EXHIBIT 1
SECOND AMENDED AND RESTATED RIGHTS AGREEMENT
This agreement (this "Agreement" or the "Rights Agreement"), dated as
of July 11, 1990, and amended and restated as of April 10, 1996 and further
amended and restated as of August 14, 1997, between Adobe Systems Incorporated,
a Delaware corporation (the "Company"), and Xxxxxx Trust Company of California
(the "Rights Agent").
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company on July 11, 1990 (i)
announced that it authorized the issuance and declared a dividend of one right
("Right") (as such number may be adjusted pursuant hereto) for each share of the
common stock of the Company ("Common Stock") outstanding as of the Close of
Business (as defined herein) on July 24, 1990 (the "RECORD DATE"), each Right
initially representing the right to purchase one share of Common Stock of the
Company upon the terms and subject to the conditions hereinafter set forth, and
(ii) further authorized the issuance of one Right (as such number may be
adjusted pursuant hereto) with respect to each share of Common Stock of the
Company that shall become outstanding between July 24, 1990 and, except as
provided in Section 22, the Distribution Date (as defined herein); and
WHEREAS, pursuant to authorization of the Board of Directors at a
meeting properly noticed and convened on April 10, 1996, this Agreement has been
amended and restated, and at a meeting properly noticed and convened on July 30,
1997, this Agreement has been further amended and restated, each as of the
respective date set forth above, in accordance with the provisions of Section 27
hereof to provide, among other things, that each Right outstanding as of and to
be issued after the date of this Second Amended and Restated Rights Agreement
shall be exercisable into one Unit (as defined herein) of Preferred Stock (as
defined herein).
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement the
following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as defined herein) who
or which, alone or together with all Affiliates (as defined herein) and
Associates (as defined herein) of such Person, without the prior approval of the
Board of Directors, shall be the Beneficial Owner (as defined herein) of 15% or
more of the outstanding Common Stock of the Company but shall not include (x) an
Exempt Person (as defined herein) or (y) any such Person who has become and is
such a Beneficial Owner solely because (A) of a change in the aggregate number
of shares of the Common Stock since the last date on which such Person acquired
Beneficial Ownership (as defined herein) of any shares of the Common Stock (as
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defined herein) or (B) it acquired such Beneficial Ownership in the good faith
belief that such acquisition would not (1) cause such Beneficial Ownership to
equal or exceed 15% of the shares of the Common Stock then outstanding and such
Person relied in good faith in computing the percentage of its Beneficial
Ownership on publicly filed reports or documents of the Company which are
inaccurate or out-of-date or (2) otherwise cause a Distribution Date or the
adjustment provided for in Section 11(a)(ii) to occur. Notwithstanding clause
(B) of the prior sentence, if any Person that is not an Acquiring Person due to
such clause (B) does not reduce its percentage of Beneficial Ownership of the
Common Stock to less than 15% by the Close of Business (as defined herein) on
the fifth Business Day (as defined herein) after notice from the Company (the
date of notice being the first day) that such person's Beneficial Ownership of
the Common Stock so equals or exceeds 15%, such Person shall at the end of such
five Business Day period, become an Acquiring Person (and such clause (B) shall
no longer apply to such Person). For purposes of this definition, the
determination whether any Person acted in "good faith" shall be conclusively
determined by the Board of Directors of the Company, acting by a vote of those
directors of the Company whose approval would be required to redeem the rights
under Section 23.
(b) "Adjustment Shares" shall have the meaning set forth in Section
11(a)(ii)(C) hereof.
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended ("Exchange Act"), as currently
in effect.
(d) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "BENEFICIALLY OWN", and shall be deemed to have "BENEFICIAL OWNERSHIP"
of, any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding, or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to "beneficially
own", or to have "Beneficial Ownership" of, securities tendered
pursuant to a tender or exchange offer made by such Person or any of
such Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or (B) the right to vote
pursuant to any agreement, arrangement or understanding
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(whether or not in writing); provided, however, that a Person shall
not be deemed the "Beneficial Owner" of, or to "beneficially own",
or to have "Beneficial Ownership" of, any securities if the
agreement, arrangement or understanding to vote such security (1)
arises solely from a revocable proxy or consent given in response
to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of the
Exchange Act and (2) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except as described in clause (B) of
subparagraph (ii) of this Section 1(d)) or disposing of any securities
of the Company.
(e) "Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of California are authorized
or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M.,
California time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., California time, on the next succeeding
Business Day.
(g) "Common Stock" when used with reference to the Company shall mean
the common stock of the Company. "Common Stock" when used with reference to any
Person other than the Company which shall be organized in corporate form shall
mean the capital stock or other equity security with the greatest per share
voting power of such Person or, if such Person is a Subsidiary (as defined
herein) of, or is controlled by another Person, the Person which ultimately
controls such first-mentioned Person. "Common Stock" when used with reference
to any Person other than the Company which shall not be organized in corporate
form shall mean units of beneficial interest which shall represent the right to
participate in profits, losses, deductions and credits of such Person and which
shall be entitled to exercise the greatest voting power per unit of such Person.
(h) "Continuing Director" shall mean a member of the Board of
Directors of the Company who is not an Acquiring Person or an Affiliate or
Associate of an Acquiring Person or a representative or nominee of an Acquiring
Person or of any such Affiliate or Associate, and who either (i) was a member of
the Board of Directors of the Company prior to the date of this Second Amended
and Restated Rights Agreement or (ii) subsequently became a member of the Board
of Directors of the Company and whose election or nomination for election is
approved or recommended by a vote of a majority of the Board of
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Directors of the Company, which majority includes a majority of the
Continuing Directors then on the Board of Directors.
(i) "Current Market Price" shall have the meaning set forth in
Section 11(d) hereof.
(j) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
(k) "Depositary Agent" shall have the meaning set forth in Section
7(c).
(l) "Distribution Date" shall have the meaning set forth in Section
3(a) hereof.
(m) "Equivalent Preferred Stock" shall have the meaning set forth in
Section 11(b) hereof.
(n) "Exchange Act" shall have the meaning set forth in Section 1(c)
hereof.
(o) "Exempt Person" shall mean the Company, any Subsidiary of the
Company, any employee benefit plan or employee stock plan of the Company or of
any Subsidiary of the Company, or any Person, organized, appointed, established
or holding Common Stock for, or pursuant to, the terms of any such plan.
(p) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(q) "Flip-In Event" shall mean any event described in Section
11(a)(ii)(A), (B) or (C) hereof.
(r) "Flip-In Exercise Payment" shall have the meaning set forth in
Section 11(a)(ii).
(s) "Flip-In Trigger Date" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(t) "Flip-Over Event" shall mean any event described in clause (x),
(y) or (z) of Section 13(a) hereof.
(u) "Flip-Over Exercise Payment" shall have the meaning set forth in
Section 13(a) hereof.
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(v) "Nasdaq" shall have the meaning set forth in Section 9(b) hereof.
(w) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(x) "Preferred Stock" shall mean the Series A Preferred Stock, par
value $.0001 per share, of the Company having the voting powers, designation,
preferences and relative, participating, optional or other special rights and
qualifications, limitations and restrictions described in the Certificate of
Designation set forth as EXHIBIT C hereto.
(y) "Preferred Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(z) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(aa) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
(bb) "Record Date" shall have the meaning set forth in the recitals to
this Agreement.
(cc) "Redemption Date" shall have the meaning set forth in Section
7(a) hereof.
(dd) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(ee) "Right Certificate" shall have the meaning set forth in Section
3(a) hereof.
(ff) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(gg) "Stock Acquisition Date" shall mean the first date of public
announcement (including, without limitation, the filing of any report pursuant
to Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that
an Acquiring Person has become such or such earlier date as a majority of the
directors shall become aware of the existence of an Acquiring Person.
(hh) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
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(ii) "Subsidiary" of a Person shall mean any corporation or other
entity of which securities or other ownership interests having ordinary voting
power sufficient to elect a majority of the board of directors or other persons
performing similar functions, are beneficially owned, directly or indirectly, by
such Person and any corporation or other entity that is otherwise controlled by
such Person.
(jj) "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.
(kk) "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.
(ll) "Triggering Event" shall mean any event described in Section
11(a)(ii)(A), (B), or (C) or Section 13 hereof.
(mm) "Unit" has the meaning set forth in Section 7(b).
(nn) "Voting Power" shall mean the voting power of all securities of
the Company then outstanding and generally entitled to vote for the election of
directors of the Company.
Any determination required by the definition contained in this Section
1 shall be made by the Board of Directors of the Company in its good faith
judgment, which determination shall be binding on the Rights Agent and the
holders of the Rights.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.
With the consent of the Rights Agent, the Company may from time to time appoint
such Co-Rights Agents as it may deem necessary or desirable.
SECTION 3. ISSUANCE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the Close of Business on the tenth day
after the Stock Acquisition Date and (ii) the Close of Business on the tenth
Business Day (or such later date as may be determined by action of the Company's
Board of Directors prior to such time as any Person becomes an Acquiring Person,
provided that no such action may be taken by the Board of Directors to determine
a later date unless, at the time of such action, there are then in office not
less than two Continuing Directors and such action is approved by a majority of
the Continuing Directors then in office and of which the Company will give the
Rights Agent prompt written notice) after the date that a tender or exchange
offer by any Person (other than an Exempt Person) is first published or sent or
given within the meaning of Rule 14d-4(a) of the Exchange Act Regulations or any
successor rule, if upon
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consummation thereof such Person would be the Beneficial Owner of 15% or more
of the shares of the outstanding Common Stock (irrespective of whether any
shares are actually purchased pursuant to any such offer) (the earlier of (i)
and (ii) above being the "DISTRIBUTION DATE"), (x) the Rights will be
evidenced (subject to the provisions of Section 3(c) hereof) by the
certificates for Common Stock registered in the names of the holders of the
Common Stock as of and subsequent to the Record Date (which certificates for
shares of Common Stock shall be deemed also to be certificates for Rights)
and not by separate Right certificates, and (y) each Right will be
transferable only in connection with the transfer of a share (subject to
adjustments as hereinafter provided) of Common Stock (including a transfer to
the Company). As soon as practicable after the Distribution Date, the Rights
Agent will mail, by first-class, postage prepaid mail, to each record holder
of the Common Stock as of the Close of Business on the Distribution Date, as
shown by the records of the Company, to the address of such holder shown on
such records, one or more Right certificates, in substantially the form of
EXHIBIT A hereto (each, a "RIGHT CERTIFICATE"), evidencing one Right for each
share of Common Stock so held, subject to adjustment as provided herein. In
the event that an adjustment in the number of Rights per share of Common
Stock of the Company has been made pursuant to Section 11(p), at the time of
distribution of the Rights Certificates, the Company may make the necessary
and appropriate rounding adjustments (in accordance with Section 14(a)) so
that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of and
after the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
(b) On July 24, 1990 or as soon as practicable thereafter, the
Company sent a copy of a Summary of Terms of Rights Agreement, substantially in
the form attached hereto as EXHIBIT B ("Summary of Rights") (Exhibit B having
been amended, however, to summarize the terms of the Rights as amended as of
April 10, 1996 and further amended as of August 14, 1997), by first-class,
postage prepaid mail, to each record holder of Common Stock as of the Close of
Business on July 24, 1990, at the address of such holder shown on the records of
the Company.
