holder of a Right (other than
Rights which have become void pursuant to Section 11(a)(ii) hereof) shall
thereafter have the right to receive, upon the exercise thereof at the
Purchase Price (as theretofore adjusted in accordance with Section 11(a)(ii)
hereof), in accordance with the terms of this Agreement and in lieu of shares
of Preferred Stock or Common Stock of the Company, such number of validly
authorized and issued, fully paid, non-assessable and freely tradeable shares
of Common Stock of the Principal Party (as such term is hereinafter defined),
not subject to any liens, encumbrances, rights of first refusal or other
adverse claims, as shall equal the result obtained by dividing the Purchase
Price (as theretofore adjusted in accordance with Section 11(a)(ii) hereof) by
50% of the Current Market Price per share of the Common Stock of such
Principal Party (determined pursuant to Section 11(d) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; provided,
--------
however, that the Purchase Price (as theretofore adjusted in accordance with
-------
Section 11(a)(ii) hereof) and the
24
number of shares of Common Stock of such Principal Party so receivable upon
exercise of a Right shall be subject to further adjustment as appropriate in
accordance with Section 11(f) hereof to reflect any events occurring in
respect of the Common Stock of such Principal Party after the occurrence of
such consolidation, merger, sale or transfer; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Flip-Over Event,
all the obligations and duties of the Company pursuant to this Rights
Agreement; (iii) the term "Company" for all purposes of this Rights Agreement
shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall only
apply to such Principal Party following the first occurrence of a Flip-Over
Event; and (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common
Stock in accordance with Section 9 hereof) in connection with the consummation
of any such transaction as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably may be, in
relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; provided, however, that, upon the subsequent
--------
occurrence of any merger, consolidation, sale of all or substantially all
assets, recapitalization, reclassification of shares, reorganization or other
extraordinary transaction in respect of such Principal Party, each holder of a
Right shall thereupon be entitled to receive, upon exercise of a Right, such
cash, shares, rights, warrants and other property which such holder would have
been entitled to receive had he, at the time of such transaction, owned the
shares of Common Stock of the Principal Party purchasable upon the exercise of
a Right, and such Principal Party shall take such steps (including, but not
limited to, reservation of shares of stock) as may necessary to permit the
subsequent exercise of the Rights in accordance with the terms hereof for such
cash, shares, rights, warrants and other property.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x) or
(y) of the first sentence of Section 13(a) hereof, (A) the Person that is
the issuer of the securities into which shares of Common Stock of the Company
are converted in such merger or consolidation, or, if there is more than one
such issuer, the issuer the Common Stock of which has the greatest aggregate
market value, or (B) if no securities are so issued, (x) the Person that is
the other party to the merger or consolidation and that survives said merger
or consolidation, or, if there is more than one such Person, the Person the
Common Stock of which has the greatest market value, or (y) if the Person that
is the other party to the merger or consolidation does not survive the merger
or consolidation, the Person that does survive the merger or consolidation
(including the Company if it survives); and
(ii) in the case of any transaction described in (z) of
the first sentence in Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions, or, if each Person that is a
party to such transaction or transactions receives the same portion of the
assets or earning power so transferred or if the Person receiving the greatest
portion of the assets or earning power cannot
25
be determined, whichever of such Persons as is the issuer of Common Stock
having the greatest aggregate market value of shares outstanding;
provided, however, that in any such case described in the foregoing (b)(i)
--------
or (b)(ii), (1) if the Common Stock of such Person is not at such time and
has not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, the term "Principal Party" shall refer to such other Person, or (2)
if such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Stocks of all of which are and have been so registered, the term
"Principal Party" shall refer to whichever of such Persons is the issuer of the
Common Stock having the greatest market value of shares outstanding, or (3) if
such Person is owned, directly or indirectly, by a joint venture formed by two
or more Persons that are not owned, directly or indirectly, by the same Person,
the rules set forth in clauses (1) and (2) above shall apply to each of the
owners having an interest in the joint venture as if the Person owned by the
joint venture was a Subsidiary of both or all of such joint venturers, and the
Principal Party in each such case shall bear the obligations set forth in this
Section 13 in the same ratio as its interest in such Person bears to the total
of such interests.
(c) The Company shall not consummate any consolidation, merger,
sale or transfer referred to in Section 13(a) unless the Principal Party shall
have a sufficient number of authorized shares of its Common Stock that have
not been issued or reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 13 and unless prior thereto the Company
and the Principal Party involved therein shall have executed and delivered to
the Rights Agent an agreement confirming that the requirements of Sections
13(a) and (b) hereof shall promptly be performed in accordance with their
terms and that such consolidation, merger, sale or transfer of assets shall
not result in a default by the Principal Party under this Rights Agreement as
the same shall have been assumed by the Principal Party pursuant to Sections
13(a) and (b) hereof and further providing that, as soon as practicable after
executing such agreement pursuant to this Section 13, the Principal Party at
its own expense shall:
(i) prepare and file a registration statement under the
Securities Act, if necessary, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its best
efforts to cause such registration statement to become effective as soon as
practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the date of expiration
of the Rights, and similarly comply with applicable state securities laws;
(ii) use its best efforts, if the Common Stock of the
Principal Party shall become listed on a national securities exchange, to list
(or continue the listing of) the Rights and the securities purchasable upon
exercise of the Rights on such securities exchange and, if the Common Stock of
the Principal Party shall not be listed on a national securities exchange, to
26
cause the Rights and the securities purchased upon exercise of the Rights to
be reported by NASDAQ or such other system then in use;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and
(iv) obtain waivers of any rights of first refusal or
preemptive rights in respect of the shares of Common Stock of the Principal
Party subject to purchase upon exercise of outstanding Rights.
In the event that any of the transactions described in Section 13(a) hereof
shall occur at any time after the occurrence of a transaction described in
Section 11(a)(ii) hereof, the Rights which have not theretofore been exercised
shall thereafter be exercisable in the manner described in Section 13(a).
