EXHIBIT 99.1
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RIGHTS AGREEMENT
This Rights Agreement (this "Agreement"), dated as of April 30, 1999, is by
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and between Data Translation, Inc. (the "Company"), a Delaware corporation, and
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BankBoston, N.A. (the "Rights Agent"), a national banking association.
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The Company's Board of Directors has declared a dividend of one preferred
share purchase right (a "Right") in respect of each share of the Company's
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Common Stock outstanding of record as of the close of business, Boston time, on
April 30, 1999 (the "Record Date"), each Right representing the right to
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purchase one one-hundredth of a Preferred Share, upon the terms and subject to
the conditions set forth in this Agreement, and has further authorized and
directed the issuance of one Right with respect to each Common Share that shall
become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date and the Final Expiration Date.
The parties hereby agree as follows:
1. CERTAIN DEFINITIONS. For purposes of this Agreement:
(a) "Acquiring Person" means any Person who, together with all Affiliates
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and Associates of such Person, is the Beneficial Owner of 15% or more of the
Common Shares of the Company then outstanding or who was such a Beneficial Owner
at any time after the date hereof, whether or not such Person continues to be
the Beneficial Owner of 15% or more of the Common Shares then outstanding, but
will not include the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any Subsidiary of the Company, or any entity
holding securities of the Company organized, appointed, or established by the
Company or any Subsidiary for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, (i) Xxxxxx X. Xxxxxxxx, Xx. will not be deemed to
be an Acquiring Person, and (ii) no Person will become an "Acquiring Person"
solely as the result of an acquisition of Common Shares by the Company which, by
reducing the number of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person to 15% or more of the Common Shares of
the Company then outstanding; provided, however, that if a Person becomes the
Beneficial Owner of 15% or more of the Common Shares of the Company then
outstanding by reason of share purchases by the Company, and after such share
purchases by the Company, becomes the Beneficial Owner of any additional Common
Shares of the Company, then such Person will be deemed to be an "Acquiring
Person." 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, and such Person divests as
promptly as practicable a sufficient number of Common Shares 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 an
"Acquiring Person" for any purposes of this Rights
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Agreement.
(b) "Adjustment Shares" shall have the meaning ascribed thereto in
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(S)11(a)(ii) hereof.
(c) "Affiliate" and "Associate" have the respective meanings ascribed to
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such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
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on the date of this Agreement.
(d) A Person will be deemed the "Beneficial Owner" of and will be deemed
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to "beneficially own" any securities:
(i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement, or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise; provided, however, that a Person
will not be deemed the "Beneficial Owner" of, or to "beneficially own," (A)
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 payment, purchase, or exchange, or (B) at any
time prior to the occurrence of a Triggering Event, securities issuable
upon exercise of Rights, or (C) from and after the occurrence of a
Triggering Event, securities issuable upon exercise of Rights, which Rights
were acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(a) or
Section 23 hereof (the "Original Rights") or pursuant to Section 11(i)
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hereof in connection with an adjustment made with respect to any Original
Rights;
(ii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or
has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act), including without
limitation pursuant to any agreement, arrangement, or understanding,
whether or not in writing; provided, however, that a Person will not be
deemed the "Beneficial Owner" of, or to "beneficially own," any security
under this subparagraph (ii) as a result of an oral or written agreement,
arrangement, or understanding to vote such security if such agreement,
arrangement, or understanding: (A) arises solely from a revocable proxy
given in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable provisions of the General Rules
and Regulations under the Exchange Act, and (B) is not also then reportable
by such Person on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) that are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person
(or any of
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such Person's Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in the
proviso to subparagraph (ii) of this paragraph (d)) or disposing of any
voting securities of the Company.
provided, however, that nothing in this paragraph (d) will cause a Person
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of, or to "beneficially own," any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.
(e) "Business Day" means any day other than a Saturday, a Sunday, or a day
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on which banking institutions in The Commonwealth of Massachusetts are
authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date means 5:00 P.M., Boston time, on
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such date; provided, however, that if such date is not a Business Day it means
5:00 P.M., Boston time, on the next succeeding Business Day.
(g) "Common Shares" when used with reference to the Company means the
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shares of common stock, par value $0.01 per share, of the Company. "Common
Shares" when used with reference to any Person other than the Company means the
capital stock with the greatest voting power, or the equity securities or other
equity interest having power to control or direct the management, of such other
Person, or if such other Person is a Subsidiary of another Person, of the Person
or Persons that ultimately control such first-mentioned Person and which have
issued and outstanding such capital stock, equity securities, or equity
interests.
(h) "Distribution Date" has the meaning set forth in Section 3 hereof.
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(i) "Expiration Date" has the meaning set forth in Section 7(a)(iii)
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hereof.
(j) "Final Expiration Date" has the meaning set forth in Section 7(a)(i)
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hereof.
(k) "Person" means any individual, firm, corporation, partnership, limited
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liability company, trust, or other entity, and includes any successor (by merger
or otherwise) of such entity.
(l) "Preferred Shares" means shares of Series A Junior Participating
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Preferred Stock, par value $0.01 per share, of the Company having rights and
preferences set forth in the Form of Certificate of Designations attached to
this Rights Agreement as Exhibit A.
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(m) "Purchase Price" has the meaning set forth in (S)7(b) hereof.
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(n) "Redemption Date" has the meaning set forth in Section 7(a)(ii)
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hereof.
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(o) "Right" has the meaning set forth in the second paragraph hereof.
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(p) "Rights Certificate" shall have the meaning ascribed thereto in
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(S)3(a) hereof.
(q) "Section 7(e) Person" has the meaning set forth in Section 7(e)
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hereof.
(r) "Section 11(a)(ii) Event" means any event described in Section
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11(a)(ii) hereof.
(s) "Section 13 Event" means any event described in clauses (x), (y), or
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(z) of Section 13(a) hereof.
(t) "Shares Acquisition Date" means the first date of public announcement
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(which, for purposes of this definition, includes without limitation a report
filed pursuant to Section 13(d) under the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such.
(u) "Subsidiary" of any Person means any other Person of which a majority
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of the voting power of the voting equity securities or equity interest is owned,
directly or indirectly, by such first-mentioned Person, or which is otherwise
controlled by such first-mentioned Person.
(v) "Summary of Rights" shall have the meaning ascribed thereto in (S)3(b)
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hereof.
(w) "Triggering Event" means any Section 11(a)(ii) Event or any Section 13
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Event.
(x) "Voting Stock" means (i) the Common Shares of the Company, and (ii)
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any other shares of capital stock of the Company entitled to vote generally in
the election of directors or entitled to vote together with the Common Shares in
respect of any merger, consolidation, sale of all or substantially all of the
Company's assets, liquidation, dissolution, or winding-up. Whenever any
provision of this Agreement requires a determination of whether a number of
shares of Voting Stock constituting a specified percentage of such Voting Stock
has been voted, tendered, acquired, sold or otherwise disposed of, or a
determination of whether a Person has offered or proposed to acquire a number of
shares of Voting Stock constituting such specified percentage, the number of
shares of Voting Stock constituting such specified percentage of Voting Stock
will in every such case be deemed to be the number of shares of Voting Stock
constituting the specified percentage of the Company's entire voting power then
entitled to vote generally in the election of directors or then entitled to vote
together with the Common Shares in respect of any merger, consolidation, sale of
all or substantially all of the Company's assets, liquidation, dissolution, or
winding-up.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
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until the Distribution Date, will also be the holders of the Common Shares in
accordance with Section 3 hereof) 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 will be as the Company may determine.