(c) With respect to certificates for Common Stock outstanding as of
July 24, 1990, until the Distribution Date (or, if earlier, the Redemption Date
or the Final Expiration Date), the Rights will be evidenced by such certificates
for Common Stock registered in the names of the holders thereof together with a
copy of the Summary of Rights. Until the Distribution Date (or, if earlier, the
Redemption Date or Final Expiration Date), the surrender for transfer of any
certificate for Common Stock outstanding on July 24, 1990, with or without a
copy of the Summary of Rights attached thereto, shall also constitute the
surrender for transfer of the Rights associated with the Common Stock
represented thereby.
(d) Certificates issued for Common Stock (including, without
limitation, certificates issued upon transfer or exchange of Common Stock) after
July 24, 1990, but
8
prior to the earlier of the Distribution Date, the Redemption Date or the
Final Expiration Date, shall have impressed on, printed on, written on, or
otherwise affixed to them, the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement between Adobe Systems
Incorporated and Manufacturers Hanover Trust Company, as Rights Agent,
dated as of July 11, 1990 (the "Rights Agreement"), the terms of which are
incorporated herein by reference and a copy of which is on file at the
principal executive office of Adobe Systems Incorporated. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by this
certificate. Adobe Systems Incorporated will mail to the holder of this
certificate a copy of the Rights Agreement without charge within five (5)
days after receipt by it of a written request therefor. Under certain
circumstances as provided in the Rights Agreement, Rights issued to or
beneficially owned by Acquiring Persons or their Associates or Affiliates
(as defined in the Rights Agreement) or any subsequent holder of such
Rights may be limited as provided in Section 11(a)(ii) and Section 24 of
the Rights Agreement.
provided, however, that with respect to certificates issued for Common Stock
(including, without limitation, certificates issued upon transfer or exchange of
Common Stock) after August 14, 1997, but prior to the earlier of the
Distribution Date, the Redemption Date or the Final Expiration Date, the first
sentence of such legend shall be replaced with the following:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Second Amended and Restated Rights Agreement
between Adobe Systems Incorporated and Xxxxxx Trust Company of California,
as Rights Agent, dated as of August 14, 1997 (the "Rights Agreement"), the
terms of which are incorporated herein by reference and a copy of which is
on file at the principal executive office of Adobe Systems Incorporated.
and the last sentence of such legend shall be replaced with the following:
Under certain circumstances as provided in the Rights Agreement, Rights
issued to or beneficially owned by Acquiring Persons or their Associates or
Affiliates (as defined in the Rights Agreement) or any subsequent holder of
such Rights may become null and void in the circumstances specified in
Section 7(f) of the Rights Agreement and may be limited as provided in
Section 11(a)(ii) and Section 24 of the Rights Agreement.
9
With respect to such certificates containing the foregoing legend, the Rights
associated with the Common Stock represented by such certificates shall, until
the Distribution Date, be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
surrender for transfer of the Rights associated with the Common Stock
represented thereby.
SECTION 4. FORM OF RIGHT CERTIFICATES.
(a) The Right Certificates (and the forms of election to purchase and
of assignment to be printed on the reverse thereof), when, as and if issued,
shall be substantially in the form set forth in EXHIBIT A hereto and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Rights Agreement, or as may be required
to comply with any law or with any rule or regulation made pursuant thereto, or
with any rule or regulation of any stock exchange on which the Rights may from
time to time be listed, or to conform to usage. Subject to the provisions of
Sections 11 and 22 hereof, the Right Certificates evidencing the Rights issued
on July 24, 1990, whenever such certificates are issued, shall be dated as of
July 24, 1990, and the Right Certificates evidencing Rights to holders of record
of Common Stock issued after July 24, 1990, shall be dated as of July 24, 1990,
but shall also be dated to reflect the date of issuance of such Right
Certificate. On their face, Right Certificates shall entitle the holders
thereof to purchase, for each Right, one Unit of Preferred Stock, or other
securities or property as provided herein, as the same may from time to time be
adjusted after the date hereof as provided herein, at the price per Unit of
$115.00, as the same may from time to time be adjusted as provided herein (the
"Purchase Price").
(b) Notwithstanding any other provision of this Rights Agreement, any
Right Certificate that represents Rights that are or were at any time on or
after the earlier of the Stock Acquisition Date or the Distribution Date
beneficially owned by: (i) an Acquiring Person or any Affiliate or Associate
thereof, (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) which becomes a transferee after the Acquiring Person becomes such,
or (iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) which becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and which receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person (or
any such Associate or Affiliate) to holders of equity interests in such
Acquiring Person (or such Associate or Affiliate) or to any Person with whom
such Acquiring Person (or such Associate or Affiliate) has any continuing
agreement, arrangement or understanding regarding either the transferred Rights,
shares of Common Stock or the Company or (B) a transfer which a majority of the
Continuing Directors has determined to be part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of
Section 7(f), shall have (to the extent feasible) impressed on, printed on,
written on or otherwise affixed to it (if the Company or the Rights
10
Agent has knowledge that such Person is an Acquiring Person or an Associate
or Affiliate thereof or transferee of such Persons or a nominee of any of the
foregoing) the following legend:
The beneficial owner of the Rights represented by this Right Certificate is
an Acquiring Person or an Affiliate or Associate (as defined in the Rights
Agreement) of an Acquiring Person or a subsequent holder of such Right
Certificates beneficially owned by such Persons. Accordingly, this Right
Certificate and the Rights represented hereby may become null and void in
the circumstances specified in Section 7(f) of the Rights Agreement and may
be limited as provided in Section 11(a)(ii) and Section 24 of the Rights
Agreement.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the Company
by its President or any Vice President, either manually or by facsimile
signature, and have affixed thereto the Company's seal or a facsimile thereof
which shall be attested by the Secretary or an Assistant Secretary of the
Company, either manually or by facsimile signature. The Right Certificates
shall be manually countersigned by the Rights Agent and shall not be valid for
any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Right Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent, issued and delivered with the same force and
effect as though the person who signed such Right Certificates had not ceased to
be such officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at one of its offices designated for such purposes, books for
registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates, the date of each of the Right Certificates and the certificate
numbers for each of the Right Certificates.
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SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Sections 4(b), 7(f) and 14(b)
hereof, at any time after the Close of Business on the Distribution Date and at
or prior to the Close of Business on the earlier of the Redemption Date or the
Final Expiration Date, any Right Certificate or Certificates may be (i)
transferred or (ii) split up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered holder to purchase a
like number of Units of Preferred Stock as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer any Right Certificate shall surrender the Right
Certificate at the office of the Rights Agent designated for such purposes with
the form of assignment on the reverse side thereof duly endorsed (or enclose
with such Right Certificate a written instrument of transfer in form
satisfactory to the Company and the Rights Agent), duly executed by the
registered holder thereof or his attorney, duly authorized in writing, and with
such signature duly guaranteed. Any registered holder desiring to split up,
combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate or
Right Certificates to be split up, combined or exchanged at the Corporate Agency
Service Center of the Rights Agent. Thereupon the Rights Agent shall
countersign (by manual signature) and deliver to the person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, if requested by the Company,
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will execute and deliver a new Right Certificate of like
tenor and representing the equivalent number of Rights to the Rights Agent for
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) The Rights shall become exercisable, and may be exercised to
purchase Units of Preferred Stock, except as otherwise provided herein, in whole
or in part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed (with such signature duly
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guaranteed), to the Rights Agent at 000 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxxx Xxxx, together with payment of
the Purchase Price with respect to each Right exercised, subject to
adjustment as hereinafter provided, at or prior to the Close of Business on
the earlier of (i) July 23, 2000 (the "Final Expiration Date"), (ii) the time
at which the Rights are redeemed as provided in Section 23 hereof (such date
being herein referred to as the "Redemption Date") or (iii) the time at which
all such Rights are exchanged as provided in Section 24 hereof.
(b) The Purchase Price and the number of Units of Preferred Stock or
other securities or consideration to be acquired upon exercise of a Right shall
be subject to adjustment from time to time as provided in Sections 11 and 13
hereof. The Purchase Price shall be payable in lawful money of the United
States of America, in accordance with Section 7(c) hereof.
(c) As promptly as practicable following the occurrence of the
Distribution Date, the Company shall deposit with a corporation in good standing
organized under the laws of the United States or any State of the United States,
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 (such institution being the "DEPOSITARY AGENT"), certificates
representing the shares of Preferred Stock that may be acquired upon exercise of
the Rights and shall cause such Depositary Agent to enter into an agreement
pursuant to which the Depositary Agent shall issue receipts representing
interests in the shares of Preferred Stock so deposited. Upon receipt of a
Right Certificate representing exercisable Rights, with the form of election to
purchase and the certificate duly executed, accompanied by payment, with respect
to each Right so exercised, of the Purchase Price for the Units of Preferred
Stock (or, following a Triggering Event, other securities, cash or other assets,
as the case may be) to be purchased thereby as set forth below and an amount
equal to any applicable transfer tax or evidence satisfactory to the Company of
payment of such tax, the Rights Agent shall, subject to Section 20(k), thereupon
promptly (i) requisition from the Depositary Agent depositary receipts
representing such number of Units of Preferred Stock as are to be purchased and
the Company will direct, and hereby authorizes and directs, the Depositary Agent
to comply with such request, (ii) requisition from the Company the amount of
cash, if any, to be paid in lieu of fractional shares in accordance with Section
14, (iii) after receipt of such depositary receipts, promptly cause the same to
be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, and (iv) after receipt thereof, promptly deliver such cash, if any, to
or upon the order of the registered holder of such Right Certificate; provided,
however, that in the case of a purchase of securities pursuant to Section 13
hereof, the Rights Agent shall promptly take the appropriate actions
corresponding to the foregoing clauses (i) through (iv). In the event that the
Company is obligated to issue Common Stock, other securities of the Company, pay
cash and/or distribute other property pursuant to Section 11(a), the Company
will make all arrangements necessary so that such Common
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Stock, other securities, cash and/or other property are available for
distribution by the Rights Agent, if and when appropriate. The payment of
the Purchase Price (as such amount may be reduced pursuant to Section
11(a)(iii)) may be made in cash or by certified or bank check payable to the
order of the Company, or by wire transfer of immediately available funds to
the account of the Company (provided that notice of such wire transfer shall
be given by the holder of the related Right to the Rights Agent).
