Exhibit 99.1
RIGHTS AGREEMENT
This Rights Agreement (this "Agreement"), dated as of January 26, 1999, is
by and between Signal Technology Corporation (the "Company"), a Delaware
corporation, and BankBoston, N.A. (the "Rights Agent"), a national banking
association.
The Company's Board of Directors has declared a dividend of one right (a
"Right") in respect of each share of the Company's Common Stock outstanding of
record as of the close of business, New York time, on February 26, 1999 (the
"Record Date"). Each Right has the terms and is subject to the conditions set
forth in this Agreement.
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
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. Xxxxxxxxx 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 Agreement.
(b) "Affiliate" and "Associate" have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the date of this Agreement.
-2-
(c) A Person will be deemed the "Beneficial Owner" of and will be deemed 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) 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 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.
-3-
(d) "Business Day" means any day other than a Saturday, a Sunday, or a day
on which banking institutions in The Commonwealth of Massachusetts are
authorized or obligated by law or executive order to close.
(e) "Close of business" on any given date means 5:00 P.M., Boston time, on
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.
(f) "Common Shares" when used with reference to the Company means the
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.
(g) "Distribution Date" has the meaning set forth in Section 3 hereof.
(h) "Expiration Date" has the meaning set forth in Section 7 hereof.
(i) "Final Expiration Date" has the meaning set forth in Section 7 hereof.
(j) "Person" means any individual, firm, corporation, partnership, limited
liability company, trust, or other entity, and includes any successor (by merger
or otherwise) of such entity.
(k) "Redemption Date" has the meaning set forth in Section 7 hereof.
(l) "Section 7(e) Person" has the meaning set forth in Section 7 hereof.
(m) "Section 11(a)(ii) Event" means any event described in Section
11(a)(ii) hereof.
(n) "Section 13 Event" means any event described in clauses (x), (y), or
(z) of Section 13(a) hereof.
(o) "Shares Acquisition Date" means the first date of public announcement
(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.
(p) "Subsidiary" of any Person means any other Person of which a majority
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.
-4-
(q) "Triggering Event" means any Section 11(a)(ii) Event or any Section 13
Event.
(r) "Voting Stock" means (i) the Common Shares of the Company, and (ii) 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
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
-5-
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"):
(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 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 A (collectively, "Rights
Certificates"), evidencing one Right for each Common Share so held. As of and
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 Common Shares, in
substantially the form of the attached Exhibit B (the "Summary of Rights"), 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 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
-6-
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 or the 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 Signal Technology
Corporation and BankBoston, N.A., dated as of January 26, 1999 (the "Rights
Agreement"), the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal executive offices of Signal
Technology Corporation. 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 no longer be evidenced by this
certificate. Signal Technology Corporation will mail to the registered
holder of this certificate a copy of the Rights Agreement without charge
after 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 Signal Technology Corporation 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 Signal Technology Corporation and BankBoston, N.A., dated as of
January 26, 1999 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal executive offices of Signal Technology Corporation. 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
separate certificates and will no longer be evidenced by such registration.
Signal Technology Corporation 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."
-7-
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 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 A,
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 Common Shares as may be set forth
therein at the price per Common Share set forth therein (the "Purchase Price"),
but the number of such Common Shares 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 Common 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
-8-
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 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 Common Shares 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
-9-
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 the Common Shares (or other securities) as to which the
Rights are being exercised, at or prior to the earliest of:
(i) the close of business on the tenth anniversary of the date hereof
(the "Final Expiration Date");
(ii) the time at which the Rights are redeemed as provided in Section
24 hereof (the "Redemption Date"); or
(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").
(b) The Purchase Price for each Common Share upon the exercise of a Right
will initially be $25.00, 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.
(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 Common Shares (or
make available, if the Rights Agent is the transfer agent) certificates for
the number of Common 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 Common Shares issuable upon conversion of the Rights hereunder into a
depository, requisition from the depository agent depository receipts
representing such number of Common Shares as are to be purchased (in which
case certificates for the Common Shares represented by such receipts will
be deposited by the transfer
-10-
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.
(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 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
further action, and no
-11-
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
will reasonably request.
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 Common Shares.
(a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued Common Shares or any Common
Shares held in its treasury, a number of Common 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 Common 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 Common 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
-12-
the issuance or delivery of the Rights Certificates or of any Common 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 Common 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 Common 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.