SECTION 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the earliest of:
(i) the close of business on the tenth Business Day after the Shares
Acquisition 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 the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any
entity holding Common Shares for or pursuant to the terms of any such plan)
of, or of the first public announcement of the intention of any Person
(other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any
entity holding Common Shares for or pursuant to the terms of any such plan)
to commence, a tender or exchange offer, the consummation of which would
result in any Person becoming the Beneficial Owner of Common Shares
aggregating 15% or more of the then outstanding Common Shares;
(including any such date which is after the date of this Agreement and prior to
the issuance of the Rights; the earliest of such dates being herein referred to
as the "Distribution Date"):
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(x) no right may be exercised;
(y) the Rights will be evidenced (subject to the provisions of
Section 3(b) hereof) by the certificates for Common Shares registered in
the names of the holders thereof (which certificates will also be deemed to
be certificates for Rights) and not by separate certificates; and
(z) the Rights (and the right to receive certificates therefor) will
be transferable only in connection with the transfer of the underlying
Common Shares.
As soon as practicable after the Distribution Date, the Company will prepare and
execute, the Rights Agent will countersign, and the Company will send or cause
to be
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sent (and if requested, the Rights Agent will send) by first-class, postage-
prepaid mail or other appropriate means, to each record holder of Common Shares
as of the Close of Business on the Distribution Date, at the address of such
holder shown on the records of the Company, a certificate for Rights, in
substantially the form of the attached Exhibit B (collectively, "Rights
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Certificates"), evidencing one Right for each Common Share so held. As of and
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after the Distribution Date, the Rights will be evidenced solely by Rights
Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the Company
will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form of the attached Exhibit C (the "Summary of Rights"), by
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first-class, postage-prepaid mail, or other appropriate means, to each record
holder of Common Shares as of the Close of Business on the Record Date, at the
address of such holder shown on the records of the Company or its transfer
agent.
With respect to certificates for Common Shares outstanding as of the Record
Date, until the Distribution Date (or earlier redemption, expiration or
termination of the Rights), the Rights will be evidenced by such certificates
registered in the names of the holders thereof together with a copy of the
Summary of Rights attached thereto, and the registered holders of the Common
Shares will also be the registered holders of the associated Rights. With
respect to uncertificated Common Shares outstanding as of the Record Date, until
the Distribution Date, the Rights will be evidenced by the registration of the
Common Shares in the Company's share register in the names of the holders
thereof.
Until the Distribution Date (or earlier redemption, expiration or
termination of the Rights), the surrender for transfer of any certificate for
Common Shares outstanding on the Record Date, even without a copy of the Summary
of Rights attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate.
(c) Certificates issued for Common Shares (including without limitation
certificates issued upon transfer or exchange of Common Shares) after the Record
Date but prior to the earlier of the Distribution Date, the Redemption Date, the
Expiration Date or the Final Expiration Date will be deemed also to be
certificates for Rights and will have impressed, printed, or written thereon, or
otherwise affixed thereto, the following legend:
"This certificate also evidences and entitles the holder hereof to certain
rights as set forth in a Rights Agreement between Data Translation, Inc.
and BankBoston, N.A., dated as of April 30, 1999 (the "Rights Agreement"),
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the terms of which are hereby incorporated herein by reference and a copy
of which is on file at the principal executive offices of Data Translation,
Inc. Under certain circumstances, as set forth in the Rights Agreement,
such Rights may be redeemed, may expire, or may be evidenced by separate
certificates and will no longer be evidenced by this certificate. Data
Translation, Inc. will mail to the registered holder of this certificate a
copy of the Rights Agreement without charge after
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receipt of a written request therefor. As described in the Rights
Agreement, under certain circumstances, Rights held by Acquiring Persons
(as defined in the Rights Agreement), or certain related Persons, and any
subsequent holder of such Rights, may become null and void."
and, in the case of the initial transaction or subsequent periodic statements
with respect to uncertificated Common Shares, the following legend:
"The registration in the share register of Data Translation, Inc. of the
shares of common stock to which this initial transaction or subsequent
periodic statement relates also evidences and entitles the registered
holder of such shares to certain rights as set forth in a Rights Agreement
between Data Translation, Inc. and BankBoston, N.A., dated as of April 30,
1999 (the "Rights Agreement"), the terms of which are hereby incorporated
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herein by reference and a copy of which is on file at the principal
executive offices of Data Translation, 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 such registration
in the share register of Data Translation, Inc. Data Translation, Inc.
will mail to the holder of this certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement, Rights issued to any
Person who becomes an Acquiring Person (as defined in the Rights Agreement)
may become null and void."
Until the Distribution Date, the Rights associated with Common Shares will
be evidenced only by the certificates representing such Common Shares, and the
surrender for transfer of any such certificate will also constitute the transfer
of the Rights associated with the Common Shares represented thereby. However,
with respect to such initial transaction or subsequent periodic statements
containing the foregoing legend, until the Distribution Date, the Rights
associated with the Common Shares with respect to which such statements are
issued shall be evidenced solely by the registration of ownership of such Common
Shares in the share register of the Company, and the registration of transfer of
ownership in such share register shall also constitute the transfer of the
Rights associated with the Common Shares whose ownership is so transferred. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares will be deemed cancelled and retired so that the Company will not
be entitled to exercise any Rights associated with the Common Shares that are no
longer outstanding.
Notwithstanding anything to the contrary stated herein, no Rights
Certificate shall be issued pursuant to this Section 3 that represents Rights
"beneficially owned" by an Acquiring Person whose Rights would be void pursuant
to Section 7(e) or any Associate or Affiliate of any such Acquiring Person; no
Rights Certificate shall be issued at any time upon the transfer of any Rights
to an Acquiring Person whose Rights would be void pursuant to Section 7(e) or
any Associate or Affiliate thereof or to any nominee of such Acquiring Person,
Associate or Affiliate; any Rights Certificate
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delivered to the Rights Agent for transfer to an Acquiring Person whose Rights
would be void pursuant to Section 7(e) shall be canceled.
SECTION 4. FORM OF RIGHTS CERTIFICATES. The Rights Certificates (and the
forms of election to purchase shares and of assignment to be printed on the
reverse thereof) will be substantially in the form of the attached Exhibit B,
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and may have such marks of identification or designation and such legends,
summaries, or indorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange or
securities quotation system on or by which the Rights may from time to time be
listed or quoted, or to conform to usage. Subject to the provisions of Section
11 and Section 23 hereof, the Rights Certificates initially will entitle the
holders thereof to purchase such number of one one-hundredths of a Preferred
Share as may be set forth therein at the price per one one-hundredth of a
Preferred Share set forth therein (the "Purchase Price"), but the number of such
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one one-hundredths of a Preferred Share and the Purchase Price will be subject
to adjustment as provided herein.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION. The Rights Certificates
will be executed on behalf of the Company by such officer or officers who would
be entitled to sign certificates representing Preferred Shares, either manually
or by facsimile signature, may (but need not) have affixed thereto the Company's
seal or a facsimile thereof, and may (but need not) be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates will be countersigned by the Rights Agent
and will not be valid for any purpose unless so countersigned. If any officer
of the Company who signed any of Rights Certificate ceases to be such officer of
the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificate, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company with
the same force and effect as though the Person who signed such Rights
Certificate had not ceased to be such officer of the Company; and any Rights
Certificate may be signed on behalf of the Company by any Person who, at the
actual date of the execution of such Rights Certificate, will be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such Person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to be
kept books for registration and transfer of the Rights Certificates, showing the
names and addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights Certificates, and
the date of each Rights Certificate.
SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES. Subject
to the provisions of Sections 3(c), 4, 7(e), and 15 hereof, at any time after
the close of business on the Distribution Date, and before the close of business
on the Expiration
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Date, any Rights Certificate(s) may be transferred, split up, combined, or
exchanged for one or more new Rights Certificates entitling the registered
holder to purchase the same number of one one-hundredths of a Preferred Share as
the Rights Certificate(s) surrendered then entitled such holder to purchase.
Any registered holder desiring to transfer, split up, combine, or exchange
any Rights Certificate(s) will make such request in writing delivered to the
Rights Agent, and will surrender the Rights Certificate or Rights Certificates
to be transferred, split up, combined, or exchanged at the office of the Rights
Agent designated for such purpose. Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the transfer,
split up, combination or exchange of any such surrendered Rights Certificate
until the registered holder shall have completed and signed the certificate
contained in the form of assignment on the reverse side of such Rights
Certificate and shall have provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request. Thereupon the Rights Agent
will countersign and deliver to the Person entitled thereto one or more Rights
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer, split-up, combination, or
exchange of Rights Certificates.
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction, or mutilation of a Rights
Certificate, and in case of loss, theft, or destruction, of indemnity and/or
security reasonably satisfactory to them, and at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Rights Certificate so lost, stolen, destroyed,
or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Subject to Section 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Rights Certificate, with the form of election to purchase
on the reverse side thereof duly executed, to the Rights Agent at the office of
the Rights Agent designated for such purpose, together with payment of the
Purchase Price for each one one-hundredth of a Preferred Share (or other
securities) as to which the Rights are being exercised, at or prior to the
earliest of:
(i) the close of business on April 30, 2009 (the "Final Expiration
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Date");
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(ii) the time at which the Rights are redeemed as provided in
Section
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24 hereof (the "Redemption Date"); or
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(iii) the time at which such Rights are exchanged as provided in
Section 25 hereof (such earliest time being herein referred to as the
"Expiration Date").
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(b) The Purchase Price for each one one-hundredth of a Preferred Share
upon the exercise of a Right will initially be $21.00, will be subject to
adjustment from time to time as provided in Sections 11 and 13 hereof, and will
be payable in lawful money of the United States of America in accordance with
Section 7(c) hereof (the "Purchase Price").
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(c) Upon receipt of a Rights Certificate representing exercisable Rights,
with the appropriate form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount equal
to any applicable transfer tax required to be paid by the holder of such Rights
Certificate in accordance with Section 9 hereof, in cash or by certified check,
cashier's check, money order, or bank draft paid or payable to the order of the
Company, the Rights Agent will thereupon promptly:
(i) (A) requisition from any transfer agent of the Preferred Shares
(or make available, if the Rights Agent is the transfer agent) certificates
for the number of Preferred Shares to be purchased (and the Company hereby
irrevocably authorizes its transfer agent to comply with all such
requests), or (B) if the Company, in its sole discretion, elects to deposit
the Preferred Shares issuable upon conversion of the Rights hereunder into
a depository, requisition from the depository agent depository receipts
representing such number of one one-hundredths of a Preferred Share as are
to be purchased (in which case certificates for the Preferred Shares
represented by such receipts will be deposited by the transfer agent with
the depository agent) and the Company will direct the depository agent to
comply with such request;
(ii) when appropriate, requisition from the Company the amount of
cash, if any, to be paid in lieu of issuance of fractional shares in
accordance with Section 15 hereof;
(iii) promptly after receipt of such certificates or depository
receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or
names as may be designated by such holder; and
(iv) when appropriate, after receipt, promptly deliver such cash to
or upon the order of the registered holder of such Rights Certificate. In
the event that the Company is obligated to issue other securities of the
Company pursuant to Section 11(a), the Company will make all arrangements
necessary so that such other securities are available for distribution by
the Rights Agent, if, as, and when appropriate.
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(d) Subject to the provisions of Section 15 hereof, if the registered
holder of any Rights Certificate exercises less than all of the Rights evidenced
thereby, a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised will be issued by the Rights Agent to the registered
holder of such Rights Certificate.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 11(a)(ii) Event, any Rights acquired or
beneficially owned by any:
(i) Acquiring Person or Associate or Affiliate of an Acquiring
Person;
(ii) transferee of an Acquiring Person (or of any Associate or
Affiliate of an Acquiring Person) who becomes such a transferee after the
Acquiring Person becomes such; or
(iii) transferee of an Acquiring Person (or of any Associate or
Affiliate of an Acquiring Person) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and who receives such
Rights pursuant to either (A) a transfer (regardless of whether for
consideration) from such Acquiring Person, Associate, or Affiliate to
holders of equity interests in such Acquiring Person, Associate, or
Affiliate, or to any Person with whom such Acquiring Person, Associate, or
Affiliate has any continuing oral or written plan, agreement, arrangement,
or understanding regarding the transferred Rights, or (B) a transfer that
the Board of Directors of the Company has determined is part of an oral or
written plan, agreement, arrangement, or understanding that has as a
primary purpose or effect avoidance of this Section 7(e);
(each Person described in the preceding clauses (i) through (iii) of this
Section 7(e), a "Section 7(e) Person") will become null and void without any
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further action being required therefor, and no holder of such Rights will have
any rights whatsoever with respect to such Rights, whether under this Agreement
or otherwise.
The Company will use reasonable efforts to insure that the provisions of
this Section 7(e) and Sections 3(c) and 4 hereof are complied with, but will
have no liability to any holder of Rights Certificates or any other Person as a
result of its failure to make or erroneous making of any determination with
respect to an Acquiring Person, Affiliate or Associate of an Acquiring Person,
or transferee of any such Person.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company will 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 the certificate contained in the form of
election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise will have been properly completed and duly
executed by the registered holder thereof and the Company will have been
provided with such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
may reasonably request.
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SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination, or exchange will, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or if surrendered to the Rights Agent, will be cancelled by it; and no Rights
Certificates will be issued in lieu thereof except as expressly permitted by any
of the provisions of this Rights Agreement. The Company will deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent will so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent will deliver
all cancelled Rights Certificates to the Company, or at the written request of
the Company, will destroy such cancelled Rights Certificates and certify such
destruction to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES.
(a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued Preferred Shares or any
Preferred Shares held in its treasury, a number of Preferred Shares (or other
securities) sufficient to permit the exercise in full of all outstanding Rights
in accordance with Section 7 of this Agreement.
(b) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Shares or other securities
delivered upon due exercise of Rights and payment of the purchase price therefor
will be duly and validly authorized and issued, fully paid, and nonassessable at
the time of delivery of the certificates for such Preferred Shares or other
securities.