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
(f) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of any Flip-In Event or Flip-Over Event, any
Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) which becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) which becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and which receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person (or any such Associate or Affiliate) to holders of equity
interests in such Acquiring Person (or such Associate or Affiliate) or to any
Person with whom such Acquiring Person (or such Associate or Affiliate) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights, shares of Common Stock or the Company or (B) a transfer which a majority
of the Continuing Directors has determined to be part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(f), shall be null and void without any further action, and no holder
of such Rights shall have any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise. The Company shall
use all reasonable efforts to ensure that the provisions of this Section 7(f)
and Section 4(b) are complied with, but shall have no liability to any holder of
Rights or any other Person as a result of its failure to make any
14
determination under this Section 7(f) or Section 4(b) with respect to an
Acquiring Person or its Affiliates, Associates or transferees.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the Provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Right Agent shall so
cancel and retire, any Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF SHARES OF PREFERRED STOCK.
(a) The Company covenants and agrees that at all times it will cause
to be reserved and kept available, out of, and to the extent of, its authorized
and unissued shares of Preferred Stock not reserved for another purpose (and,
following the occurrence of a Triggering Event, other securities) or held in its
treasury, the number of shares of Preferred Stock (and, following the occurrence
of a Triggering Event, other securities) that, as provided in this Agreement,
including Section 11(a)(iii) hereof, will be sufficient to permit the exercise
in full of all outstanding Rights, provided, however, that the Company shall not
be required to reserve and keep available shares of Preferred Stock or other
securities sufficient to permit the exercise in full of all outstanding Rights
pursuant to the adjustments set forth Section 11(a)(ii), Section 11(a)(iii) or
Section 13 hereof unless, and only to the extent that, the Rights become
exercisable pursuant to such adjustments.
(b) The Company shall (i) use its best efforts to cause, from and
after such time as the Rights become exercisable, the Rights and all shares of
Preferred Stock (and following the occurrence by a Triggering Event, other
securities) issued or reserved for issuance upon exercise thereof to be reported
by The Nasdaq Stock Market Consolidated Quotations Service ("Nasdaq") or such
other system then in use, and if the Preferred Stock shall become listed on any
national securities exchange, to cause, from and after such time as the Rights
become exercisable, the Rights and all shares of Preferred Stock (and, following
the occurrence of a Triggering Event, other securities) issued or reserved for
issuance upon exercise thereof to be listed on such exchange upon official
notice of issuance upon such exercise and (ii) if then necessary, to permit the
offer and issuance of such shares of Preferred Stock (and, following occurrence
of a Triggering Event, other securities), register
15
and qualify such shares of Preferred Stock (and, following the occurrence of
a Triggering Event, other securities) under the Securities Act and any
applicable state securities or "blue sky" laws (to the extent exemptions
therefrom are not available), cause such registration, statement and
qualifications to become effective as soon as possible after such filing and
keep such registration and qualifications effective until the earlier of the
Redemption Date or the Final Expiration Date of the Rights. The Company may
temporarily suspend, for a period of time not to exceed ninety (90) days, the
exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. Upon
any such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as well
as a public announcement at such time as the suspension is not longer in
effect. Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained and until a
registration statement under the Securities Act (if required) shall have been
declared effective.
(c) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock (and
following the occurrence of a Triggering Event, other securities) delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Purchase Price in respect thereof), be duly
and validly authorized and issued and fully paid and nonassessable shares in
accordance with applicable law.
(d) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any Units of Preferred Stock (or other securities, as the case may be) upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Right Certificates to a Person other than, or the issuance or delivery of
certificates or depository receipts for Units of Preferred Stock (or other
securities, as the case may be) upon exercise of Rights in a name other than
that of, the registered holder of the Right Certificate, and the Company shall
not be required to issue or deliver a Right Certificate or certificate or
depository receipt for Units of Preferred Stock (or other securities, as the
case may be) to a person other than such registered holder until any such tax
shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
SECTION 10. PREFERRED STOCK RECORD DATE. Each Person in whose name
any certificate for Units of Preferred Stock (or other securities, as the case
may be) is issued upon the exercise of Rights shall for all purposes be deemed
to have become the holder of record of the Units of Preferred Stock (or other
securities, as the case may be)
16
represented thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made.
SECTION 11. ADJUSTMENTS TO NUMBER AND KIND OF SECURITIES, NUMBER OF
RIGHTS OR PURCHASE PRICE. The number and kind of securities subject to purchase
upon the exercise of each Right, the number of Rights outstanding and the
Purchase Price are subject to adjustment from time to time as provided in this
Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Rights Agreement (A) declare or pay any dividend on Preferred Stock payable
in shares of Preferred Stock, (B) subdivide or split the outstanding shares of
Preferred Stock into a greater number of shares, (C) combine or consolidate the
outstanding shares of Preferred Stock into a smaller number of shares or effect
a reverse split of the outstanding shares of Preferred Stock, or (D) issue any
shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a), the Purchase Price in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of shares
of Preferred Stock or capital stock, as the case may be, issuable on such date,
shall be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive, upon payment of the Purchase Price
then in effect, the aggregate number and kind of shares of Preferred Stock or
capital stock, as the case may be, which, if such Right had been exercised
immediately prior to such date, the holder thereof would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(i)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to any adjustment required pursuant to, Section 11(a)(ii).
(ii) Subject to Section 24, in the event
(A) any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, at any time after the date of this Agreement, directly or
indirectly, (1) shall consolidate with or merge with and into the Company
or any of its Subsidiaries or otherwise combine with the Company or any of
its Subsidiaries, and the Company or such Subsidiary shall be the
continuing or surviving corporation of such consolidation, merger or
combination and the Common Stock of the Company shall remain outstanding
and no shares thereof shall be changed into or exchanged for stock or other
securities of the Company or any other property, or (2) shall, in one or
more transactions, other than in connection with the exercise of a Right or
Rights and other
17
than in connection with the exercise or conversion of securities
exercisable for or convertible into securities of the Company or of any
Subsidiary of the Company, transfer any assets or property to the
Company or any of its Subsidiaries in exchange (in whole or in part) for
any shares of any class of capital stock of the Company or any of its
Subsidiaries or any securities exercisable for or convertible into
shares of any class of capital stock of the Company or any of its
Subsidiaries, or otherwise obtain from the Company or any of its
Subsidiaries, with or without consideration, any additional shares of
any class of capital stock of the Company or any of its Subsidiaries or
any securities exercisable for or convertible into shares of any class
of capital stock of the Company or any of its Subsidiaries (other than
as part of a pro rata offer or distribution by the Company or such
Subsidiary to all holders of such shares), or (3) shall sell, purchase,
lease, exchange, mortgage, pledge, transfer or otherwise acquire (other
than as a pro rata dividend) or dispose, to, from or with, as the case
may be, in one transaction or a series of transactions, the Company or
any of its Subsidiaries, assets (including securities) on terms and
conditions less favorable to the Company or such Subsidiary than the
Company or such Subsidiary would be able to obtain in arm's-length
negotiation with an unaffiliated third party, or (4) shall receive any
compensation from the Company or any of its Subsidiaries for services
other than compensation for employment as a regular or part-time
employee, or fees for serving as a director, at rates in accordance with
the Company's (or its Subsidiary's) past practices, or (5) shall receive
the benefit, directly or indirectly (except proportionately as a
shareholder), of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or tax advantage provided by the
Company or any of its Subsidiaries, or (6) shall engage in any
transaction with the Company (or any of its Subsidiaries) involving the
sale, license, transfer or grant of any right in, or disclosure of, any
patents, copyrights, trade secrets, trademarks, know-how or any other
intellectual or industrial property rights recognized under any
country's intellectual property laws which the Company (including its
Subsidiaries) owns or has the right to use on terms and conditions not
approved by the Board; or
(B) any Person, alone or together with its Affiliates and Associates,
shall become an Acquiring Person other than pursuant to any transaction set
forth in Section 13(a) hereof; or
(C) during such time as there is an Acquiring Person, there shall be
any reclassification of securities (including any reverse stock split), or
any recapitalization of the Company, or any merger or consolidation of the
Company with any of its Subsidiaries or any other transaction or series of
transactions involving the Company or any of its Subsidiaries (whether or
not with or into or otherwise involving an Acquiring Person or any
Affiliate or Associate of such Acquiring Person) which has the effect,
directly or indirectly, of increasing by more than 1% the proportionate
share of the outstanding share of any class of equity securities of the
Company or any
18
of its Subsidiaries, or securities exercisable for or convertible into
equity securities of the Company or any of its Subsidiaries, which is
directly or indirectly beneficially owned by any Acquiring Person or any
Affiliate or Associate of any Acquiring Person,
then, subject to the last sentence of Section 23(a)(i) and except as otherwise
provided in this Section 11, each holder of a Right shall thereafter have a
right to receive for each Right, upon payment of an amount equal to the product
of the then current Purchase Price and the then number of Units of Preferred
Stock for which a Right was exercisable immediately prior to the first
occurrence of a Flip-In Event (the "Flip-In Exercise Payment") and exercise of a
Right in accordance with the terms of this Rights Agreement, such number of
Units of Preferred Stock as shall equal the result obtained by dividing the
Flip-In Exercise Payment by 50% of the Current Market Price per Unit of
Preferred Stock on the date of the first occurrence of a Flip-In Event (such
number of Units of Preferred Stock is herein called the "Adjustment Shares");
provided that the Purchase Price per Unit and the number of Adjustment Shares
shall be further adjusted as provided in this Agreement to reflect any events
occurring after the date of such first occurrence; and provided further 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 shall apply and no adjustment shall be made pursuant to this
Section 11(a)(ii). Notwithstanding the foregoing, the adjustment pursuant to
this Section 11(a)(ii) shall not occur with respect to any Rights that are or
were at any time on or after the earlier of the Stock Acquisition Date or the
Distribution Date beneficially owned by the Acquiring Person or any Associate or
Affiliate of the Acquiring Person which is or was involved in or which caused or
facilitated, directly or indirectly, the event or transaction or transactions
listed above in this Section 11(a)(ii) in respect of which such adjustment
occurs (or any subsequent transferee of such Rights).