(d) Furthermore, in case the Principal Party which is to be a
party to a transaction referred to in this Section 13 has a provision in any
of its authorized securities or in its Certificate of Incorporation or By-laws
or other instrument governing its corporate affairs, which provision would
have the effect of (i) causing such Principal Party to issue, in connection
with, or as a consequence of, the consummation of a transaction referred to in
this Section 13, shares of Common Stock of such Principal Party at less than
the then Current Market Price per share (determined pursuant to Section 11(d)
hereof) or securities exercisable for, or convertible into, Common Stock of
such Principal Party at less than such then current market price (other than
to holders of Rights pursuant to this Section 13) or (ii) providing for any
special payment, tax or similar provisions in connection with the issuance of
the Common Stock of such Principal Party pursuant to the provisions of Section
13, then, in such event, the Company hereby agrees with each holder of Rights
that it shall not consummate any such transaction unless prior thereto the
Company and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing that the provision in question
of such Principal Party shall have been canceled, waived or amended, or that
the authorized securities shall be redeemed, so that the applicable provision
will have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction.
14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional Rights.
In lieu of such fractional Rights, there shall be paid to the holders of
record of the Right Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of
the then current market value of a whole Right. For the purposes of this
Section 14(a), the then
27
current market value of a Right shall be determined in the same manner as the
Current Market Price of a share of Common Stock shall be determined pursuant
to Section 11(d) hereof.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples
of one one-thousandth of a share of Preferred Stock) upon exercise of the
Rights or to distribute certificates which evidence fractional shares of
Preferred Stock (other fractions which are integral multiples of one one-
thousandth of a share of Preferred Stock). Fractions of shares of Preferred
Stock in integral multiples of one one-thousandth of a share of Preferred
Stock may, at the election of the Company, be evidenced by depository
receipts, pursuant to an appropriate agreement between the Company and a
depository selected by it, provided that such agreement shall provide that the
holders of such depository receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the shares of
Preferred Stock represented by such depository receipts. In lieu of fractional
shares of Preferred Stock that are not integral multiples of one one-
thousandth of a share of Preferred Stock, the Company may pay to the
registered holders of Right Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one one-thousandth of a share of Preferred Stock. For purposes
of this Section 14(b), the current market value of one one-thousandth of a
share of Preferred Stock shall be the Current Market Price of a share of
Common Stock (as determined pursuant to Section 11(d)(ii) hereof) for the
Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Flip-In Event, the Company
shall not be required to issue fractions of shares or units of Common Stock or
Common Stock Equivalents or other securities upon exercise of the Rights or to
distribute certificates which evidence fractional shares of such Common Stock
or Common Stock Equivalents or other securities. In lieu of fractional shares
or units of such Common Stock or Common Stock Equivalents or other securities,
the Company may pay to the registered holders of Right Certificates at the
time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the Current Market Value of a share or unit of such
Common Stock or Common Stock Equivalent or other securities. For purposes of
this Section 14(c), the Current Market Value shall be determined in the
manner set forth in Section 11(d) hereof for the Trading Day immediately
prior to the date of such exercise and, if such Common Stock Equivalent is not
traded, each such Common Stock Equivalent shall have the value of one one-
thousandth of a share of Preferred Stock.
(d) The holder of a Right by the acceptance of a Right expressly
waives his right to receive any fractional Right or any fractional shares upon
exercise of a Right.
15. Rights of Action. All rights of action in respect of this
----------------
Agreement, other than any rights of action vested in the Rights Agent pursuant
to Sections 18 and 20 below, are vested in the respective holders of record of
the Right Certificates (and, prior to the Distribution Date, the holders of
record of the Common Stock); and any holder of record of any Right Certificate
(or,
28
prior to the Distribution Date, of the Common Stock), without the consent
of the Rights Agent or of the holder of any other Right Certificate (or, prior
to the Distribution Date, of the Common Stock), may, in his own behalf and for
his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company or any other Person to enforce, or otherwise
act in respect of, his right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this
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,
accordingly, that they will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement.
Holders of Rights shall be entitled to recover the reasonable costs and
expenses, including attorneys' fees, incurred by them in any action to enforce
the provisions of this Agreement.
16. Agreement of Right Holders. Every holder of a Right by accepting
--------------------------
the same consents and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will not be
evidenced by a Right Certificate and will be transferable only in connection
with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates will be
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the Distribution
Date, the associated Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificate or the associated
Common Stock certificate made by anyone other than the Company or the Rights
Agent or the transfer agent of the Common Stock) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice
to the contrary; and
(d) notwithstanding anything in this 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 must use its best efforts to have any such order, decree or ruling
lifted or otherwise overturned as soon as possible.
29
17. Right Certificate Holder Not Deemed a Stockholder. No holder of a
-------------------------------------------------
Right, as such, shall be entitled to vote, receive dividends in respect of or
be deemed for any purpose to be the holder of Common Stock or any other
securities of the Company which may at any time be issuable upon the exercise
of the Rights, nor shall anything contained herein or in any Right Certificate
be construed to confer upon the holder of any Right Certificate, as such, any
of the rights of a stockholder of the Company or any right to vote in the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to receive dividends or subscription rights
in respect of any such stock or securities, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all service rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Rights Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability or expense incurred without gross negligence, bad
faith or willful misconduct on the part of the Rights Agent for any thing done
or omitted to be done by the Rights Agent in connection with the acceptance
and administration of this Rights Agreement, including the cost and expenses
of defending against any claim of liability in the premises. The costs and
expenses of enforcing this right of indemnification shall also be paid by the
Company. The indemnity provided herein shall survive the expiration of the
Rights and the termination of this Rights Agreement. Anything in this
agreement to the contrary notwithstanding, in no event shall the Rights Agent
be liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Rights
Agent has been advised of the likelihood of such loss damage and regardless of
the form of action.
(b) The Rights Agent may conclusively rely upon and shall be
protected and shall incur no liability for or in respect of any action taken,
suffered or omitted by it in connection with its administration of this Rights
Agreement in reliance upon any Right Certificate, certificate for Common Stock
or other securities of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, guaranteed, verified or
acknowledged, by the proper Person or Persons.