Section 10. Common Shares Record Date. Each Person in whose name any
certificate for Common 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 Common Shares 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 Common 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 Common 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 Common Shares payable in Common Shares, (B)
subdivides the outstanding Common Shares, (C) combines the outstanding
Common Shares into a smaller number of shares, or (D) issues any shares of
its
-13-
capital stock in a reclassification of the Common Shares (including any
such reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), 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 Common 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 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
in accordance with the terms of this Agreement, 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 then number of Common Shares 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). In the event
that 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) In the event that 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)
-14-
of this Section 11(a), the Company will: (A) determine the excess of the
value of the Adjustment Shares issuable upon the exercise of a Right (the
"Current Value") over the Purchase Price (such excess, the "Spread"), and
(B) with respect to each Right, make adequate provision to substitute for
the Adjustment Shares, upon payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the Purchase Price, (3) Common Shares of the same
or a different class or other equity securities of the Company (including
without limitation preferred shares or units of preferred shares that the
Company's Board of Directors in good xxxxx xxxxx (based on, among other
things, the dividend and liquidation rights of such preferred shares) to
have substantially the same economic value as Common Shares (such preferred
shares, hereinafter referred to as "common share equivalents")), (4) debt
securities of the Company, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors after
considering the advice of a competent investment banking firm selected by
the Board of Directors of the Company; provided, however, that if the
Company has not made adequate provision to deliver value pursuant to clause
(B) above within thirty (30) days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the date on which the
Company's right of redemption pursuant to Section 24(b) expires (the later
of (x) and (y) being referred to herein as the "Section 11(a)(ii) Trigger
Date"), then the Company will be obligated to deliver, upon the surrender
for exercise of a Right and without requiring payment of the Purchase
Price, Common Shares (to the extent available) and then, if necessary,
cash, which shares and/or cash have an aggregate value equal to the Spread.
If the Board of Directors of the Company determines in good faith that it
is likely that sufficient additional Common Shares could be authorized for
issuance upon exercise in full of the Rights, the 30-day period set forth
above may be extended to the extent necessary, but not more than 90 days
after the Section 11(a)(ii) Trigger Date, in order that the Company may
seek stockholder approval for the authorization of such additional shares
(such period, as it may be extended, the "Substitution Period"). To the
extent that the Company determines that action need be taken pursuant to
the first and/or second sentences of this Section 11(a)(iii), the Company
will provide, subject to Section 7(e) hereof, that such action will apply
uniformly to all outstanding Rights, and may suspend the exercisability of
the Rights until the expiration of the Substitution Period in order to seek
any authorization of additional shares and/or to decide the appropriate
form of distribution to be made pursuant to such first sentence and to
determine the value thereof. The Company will make a public announcement
when the exercisability of the Rights has been temporarily suspended, and
again when such suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of the Common Shares will be the current
market price (as determined pursuant to Section 11(d) hereof) per Common
Share on the Section 11(a)(ii) Trigger Date and the value of any "common
share equivalent" will be deemed to have the same value as the Common
Shares on such date.
(b) If the Company fixes a record date for the issuance of rights, options,
or warrants to all holders of Common Shares entitling them (for a period
expiring within
-15-
45 calendar days after such record date) to subscribe for or purchase Common
Shares (or shares having the same or more favorable rights, privileges, and
preferences as the Common Shares ("equivalent common shares")) or securities
convertible into Common Shares or equivalent common shares at a price per Common
Share or equivalent common share (or having a conversion price per share, if a
security convertible into Common Shares or equivalent common shares) less than
the then current per share market price of the Common 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 Common Shares outstanding on such record date plus the number
of Common Shares that the aggregate offering price of the total number of Common
Shares and/or equivalent common shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such current market price and the denominator of which will be the
number of Common Shares outstanding on such record date plus the number of
additional Common Shares and/or equivalent common shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); 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. Common 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 Common Shares (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation) of cash, evidences of indebtedness, or other assets
(other than a dividend payable in Common 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 Common 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 Common
Share and the denominator of which will be such current per share market price
of the Common 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
-16-
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 other than
computations made pursuant to Section 11(a)(iii) hereof, the "current 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 American Stock Exchange (the "AMEX"), or if
the Security is not listed or admitted to trading on the AMEX, 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 National
Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") 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 Common Shares will be determined in accordance
with the method set forth in Section 11(d)(i). If the Common Shares are not
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.