(iii) To the extent permitted by applicable law and any agreements
in effect on the date hereof to which the Company is a party, the Company may:
(A) determine the value of the Adjustment Shares issuable upon the exercise of a
Right (the "Current Value") and (B) with respect to each Right, upon exercise of
such Right, make adequate provision to substitute for the Adjustment Shares not
received upon exercise of such Right (1) cash, (2) Common Stock or other equity
securities of the Company (including, without limitation, shares, or units of
shares, of preferred stock which, by virtue of having dividend, voting and
liquidation rights substantially comparable to those of Units of Preferred
Stock, are deemed in good faith by the Board of Directors of the Company to have
substantially the same value as Units of Preferred Stock (such shares or units
of shares of preferred stock are herein called "Preferred Stock Equivalents"),
(3) debt securities of the Company, (4) other assets, or (5) any combination of
the foregoing, having a value which, when added to the value of the Units of
Preferred Stock actually issued upon exercise of such Right, shall have an
aggregate value equal to the Current Value, where such aggregate value has been
determined
19
in good faith by the Board of Directors of the Company based upon the advice
of a nationally recognized independent investment banking firm selected in
good faith by the Board of Directors of the Company; PROVIDED, HOWEVER, if
the Company shall not have made adequate provision to deliver value pursuant
to clause (B) above within thirty days following the later of (x) first
occurrence of a Flip-In Event and (y) the date of which the Company's right
of redemption pursuant to Section 23(a) expires (the later of (x) and (y)
being referred to herein as the "Flip-In Trigger Date") (such thirty day
period is herein called the "Substitution Period"), then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, Units of Preferred Stock (to the
extent available) and then, if necessary, cash, which Units and/or cash have
an aggregate value equal to the excess of the Current Value over the Purchase
Price. To the extent that the Company determines to take action pursuant to
the first sentence of this Section 11(a)(iii), the Company (x) shall provide,
subject to the first sentence of Section 11(a)(ii) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period
in order to decide the appropriate form of distribution to be made pursuant
to such first sentence and to determine the value thereof. In the event of
any such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as well
as a public announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of a Unit of
Preferred Stock shall be the Current Market Price per Unit on the Flip-In
Trigger Date and the per share or per unit value of any Preferred Stock
Equivalent shall be deemed to equal the Current Market Price per share or
unit on such date. The Board of Directors may, but shall not be required to,
establish procedures to allocate the right to receive Preferred Stock upon
the exercise of the Rights among holders of Rights pursuant to this Section
11(a)(iii).
(b) In case the Company shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of Preferred
Stock entitling them to subscribe for or purchase (for a period expiring within
forty-five calendar days after such record date) Preferred Stock, shares having
the same rights, privileges and preferences as the Preferred Stock ("Equivalent
Preferred Stock") or securities convertible into Preferred Stock or Equivalent
Preferred Stock at a price per share of Preferred Stock or Equivalent Preferred
Stock (or having a conversion price per share, if a security convertible into
Preferred Stock or Equivalent Preferred Stock) less than the Current Market
Price per share of Preferred Stock on such record date, the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date, plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock and/or
Equivalent Preferred Stock (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such Current Market
Price, and the denominator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the
20
number of additional shares of Preferred Stock and/or Equivalent Preferred
Stock to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In case
such subscription price may be paid by delivery of consideration part or all
of which may be in a form other than cash, the value of such non-cash
consideration shall be as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a statement filed
with the Rights Agent. Shares of Preferred Stock owned, by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are not
so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash, assets (other than a dividend
payable in Preferred Stock, but including any dividend payable in stock other
than Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the Current Market Price per share of Preferred Stock on such record
date, less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to a share of Preferred Stock and the denominator of which shall be
such Current Market Price per share of Preferred Stock. Such adjustments shall
be made successively whenever such a record date is fixed, and in the event that
such distribution is not so made, the Purchase Price shall be adjusted to be the
Purchase Price which would have been in effect if such record date had not been
fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "Current Market
Price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of the Common Stock for the thirty
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date, and for purpose of computations made pursuant to Section
11(a)(iii) hereof, the "Current Market Price" per share of the Common Stock on
any date shall be deemed to be the average of the daily closing Prices per share
of the Common Stock for the ten consecutive Trading Days immediately following
such date; provided, however, that in the event that the Current Market Price
per share of the Common Stock is determined during a period following the
announcement by the issuer of the Common Stock of (i) any dividend or
distribution on the Common Stock (other than a regular quarterly cash dividend
and other than the Rights), (ii) any subdivision, combination
21
or reclassification of the Common Stock, and prior to the expiration of the
requisite thirty Trading Day or ten Trading Day period, as set forth above,
the ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification occurs, then, and in
each such case, the Current Market Price shall be properly adjusted to take
into account ex-dividend trading. The closing price for each day shall be
the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the shares of Common Stock are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading or, if the shares of
Common Stock are not listed or admitted to trading on any national securities
exchange, the last quoted sale price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market, as reported by
Nasdaq or such other system then in use, or, if on any such date the shares
of Common Stock are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker
making a market in the Common Stock selected by the Board of Directors of the
Company. If on any such date no market maker is making a market in the
Common Stock, the fair value of such shares on such date as determined in
good faith by the Board of Directors of the Company shall be used. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the shares of Common Stock are listed or admitted to
trading is open for the transaction of business or, if the shares of Common
Stock are not listed or admitted to trading on any national securities
exchange, a Business Day. If the Common Stock is not publicly held or not so
listed or traded, "Current Market Price" per share shall mean the fair value
per share as determined in good faith by a majority of the Continuing
Directors, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive of all purposes.
(ii) For the purpose of any computation hereunder, the "current market
price" per share of Preferred Stock shall be determined in the same manner as
set forth above for Common Stock in clause (i) of this Section 11(d) (other than
the third sentence thereof). If the current market price per share of Preferred
Stock cannot be determined in the manner provided above or if the Preferred
Stock is not publicly held or listed or traded in a manner described in
clause (i) of this Section 11(d), the "current market price" per share of
Preferred Stock shall be conclusively deemed to be an amount equal to 1,000 (as
such amount may be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to Common Stock occurring after the
date of this Agreement) multiplied by the current market price per share of
Common Stock. If neither Common Stock nor Preferred Stock is publicly held or
so listed or traded, "current market price" per share of the Preferred Stock
shall mean the fair value per share as determined in good faith
22
by a majority of the Continuing Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on
the Rights Agent and the holders of the Rights. For all purposes of this
Agreement, the "current market price" of a Unit of Preferred Stock shall be
equal to the "current market price" of one share of Preferred Stock divided
by 1,000.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent in the Purchase Price; provided,
however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest ten-thousandth of a share, as the case may
be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates such adjustment, or (ii)
the Redemption Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of any Right and the Purchase Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Stock contained in
Section 11(a), (b), (c), (g), (h), (i), (j), (k) and (m) hereof, and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred
Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Units of Preferred Stock
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of Units of Preferred
Stock (calculated to the nearest ten-thousandth) obtained by (i) multiplying (x)
the number of Units 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.
23
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price or any adjustment to the number of Units of Preferred Stock
for which a Right may be exercised, to adjust the number of Rights, in lieu of
any adjustment in the number of Units of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of Units of Preferred Stock
for which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest 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 shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be made.
This record date may be the date on which the Purchase Price is adjusted or any
day thereafter, but, if the Right Certificates have been issued, shall be at
least ten days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right Certificates evidencing
all the Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the option of
the Company, the adjusted Purchase Price) and shall be registered in the names
of the holders of record of Right Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Units of Preferred Stock issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to express
the Purchase Price per Unit and the number of Units of Preferred Stock which
were expressed in the initial Right Certificate issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value of the number of Units of Preferred
Stock issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue such fully paid and nonassessable number
of Units of Preferred Stock at such adjusted Purchase Price.