19. Merger or Consolidation or Changed 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
30
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust
or stock transfer business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for
--------
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have
been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and, in case at that time any of the
Right Certificates shall not have been countersigned, any successor Rights
Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such
cases such Right Certificate shall have the full force provided in the Right
Certificates and in this Rights Agreement.
20. Duties of Rights Agent. The Rights Agent undertakes the duties and
----------------------
obligations imposed by this Rights Agreement upon the following terms and
conditions, and no implied duties or obligations shall be read into this
Agreement against the Rights Agent by all of which the Company and the holders
of Right Certificates, by their acceptance thereof, shall be bound:
(a) Before the Rights Agent acts or refrains from acting, the
Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted to be taken by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact
or matter (including, without limitation, the identity of any Acquiring Person
and the determination of "Current Market Price") be proved or established by
the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by
certificate signed by the President or any Vice President and by the Treasurer
or any Assistant Treasurer or the Secretary or any Assistant Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be full
31
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Rights Agreement in reliance upon
such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Rights Agreement or in
the Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Rights Agreement or in
any Right Certificate; nor shall it be responsible for any adjustment required
under the provisions of Sections 11, 13, 23 or 24 hereof or responsible for
the manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Right Certificates after receipt of a
Certificate furnished pursuant to Section 12 describing any such adjustment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Common Stock
to be issued pursuant to this Rights Agreement or any Right Certificate or as
to whether any shares of Common Stock will, when issued, be validly authorized
and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing
by the Rights Agent of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the Chief Executive Officer, the President or any Vice
President or the Secretary or any Assistant Secretary or the Treasurer or any
Assistant Treasurer of the Company, and to apply to such officers for advice
or instructions in connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent under this Rights Agreement and the date on and/or after which such
action shall be taken or such omission shall be effective. Subject to Section
20(c) hereof, the Rights Agent shall not be liable for any action taken by,
or omission of, the Rights Agent in accordance with a proposal included in any
such application on or after the date specified in such
32
application (which date shall not be less than five Business Days after the
date any officer of the Company actually receives such application, unless any
such officer shall have consented in writing to an earlier date) unless, prior
to taking any such action (or the effective date in the case of an omission),
the Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were
not the Rights Agent under this Rights Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the Company or
for any other entity.
(i) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of its rights if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form
of assignment or the form of election to purchase set forth on the reverse
thereof, as the case may be, has either not been completed or indicates an
affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not
take any further action with respect to such requested exercise of transfer
without first consulting with the Company.
(l) The Rights Agent shall not be required to take notice or be
deemed to have notice of any fact, event or determination (including, without
limitation, and dates or events defined in this Agreement or the designation
of any Person as an Acquiring Person, Affiliate or Associate) under this
Agreement unless and until the Rights Agent shall be sufficiently notified in
writing by the Company of such fact, event or determination.
21. Change of Rights Agent. The Rights Agent or any successor Rights
----------------------
Agent may resign and be discharged from its duties under this Rights Agreement
upon 30 days' notice in writing, or such earlier period as shall be agreed to
in writing, mailed to the Company and to each transfer agent of the Common
Stock by registered or certified mail, and, at the expense of
33
the Company, to the holders of the Right Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent (with or
without cause) upon 30 days' notice in writing, or such earlier period as
shall be agreed to in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Stock by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. 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. Notwithstanding the foregoing provisions of this Section 21,
in no event shall the resignation or removal of a Rights Agent be effective
until a successor Rights Agent shall have been appointed and have accepted
such appointment. If the Company shall fail to make such appointment within a
period of 30 days after such removal or after it has been notified in writing
of such resignation or incapacity by the resigning or incapacitated Rights
Agent or by the holder of a Right Certificate (who shall, with such notice,
submit his Right Certificate for inspection by the Company), then the
incumbent Rights Agent or the holder of record of any Right Certificate may
apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or
by such a court, shall be (a) a corporation organized and doing business under
the laws of the United States or any State thereof, in good standing, which is
authorized under such laws to exercise corporate trust or stock transfer
powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000 or (b) an Affiliate
controlled by a corporation described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment the Company shall file notice thereof
in writing with the predecessor Rights Agent and each transfer agent of the
Common Stock, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
22. Issuance of New Right Certificates. Notwithstanding any of the
----------------------------------
provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price per share and the number or kind or
class of shares of stock or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this Rights
Agreement. In addition, in connection with the issuance or sale of shares of
Common Stock following the Distribution Date and prior to the redemption or
expiration of the Rights, the Company shall, with respect to shares of Common
Stock so issued or sold pursuant to the exercise of stock options or under any
employee plan or
34
arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, in each case existing prior to the
Distribution Date, issue Right Certificates representing the appropriate
number of Rights in connection with such issuance or sale; provided, however,
that (i) no such Right Certificate shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Right Certificate would be issued, and (ii) no such Right
Certificate shall be issued, if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
23. Redemption.
----------
(a) The Board of Directors of the Company may, at its option, at
any time prior to the earlier of (x) the first occurrence of a Flip-In Event
or (y) the Close of Business on the Expiration Date, redeem all but not less
than all the then outstanding Rights at a redemption price of $.001 per Right,
as such amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price").
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights (or at such later time as the
Board of Directors may establish for the effectiveness of such redemption),
and without any further action and without any notice, the right to exercise
the Rights will terminate and the only right thereafter of the holders of
Rights shall be to receive the Redemption Price. The Company shall promptly
give public notice of any such redemption; provided, however, that the failure
-------- -------
to give, or any defect in, any such notice shall not affect the validity of
such redemption. Within ten (10) days after such action of the Board of
Directors ordering the redemption of the Rights (or such later time as the
Board of Directors may establish for the effectiveness of such redemption),
the Company shall mail a notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Stock. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption shall state the method by
which the payment of the Redemption Price will be made. The failure to give
notice required by this Section 23(b) or any defect therein shall not affect
the legality or validity of the action taken by the Company.