-17-
(e) Subject to the final sentence of this Section 11(e), no adjustment in
the 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 ten-thousandth of any Common Share or 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 Common 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 Common 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 Common
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 Common Shares
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 Common Shares
(calculated to the nearest one ten thousandth of a Common Share) obtained by (i)
multiplying (x) the number of Common Shares 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 Common Shares 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 Common Shares for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights 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 Company will make a public announcement of
-18-
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 Common 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 Common Shares 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 the then par value, if any, of the Common 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 Common 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 Common Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
over and above the Common 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 subdivision of the Common Shares, issuance wholly for
cash of any Common Shares at
-19-
less than the current market price, issuance wholly for cash of Common Shares or
securities that by their terms are convertible into or exchangeable for Common
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
Common Shares will not be taxable to such stockholders.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made pursuant to Section 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 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 Common 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) In the event that, 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
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(b) 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 in accordance with the terms of this Agreement, such
number of freely tradable Common Shares of the Principal Party (as hereinafter
defined), free and clear of liens, rights of
-20-
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 Common Shares 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 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
-21-
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;
(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 AMEX; 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
-22-
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 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 AMEX, or if the Rights are not listed or
admitted to trading on the AMEX, 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 Common Shares
upon exercise of the Rights or to distribute certificates that evidence
fractional Common Shares. In lieu of fractional Common Shares, the Company will
pay to the registered holders of Rights Certificates at the time such Rights are
exercised as
-23-
herein provided an amount in cash equal to the same fraction of the current
market value of one Common Share. For the purposes of this Section 15(b), the
current market value of a Common Share will be the closing price of a Common
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 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
-24-
(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 Common 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 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
-25-
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 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 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.
-26-
(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 or Common
Shares; nor will it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Common Shares or other
securities to be issued pursuant to this Agreement or any Rights Certificate or
as to whether any 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 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
-27-
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.
(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 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 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
-28-
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 each transfer agent of the Common 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
-29-
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.
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
-30-
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) In the event that 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.
(d) The Company will not be required to issue fractions of Common Shares or
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
Common Shares or to make any other distribution to the holders of its Common
Shares, (ii) to offer to the holders of its Common Shares rights or warrants to
subscribe for or to purchase any additional Common Shares or shares of stock of
any class or any other securities, rights, or options, (iii) to effect any
reclassification of its Common Shares (other than a reclassification involving
only the subdivision of outstanding Common Shares), (iv) to effect any
consolidation or merger into or with, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of 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, 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 Common 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
-31-
of the Common Shares, whichever will be the earlier.
(b) In case any of Section 11(a)(ii) Event will 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
Common Shares or, if appropriate, other securities.
Section 27. Notices. Any notice or demand authorized by this Agreement to
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:
Signal Technology Corporation
000 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
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 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 Common 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
-32-
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 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.
[ Remainder of Page Intentionally Left Blank ]
-33-
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.
SIGNAL TECHNOLOGY CORPORATION
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxx
Title: President and Chief Executive
Officer
BANKBOSTON, N.A.,
as Rights Agent
By: /s/ Xxxxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxx
Title: Director Of Client Services
Exhibit A to Rights Agreement
[Form of Rights Certificate]
Certificate No. R-____________ ________ Rights
NOT EXERCISABLE AFTER JANUARY 26, 2009, OR EARLIER IF NOTICE OF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT, AT THE OPTION OF
THE COMPANY, TO REDEMPTION AT $0.001 PER RIGHT AND TO EXCHANGE ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES,
RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID.
RIGHTS CERTIFICATE
SIGNAL TECHNOLOGY CORPORATION
This certifies that __________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions, and conditions of the
Rights Agreement, dated as of January 26, 1999 (the "Rights Agreement"), by and
between Signal Technology Corporation (the "Company"), a Delaware corporation,
and BankBoston, N.A. (the "Rights Agent"), to purchase from the Company at any
time after the Distribution Date (as defined in the Rights Agreement) and prior
to 5:00 P.M., Boston time, on January 26, 2009, at the office of the Rights
Agent designated for such purpose, or at the office of its successor as Rights
Agent designated for such purpose, one share of Common Stock, par value $0.01
per share (the "Common Shares"), of the Company, at a purchase price of $25.00
per Common Share (the "Purchase Price"), upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase duly executed. The
number of Rights evidenced by this Rights Certificate (and the number of Common
Shares that may be purchased upon exercise hereof) set forth above, and the
Purchase Price set forth above, are the number of Rights and Purchase Price as
of January 26, 1999, based on the Common Shares as constituted at such date. As
provided in the Rights
-2-
Agreement, the Purchase Price and the number of Common Shares that may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement, which terms, provisions, and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties, and immunities of the Rights Agent,
the Company and the holders of the Rights Certificates. Copies of the Rights
Agreement are on file at the principal executive offices of the Company and the
above-mentioned office of the Rights Agent.