24
(1) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the Units of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the Units of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
holder a due xxxx or other appropriate instrument evidencing such holder's right
to receive such additional shares (fractional or otherwise) and other capital
stock or securities upon the occurrence of the event requiring such adjustments.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance for cash of any shares of
Preferred Stock at less than the current market price, (iii) issuance for cash
of shares of Preferred Stock or securities which by their terms are convertible
into or exchangeable for shares of Preferred Stock, (iv) stock dividends or (v)
issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Preferred Stock shall not be
taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company), (ii) merge with or into any other Person (other than
a Subsidiary of the Company), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons (other than the Company and/or any of its Subsidiaries),
if (x) at the time of, or immediately after, such consolidation, merger or sale
there are any rights, warrants or other instruments securities outstanding or
agreements in effect which substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (y) prior to, simultaneously
with, or immediately after, such consolidation, merger or sale, the shareholders
of the Person who constitutes, or would constitute, the "Principal Party" for
purposes of Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23, Section 24 or Section 27
hereof, take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably
25
foreseeable that such action will diminish substantially or eliminate the
benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time prior to the Distribution Date
(i) declare a dividend on the outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding shares of Common Stock,
(iii) combine the outstanding shares of Common Stock into a smaller number of
shares, or (iv) issue any shares of its capital stock in a reclassification of
Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), the number of Rights associated with each share of Common Stock
then outstanding, or issued or delivered thereafter but prior to the
Distribution Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event by a
fraction the numerator of which shall be the total number of shares of Common
Stock outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
SECTION 12. CERTIFICATION OF ADJUSTMENTS. Whenever an adjustment is
made as provided in Sections 11 and 13 hereof, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a brief statement of the
facts giving rise to such adjustment, (b) promptly file with the Rights Agent
and with each transfer agent for the Preferred Stock a copy of such certificate
and (c) mail a brief summary thereof to each holder of a Right Certificate (or,
if prior to the Distribution Date, to each holder of a certificate representing
shares of Common Stock) in accordance with Section 26 hereof. Notwithstanding
the foregoing sentence, the failure of the company to give such notice shall not
affect the validity of, or the force or effect of, or the requirement for, such
adjustment. The Rights Agent shall be fully protected in relying on any
certificate prepared by the Company pursuant to Sections 11 and 13 and on any
adjustment therein contained and shall not be deemed to have knowledge of any
such adjustment unless and until it shall have received such certificate. Any
adjustment to be made pursuant to Sections 11 and 13 of this Rights Agreement
shall be effective as of the date of the event giving rise to such adjustment.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event that, at any time on or after the Distribution Date,
directly or directly, (x) the Company shall consolidate with, or merge with and
into, any other Person or Persons and the Company shall not be the surviving or
continuing corporation of such consolidation or merger, or (y) any Person or
Persons shall consolidate with, or merge
26
with and into, the Company, and the Company shall be the continuing or
surviving corporation of such consolidation or merger and, in connection with
such consolidation or merger, all or part of the outstanding shares of Common
Stock shall be changed into or exchanged for stock or other securities of any
other Person or of the Company or each or any other property (other than, in
the case of the transactions described in subparagraphs (x) or (y), a merger
or consolidation which would result in all of the Voting Power represented by
the securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into securities of the surviving entity) all of the Voting Power
represented by the securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation and the holders of
such securities not having changed as a result of such transactions), or (z)
the Company or one or more of its Subsidiaries shall sell, mortgage or
otherwise transfer to any other Person or any Affiliate or Associate of such
Person, in one transaction, or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole), then, on the first
occurrence of any such event, proper provision shall be made so that (i) each
holder of record of a Right shall thereafter have the right to receive, upon
payment of an amount equal to the product of the then current Purchase Price
per Unit and the then number of Units of Preferred Stock for which a Right
was exercisable immediately prior to the first occurrence of a Flip-Over
Event (or, if a Flip-In Event hereof has occurred prior to the first
occurrence of a Flip-Over Event, multiplying the Purchase Price per Unit in
effect immediately prior to the first occurrence of a Flip-In Event by the
number of Units of Preferred Stock for which a Right was exercisable
immediately prior to such first occurrence of a Flip-In Event (the "Flip-Over
Exercise Payment") and the exercise of a Right in accordance with the terms
of this Rights Agreement, such number of shares of validly issued, fully paid
and nonassessable and freely tradeable Common Stock of the Principal Party
(as defined herein) not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall be equal to the result obtained by
dividing the Flip-Over Exercise Payment by 50% of the Current Market Price
(determined as provided in Section 11(d) hereof with respect to the Common
Stock) per share of the Common Stock of such Principal Party on the date of
consummation of such Flip-Over Event (or the fair market value on such date
of other securities or property of the Principal Party, as provided for
herein); PROVIDED that the Purchase Price per share and the number of shares
of Common Stock of such Principal Party issuable upon exercise of each Right
shall be further adjusted as provided in this Agreement to reflect any events
occurring after the date of the first occurrence of a Flip-Over Event; (ii)
such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Flip-Over Event, all the obligations and duties of the Company
pursuant to this Rights Agreement; (iii) the term "Company" for all purposes
of this Rights Agreement shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall only apply to such Principal Party following the
first occurrence of a Flip-Over Event; and (iv) such Principal Party shall
take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock in accordance with Section
27
9 hereof) in connection with the consummation of any such transaction as may
be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its shares of
Common Stock thereafter deliverable upon the exercise of the Rights;
provided, however, that, upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all assets, recapitalization,
reclassification of shares, reorganization or other extraordinary transaction
in respect of such Principal Party, each holder of a Right shall thereupon be
entitled to receive, upon exercise of a Right, such cash, shares, warrants
and other property which such holder would have been entitled to receive had
he, at the time of such transaction, owned the shares of Common Stock of the
Principal Party purchasable upon the exercise of a Right, and such Principal
Party shall take such steps (including, but not limited to, reservation of
shares of stock) as may be necessary to permit the subsequent exercise of the
right in accordance with the terms hereof for such cash, shares, rights,
warrants and other property.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x) or (y) of
the first sentence of Section 13(a) hereof; (A) the Person that is the
issuer of the securities into which shares of Common Stock of the Company
are converted in such merger or consolidation, or, if there is more than
one such issuer, the issuer the Common Stock of which has the greatest
market value or (B) if no securities are so issued, (x) the Person that is
the other party to the merger or consolidation and that survives said
merger or consolidation, or, if there is more than one such Person, the
Person the Common Stock of which has the greatest market value or (y) if
the Person that is the other Party to the merger or consolidation does not
survive the merger or consolidation, the Person that does survive the
merger or consolidation (including the Company if it survives); and
(ii) in the case of any transaction described in (z) of the first
sentence in Section 13(a) hereof, the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions, or, if each Person that is a party to
such transaction or transactions receives the same portion of the assets or
earning power so transferred or if the Person receiving the greatest
portion of the assets or earning power cannot be determined, whichever of
such Persons as is the issuer of Common Stock having the greatest market
value of shares outstanding; provided, however, that in any such case
described in the foregoing (b)(i) or (b)(ii), if the Common Stock of such
Person is not at such time and has not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect Subsidiary of another Person the Common
Stock of which is and has been so registered, the term "Principal Party"
shall refer to such other Person, or if such Person is a Subsidiary,
directly or indirectly, of more than one Person, the Common
28
Stocks of all of which are and have been so registered, the term
"Principal Party" shall refer to whichever of such Persons is the issuer
of the Common Stock having the greatest market value of shares
outstanding.
(c) The Company shall not consummate any consolidation, merger, sale
or transfer referred to in Section 13(a) unless the Principal Party shall have a
sufficient number of authorized shares of its Common Stock which have not been
issued or reserved for issuance to permit the exercise of the Rights in
accordance with this Section 13 and unless prior thereto the Company and the
Principal Party involved therein shall have executed and delivered to the Rights
Agent an agreement confirming that the requirements of Sections 13(a) and (b)
hereof shall promptly be performed in accordance with their terms and that such
consolidation, merger, sale or transfer of assets shall not result in a default
by the Principal Party under this Rights Agreement as the same shall have been
assumed by the Principal Party pursuant to Section 13(a) and (b) hereof and
further providing that, as soon as practicable after executing such agreement
pursuant to this Section 13, the Principal Party at its own expense shall:
(i) prepare and file a registration statement under the
Securities Act, if necessary, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its
best efforts to cause such registration statement to become effective as
soon as practicable after such filing and use its best efforts to cause
such registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Act) until the date of expiration of
the rights, and similarly comply with applicable state securities laws;
(ii) use its best efforts, if the Common Stock of the Principal
Party shall become listed on a national securities exchange, to list (or
continue the listing of) the Rights and the securities purchasable upon
exercise of the Rights on such securities exchange and, if the Common Stock
of the Principal Party shall not be listed on a national securities
exchange, to cause the Rights and the securities purchased upon exercise of
the Rights to be reported by Nasdaq or such other system then in use;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and
(iv) obtain waivers of any rights of first refusal or preemptive
rights in respect of the shares of Common Stock of the Principal Party
subject to purchase upon exercise of outstanding Rights.
29
In the event that any of the transactions described in Section 13(a) hereof
shall occur at any time after the occurrence of a transaction described in
Section 11(a)(ii) hereof, the Rights which have not theretofore been exercised
shall thereafter be exercisable in the manner described in Section 13(a). The
provisions of this Section 13 shall similarly apply to all successive Flip-Over
Events.
(d) Furthermore, in case the Principal Party which is to be a party
to a transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, shares of Common Stock of such Principal Party at less than the then Current
Market Price per share (determined pursuant to Section 11(d) hereof) or
securities exercisable for, or convertible into, Common Stock of such Principal
Party at less than such then current market price (other than to holders of
Rights pursuant to this Section 13) or (ii) providing for any special payment,
tax or similar provisions in connection with the issuance of the Common Stock of
such Principal Party pursuant to the provisions of Section 13; then, in such
event, the Company hereby agrees with each holder of Rights that it shall not
consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the holders of record of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the then current
market value of a whole Right. For the purposes of this Section 14(a), the then
current market value of a Right shall be determined in the same manner as the
Current Market Price of a share of Common Stock shall be determined pursuant to
Section 11(d) hereof.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one one-
thousandth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). In lieu of issuing fractions of shares of Preferred
Stock that are not integral multiples of one one-thousandth of a share,
30
there shall be paid to the holder of record of Right Certificates at the time
such Right Certificates are exercised as herein provided an amount in cash
equal to the same fraction of the then current market value of a share of
Preferred Stock. For purposes of this Section 14(b), the then current market
value of a share of Preferred Stock shall be the Current Market Price thereof
as determined pursuant to Section 11(d) hereof.
(c) The holder of a Right by the acceptance of a Right expressly
waives his right to receive any fractional Right or any fractional shares upon
exercise of a Right.
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, other than any rights of action vested in the Rights Agent
pursuant to Sections 18 and 20 below, are vested in the respective holders of
record of the Right Certificates (and, prior to the Distribution Date, the
holders of record of the Common Stock); and any holder of record of any Right
Certificate (or, prior to the Distribution Date, of the Common Stock), without
the consent of the Rights Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, of the Common Stock), may, in his own
behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company or any other Person to enforce,
or otherwise act in respect of, his right to exercise the Rights evidenced by
such Right Certificate in the manner provided in such Right Certificate and in
this Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and,
accordingly, that they will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this Agreement. Holders of Rights
shall be entitled to recover the reasonable costs and expenses, including
attorneys' fees, incurred by them in any action to enforce the provisions of
this Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will not be evidenced
by a Right Certificate and will be transferable only in connection with the
transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates will be
transferable only on the registry books of the Rights Agent if surrendered at
the principal offices of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced
31
thereby (notwithstanding any notations of ownership or writing on the Right
Certificate or the associated Common Stock certificate made by anyone other
than the Company or the Rights Agent or the transfer agent of the Common
Stock) for all purposes whatsoever, and neither the Company nor the Rights
Agent shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(f), shall have any liability to any holder of a Right or other Person
as a result of its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
PROVIDED, however, the Company must use its best efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as possible.