(c) In the case of a redemption permitted under Section 23(a),
the Company may, at its option, discharge all of its obligations with respect
to the Rights by (i) issuing a press release announcing the manner of
redemption of the Rights and (ii) mailing payment of the Redemption Price to
the registered holders of the Rights at their last addresses as they appear on
the registry books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the transfer agent of the Common Stock, and upon such
action, all outstanding Right Certificates shall be null and void without any
further action by the Company.
35
24. Exchange of Rights for Common Stock.
-----------------------------------
(a) The Board of Directors of the Company may, at its option, at
any time after the occurrence of a Flip-In Event, exchange all or part of the
then outstanding and exercisable Rights (which (i) shall not include Rights
that have become void pursuant to the provisions of Section 11(a)(ii) and
(ii) shall include, without limitation, any Rights issued after the
Distribution Date in accordance with Section 22) for shares of Common Stock at
an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (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 an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of shares of Common
Stock aggregating 50% or more of the shares of Common Stock then outstanding.
From and after the occurrence of an event specified in Section 13(a) hereof,
any Rights that theretofore have not been exchanged pursuant to this Section
24(a) shall thereafter be exercisable only in accordance with Section 13 and
may not be exchanged pursuant to this Section 24(a).
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of
this Section 24 and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter of
a holder of such Rights shall be to receive that number of shares of Common
Stock equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
-------- -------
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights
at their last addresses as they appear upon the registry books of the Rights
Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the shares of
Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 11(a)(ii)
hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute, and, in the event that there shall not be
sufficient shares of Common Stock issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in accordance with
this Section 24, the Company shall substitute to the extent of such
insufficiency, for each share of Common Stock that would otherwise be issuable
upon exchange of a Right, a number of shares of Preferred Stock or fractions
thereof (or equivalent preferred shares, as such term is defined in Section
11(b)) having an aggregate current per share market
36
price (determined pursuant to Section 11(d) hereof) equal to the current per
share market price of one share of Common Stock (determined pursuant to
Section 11(d) hereof) as of the date of the Flip-In Event.
(d) In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit
any exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock, the
Company shall pay to the registered holders of the Right Certificates with
regard to which such fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of a whole share of Common Stock. For the purposes of this paragraph
(d), the current market value of a whole share of Common Stock shall be the
Current Market Price of a share of Common Stock (as defined in Section 11(d)
hereof for the purposes of computations made other than pursuant to Section
11(a)(iii)) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.
25. Notice of Proposed Actions.
--------------------------
(a) In case the Company, after the Distribution Date, shall
propose (i) to effect any of the transactions referred to in Section
11(a)(i) or to pay any dividend to the holders of record of its Preferred
Stock payable in stock of any class or to make any other distribution to the
holders of record of its Preferred Stock (other than a regular periodic cash
dividend), or (ii) to offer to the holders of record of its Preferred Stock or
options, warrants, or other rights to subscribe for or to purchase shares of
Preferred Stock (including any security convertible into or exchangeable for
Preferred Stock) or shares of stock of any other class or any other
securities, options, warrants, convertible or exchangeable securities or other
rights, or (iii) to effect any reclassification of its Preferred Stock or any
recapitalization or reorganization of the Company, or (iv) to effect any
consolidation or merger with or into, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons, or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of record of a Right Certificate, in accordance with Section 26
hereof, notice of such proposed action, which shall specify the record date
for the purposes of such transaction referred to in Section 11(a)(i), or
such dividend or distribution, or the date on which such reclassification,
recapitalization, reorganization, consolidation, merger, sale or transfer of
assets, liquidation, dissolution or winding up is to take place and the record
date for determining participation therein by the holders of record of
Preferred Stock, if any such date is to be fixed, and such
37
notice shall be so given in the case of any action covered by clause (i) or
(ii) above at least 10 days prior to the record date for determining holders
of record of the Preferred Stock for purposes of such action, and in the case
of any such other action, at least 10 days prior to the date of the taking of
such proposed action or the date of participation therein by the holders of
record of Preferred Stock, whichever shall be the earlier.
(b) In case any of the transactions referred to in Section
11(a)(ii) or Section 13 of this Rights Agreement are proposed, then, in
any such case, the Company shall give to each holder of Rights, in accordance
with Section 26 hereof, notice of the proposal of such transaction at least 10
days prior to consummating such transaction, which notice shall specify the
proposed event and the consequences of the event to holders of Rights under
Section 11(a)(ii) or Section 13 hereof, as the case may be, and, upon
consummating such transaction, shall similarly give notice thereof to each
holder of Rights.
(c) The failure to give notice required by this Section 25 or
any defect therein shall not affect the legality or validity of the action
taken by the Company or the vote upon any such action.
26. Notices. Notices or demands authorized by this Rights Agreement to
-------
be given or made by the Rights Agent or by the holder of record of any Right
Certificate or Right to or on behalf of the Company shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Rights Agent) as follows:
Power Integrations, Inc.
000 X. Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Corporate Secretary
Subject to the provisions of Section 20 hereof, any notice or demand authorized
by this Rights Agreement to be given or made by the Company or by the holder of
record of any Right Certificate or Right to or on the Rights Agent shall be
sufficiently given or made if sent by registered or certified mail and shall be
deemed given upon receipt (until another address is filed in writing with the
Company) as follows:
BankBoston, N.A.
c/o EquiServe Limited Partnership
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Client Administration
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of record of any Right Certificate
or Right shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address
38
of such holder as it appears upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the Transfer Agent.