(c) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges payable in
respect of the issuance or delivery of the Rights Certificates or of any
Preferred Shares or other securities upon the exercise of Rights. The Company
will not, however, be required to pay any transfer tax payable in respect of any
transfer or delivery of Rights Certificates to a Person other than, or the
issuance or delivery of certificates or depository receipts for the Preferred
Shares or other securities in a name other than that of, the registered holder
of the Rights Certificate evidencing Rights surrendered for exercise; or to
issue or to deliver any certificates or depository receipts for Preferred Shares
or other securities upon the exercise of any Rights until any such tax has been
paid (any such tax being payable by the holder of such Rights Certificate at the
time of surrender) or until it has been established to the Company's reasonable
satisfaction that no such tax is due.
(d) The Company may temporarily suspend the exercisability of the Rights
in order to prepare and file any registration statement as may be required to be
filed pursuant to applicable law with respect to securities purchasable upon
exercise of the Rights. Upon any such suspension, the Company will issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended. The Company will thereafter issue a public announcement
at such time as the suspension is no longer in effect.
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SECTION 10. PREFERRED SHARES RECORD DATE. Each Person in whose name any
certificate for Preferred Shares (or other securities) is issued upon the
exercise of Rights will for all purposes be deemed to have become the holder of
record of the Preferred Shares (or other securities) represented thereby on, and
such certificate will be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Shares (or
other securities) transfer books of the Company are closed, such Person will be
deemed to have become the record holder of such shares on, and such certificate
will be dated, the next succeeding Business Day on which the Preferred Shares
(or other securities) transfer books of the Company are open.
Until a Rights Certificate has been duly exercised, the holder thereof will
not be entitled to any rights of a stockholder of the Company with respect to
shares for which the Rights may be exercisable (including without limitation the
rights to vote and to receive dividends and other distributions) and will not be
entitled to receive any notice of any proceedings of the Company, except as
specifically provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares covered by
each Right, and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) Except as otherwise provided in this Section 11(a) and in
Section 7(e), if the Company at any time after the date of this Agreement
(A) declares a dividend on the Preferred Shares payable in Preferred
Shares, (B) subdivides the outstanding Preferred Shares, (C) combines the
outstanding Preferred Shares into a smaller number of shares, or (D)
issues any shares of its capital stock in a reclassification of the
Preferred Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), then 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, as the case may be, and the number and
kind of shares of capital stock issuable on such date, each will be
proportionately adjusted so that the holder of any Right duly exercised
after such applicable time will be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares of
capital stock that, if such Right had been exercised immediately prior to
such applicable time and at a time when the Preferred Shares transfer books
of the Company were open, such holder would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination, or reclassification; provided, however, that in no event will
the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. If an event occurs that would require
an adjustment under both this Section 11(a)(i) and Section 11(a)(ii), the
adjustment provided for in this Section 11(a)(i) will be in addition to,
and will be made prior to, any adjustment required pursuant to
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Section 11(a)(ii).
(ii) Subject to Section 25 of this Agreement, if any Person becomes
an Acquiring Person then, and in each such case, proper provision will be
made promptly so that, following the Distribution Date, each holder of a
Right, except as provided in Section 7(e) hereof, will have a right to
receive, upon exercise thereof at a price equal to the then current
Purchase Price multiplied by the number of one one-hundredths of a
Preferred Share for which a Right is then exercisable, in accordance with
the terms of this Agreement and in lieu of Preferred Shares, such number of
Common Shares of the Company as is equal to the result obtained by (x)
multiplying the then current Purchase Price by the number of one one-
hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event, and
(y) dividing that product (which following such first occurrence will
thereafter be referred to as the "Purchase Price" for each Right and for
--------------
all purposes of this Agreement) by 50% of the then current per share market
price of the Company's Common Shares (determined pursuant to Section 11(d)
hereof) on the date of such first occurrence (such number of shares, the
"Adjustment Shares"); provided, however, that if the transaction that would
-----------------
otherwise give rise to the foregoing adjustment is also subject to the
provisions of Section 13 hereof, then only the provisions of Section 13
hereof will apply and no adjustment will be made pursuant to this Section
11(a)(ii). If any Person shall become an Acquiring Person and the Rights
shall then be outstanding, the Company shall not take any action which
would eliminate or diminish the benefits intended to be afforded by the
Rights.
(iii) If the number of Common Shares that are authorized by the
Company's certificate of incorporation (as amended and in effect as of the
relevant time) but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights, are not sufficient to permit the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company shall take all such
action as may be necessary to authorize additional Common Shares for
issuance upon exercise of the Rights. If the Company shall, after good
faith effort, be unable to take all such action as may be necessary to
authorize such additional Common Shares, the Company shall then substitute,
for each Common Share that would otherwise be issuable upon exercise of a
Right, a number of Preferred Shares or fraction thereof such that the
current per share market price of one Preferred Share multiplied by such
number or fraction is equal to the current per share market price of one
Common Share as of the date of issuance of such Preferred Shares or
fraction thereof.
(b) If the Company fixes a record date for the issuance of rights,
options, or warrants to all holders of Preferred Shares entitling them (for a
period expiring within 45 calendar days after such record date) to subscribe for
or purchase Preferred Shares (or shares having the same or more favorable
rights, privileges, and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or
-15-
equivalent preferred share (or having a conversion price per share, if a
security convertible into Preferred Shares or equivalent preferred shares) less
than the then current per share market price of the Preferred Shares (as defined
in Section 11(d)) on such record date, the Purchase Price to be in effect after
such record date will be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which will
be the number of Preferred Shares outstanding on such record date plus the
number of Preferred Shares that the aggregate offering price of the total number
of Preferred Shares and/or equivalent preferred shares so to be offered (and/or
the aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price and the denominator of
which will be the number of Preferred Shares outstanding on such record date
plus the number of additional Preferred Shares and/or equivalent Preferred
Shares to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however, that
in no event will the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. In case such subscription price may be paid
in a consideration part or all of which will be in a form other than cash, the
value of such consideration will be as determined in good faith by the Board of
Directors of the Company, whose determination will be described in a statement
filed with the Rights Agent. Preferred Shares owned by or held for the account
of the Company will not be deemed outstanding for the purpose of any such
computation. Such adjustment will be made successively whenever such a record
date is fixed; and in the event that such rights, options or warrants are not so
issued, the Purchase Price will be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.