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder of a Right, as such, shall be entitled to vote, receive dividends in
respect of or be deemed for any purpose to be the holder of Preferred Stock or
any other securities of the Company which may at any time be issuable upon the
exercise of the Rights, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a shareholder of the Company or any right to vote in
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in Section 25 hereof), or to receive dividends or subscription rights
in respect of any such stock or securities, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all service rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution of this Rights
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability or expense incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent for anything done or omitted
to be done by the Rights Agent in connection with the acceptance and
administration of the Rights Agreement, including the cost and expenses of
defending against any claim of liability in the premises. The indemnity
provided herein shall survive the expiration of the Rights and the termination
of this Rights Agreement.
32
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Rights Agreement in reliance upon any Right
Certificate, certificate for Preferred Stock or other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, guaranteed, verified or acknowledged, by the proper Person or
Persons.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGED NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent, under this
Rights Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Rights Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and, in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver such Right Certificates so countersigned; and in case at that
time any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificate shall have the full
force provided in the Right Certificates and in this Rights Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Rights Agreement upon the following terms
and conditions, by all of which the Company and the holder of Right
Certificates, by their acceptance thereof, shall be bound:
33
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted to be taken by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person) be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by certificate signed by the President or any Vice President and by
the Chief Financial Officer or the Secretary or any Assistant Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Rights Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Rights Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Right Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Sections 11, 13, 23 or 24 hereof or responsible for the manner,
method or amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after receipt of a
certificate furnished pursuant to Section 12 describing any such adjustment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Preferred Stock
to be issued pursuant to this Rights Agreement or any Right Certificate or as to
whether any shares of Preferred Stock will, when issued, be validly authorized
and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for
34
the carrying out or performing by the Rights Agent of the provisions of this
Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President or any Vice President or the Secretary or
any Assistant Secretary or the Chief Financial Officer of the Company, and to
apply to such officers for advice or instructions in connection with its duties,
and it shall not be liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer. Any application
by the Rights Agent for written instructions from the Company may, at the option
of the Rights Agent, set forth in writing any action proposed to be taken or
omitted by the Rights Agent under this Rights Agreement and the date on and/or
after which such action shall be taken or such omission shall be effective
subject to Section 20(c) hereof, the Rights Agent shall not be liable for any
action taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after the date
any officer of the Company actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Rights Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
35
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form
of assignment or the form of election to purchase set forth on the reverse
thereof, as the case may be, has either not been completed or indicates an
affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not
take any further action with respect to such requested exercise or transfer
without first consulting with the Company.
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Rights Agreement upon 30 days notice in writing, or such earlier period
as shall be agreed to in writing, mailed to the Company and to each transfer
agent of the Preferred Stock and the Common Stock by registered or certified
mail, and to the holders of the Right Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent (with or
without cause) upon 30 days notice in writing, or such earlier period as
shall be agreed to in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Preferred Stock
and the Common Stock by registered or certified mail, and to the holders of
the Right Certificates by first-class mail. If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. Notwithstanding the foregoing
provisions of this Section 21, in no event shall the registration or removal
of a Rights Agent be effective until a successor Rights Agent shall have been
appointed and have accepted such appointment. If the Company shall fail to
make such appointment within a period of 30 days after such removal or after
it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the incumbent Rights Agent or the holder of
record of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be (a) a
corporation organized and doing business under the laws of the United States
or any State thereof, in good standing, which is authorized under such laws
to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000 or (b) an Affiliate controlled by a corporation described
in clause (a) of this sentence. After appointment, the successor Rights
Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Not later than the effective date of any
such appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Preferred Stock and
the Common Stock, and mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice provided for
in this Section 21,
36
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding
any of the provisions of this Rights Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors
to reflect any adjustment or change in the purchase price per share and the
number or kind or class of shares of stock or other securities or property
purchasable under the Right Certificates made in accordance with the
provisions of this Rights Agreement. In addition, in connection with the
issuance or sale of shares of Common Stock following the Distribution Date
and prior to the redemption or expiration of the Rights, the Company (a)
shall, with respect to shares of Common Stock so issued or sold pursuant to
the exercise of stock options or under any employee plan or arrangement, or
upon the exercise, conversion or exchange of securities hereinafter issued by
the Company, and (b) may, in any other case, if deemed necessary or
appropriate by the Board of Directors of the Company, issue Right
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; PROVIDED, HOWEVER, that (i) no such Right Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material
adverse tax consequences to the Company or the Person to whom such Right
Certificate would be issued, and (ii) no such Right Certificate shall be
issued, if, and to the extent that, appropriate adjustment shall otherwise
have been made in lieu of the issuance thereof.
SECTION 23. REDEMPTION.
(a) (i) The Board of Directors of the Company may, at its option,
at any time prior to the earlier of (x) the Close of Business on the tenth
day following a Stock Acquisition Date, subject to extension by the Board of
Directors as provided in Section 27 hereof or (y) the Close of Business on
the Final Expiration Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 per Right, as such amount
may be appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the "Redemption Price"), and the Company
may, at its option, by action of a majority of the Company's Board of
Directors, pay the Redemption Price either in shares of Common Stock (based
on the current market price, determined in accordance with Section 11(d), of
the shares of Common Stock at the time of redemption) or cash; PROVIDED that,
notwithstanding anything to the contrary contained in this Section 23(a), the
Company may not take any action pursuant to this Section 23(a) unless (x) at
the time of the action of the Board of Directors of the Company approving
such redemption and the form of payment of the Redemption Price, there are
then in office not less than two Continuing Directors and (y) such action is
approved by a majority of the Continuing Directors then in office. Subject
37
to the foregoing, 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. Notwithstanding anything contained in this
Agreement to the contrary, the Rights shall not be exercisable after the
first occurrence of a Flip-In Event until such time as the Board of
Directors' right of redemption under this Section 23(a)(i) has expired.
(ii) Notwithstanding anything contained in this Agreement to the
contrary, the Board of Directors of the Company may redeem all but not less
than all of the then outstanding Rights at the Redemption Price following the
occurrence of a Stock Acquisition Date but prior to any Flip-Over Event in
connection with a Flip-Over Event in which all holders of Common Stock are
treated like and not involving (other than as a holder of Common Stock being
treated like all other such holders) an Acquiring Person or an Affiliate or
Associate of an Acquiring Person or any other Person in which such Acquiring
Person, Affiliate or Associate has an interest, or any other Person or
Persons acting directly or indirectly on behalf of or in association with any
such Acquiring Person, Affiliate or Associate.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights (the date of such action being
the "Redemption Date"), and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter or the holders of Rights shall be to receive the Redemption Price,
without any interest thereon. Within 10 days after the Redemption Date, the
Company shall give notice of such redemption to the Rights Agent and the
holders of the then outstanding Rights by mailing such notice to all such
holders at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent of the Common Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. The failure to give notice
required by this Section 23(b) or any defect therein shall not affect the
legality or validity of the action taken by the Company.
(c) In the case of a redemption permitted under Section 23(a), the
Company may, at its option, discharge all of its obligations with respect to
the Rights by (i) issuing a press release announcing the manner of redemption
of the Rights and (ii) mailing payment of the Redemption Price to the
registered holders of the Rights at their last addresses as they appear on
the registry books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the transfer agent of the Common Stock, and upon such
action, all outstanding Right Certificates shall be null and void without any
further action by the Company.
38
SECTION 24. EXCHANGE.
(a) (i) The Board of Directors of the Company may, at its option,
at any time after any person becomes an Acquiring Person, upon resolution
adopted by a majority of the Company's Board of Directors, exchange all or
part of the then outstanding and exercisable Rights (which shall not include
Rights that have become null and void pursuant Section 7(f)) for Units of
Preferred Stock at an exchange ratio of one Unit of Preferred Stock per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio
being hereinafter referred to as the "SECTION 24(A)(I) EXCHANGE RATIO").
Notwithstanding the foregoing, the Company may not effect such exchange at
any time after any Person (other than an Exempt Person), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50%
or more of the shares of Common Stock then outstanding.
(ii) The Board of Directors of the Company may, at its option, at
any time after any person becomes an Acquiring Person, upon resolution
adopted by a majority of the Company's Board of Directors, exchange all or
part of the then outstanding and exercisable Rights (which shall not include
Rights that have become null and void pursuant to Section 7(f)) for Units of
Preferred Stock at an exchange ratio specified in the following sentence, as
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof. Subject to such adjustment,
each Right may be exchanged for that number of Units of Preferred Stock
obtained by dividing the Adjustment Spread (as defined below) by the then
Current Market Price (determined pursuant to Section 11(d)) per Unit of
Preferred Stock on the earlier of (i) the date on which any Person becomes an
Acquiring Person and (ii) the date on which a tender or exchange offer by any
Person (other than an Exempt Person) is first published or sent or given
within the meaning of Rule 14d-4(a) of the Exchange Act Regulations or any
successor rule, if upon consummation thereof such Person would be the
Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding (such exchange ratio being the "SECTION 24(A)(II) EXCHANGE
RATIO"). The "ADJUSTMENT SPREAD" shall equal (x) the aggregate market price
on the date of such event of the number of Adjustment Shares determined
pursuant to Section 11(a)(ii), minus (y) the Purchase Price. Notwithstanding
the foregoing, the Company may not effect such exchange at any time after any
Person (other than an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
shares of the Common Stock then outstanding.
Notwithstanding anything contained in this Section 24(a) to the
contrary, the Company may not exchange any Rights pursuant to this Section
24(a) unless (x) at the time of the action of the Board of Directors of the
Company approving such exchange, there are then in office not less than two
Continuing Directors and (y) such exchange is approved by a majority of the
Continuing Directors then in office.
39
(b) Immediately upon the action of a majority of the Continuing
Directors ordering the exchange of any Rights pursuant to Section 24(a) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of Units of Preferred Stock equal to
the number of such Rights held by such holder multiplied by the Section
24(a)(i) Exchange Ratio or Section 24(a)(ii) Exchange Ratio, as the case may
be. The Company shall promptly give public notice of any such exchange;
PROVIDED, HOWEVER, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company promptly shall
mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights
Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such
notice of exchange shall state the method by which the exchange of Units of
Preferred Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to Section 7(f)) held by each holder of
Rights.
(c) In the event that the number of shares of Preferred Stock
which are authorized by the Company's Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all
such action as may be necessary to authorize additional shares of Preferred
Stock for issuance upon exchange of the Rights or make adequate provision to
substitute (1) cash, (2) Common Stock or other equity securities of the
Company, (3) debt securities of the Company, (4) other assets or (5) any
combination of the foregoing, having an aggregate value equal to the
Adjustment Spread, where such aggregate value has been determined by a
majority of the Continuing Directors.