27. Supplements and Amendments. Except as provided in the penultimate
--------------------------
sentence of this Section 27, for so long as the Rights are then redeemable,
the Company may in its sole and absolute discretion, and the Rights Agent
shall if the Company so directs, supplement or amend any provision of this
Agreement in any respect without the approval of any holders of the Rights. At
any time when the Rights are no longer redeemable, except as provided in the
penultimate sentence of this Section 27, the Company may, and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement without
the approval of any holders of Rights Certificates in order to (i) cure any
ambiguity, (ii) correct or supplement any provision contained herein which may
be defective or inconsistent with any other provisions herein, (iii) shorten
or lengthen any time period hereunder, or (iv) change or supplement the
provisions hereunder in any manner which the Company may deem necessary or
desirable; provided that no such supplement or amendment shall adversely
--------
affect the interests of the holders of Rights as such (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person), and no such
amendment may cause the Rights again to become redeemable or cause the
Agreement again to become amendable other than in accordance with this
sentence. Notwithstanding anything contained in this Rights Agreement to the
contrary, no supplement or amendment shall be made which changes the
Redemption Price and no supplement or amendment that changes the rights and
duties of the Rights Agent under this Agreement will be effective against the
Rights Agent without the execution of such supplement or amendment by the
Rights Agent. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of Common
Stock.
28. Successors. All of the covenants and provisions of this Rights
----------
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
29. Benefits of this Rights Agreement. Nothing in this Rights Agreement
---------------------------------
be construed to give to any person or corporation other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Stock) any legal or equitable right, remedy or
claim under this Rights Agreement; but this Rights Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the holders of
record of the Right Certificates (and, prior to the Distribution Date, the
Common Stock).
30. Governing Law. This Rights Agreement and each Right Certificate
-------------
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts to be made
solely by residents of such state and performed entirely within such state.
39
31. Counterparts. This Rights Agreement may be executed in any number of
------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
32. Descriptive Headings. Descriptive headings of the several sections
--------------------
of this Rights Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
33. Severability. If any term, provision, covenant or restriction of
------------
this Rights Agreement is held by a court of competent jurisdiction or other
authority to be invalid, illegal or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Rights Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
40
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to
be duly executed, and their seals affixed and attested, all as of the date and
year first above written.
[SEAL]
ATTEST: POWER INTEGRATIONS, INC.
By:__________________________ By:__________________________
Name: Name:
Title: Title:
[SEAL]
ATTEST: BANKBOSTON, N.A.
as Rights Agent
By:__________________________ By:__________________________
Name: Name:
Title: Title:
41
Exhibit A
---------
POWER INTEGRATIONS, INC.
CERTIFICATE
OF DESIGNATION, PREFERENCES AND RIGHTS
OF THE TERMS OF THE
SERIES A PREFERRED STOCK
Pursuant to Section 151 of the General Corporation Law of the State of Delaware
We, the President and Chief Executive Officer and the Secretary,
respectively, of Power Integrations, Inc., organized and existing under the
General Corporation Law of the State of Delaware, in accordance with the
provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the said Corporation, the said Board of
Directors on February 24, 1999, adopted the following resolution creating a
series of 75,000 shares of Preferred Stock designated as Series A Preferred
Stock:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of this Corporation in accordance with the provisions of its Certificate of
Incorporation, a series of Preferred Stock of the Corporation be and it hereby
is created, and that the designation and amount thereof and the powers,
preferences and relative, participating, optional and other special rights of
the shares of such series, and the qualifications, limitations or restrictions
thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be
---------- ----------------------
designated as "Series A Preferred Stock" (the "Series A Preferred Stock"), $.001
par value per share, and the number of shares constituting such series shall be
75,000.
Section 2. Dividends and Distributions.
---------- ---------------------------
(A) The dividend rate on the shares of Series A Preferred Stock
shall be for each quarterly dividend (hereinafter referred to as a "quarterly
dividend period"), which quarterly dividend periods shall commence on January
1, April 1, July 1 and October 1 each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date") (or in the case of original
issuance, from the date of original issuance) and shall end on and include the
day next preceding the first date of the next quarterly dividend period, at a
rate per quarterly dividend period (rounded to the nearest cent) equal to the
greater of (a) $3,750.00 or (b) subject to the provisions for adjustment
hereinafter set forth, 1,000 times the aggregate per share amount of all cash
dividends, and 1,000 times the aggregate per share amount (payable in cash,
based upon the
fair market value at the time the non-cash dividend or other distribution is
declared as determined in good faith by the Board of Directors) of all non-
cash dividends or other distributions other than a dividend payable in shares
of Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared (but not withdrawn) on the Common
Stock, par value $.001 per share, of the Corporation (the "Common Stock")
during the immediately preceding quarterly dividend period, or, with respect
to the first quarterly dividend period, since the first issuance of any share
or fraction of a share of Series A Preferred Stock. In the event this Company
shall at any time after March 12, 1999 (the "Rights Declaration Date") (i)
declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such case the
amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is
a date after the record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on
the shares of Series A Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be no more than 45 days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
---------- -------------
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to 1,000 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine
the outstanding Common Stock into a smaller number of shares, then in each
such case the number of votes per share to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation or by law, the holders of shares of Series A Preferred Stock and
the holders of shares of Common Stock shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, in the Certificate of
Incorporation and in the By-laws, holders of Series A Preferred Stock shall
have no special voting rights and their consent shall not be required (except
to the extent they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.
Section 4. Reacquired Shares. Any shares of Series A Preferred Stock
---------- -----------------
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject
to the conditions and restrictions on issuance set forth herein.
Section 5. Liquidation, Dissolution or Winding Up.
---------- --------------------------------------
(A) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of the Series A
Preferred Stock shall be entitled to receive the greater of (a) $150,000.00
per share, plus accrued dividends to the date of distribution, whether or not
earned or declared, or (b) an amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 1,000 times the aggregate amount to
be distributed per share to holders of Common Stock. In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare
any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior
to such event pursuant to clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 6. Consolidation, Merger, etc. In case the Corporation shall
---------- ---------------------------
enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the
shares of Series A Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine
the outstanding Common Stock into a smaller number of shares, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. No Redemption. The shares of Series A Preferred Stock shall
---------- -------------
not be redeemable.
Section 8. Fractional Shares. Series A Preferred Stock may be issued in
---------- -----------------
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and have the benefit of all other rights of holders
of Series A Preferred Stock. All payments made with respect to fractional
shares hereunder shall be rounded to the nearest whole cent.