(c) If the Company fixes a record date for the making of a distribution to
all holders of the Preferred Shares (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation) of cash, evidences of indebtedness, or other assets
(other than a dividend payable in Preferred Shares) 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 will be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which will be the then current per share market price
of the Preferred Shares on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Company, whose
determination will be described in a statement filed with the Rights Agent) of
the portion of the cash, evidences of indebtedness, or other assets so to be
distributed or of such subscription rights or warrants applicable to one
Preferred Share and the denominator of which will be such current per share
market price of the Preferred Shares; provided, however, that in no event will
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company to be issued
upon exercise of one Right. Such adjustments will be made successively whenever
such a record date is fixed; and in the event that such distribution is not so
made, the Purchase Price will again be adjusted to be the Purchase Price that
would then be in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current
-16-
per share market price" of any Security (a "Security" for the purpose of
--------
this Section 11(d)(i)) on any date will be deemed to be the average of the
daily closing prices per share of such Security for the 30 consecutive
Trading Days (as hereinafter defined) immediately prior to such date;
provided, however, that in the event that the current per share market
price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or
securities convertible into such shares, or (B) any subdivision,
combination, or reclassification of such Security and prior to the
expiration of 30 Trading Days after the ex-dividend date for such dividend
or distribution, or the record date for such subdivision, combination, or
reclassification, then, and in each such case, the current per share market
price will be appropriately adjusted to reflect the current market price
per share equivalent of such Security. The closing price for each day will
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
National Association of Securities Dealers, Inc. (the "NASDAQ") National
------
Market System, or if the Security is not listed or admitted to trading on
the NASDAQ, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national
securities exchange on which the Security is listed or admitted to trading,
or if the Security is not listed or admitted to trading on any national
securities exchange, the last quoted price, or if not so quoted, the
average of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ Automated Quotations System or such other
system then in use, or if on any such date the Security is not quoted by
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Security
selected by the Board of Directors of the Company. The term "Trading Day"
-----------
means a day on which the principal national securities exchange on which
the Security is listed or admitted to trading is open for the transaction
of business or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the "current
per share market price" of the Preferred Shares will be determined in
accordance with the method set forth in Section 11(d)(i). If the Preferred
Shares are not publicly traded, the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be the current per share
market price of the Common Shares as determined pursuant to Section
11(d)(i) (appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof), multiplied by one
hundred. If neither the Common Shares nor the Preferred Shares are
publicly held or so listed or traded, "current per share market price"
means the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination will be described in a
statement filed with the Rights Agent.
(e) Subject to the final sentence of this Section 11(e), no adjustment in
the
-17-
Purchase Price will be required unless such adjustment would require an increase
or decrease of at least 1% in the Purchase Price; provided, however, that any
adjustments that by reason of this Section 11(e) are not required to be made
will be carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 will be made to the nearest cent or to the
nearest one-millionth of a Preferred Share or one ten-thousandth of any other
share or security, as the case may be. Notwithstanding the first sentence of
this Section 11(e), any adjustment required by this Section 11 will be made no
later than the earlier of (i) three years from the date of the transaction that
requires such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) hereof,
the holder of any Right thereafter exercised will become entitled to receive any
shares of capital stock of the Company other than Preferred Shares, thereafter
the number of such other shares so receivable upon exercise of any Right will be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred Shares
contained in Section 11(a) through (c), (e), (h) through (k), and (m), and the
provisions of Sections 7, 9, 10, 13, 14, and 15 with respect to the Preferred
Shares will 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 will evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company has 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 will thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of a
Preferred Share (calculated to the nearest one one-millionth of a Preferred
Share) obtained by (i) multiplying (x) the number of one one-hundredths of a
Preferred Share (calculated to the nearest one millionth of a Preferred Share)
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 to adjust the number of Rights, in substitution for any
adjustment in the number of one one-hundredths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights will be exercisable for the number of one
one-hundredths of a Preferred Share 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 will become that number of Rights (calculated
to the nearest one ten-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
-18-
Company will make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and if known at the time,
the amount of the adjustment to be made. This record date may be the date on
which the Purchase Price is adjusted or any day thereafter, but if the Rights
Certificates have been issued, will be at least 10 days later than the date of
the public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
as promptly as practicable will cause to be distributed to holders of record of
Rights Certificates on such record date Rights Certificates evidencing, subject
to Section 15 hereof, the additional Rights to which such holders will be
entitled as a result of such adjustment, or at the Company's option, will cause
to be distributed to such holders of record in substitution and replacement for
the Rights Certificates held by such holders prior to the date of adjustment,
and upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders are entitled after such
adjustment. Rights Certificates so to be distributed will 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 will be registered in the names
of the holders of record of Rights Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of one one-hundredths of a Preferred Share issuable upon the exercise of
the Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number of one one-hundredths of a
Preferred Share that were expressed in the initial Rights Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below one one-hundredths of the then par value, if any, of the
Preferred Shares issuable upon exercise of the Rights, the Company will take any
corporate action that may be necessary, in the opinion of its counsel, in order
that the Company may validly and legally issue fully paid and nonassessable
Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 requires that an adjustment in
the Purchase Price be made effective as of a record date for a specified event,
the Company may defer until the occurrence of such event the issuing to the
holder of any Right exercised after such record date of the Preferred Shares and
other capital stock or securities of the Company, if any, issuable upon such
exercise over and above the Preferred Shares 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 will deliver to such holder an appropriate instrument evidencing
such holder's right to receive such additional shares upon the occurrence of the
event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company will be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion determines to be advisable in order
that any consolidation or
-19-
subdivision of the Preferred Shares, issuance wholly for cash of any Preferred
Shares at less than the current market price, issuance wholly for cash of
Preferred Shares or securities that by their terms are convertible into or
exchangeable for Preferred Shares, stock dividends, or issuance of rights,
options, or warrants referred to hereinabove in this Section 11, hereafter made
by the Company to holders of its Preferred Shares will not be taxable to such
stockholders.
(n) If at any time after the date of this Rights Agreement and prior to
the Distribution Date, the Company shall (i) declare or pay any dividend on the
Common Shares payable in Common Shares or (ii) effect a subdivision, combination
or consolidation of the Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares) into a greater or lesser number of Common
Shares, then in any such case (A) the number of one one-hundredths of a
Preferred Share purchasable after such event upon proper exercise of each Right
shall be determined by multiplying the number of one one-hundredths of a
Preferred Share so purchasable immediately prior to such event by a fraction,
the numerator of which is the number of Common Shares outstanding immediately
before such event and the denominator of which is the number of Common Shares
outstanding immediately after such event, and (B) each Common Share outstanding
immediately after such event shall have issued with respect to it that number of
Rights which each Common Share outstanding immediately prior to such event had
issued with respect to it. The adjustments provided for in this Section 11(n)
shall be made successively whenever such a dividend is declared or paid or such
a subdivision, combination or consolidation is effected.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made pursuant to Sections 11 or 13 hereof, the Company
will promptly (a) prepare a certificate setting forth such adjustment, and a
brief statement of the facts accounting for such adjustment, (b) file with the
Rights Agent and with each transfer agent for the Common Shares or the Preferred
Shares a copy of such certificate, and (c) mail a brief summary thereof to each
holder of a Rights Certificate (or if prior to the Distribution Date, to each
holder of a certificate representing Preferred Shares) in accordance with
Section 27 hereof. The Rights Agent may rely on such certificate without
further inquiry and may assume that no such adjustment has been made unless and
until it will have received such certificate.
SECTION 13. CONSOLIDATION, MERGER, OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER OF THE COMPANY.