(d) The Company shall not be required to issue fractions of Units
of Preferred Stock or to distribute certificates which evidence fractional
Units. In lieu of fractional Units, the Company may pay to the registered
holders of Right Certificates at the time such Rights are exchanged as herein
provided an amount in cash equal to the same fraction of the Current Market
Price (determined pursuant to Section 11(d)) of one Unit of Preferred Stock.
SECTION 25. NOTICE OF PROPOSED ACTIONS.
(a) In case the Company, after the Distribution Date, shall
propose (i) to effect any of the transactions referred to in Section 11(a)(i)
or to pay any dividend to the holders of record of its Common Stock payable
in stock of any class or to make any other distribution to the holders of
record of its Common Stock (other than a regular periodic cash
40
dividend), or (ii) to offer to the holders of record of its Common Stock or
options, warrants, or other rights to subscribe for or to purchase shares of
Common Stock (including any security convertible into or exchangeable for
Common Stock) or shares of stock of any class or any other securities,
options, warrants, convertible or exchangeable securities or other rights, or
(iii) to effect any reclassification of its Common Stock or any
recapitalization or reorganization of the Company, or (iv) to effect any
consolidation or merger with or into, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons, or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of record of a Right Certificate, in accordance with Section 26
hereof, notice of such proposed action, which shall specify the record date
for the purposes of such transaction referred to in Section 11(a)(i), or such
dividend or distribution, or the date on which such reclassification,
recapitalization, reorganization, consolidation, merger, sale or transfer of
assets, liquidation, dissolution or winding up is to take place and the
record date for determining participation therein by the holders of record of
Common Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at least
10 days prior to the record date for determining holders of record of the
Common Stock for purposes of such action, and in the case of such other
action, at least 10 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of record of
Common Stock, whichever shall be the earlier.
(b) In case any of the transactions referred to in Section
11(a)(ii) or Section 13 of this Rights Agreement are proposed, then, in any
such case, the Company shall give to each holder of Rights, in accordance
with Section 26 hereof, notice of the proposal of such transaction at least
10 days prior to consummating such transaction, which notice shall specify
the proposed event and the consequences of the event to the holders of Rights
under Section 11(a)(ii) or Section 13 hereof, as the case may be, and, upon
consummating such transaction, shall similarly give notice thereof to each
holder of Rights.
(c) The failure to give notice required by this Section 25 or any
defect therein shall not affect the legality or validity of the action taken
by the Company or the vote upon any such action.
SECTION 26. NOTICES. Notices or demands authorized by the Rights
Agreement to be given or made by the Rights Agent or by the holder of record
of any Right Certificate or Right to or on behalf of the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent)
as follows:
41
Adobe Systems Incorporated
000 Xxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: General Counsel
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Rights Agreement to be given or made by the Company or by the holder of
record of any Right Certificate or Right to or on behalf of the Rights Agent
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Company)
as follows:
Xxxxxx Trust Company of California
000 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxx
Notices or demands authorized by this Rights Agreement to be given or made by
the Company of the Rights Agent to the holder of record of any Right
Certificate or Right shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as it appears upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the Transfer Agent.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. The Company and the
Rights Agent may from time to time supplement or amend this Agreement without
approval of any holders of Right Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provision herein, (iii) prior
to the Close of Business on the tenth day following the Stock Acquisition
Date and subject to extension by the Board of Directors by amendment hereof,
to change or supplement any of the provisions herein which the Company may
deem necessary or desirable, or (iv) following the time at which the Board of
Directors' right of redemption under Section 23(a)(i) has expired, to amend
or supplement the provisions hereunder in any manner which the Company may
deem necessary or desirable and which shall not adversely affect the
interests of the holders of Right Certificates; PROVIDED, HOWEVER, that this
Agreement may not be amended or supplemented pursuant to this clause (iv) to
lengthen a time period relating to when the Rights may be redeemed. Upon
delivery of a certificate from an appropriate officer of the Company or, so
long as any Person is an Acquiring Person hereunder, from the majority of the
Continuing Directors, which states that the proposed supplement or amendment
is in compliance with the terms of this Section 27, the Rights Agent shall
execute such supplement or amendment unless the Rights Agent shall have
determined in good faith that such supplement or amendment would adversely
affect its interests under this Agreement. Notwithstanding anything contained
in this Agreement to the contrary, supplements or amendments shall be made
only if (x) at the
42
time of the action of the Board of Directors of the Company approving such
supplement or amendment there are then in office not less than two Continuing
Directors and (y) such supplement or amendment is approved by a majority of
the Continuing Directors then in office. Notwithstanding anything contained
in this Rights Agreement to the contrary, no supplement or amendment shall be
made which changes the Redemption Price. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock.
SECTION 28. SUCCESSORS. All of the covenants and provisions of this
Rights Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS,
ETC.
(a) For all purposes of this Agreement, any calculation of the number
of shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Exchange Act
Regulations as in effect on the date hereof. Except as otherwise specifically
provided herein, and subject to paragraph (b) of this Section 29, the Board of
Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors of the Company or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power (i) to interpret the provisions of this
Agreement and (ii) to make all determinations deemed necessary or advisable for
the administration of this Agreement. All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
or by a majority of the Continuing Directors in good faith shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject the Board of Directors of the
Company or any member thereof to any liability to the holders of the Rights.
(b) Notwithstanding anything to the contrary contained in this
Agreement, the concurrence of a majority of the Continuing Directors then in
office shall be required to give effect to any action, calculation,
interpretation or determination made by the Board of Directors of the Company in
the administration of this Agreement and the exercise of the rights or powers
granted to the Board of Directors of the Company, to the Continuing Directors or
to the Company pursuant to this Agreement and no effect shall be given to any
such action, calculation, interpretation, determination or exercise of rights or
powers unless at least two Continuing Directors are then in office.
43
SECTION 30. BENEFITS OF THIS RIGHTS AGREEMENT. Nothing in this
Rights Agreement shall be construed to give to any person or corporation other
than the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Stock) any legal
or equitable right, remedy or claim under this Rights Agreement; but this Rights
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the holders of record of the Right Certificates (and, prior to the
Distribution Date, the Common Stock).
SECTION 31. GOVERNING LAW. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware (or the laws of the state of incorporation of
any successor of the Company) and for all purposes shall be governed by and
construed in accordance with the laws of such state applicable to contracts
to be made solely by residents of such state and performed entirely within
such state.
SECTION 32. COUNTERPARTS. This Rights Agreement may be executed
in any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same Instrument.
SECTION 33. DESCRIPTIVE HEADINGS. Descriptive headings of the
several sections of this Rights Agreement are inserted for convenience only
and shall not control or affect the meaning or construction of any of the
provisions hereof.
SECTION 34. SEVERABILITY. If any term, provision, covenant or
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, illegal or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated; PROVIDED, HOWEVER, that notwithstanding
anything in this Agreement to the contrary, if any such term, provision,
covenant or restriction is held by such court or authority to be invalid,
void or unenforceable and a majority of the Continuing Directors determines
in its good faith judgment that severing the invalid language from this
Agreement would adversely affect the purpose or effect of this Agreement and
the Rights shall not then be redeemable, the right of redemption set forth in
Section 23 shall be reinstated and shall not expire until the Close of
Business on the tenth Business Day following the date of such determination
by a majority of the Continuing Directors.
44
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly amended and restated as of the day and year first above
written.
[SEAL]
ATTEST: ADOBE SYSTEMS INCORPORATED
By:____________________________ By:____________________________
Name: Name:
Title: Title:
[SEAL]
ATTEST: XXXXXX TRUST
COMPANY OF CALIFORNIA
By:____________________________ By:____________________________
Name: Name:
Title: Title:
EXHIBIT A
[Form of Right Certificate]
Certificate No. _______________ _________________ Rights
NOT EXERCISABLE AFTER JULY 23, 2000, OR EARLIER IF REDEEMED OR EXCHANGED. AT
THE OPTION OF THE COMPANY, THE RIGHTS MAY BE REDEEMED AT $.01 PER RIGHT OR
EXCHANGED FOR UNITS OF PREFERRED STOCK ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. IN THE EVENT THAT THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE
ISSUED TO A PERSON WHO IS AN ACQUIRING PERSON OR A TRANSFEREE OF THE RIGHTS
PREVIOUSLY OWNED BY SUCH PERSONS, THIS RIGHT CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(f) OF THE RIGHTS AGREEMENT AND MAY BE LIMITED AS PROVIDED IN SECTION
11(A)(II) AND SECTION 24 OF THE RIGHTS AGREEMENT.
RIGHT CERTIFICATE
ADOBE SYSTEMS INCORPORATED
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 Second
Amended and Restated Rights Agreement dated as of August 14, 1997 ("Rights
Agreement") between Adobe Systems Incorporated, a Delaware corporation
("Company"), and Xxxxxx Trust Company of California ("Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 p.m. (California time) on
July 23, 2000, at the office of the Rights Agents, or its successors as Rights
Agent, designated for such purposes, one one-thousandth of a fully paid and
nonassessable share of Series A Preferred Stock of the Company, par value $.0001
per share ("Preferred Stock") at a purchase price of $115.00 per one-thousandth
of a share (each such one one-thousandth of a share being a "UNIT") of Preferred
Stock, as the same may from time to time after the date of the Rights Agreement
be adjusted in accordance with the Rights Agreement ("Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly executed.
As provided in the Rights Agreement, the Purchase Price and the number
of Units of Preferred Stock which may be purchased upon the exercise of the
Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events, and, upon the happening of
certain events, securities other than Units of Preferred Stock, or other
property, may be acquired upon exercise of the Rights evidenced by this Right
Certificate, as provided by the Rights Agreement.
A-1
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of record of the Right Certificates. Copies of the
Rights Agreement are on file at the principal executive office of the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the corporate agency service center of the Rights Agent, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder of record to purchase a like
aggregate number of shares of Common Stock as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof, another Right Certificate or
Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, at any time prior
to the earlier of (i) the Close of Business on the tenth day following Stock
Acquisition Date and subject to extension by the Board of Directors by amendment
of the Rights Agreement or (ii) the Final Expiration Date, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $.01 per Right if exchanged by the Company at its option in whole or in
part for Units of Preferred Stock.