Section 9. Certain Restrictions.
---------- --------------------
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series
A Preferred Stock, except dividends paid ratably on the Series A
Preferred Stock and all such parity stock on which dividends are payable
or in arrears in proportion to the total amounts to which the holders of
all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series
A Preferred Stock, provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such parity stock in exchange
for shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A
Preferred Stock, or any shares of stock ranking on a parity with the
Series A Preferred Stock, except in accordance with a purchase offer made
in writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes
shall determine in good faith will result in fair and equitable treatment
among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 9, purchase or otherwise acquire such shares at such time and in
such manner.
Section 10. Ranking. The Series A Preferred Stock shall be junior to all
----------- -------
other Series of the Corporation's preferred stock as to the payment of
dividends and the distribution of assets, unless the terms of any series shall
provide otherwise.
Section 11. Amendment. The Certificate of Incorporation of the
----------- ---------
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of two-thirds or more of the outstanding shares of Series A Preferred
Stock voting together as a single class.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury this 24th day of
February, 1999.
--------------------------------------
Xxxxxx X. Xxxxxxx, President and Chief
Executive Officer
Attest:
----------------------------
Xxxxxx X. Xxxxxxx, Secretary
EXHIBIT B
[Form of Right Certificate]
Certificate No. W-_____ _____ Rights
NOT EXERCISABLE AFTER FEBRUARY 23, 2009, OR EARLIER IF REDEEMED OR
EXCHANGED. AT THE OPTION OF THE COMPANY, THE RIGHTS MAY BE REDEEMED AT
$.001 PER RIGHT OR EXCHANGED FOR PREFERRED STOCK ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT. IN THE EVENT THAT THE RIGHTS REPRESENTED BY THIS
CERTIFICATE ARE ISSUED TO A PERSON WHO IS AN ACQUIRING PERSON OR CERTAIN
TRANSFEREE OF THE RIGHTS PREVIOUSLY OWNED BY SUCH PERSONS, THIS RIGHT
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY SHALL BE NULL AND VOID AND
WILL NO LONGER BE TRANSFERABLE.
RIGHT CERTIFICATE
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 February 24, 1999 ("Rights Agreement") between
Power Integrations, Inc., a Delaware corporation (the "Company"), and
BankBoston, N.A. (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 p.m. (New York time) on February 23, 2009 at the principal
office of the Rights Agent, or its successors as Rights Agent, designated for
such purposes, one one-thousandth of a fully paid and nonassessable share of
Series A Preferred Stock of the Company ("Preferred Stock") at a purchase price
of $150.00 per one-thousandth of a share of Preferred Stock, as the same may
from time to time be adjusted in accordance with the Rights Agreement ("Purchase
Price"), upon presentation and surrender of this Right Certificate with the Form
of Election to Purchase duly executed. Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to such terms in the
Rights Agreement.
As provided in the Rights Agreement, the Purchase Price and the number of
shares of Preferred Stock or other securities which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events and, upon the
happening of certain events, securities other than shares of Preferred Stock, or
other property, may be acquired upon exercise of the Rights evidenced by this
Right Certificate, as provided by the Rights Agreement.
Upon the occurrence of a Flip-In Event, if the Rights evidenced by this
Rights Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person, (ii) a transferee of any
such Acquiring Person, Associate or Affiliate, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of a person who,
after such transfer, became an Acquiring Person, or any Affiliate or Associate
of an Acquiring Person, such Rights shall be null and void and will no longer be
transferable and no holder hereof shall have any right with respect to such
Rights from and after the occurrence of such Flip-In Events.
This Right Certificate is subject to all the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of record of the Right Certificates, which
limitation of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal executive office of
the Company and are available upon written request to the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder of record to purchase a like aggregate
number of shares of Preferred Stock as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof, another Right Certificate or
Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, at any time prior to the
earlier of (i) the occurrence of a Flip-In Event (as such term is defined in the
Rights Agreement) or (ii) the Expiration Date (as such term is defined in the
Rights Agreement), the Rights evidenced by this Certificate may be redeemed by
the Company at its option at a redemption price of $.001 per Right. Subject to
the provisions of the Rights Agreement, the Company may, at its option, at any
time after a Flip-In Event, exchange all or part of the Rights evidenced by this
Certificate for shares of the Company's Common Stock or for Preferred Stock (or
shares of a class or series of the Company's preferred stock having the same
rights, privileges and preferences as the Preferred Stock).
In the event (i) any person or group becomes an Acquiring Person or (ii)
any of the types of transactions, acquisitions or other events described above
as self-dealing transactions occur, and prior to the acquisition by such person
or group of 50% or more of the outstanding shares of Common Stock, the Board may
require all or any portion of the outstanding Rights (other than Rights owned by
such Acquiring Person which have become void) to be exchanged for Common Stock
on a pro rata basis, at an exchange ratio of one share of Common Stock or one
one-hundredth of a share of Preferred Stock (or of a share of a class or series
of the Company's Preferred Stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
No fractional shares of Preferred Stock shall be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a share of Preferred Stock, which may, at the
option of the Company, be evidenced by depository receipts), and no fractional
shares of Common Stock will be issued upon the exchange of any Right or Rights
evidenced hereby, and in lieu thereof, as provided in the Rights
Agreement, fractions of shares of Preferred Stock or Common Stock shall
receive an amount in cash equal to the same fraction of the then Current
Market Price (as such term is defined in the Rights Agreement) of a share of
Preferred Stock or Common Stock, as the case may be.
No holder of this Right Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Common Stock or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote in the election of directors, or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action or to receive notice of meetings or
other actions affecting stockholders (other than certain actions specified in
the Rights Agreement) or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right Certificate shall
have been exercised or exchanged as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of _______________, 19____.
ATTEST: Power Integrations, Inc.
_____________________________ By:____________________________________
Secretary
Title:_________________________________
COUNTERSIGNED: BankBoston, N.A.