This Rights Certificate, with or without other Rights Certificates, may be
surrendered at the principal office of the Rights Agent in exchange for another
Rights Certificate or Rights Certificates of like tenor and date evidencing
Rights entitling the holder to purchase the same aggregate number of Common
Shares as the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered entitled such holder to purchase. If this Rights Certificate is
exercised in part, the holder will be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate (i) may be redeemed by the Company at its option at a
redemption price of $0.001 per Right, or (ii) may be exchanged in whole or in
part by the Company, at its option, for Common Shares.
No fractional Common Shares will be issued upon the exercise of any Right
or Rights evidenced hereby, but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Rights Certificate, as such, will be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Common Shares
or of any other securities of the Company that may at any time be issuable on
the exercise hereof, nor will anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Rights Certificate have been
exercised as provided in the Rights Agreement.
-3-
This Rights Certificate will not be valid or obligatory for any purpose
until it is countersigned by the Rights Agent.
Dated as of ____________, ____.
SIGNAL TECHNOLOGY CORPORATION
By: _________________________________
Name:
Title:
Countersigned:
______________________________________
By: __________________________________
Name:
Title:
-4-
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Rights Certificate.)
FOR VALUE RECEIVED ____________________________________________________
hereby sells, assigns, and transfers to_________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Rights Certificate, together with all right, title, and interest therein,
and does hereby irrevocably constitute and appoint _____________________ as
attorney, to transfer the within Rights Certificate on the books of Signal
Technology Corporation, with full power of substitution.
Dated: _____________, _____ ___________________________
(Signature)
Medallion Signature Guaranty:
--------------------------------------------------------------------------------
Assignment Certification
------------------------
The undersigned hereby certifies by checking the appropriate boxes that:
(l) The Rights evidenced by this Rights Certificate [ ] are [ ] are not
being sold, assigned, and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such term is defined pursuant to the Rate Agreement);
(2) After due inquiry and to the best knowledge of the undersigned, he,
she, or it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any person who is or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
-5-
Dated: _____________, _____ ___________________________
(Signature)
Notice
------
The signatures to the foregoing Assignment and Certification must
correspond exactly to the name of the registered owner hereof, as written upon
the face of this Rights Certificate, without any change whatsoever.
--------------------------------------------------------------------------------
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise the Rights Certificate.)
To SIGNAL TECHNOLOGY CORPORATION:
The undersigned hereby irrevocably elects to exercise
_____________________ Rights represented by this Rights Certificate to purchase
the Common Shares (or such other securities of the Company or of any other
person) issuable upon the exercise of such Rights and requests that certificates
for such shares be issued in the name of:
Please insert social security or other identifying number: _____________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
(If the above number of Rights is not all of the Rights evidenced by this
Rights Certificate, then a new Rights Certificate for the balance remaining of
such Rights will be registered and returned to the undersigned.)
Dated: _____________, _____ ___________________________
(Signature)
Medallion Signature Guaranty:
-6-
--------------------------------------------------------------------------------
Election Certification
----------------------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) The Rights evidenced by this Rights Certificate [ ] are [ ] are not
being sold, assigned, and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of any Acquiring Person (as
such terms are defined pursuant to the Rate Agreement).
(2) After due inquiry and to the best knowledge of the undersigned, he,
she, or it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any person who is or was an Acquiring Person or an Affiliate or
Associate of any Acquiring Person.
Dated: _____________, _____ ___________________________
(Signature)
--------------------------------------------------------------------------------
NOTICE
------
The signatures in the foregoing Election to Purchase and Certification must
correspond exactly to the name of the registered owner hereof, as written upon
the face of this Rights Certificate, without any change whatsoever.
In the event the certification set forth above in the Assignment or the
Election to Purchase, as the case may be, is not completed, the Company and the
Rights Agent will deem the beneficial owner of the Rights evidenced by this
Rights Certificate to be an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement) and such Assignment or Election to
Purchase will not be honored.