(a) If, following the Shares Acquisition Date, directly or indirectly:
(x) the Company consolidates with, or merges with and into, any other
Person (other than a Subsidiary of the Company in a transaction that
complies with Section 14(b) hereof), and the Company is not the continuing
or surviving corporation of such consolidation or merger;
(y) any Person (other than a Subsidiary of the Company in a
transaction that complies with Section 14(b) hereof) consolidates with the
Company, or merges with and into the Company and the Company is the
-20-
continuing or surviving corporation of such merger, and in connection with
such merger, all or part of the Common Shares will be changed into or
exchanged for stock or other securities of any other Person (or the
Company) or cash or any other property;
(z) the Company sells or otherwise transfers (or one or more of its
Subsidiaries sells or otherwise transfers), in one or more transactions,
assets or earning power aggregating 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to any Person
(other than to the Company or one or more of its Subsidiaries, in one or
more transactions that complies with Section 14 hereof);
then, and in each such case, proper provision will be made so that (i) following
the Distribution Date, and subject to Section 7(e) hereof, each holder of a
Right will have the right to receive, upon the exercise thereof at the then
current Purchase Price multiplied by the number of one one-hundredths of a
Preferred Share for which a Right is then exercisable, in accordance with the
terms of this Agreement and in lieu of Preferred Shares, such number of freely
tradable Common Shares of the Principal Party (as hereinafter defined), free and
clear of liens, rights of call or first refusal, encumbrances, and other adverse
claims, as is equal to the result obtained by (1) multiplying the then current
Purchase Price by the number of one one-hundredths of a Preferred Share for
which a Right is exercisable immediately prior to the first occurrence of a
Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to the
first occurrence of a Section 13 Event, multiplying the number of such shares
for which a Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event, by the Purchase Price in effect immediately prior to
such first occurrence), and (2) dividing that product (which following the first
occurrence of a Section 13 Event, will be referred to as the "Purchase Price"
--------------
for each Right and for all purposes of this Agreement) by 50% of the current per
share market price of the Common Shares of such Principal Party (determined
pursuant to Section 11(d) hereof) on the date of consummation of such Section 13
Event; (ii) such Principal Party will thereafter be liable for, and will assume,
by virtue of such consolidation, merger, sale, or transfer, all the obligations
and duties of the Company pursuant to this Agreement; (iii) the term "Company"
will thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof will apply to
such Principal Party; and (iv) such Principal Party will take such steps
(including without limitation the reservation of a sufficient number of its
Common Shares in accordance with Section 9 hereof) in connection with such
consummation as may be necessary to assure that the provisions hereof will
thereafter be applicable, as nearly as reasonably may be, in relation to the
Common Shares thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" means
---------------
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of subsection (a) of this Section 13, the Person that is
the issuer of any securities into which Common Shares of the Company are
converted in such merger of consolidation, and if no securities are so
issued, the Person that is the
-21-
other party to the merger or consolidation (including, if applicable, the
Company, if it is the surviving corporation); and
(ii) in the case of any transaction described in clause (z) of the
first sentence of paragraph (a) of this Section 13, the Person that is the
party receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case (1) if the Common Shares of such Person
are not at such time and have not been continuously over the preceding 12-month
period registered under Section 12 of the Securities Exchange Act of l934, as
amended (the "Exchange Act"), and such Person is a direct or indirect subsidiary
------------
or Affiliate of another Person, then "Principal Party" will refer to such other
Person; (2) in case such Person is a subsidiary, directly or indirectly, or
Affiliate of more than one Person, the Common Shares of two or more of which are
and have been so registered, "Principal Party" will refer to whichever of such
Persons is the issuer of the Common Shares having the greatest aggregate market
value; and (3) in case 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 the preceding clauses (1)
and (2) will apply to each of the chains of ownership having an interest in such
joint venture as if such party were a "Subsidiary" of both or all of such joint
ventures and the Principal Parties in each such chain will bear the obligations
set forth in this Section 13 in the same ratio as their direct or indirect
interests in such Person bear to the total of such interests.
(c) The Company will not consummate any such consolidation, merger, sale
or transfer unless the Principal Party has a sufficient number of authorized
Common Shares 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 each Principal Party and each other Person who may
become a Principal Party as a result of such consolidation, merger, sale, or
transfer first execute and deliver to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any Section
13 Event, the Principal Party at its own expense will:
(i) prepare and file a registration statement under the Securities
Act with respect to the Rights and the securities purchasable upon the
exercise of the Rights, will use its best efforts to cause such
registration statement to become effective as soon as practicable after
such filing and will use its best efforts to cause such registration
statement to remain effective (with a prospectus meeting the requirements
of the Securities Act) until the Expiration Date;
(ii) use its best efforts to qualify or register the Rights and the
securities purchasable upon exercise of the Rights under the blue sky laws
of such jurisdictions as may be necessary;
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(iii) use its best efforts to list (or continue the listing of) the
Rights and the securities purchasable upon exercise of the Rights on a
national securities exchange or to meet the eligibility requirements for
quotation on the NASDAQ National Market System; and
(iv) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates, which
financial statements comply in all material respects with the requirements
for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 will similarly apply to successive mergers or
consolidations or sales or other transfers. If a Section 13 Event occurs at any
time after the occurrence of a Section 11(a)(ii) Event, the Rights that have not
theretofore been exercised will thereafter become exercisable solely in the
manner described in paragraph (a) of this Section 13.
SECTION 14. ADDITIONAL COVENANTS.
(a) The Company covenants and agrees that it will not at any time after
the Distribution Date (i) consolidate with, (ii) merge with or into, or (iii)
sell or transfer, in one or more 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, if at the time of or after
such consolidation, merger, or sale there are any charter or by-law provisions
or any rights, warrants, or other instruments outstanding or any other action
taken or circumstances extant that would diminish or otherwise eliminate the
benefits intended to be afforded by the Rights. The Company will not consummate
any such consolidation, merger, or sale unless the Company and such other Person
first execute and deliver to the Rights Agent a supplemental agreement
evidencing compliance with this subsection.
(b) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Section 24 or Section 28 hereof, take any
action if at the time such action is taken it is reasonably foreseeable that
such action will substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.
SECTION 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company will not be required to issue fractions of Rights, except
prior to the Distribution Date as provided in Section 11(i), or to distribute
Rights Certificates that evidence fractional Rights. In lieu of such fractional
Rights, there will be paid to the registered holders of the Rights Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 15(a), the current market value of a
whole Right will be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day will be the last sale price,
regular way, or in case no such sale takes place on such day, the
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average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the NASDAQ National Market
System, or if the Rights are not listed or admitted to trading on the NASDAQ
National Market System, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading, or if
the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price, or if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use, or if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no such
market maker is making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board of Directors of the Company
will be used.
(b) The Company will not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-hundredths
of a Preferred Share) upon exercise of the Rights or to distribute certificates
that evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-hundredths of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-hundredths of a Preferred
Share may, at the election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a depositary
selected by it; provided that such agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and preferences
to which they are entitled as Beneficial Owners of the Preferred Shares
represented by such depositary receipts. In lieu of fractional Preferred Shares
that are not integral multiples of one one-hundredths of a Preferred Share, the
Company will pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one Preferred Share. For the purposes of
this Section 15(b), the current market value of a Preferred Share will be the
closing price of a Preferred Share (as determined pursuant to Section 11(d)(ii)
hereof) for the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right.
SECTION 16. RIGHTS OF ACTION. Excepting the rights of action given to the
Rights Agent under Section 19 hereof, all rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Rights Certificate (or prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action, or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner
-24-
provided in such Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement. Holders
of Rights will 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.