As Rights Agent
By:____________________________________
Authorized Officer
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such holder
desires to transfer any or all of the Rights
represented by this Right Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________________________________________________________
________________________________________________________________________________
(Name, address and social security or other
identifying number of transferee)
___________________________________ (_______________) of the Rights represented
by this Right Certificate, together with all right, title and interest in and to
said Rights, and hereby irrevocably constitutes and appoints
_________________________ attorney to transfer said Rights on the books of the
within-named Company with full power of substitution.
Dated:________________________ ____________________________________
(Signature)
Signature Guaranteed:
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the rights evidenced by this Right Certificate [ ] are [ ] are not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person (as such capitalized terms are defined in the Rights
Agreement);
(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 or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person or any transferee of such Persons.
Dated:________________________ ____________________________________
(Signature)
Signature Guaranteed:
Form of Reverse Side of Right Certificate
(continued)
NOTICE
------
The signatures to the foregoing Assignment and the foregoing Certificate,
if applicable, must correspond to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a participant in a Securities
Transfer Association ("STA") recognized signature program.
In the event that the foregoing Certificate is not duly executed, with
signature guaranteed, the Company may deem the Rights represented by this Right
Certificate to be Beneficially Owned by an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such capitalized terms are defined in the
Rights Agreement), and not issue any Right Certificate or Right Certificates in
exchange for this Right Certificate.
Form of Reverse of Right Certificate
(continued)
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed by the registered holder if such holder
desires to exercise any or all of the Rights
represented by this Right Certificate)
To:
The undersigned hereby irrevocably elects to exercise ____________________
(__________) of the Rights represented by this Right Certificate to purchase the
shares of the Common Stock of the Company, or other securities or property
issuable upon the exercise of said number of Rights pursuant to the Rights
Agreement.
The undersigned hereby requests that a certificate for any such securities
and any such property be issued in the name of and delivered to:
________________________________________________________________________________
________________________________________________________________________________
(Name, address and social security or other
identifying number of issuee)
The undersigned hereby further requests that if said number of Rights shall
not be all the Rights represented by this Right Certificate, a new Right
Certificate for the remaining balance of such Rights be issued in the name of
and delivered to:
________________________________________________________________________________
(Name, address and social security or other
identifying number of issuee)
Dated:________________________ ____________________________________
(Signature)
Signature Guaranteed:
Form of Reverse Side of Right Certificate
(continued)
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined pursuant to
the Rights Agreement);
(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 or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person or any transferee of such Persons.
Dated:________________________ ____________________________________
(Signature)
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Election to Purchase and the foregoing
Certificate, if applicable, must correspond to the name as written upon the face
of the this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever, and must be guaranteed by a member firm of
a registered national securities exchange, a member of the National Association
of Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
In the event that the foregoing Certificate is not executed, with signature
guaranteed, the Company may deem the Rights represented by this Right
Certificate to be Beneficially Owned by an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such capitalized terms are defined in the
Rights Agreement), and not issue any Right Certificate or Right Certificates in
exchange for this Right Certificate.
EXHIBIT C
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED
TO, BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN
ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) OR AN ASSOCIATE OR
AFFILIATE (AS DEFINED IN THE RIGHTS AGREEMENT) THEREOF AND CERTAIN TRANSFEREES
THEREOF WILL BE NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
Power Integrations, Inc.
Summary of Terms of
Rights Agreement
Nature of Right: When exercisable, each Right (a "Right") will
initially entitle the holder to purchase one one-
thousandth of a share of Series A Preferred Stock
("Preferred Stock") of Power Integrations, Inc. (the
"Company").
Means of Distribution: The Rights will be distributed to holders of the
Company's outstanding Common Stock as a dividend of
one Right for each share of Common Stock. The
Rights will also be attached to all future
issuances of Common Stock prior to the Distribution
Date (as defined below).
Exercisability: Rights become exercisable on the earlier of: (i)
the tenth day following the date of public
announcement by the Company or by any person or
group (an "Acquiring Person") that such person or
group has acquired beneficial ownership of 15% or
more of the Company's outstanding Common Stock, or
(ii) the tenth business day (unless extended by the
Board prior to the time a person becomes an
Acquiring Person) following the commencement, or
announcement of an intention to commence, by any
person or group of a tender or exchange offer which
would result in such person owning 15% or more of
the outstanding Common Stock of the Company (the
earlier of such dates being referred to as the
"Distribution Date"), provided that an Acquiring
Person does not include an Exempt Person (as such
term is defined in the Rights Agreement). Rights
will trade separately from the Common Stock once
the Rights become exercisable.
Exercise Price: $150.00 per one one-thousandth of a share of
Preferred Stock, which is the amount that in the
judgment of the Board of Directors represents the
long-term value of the Common Stock over the term
of the Rights Agreement (the "Purchase Price").
Term: The Rights will expire upon the earlier of (i) ten
years after the date of issuance, or February 23,
2009 or (ii) redemption or exchange by the Company
as described below.
Redemption of Rights: Rights are redeemable at a price of $.001 per
Right, by the vote of the Company's Board of
Directors, at any time until the occurrence of a
Flip-In Event (defined below).
Preferred Stock: The Preferred Stock purchasable upon exercise of
the Rights will be nonredeemable and junior to any
other series of preferred stock the Company may
issue (unless otherwise provided in the terms of
such other series). Each share of Preferred Stock
will have a preferential cumulative quarterly
dividend in an amount equal to the greater of (a)
$3,750.00 or (b) 1,000 times the dividend declared
on each share of Common Stock. In the event of
liquidation, the holders of Preferred Stock will
receive a preferred liquidation payment equal to
the greater of (a) $150,000.00 per share, plus
accrued dividends to the date of distribution
whether or not earned or declared, or (b) an amount
per share equal to 1,000 times the aggregate
payment to be distributed per share of Common
Stock. Each share of Preferred Stock will have
1,000 votes, voting together with the shares of
Common Stock. In the event of any merger,
consolidation or other transaction in which shares
of Common Stock are exchanged for or changed into
other securities, cash and/or other property, each
share of Preferred Stock will be entitled to
receive 1,000 times the amount and type of
consideration received per share of Common Stock.