Exhibit B to Rights Agreement
SUMMARY OF RIGHTS TO PURCHASE
COMMON SHARES
On January 26, 1999, the Board of Directors of Signal Technology
Corporation (the "Company") declared a dividend distribution of one common share
purchase right (a "Right") for each outstanding share of common stock, par value
$0.01 per share (the "Common Shares"), of the Company. The dividend is payable
on February 26, 1999 (the "Record Date") to the stockholders of record on that
date. Except as described below, each Right, when exercisable, entitles the
registered holder to purchase from the Company one Common Share of the Company
at a price of $25.00 per Common Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and BankBoston, N.A., as
Rights Agent (the "Rights Agent").
Initially, the Rights will be attached to all certificates representing
Common Shares then outstanding, and no separate Rights certificates will be
distributed. Until the earlier to occur of (i) 10 business days following a
public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") have acquired beneficial ownership of 15% or more of the
outstanding Common Shares (the date of such an announcement being a "Shares
Acquisition Date"), or (ii) 10 business days (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) following the commencement of, or announcement of
an intention to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of 15% or more of
such outstanding Common Shares, the Rights will be evidenced, with respect to
any of the Common Share certificates outstanding as of the Record Date, by such
Common Share certificates together with a copy of this Summary of Rights.
The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with the Common Shares. Until the Distribution
Date (or earlier redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights
-2-
("Rights Certificates") will be mailed to holders of record of the Common Shares
as of the close of business on the Distribution Date, and the separate Rights
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on January 26, 2009 (the "Final Expiration Date"), unless the Rights are
earlier redeemed by the Company, as described below.
The Purchase Price payable, and the number of Common Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Common
Shares, (ii) upon the grant to holders of the Common Shares of certain rights or
warrants to subscribe for or purchase Common Shares at a price, or securities
convertible into Common Shares with a conversion price, less than the then
current market price of the Common Shares or (iii) upon the distribution to
holders of the Common Shares of evidences of indebtedness or assets (excluding
regular periodic cash dividends paid out of earnings or retained earnings or
dividends payable in Common Shares) or of subscription rights or warrants (other
than those referred to above).
The number of outstanding Rights and the number of Common Shares issuable
upon exercise of each Right are also subject to adjustment in the event of a
stock split of the Common Shares or a stock dividend on the Common Shares
payable in Common Shares or subdivisions, consolidations or combinations of the
Common Shares occurring, in any such case, prior to the Distribution Date.
Common Shares purchasable upon exercise of the Rights will not be
redeemable.
In the event that, after the first date of public announcement by the
Company or an Acquiring Person that an Acquiring Person has become such, the
Company is involved in a merger or other business combination transaction in
which the Common Shares are exchanged or changed, or 50% or more of the
Company's consolidated assets or earning power are sold (in one transaction or a
series of transactions), proper provision will be made so that each holder of a
Right (other than an Acquiring Person) will thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock of the acquiring company (or, in
the event there is more than one acquiring company, the acquiring company
receiving the greatest portion of the assets or earning power transferred) which
at the time of such transaction would have a market value of two times the
exercise price of the Right.
-3-
In the event that any person becomes an Acquiring Person, each holder
of a Right will thereafter have the right to receive upon exercise that number
of Common Shares having a market value of two times the exercise price of the
Right. Upon occurrence of any of the events described in the immediately
preceding sentence, any Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring
Person shall immediately become null and void.
At any time after the occurrence of any such event and prior to the
acquisition by such person or group of 50% or more of the outstanding Common
Shares, the Board of Directors may exchange the Rights (other than Rights owned
by such person or group which have become void), in whole or in part, at an
exchange ratio of one Common Share per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Common Shares will be issued and in lieu
thereof, an adjustment in cash will be made based on the market price of the
Common Shares on the last trading day prior to the date of exercise.
At any time prior to the earlier of (i) the tenth day after a Shares
Acquisition Date, or (ii) the expiration of the Rights, the Board of Directors
may redeem the Rights in whole, but not in part, at a price of $0.001 per Right
(the "Redemption Price"). The redemption of the Rights 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. Immediately upon any redemption of the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
Other than those provisions relating to the principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board in order to cure any ambiguity, to make changes that do not adversely
affect the interests of holders of Rights (excluding the interests of any
Acquiring Person), or to shorten or lengthen any time period under the Rights
Agreement; provided, however, that no amendment to adjust the time period
governing redemption shall be made at such time as the Rights are not
redeemable.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
-4-
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K. A copy of the
Rights Agreement is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is hereby incorporated
herein by reference.