SECTION 17. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Rights Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the principal
office of the Rights Agent, duly indorsed or accompanied by a proper instrument
of transfer;
(c) subject to Section 6 and Section 7(f) hereof, the Company and the
Rights Agent may deem and treat the Person in whose name the Rights Certificate
(or prior to the Distribution Date, the associated Common Shares certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Shares certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent will 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 will have any liability to any holder of a
Right or a beneficial interest in 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, the Company must use its best efforts to have any such order, decree or
ruling lifted or otherwise overturned as soon as possible.
SECTION 18. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Rights Certificate will be entitled to vote, receive
dividends or be deemed for any purpose to be the holder of the Preferred Shares
or any other securities of the Company that may at any time be issuable on the
exercise of the Rights represented thereby, nor will anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to
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give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in Section
26 hereof), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by such Rights Certificate have been exercised in
accordance with the provisions hereof.
SECTION 19. CONCERNING THE RIGHTS AGENT. The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
gross negligence, bad faith, or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability arising directly therefrom.
The Rights Agent will be protected and will incur no liability for or in
respect of any action taken, suffered, or omitted by it in connection with its
administration of this Agreement in reliance upon any Rights Certificate or
certificate for Common Shares 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 if necessary,
verified or acknowledged, by the proper Person or Persons.
SECTION 20. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent may be a party, or any corporation succeeding to the stock transfer or
corporate trust business of the Rights Agent or any successor Rights Agent, will
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 22 hereof. In case at
the time such successor Rights Agent succeeds to the agency created by this
Agreement, any of the Rights Certificates will have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates have not been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Rights Certificates
will have the full force provided in the Rights Certificates and in this
Agreement.
In case at any time the name of the Rights Agent is changed and at such
time any of the Rights Certificates have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its prior name and deliver
Rights
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Certificates so countersigned; and in case at that time any of the Rights
Certificates have not been countersigned, the Rights Agent may countersign such
Rights Certificates either in its prior name or in its changed name; and in all
such cases such Rights Certificates will have the full force provided in the
Rights Certificates and in this Agreement.
SECTION 21. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, will be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel will be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent deems it necessary or desirable that any fact or matter (including
without limitation the identity of any Acquiring Person) 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 is specifically
prescribed herein) may be deemed to be conclusively proved and established by a
certificate signed by the Chief Executive Officer, President, any Vice
President, the Treasurer, or the Secretary of the Company and delivered to the
Rights Agent; and such certificate will be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent will be liable hereunder to the Company and any other
Person only for its own gross negligence, bad faith, or willful misconduct.
(d) The Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and will be deemed to have been
made by the Company only.
(e) The Rights Agent will not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
will it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor will it
be responsible for any adjustment required under the provisions of Section 11 or
Section 13 hereof or for the manner, method, or amount of any 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 Rights Certificates
after receipt of a certificate furnished pursuant to Section 12 describing any
such adjustment); nor will it be responsible for any determination by the Board
of Directors of the Company of the current market value of the Rights,
-27-
Common Shares or Preferred Shares; nor will it by any act hereunder be deemed to
make any representation or warranty as to the authorization or reservation of
any Preferred Shares, Common Shares or other securities to be issued pursuant to
this Agreement or any Rights Certificate or as to whether any Preferred Shares,
Common Shares or other securities will, when issued, be validly authorized and
issued, fully paid, and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge, and
deliver or cause to be performed, executed, acknowledged, and delivered all such
further and other acts, instruments, and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chief Executive Officer, President, any Vice President, the Treasurer, or the
Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it will not be liable for any
action taken or suffered by it in good faith in accordance with instructions of
any such officer or for any delay in acting while waiting for those
instructions. Any application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent under this Rights
Agreement and the date on and/or after which such action will be taken or such
omission will be effective. The Rights Agent will not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date will not be less than ten (10) Business Days after the
date the Chief Executive Officer, President, any Vice President, the Treasurer,
or the Secretary of the Company actually receives such application, unless any
such officer of the Company consents 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 receives written instructions in response to such
application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer, or employee
of the Rights Agent may buy, sell, or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein will preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent will 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 the act, default,
neglect, or misconduct of any such attorney or agent, provided reasonable care
was exercised in the selection and continued employment thereof.
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(j) No provision of this Agreement will 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 will be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certification attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause l and/or 2
thereof, the Rights Agent will not take any further action with respect to such
requested exercise of transfer without first consulting with the Company.
SECTION 22. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' prior notice in writing to the Company and to each transfer agent
of the Common Shares or Preferred Shares in accordance with Section 27 hereof,
and to the holders of the Rights Certificates by first-class mail at the expense
of the Company.
The Company may remove the Rights Agent or any successor Rights Agent upon
30 days' prior notice in writing sent to the Rights Agent or successor Rights
Agent, as the case may be, and each transfer agent of the Common Shares or
Preferred Shares in accordance with Section 27 hereof, and to the holders of the
Rights Certificates by first-class mail.
If the Rights Agent resigns or is removed or otherwise becomes incapable of
acting, the Company will appoint a successor to the Rights Agent. If the
Company fails to make such appointment within a period of 30 days after giving
notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Rights Certificate (who will, with such notice, submit his
Rights Certificate for inspection by the Company), then the registered holder of
any Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or by a court,
will be an entity organized and doing business under the laws of the United
States or any state of the United States (so long as such entity is in good
standing), and 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 $100 million. After appointment, the
successor Rights Agent will 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 will 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 will file notice thereof in writing with the predecessor Rights Agent
and
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each transfer agent of the Common Shares or Preferred Shares, and mail a notice
thereof in writing to the registered holders of the Rights Certificates. Failure
to give any notice provided for in this Section 22, however, or any defect
therein, will not affect the legality or validity of the resignation or removal
of the Rights Agent or the appointment of the successor Rights Agent, as the
case may be.
SECTION 23. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
at its option may issue new Rights Certificates in such form as may be approved
by its Board of Directors to reflect any adjustment or change in the Purchase
Price and the number or kind or class of shares or other securities or property
purchasable under the Rights Certificates made in accordance with the provisions
of this Agreement.
SECTION 24. REDEMPTION.
(a) The Rights may be redeemed by action of the Board of Directors
pursuant to paragraph (b) of this Section 24, and will not be redeemed in any
other manner.
(b) The Board of Directors of the Company may, at its option, at any time
prior to the earliest of (x) the close of business on the tenth day following a
Shares Acquisition Date, or (y) 5:00 p.m., E.S.T., on the Final Expiration Date,
redeem all but not less than all of the then outstanding Rights at a redemption
price of $0.001 per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof. The
redemption of the Rights by the Board of Directors may be made effective at such
time, on such basis, and with such conditions as the Board of Directors in its
sole discretion may establish.
(c) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights pursuant to paragraph (b) of this Section
24, 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
will be to receive the Redemption Price. The Company will promptly give public
notice of any such redemption; provided, however, that the failure to give, or
any defect in, any such notice will not affect the validity of such redemption.