The rights of the Preferred Stock as to dividends,
liquidation and voting, and in the event of mergers
and consolidations, are protected by customary anti-
dilution provisions. Fractional shares (in integral
multiples of one one-thousandth) of Preferred Stock
will be issuable; however, the Company may elect to
distribute depositary receipts in lieu of such
fractional shares. In lieu of fractional shares
other than fractions that are multiples of one one-
thousandth of a share, an adjustment in cash will
be made based on the market price of the Preferred
Stock on the last trading date prior to the date of
exercise. Because of the nature of the Preferred
Stock's dividend, liquidation and voting rights,
the value of one one-thousandth of a share of
Preferred Stock purchasable upon exercise of each
Right should approximate the value of one share of
Common Stock.
Rights in Event of In the event that an Acquiring Person engages in
Self-Dealing Transaction certain self-dealing transactions or becomes a
or Acquisition of beneficial owner of 15% or more of the outstanding
Substantial Amount of Common Stock ("Flip-In Events"), a holder of a Right
Common Stock: thereafter has the right to purchase, upon payment of
the then current Exercise Price, in lieu of one one-
thousandth of a share of Preferred Stock, such number
of shares of Common Stock having a market value at
the time of the transaction equal to the Exercise
Price divided by one-half the Current Market Price
(as defined in the Rights Agreement) of the Common
Stock. Notwithstanding the foregoing, Rights held by
the Acquiring Person or any Associate or Affiliate
thereof or certain transferees will be null and void
and no longer be transferable.
Self-dealing transactions are defined to include a
consolidation, merger or other combination of an
Acquiring Person with the Company in which the
Company is the surviving corporation, the transfer of
assets to the Company in exchange for securities of
the Company, the acquisition of securities of the
Company (other than in a pro rata distribution to all
stockholders), the sale, purchase, transfer,
distribution, lease, mortgage, pledge or acquisition
of assets by the Acquiring Person to, from or with
the Company on other than an arm's length basis,
compensation to an Acquiring Person for services
(other than for employment as a regular or part-time
employee or director on a basis consistent with the
Company's past practice), a loan or provision of
other financial assistance (except
proportionately as a stockholder) to an Acquiring
Person or the licensing, sale or other transfer of
proprietary technology or know-how from the Company
to the Acquiring Person on terms not approved by the
Board of Directors or a reclassification,
recapitalization or other transaction with the effect
of increasing by more than 1% the Acquiring Person's
proportionate share of any class of securities of the
Company.
Rights in Event of If, following the occurrence of a Flip-In Event,
Business Combination: the Company is acquired by any person in a merger
or other business combination transaction in which
the Common Stock is exchanged or converted or in
which the Company is not the surviving corporation,
or 50% or more of its assets or earnings power are
sold to any person, each holder of a Right (other
than an Acquiring Person, or Affiliates or Associates
thereof) shall thereafter have the right to purchase,
upon payment of the then current Exercise Price, such
number of shares of common stock of the acquiring
company having a current market value equal to the
Exercise Price divided by one-half the Current Market
Price of such common stock.
Exchange Option: In the event (i) any person or group becomes an
Acquiring Person or (ii) any of the types of
transactions, acquisitions or other events described
above as self-dealing transactions occur, and prior
to the acquisition by such person or group of 50% or
more of the outstanding shares of Common Stock, the
Board may require all or any portion of the
outstanding Rights (other than Rights owned by such
Acquiring Person which have become void) to be
exchanged for Common Stock on a pro rata basis, at an
exchange ratio of one share of Common Stock or one
one-thousandth of a share of Preferred Stock (or of a
share of a class or series of the Company's Preferred
Stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
Fractional Shares: No fractional shares of Common Stock will be issued
upon exercise of the Rights and, in lieu thereof, a
payment in cash will be made to the holder of such
Rights equal to the same fraction of the current
market value of a share of Common Stock.
Adjustment: The Exercise Price payable, and the number of shares
of Preferred Stock or other securities or property
issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i)
in the event of a stock dividend on, or a
subdivision, combination or reclassification of the
Preferred Stock, (ii) upon the grant to holders of
the Preferred Stock of certain rights or warrants to
subscribe for Preferred Stock or convertible
securities at less than the current market price of
the Preferred Stock or (iii) upon the distribution to
holders of the Preferred Stock of evidences of
indebtedness or assets (excluding dividends payable
in Preferred Stock) or of subscription rights or
warrants (other than those referred to above). The
number of Rights associated with each share of Common
Stock is also subject to adjustment in the event of a
stock split of the Common Stock or a stock dividend
on the Common Stock payable in Common Stock or
subdivisions, consolidations or combinations of the
Common Stock occurring, in any such case, prior to
the Distribution Date.
Rights as Stockholder: The Rights themselves do not entitle the holder
thereof to any rights as a
stockholder, including, without limitation, voting
rights or to receive dividends.
Amendment of Rights: Until the Rights become nonredeemable, the Company
may, except with respect to the redemption price,
amend the Agreement in any manner. After the Rights
become nonredeemable, the Company may amend the
Agreement to cure any ambiguity, to correct or
supplement any provision which may be defective or
inconsistent with any other provisions, to shorten or
lengthen any time period under the Rights Agreement,
or to change or supplement any provision in any
manner the Company may deem necessary or desirable,
provided that no such amendment may adversely affect
the interests of the holders of the Rights (other
than the Acquiring Person or its Affiliates or
Associates) or cause the Rights to again be
redeemable or the Agreement to again be freely
amendable.
A copy of the Rights Agreement is available, free of charge, from the
Company, Power Integrations, Inc., 000 X. Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX
00000, Attention: Corporate Secretary. This summary description of the
Rights Agreement does not purport to be complete and is qualified in its
entirety by reference to the Rights Agreement, as amended from time to
time, which is incorporated in this summary description by reference.