Within 10 days after such action ordering the redemption of the Rights pursuant
to paragraph (b) or (c), as the case may be, the Company will 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 Shares. Any notice mailed in the manner herein provided will be deemed
duly given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. The Company may, at its option, pay the Redemption Price in cash,
Common Shares (based on the current per share market price of the Common Shares
as of the time of redemption) or any other form of consideration deemed
appropriate by the Board of Directors. Notwithstanding anything contained in
this Agreement to the contrary, the Rights will not be exercisable after the
first occurrence of a Section 11(a)(ii) Event until such time as the Company's
right of redemption under Section 24(b) has expired.
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SECTION 25. EXCHANGE.
(a) The Company's Board of Directors, at its option, at any time after the
occurrence of a Section 11(a)(ii) Event may exchange all or part of the then
outstanding and exercisable Rights (which will not include Rights that have
become void pursuant to the provisions of Section 7(e) hereof) for Common Shares
at an exchange ratio of one Common Share per Right, appropriately adjusted to
reflect any stock split, stock dividend, or similar transaction occurring after
the date hereof (such exchange ratio being hereinafter referred to as the
"Exchange Ratio"). Notwithstanding the foregoing, the Company's Board of
--------------
Directors may not effect such exchange at any time after any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or any such Subsidiary, or any entity holding Common Shares for or
pursuant to the terms of any such plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Common Shares then outstanding.
(b) Immediately upon the action of the Company's Board of Directors
ordering the exchange of any Rights pursuant to subsection (a) of this Section
25, and without any further action and without any notice, the right to exercise
such Rights will terminate and the only right thereafter of a holder of such
Rights will be to receive that number of Common Shares equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio. The Company
will promptly give public notice of any such exchange; provided, however, that
the failure to give, or any defect in, such notice will not affect the validity
of such exchange. The Company promptly will 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 will 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 Common Shares for Rights will be effected and, in the event of
any partial exchange, the number of Rights that will be exchanged. Any partial
exchange will be effected pro rata based on the number of Rights (other than
Rights that have become void pursuant to the provisions of Section 7(e) hereof)
held by each holder of Rights.
(c) If there are not sufficient Common Shares issued but not outstanding
or authorized but unissued to permit any exchange of Rights as contemplated in
accordance with this Section 25, the Company will take all such action as may be
necessary to authorize additional Common Shares for issuance upon exchange of
the Rights. If the Company shall, after good faith effort, be unable to take all
such action as may be necessary to authorize such additional Common Shares, the
Company shall substitute, for each Common Share that would otherwise be issuable
upon exchange of a Right, a number of Preferred Shares or fraction thereof such
that the current per share market price of one Preferred Share multiplied by
such number or fraction is equal to the current per share market price of one
Common Share as of the date of issuance of such Preferred Shares or fraction
thereof.
(d) The Company will not be required to issue fractions of Common Shares
or
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to distribute certificates that evidence fractional Common Shares. In lieu of
such fractional Common Shares, the Company will pay to the registered holders of
the Rights Certificates with regard to which such fractional Common Shares would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Common Share. For the purposes of this
paragraph (e), the current market value of a whole Common Share will be the
closing price of a Common Share (as determined pursuant to Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of exchange pursuant
to this Section 25.
SECTION 26. NOTICE OF CERTAIN EVENTS.
(a) In case the Company proposes, at any time after the Distribution Date,
(i) to pay any dividend payable in stock of any class to the holders of its
Preferred Shares or to make any other distribution to the holders of its
Preferred Shares, (ii) to offer to the holders of its Preferred Shares rights or
warrants to subscribe for or to purchase any additional Preferred Shares or
shares of stock of any class or any other securities, rights, or options, (iii)
to effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred
Shares), (iv) to effect any consolidation or merger into or with, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of 50% or more
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person, (v) to effect the liquidation, dissolution, or
winding-up of the Company, or (vi) to declare or pay any dividend on the Common
Shares payable in Common Shares or to effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares), then, in each such case, the Company
will give to each holder of a Rights Certificate, in accordance with Section 27
hereof, a notice of such proposed action, which will specify the record date for
the purposes of such stock dividend, or distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding-up is to take place and the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such notice will 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 the Preferred Shares 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 the Common Shares and/or Preferred Shares, whichever
will be the earlier.
(b) If a Section 11(a)(ii) Event shall occur, (i) the Company will as soon
as practicable thereafter give to each holder of a Rights Certificate, in
accordance with Section 27 hereof, a notice of the occurrence of such event,
which notice will describe such event and the consequences of such event to
holders of Rights under Section 11(a)(ii) hereof, and (ii) all references in the
preceding paragraph to Common Shares will be deemed thereafter to refer to
Preferred Shares or, if appropriate, other securities.
SECTION 27. NOTICES. Any notice or demand authorized by this Agreement to
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be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company will be sufficiently given or made if sent by reputable
overnight courier or by registered, certified, or first-class mail, postage or
delivery charges prepaid and addressed (until another address is filed in
writing with the Rights Agent) as follows:
Data Translation, Inc.
000 Xxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attn: Chairman, President and CEO
Any notice or demand authorized by this Agreement to be given or made by
the Company or by the holder of any Rights Certificate to or on the Rights Agent
will be sufficiently given or made if sent by reputable overnight courier or by
registered, certified, or first-class mail, postage or delivery charges prepaid
and addressed (until another address is filed in writing with the Company) as
follows:
BankBoston, N.A.
c/o Equiserve Limited Partnership
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Client Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate or
certificate representing Common Shares or Preferred Shares will be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed to such
holder at the address of such holder as shown on the registry books of the
Company.
SECTION 28. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date,
if the Company so directs, the Company and the Rights Agent will supplement or
amend any provision of this Agreement without the approval of any holders of
certificates representing Preferred Shares. From and after the Distribution
Date, if the Company so directs, the Company and the Rights Agent will
supplement or amend this Agreement without the approval of any holders of Rights
Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained herein that may be defective or inconsistent with any
other provisions herein, (iii) to shorten or lengthen any time period hereunder,
or (iv) to change or supplement the provisions hereunder in any manner that the
Company may deem necessary or desirable and that will not adversely affect the
interests of the holders of Rights Certificates (other than an Acquiring Person
or any Affiliate or Associate of an Acquiring Person).
SECTION 29. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent will bind and
inure to the benefit of their respective successors and assigns hereunder.
SECTION 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement will be
construed to give to any Person or corporation other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and prior to
the
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Distribution Date, of the Common Shares) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement will be for the sole and
exclusive benefit of the Company, the Rights Agent, and the registered holders
of the Rights Certificates (and, prior to the Distribution Date, of the Common
Shares).
SECTION 31. SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement will remain in full
force and effect and will in no way be affected, impaired or invalidated.
SECTION 32. GOVERNING LAW. This Agreement and each Rights Certificate
issued hereunder will be deemed to be a contract made under the laws of the
State of Delaware and for all purposes will be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
SECTION 33. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts will for all purposes be deemed to be
an original, and all such counterparts will together constitute but one and the
same agreement.
SECTION 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and will not
control or affect the meaning or construction of any of the provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, as an agreement under seal, as of the date first
above written.
DATA TRANSLATION, INC.
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx, Xx.
Title: Chairman, President and CEO
BANKBOSTON, N.A.,
as Rights Agent
By: /s/ Xxxxx Xxxxxx-Xxxx
-------------------------------
Name: Xxxxx Xxxxxx-Xxxx
Title: Director of Client Services