No fractional Units of Preferred Stock shall be issued upon the
exercise or exchange of any Right or Rights evidenced hereby, and in lieu
thereof, as provided in the Rights Agreement, fractions of Units Preferred Stock
shall receive an amount in cash equal to the same fraction of the then Current
Market Price (as such term is defined in the Rights Agreement) of Units of
Preferred Stock.
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Preferred
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to vote in the
election of directors; or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action or to
receive notice of meetings or other actions affecting shareholders (other than
certain actions specified in the Rights Agreement) or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by this
Right Certificate shall have been exercised or exchanged as provided in the
Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
A-2
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ____________________, 19_____
ATTEST: Adobe Systems Incorporated
By: ______________________________ By: __________________________________
Secretary Title:
COUNTERSIGNED:
Xxxxxx Trust Company of California,
As Rights Agent
By:_______________________________
Authorized Signature:
A-3
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the
Right Certificate.)
FOR VALUE RECEIVED____________________________________________________
hereby sells, assigns and transfers unto______________________________
______________________________________________________________________
(Please print name and address of transferee)
______________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint_____________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated:________________ __, 199_
_____________________________
Signature
Signature Guaranteed:
A-4
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate [ ] is [ ] is 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 terms are defined
pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:___________________ __, 199_ ____________________________
Signature
Signature Guaranteed:
--------------------------------------------------------------
NOTICE
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by an approved eligible financial institution
acceptable to the Rights Agent in its sole discretion.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Right
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Right Certificates issued in exchange for this
Right Certificate.
A-5
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder
desires to exercise Rights represented
by the Right Certificate.)
To: Adobe Systems Incorporated
The undersigned hereby irrevocably elects to exercise _____________ Rights
represented by this Right Certificate to purchase the Units of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person or other property which may be issuable upon the
exercise of the Rights) and requests that certificates for such Units be issued
in the name of and delivered to:
_________________________________________
(Please print name and address)
_________________________________________
Please insert social security
or other identifying number:_____________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance of such Rights shall
be registered in the name of and delivered to:
_________________________________________
(Please print name and address)
_________________________________________
Please insert social security
or other identifying number:_____________
Dated:_______________ __, 199_
______________________________
Signature
Signature Guaranteed:
A-6
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
beneficially owned by an Acquiring Person or an Affiliate or an Associate
thereof (as defined in the Right Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.
Dated:___________________ __, 199_ ____________________________
Signature
Signature Guaranteed:
--------------------------------------------------------------
NOTICE
The signature in the foregoing Election to Purchase and Certificate must
conform to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by an approved eligible financial institution
acceptable to the Rights Agent in its sole discretion.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Right
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Right Certificates issued in exchange for this
Right Certificate.
A-7
EXHIBIT B
ADOBE SYSTEMS INCORPORATED
Summary of Terms of
Rights Agreement
Nature of Right: When exercisable, each Right
(a "Right") will initially
entitle the holder to purchase
one one-thousandth of a share
(a "Unit") of the Preferred
Stock ("Preferred Stock") of
Adobe Systems Incorporated
(the "Company").
Means of Distribution: The Rights will be distributed
to holders of the Company's
outstanding Common Stock as a
dividend of one Right for each
share of Common Stock. The
Rights will also be attached
to all future issuances of
Common Stock prior to the
Distribution Date (as defined
below).
Exercisability: Rights become exercisable on
the earlier of: (i) the Close
of Business on the tenth day
following a public
announcement by the Company or
any person or group (an
"Acquiring Person") that such
person or group has acquired,
without the approval of the
Board of Directors, beneficial
ownership of 15% or more of
the Company's outstanding
Common Stock, or (ii) the
tenth business day (unless
extended by the Board prior to
the time a person becomes an
Acquiring Person) following
the commencement, or
announcement of an intention
to commence, by any person or
group, of a tender offer which
would result in such person
owning 15% or more of the
outstanding Common Stock of
the Company (the earlier of
such dates is referred to as
the "Distribution Date").
Rights may be traded
separately from the
B-1
Common Stock once the Rights
become exercisable.
Exercise Price: $115.00 per share, which is
the amount that in the
judgment of the Board of
Directors represents the long-
term value of the Common Stock
(the "Exercise Price").
Term The Rights will expire ten
years after the date of
issuance, or July 23, 2000,
unless earlier redeemed by the
Company as described below.
Redemption of Rights: Rights are redeemable at a
price of $0.01 per Right, by
the vote of the Company's
Board of Directors (and upon
approval by a majority of the
Continuing Directors (as
defined below)), at any time
until the Close of Business on
the tenth day following the
date on which a person has
become an Acquiring Person
(the "Stock Acquisition
Date"). After the Stock
Acquisition Date, Rights are
also redeemable prior to any
business combination in which
all holders of Common Stock
are treated alike and not
involving (except as a holder
of Common Stock treated like
all other holders) an
Acquiring Person.
Rights in Event If the Company is acquired by any
of Business Combination: person in a merger or
other business combination
transaction or 50% or more of its
assets or earnings powers are sold
to any person after the
Distribution Date, each holder of a
Right shall thereafter have the
right to purchase, upon payment of
the then current Exercise Price,
such number of shares of common
stock of the acquiring company
having a current market value equal
to twice the Exercise Price.
B-2
Rights in Event of In the event that an Acquiring
Self-Dealing Transaction Person engages in certain
or Acquisition of self-dealing transactions with the
Substantial Amount of Company, or a person becomes the
Common Stock (a "Flip-In Event"): beneficial owner of 15% or more of
the outstanding Common Stock, each
holder of a Right thereafter has
the right to purchase, upon payment
of the then current Exercise Price,
such number of Units of Preferred
Stock having a market value at the
time of the transaction equal to
twice the Exercise Price. If
insufficient authorized but
unissued shares of Preferred Stock
are available for issuance, the
Company must deliver all the
available shares of Preferred Stock
and an amount of cash or other
property of the Company, so that
the aggregate value received is
equal to twice the Exercise Price.
Rights held by the Acquiring Person
will not be entitled to the benefit
of such an adjustment.
Self-dealing transactions are
defined to include a merger of an
Acquiring Person into the Company
in which the Common Stock remains
outstanding and unchanged, the
issuance of securities of the
Company to an Acquiring Person, the
transfer of assets to an Acquiring
Person on other than an arm's
length basis, compensation to an
Acquiring Person on a basis
inconsistent with the Company's
past practice, a loan or provision
of other financial assistance
(except proportionately as a
stockholder) to an Acquiring Person
or the licensing, sale or other
transfer of proprietary technology
or know-how from the Company to the
Acquiring Person on terms not
approved by the Board of Directors.
B-3
Exchange Option: In the event any person or
group becomes an Acquiring
Person, the Board may require
all or any portion of the
outstanding Rights to be
exchanged for (i) one Unit of
Preferred Stock or (ii) such
number of Units of Preferred
Stock as will equal (x) the
difference between the
aggregate market price of the
number of Units to be received
upon a Flip-In Event and the
purchase price set forth in
the Rights Agreement, divided
by (y) the market price per
Unit of Preferred Stock upon
the Flip-In Event. However,
any rights held by an
Acquiring Person would not be
entitled to participate in
this exchange.
Fractional Shares: No fractional Units of
Preferred Stock will be issued
upon exercise of the Rights
and, in lieu thereof, a
payment in cash will be made
to the holder of such Rights
equal to the same fraction of
the current market value of a
Unit of Preferred Stock.
Adjustment: The Exercise Price payable,
and the number of Units of
Preferred Stock or other
securities or property
issuable, upon exercise of the
Rights are subject to
adjustment from time to time
to prevent dilution (i) in the
event of a stock dividend on,
or a subdivision, combination
or reclassification of, the
Preferred Stock, (ii) upon the
grant to holders of the
Preferred Stock or convertible
securities at less than the
current market price of the
Preferred Stock or (iii) upon
the distribution to holders of
the Preferred Stock of
evidences of indebtedness or
assets (excluding dividends
payable in Preferred Stock) or
of subscription rights or
warrants (other than those
referred to above).
B-4
Voting Power of Rights: The Rights themselves do not
entitle the holder thereof to
any voting rights.
Amendment of Rights: Until the Distribution Date,
the Company may, except with
respect to the redemption
price, amend the Rights in any
manner (including an amendment
that provides that the Rights
shall become exercisable for
shares or fractions of shares
of preferred stock that are
economically common stock
equivalents). After the
Distribution Date, the Company
may amend the Rights in any
manner that does not adversely
affect the interests of the
holders of the Rights.
Continuing Directors: Certain actions by the
Board of Directors (e.g.,
redemption of the Rights,
exercise of the exchange
option and amendment of
the Rights Agreement) are
subject to the approval
by Directors (the
"Continuing Directors")
who are not affiliated
with an Acquiring Person
and who either were
members of the Board on
the date of adoption of
the Second Amended and
Restated Rights Agreement
or whose election or
nomination was approved
or recommended by a
majority of the
Continuing Directors.
A COPY OF THE RIGHTS AGREEMENT IS AVAILABLE, FREE OF CHARGE, FROM THE COMPANY,
000 XXXX XXXXXX, XXX XXXX, XXXXXXXXXX, 00000-0000, ATTENTION: GENERAL COUNSEL.
THIS SUMMARY DESCRIPTION OF THE RIGHTS AGREEMENT DOES NOT PURPORT TO BE COMPLETE
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE RIGHTS AGREEMENT WHICH IS
INCORPORATED IN THIS SUMMARY DESCRIPTION BY REFERENCE.
B-5
EXHIBIT C
CERTIFICATE OF DESIGNATION
OF THE VOTING POWERS, DESIGNATION,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS OF THE
SERIES A PREFERRED STOCK
------------------------------
Pursuant to Section 151 of the
General Corporation Law of
the State of Delaware
------------------------------
I, Xxxx X. Xxxxxxx, Chairman of the Board and Chief Executive Officer
of Adobe Systems Incorporated, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "CORPORATION"), DO HEREBY
CERTIFY:
that, pursuant to authority conferred upon the Board of Directors of
the Corporation by its Certificate of Incorporation (the "CERTIFICATE"), and,
pursuant to the provisions of Section 151 of the General Corporation Law of the
State of Delaware, said Board of Directors, at a duly called meeting held on
July 30, 1997, at which a quorum was present and acted throughout, adopted the
following resolutions, which resolutions remain in full force and effect on the
date hereof creating a series of 100,000 shares of Preferred Stock having a par
value of $.0001 per share, designated as Series A Preferred Stock (the "SERIES A
PREFERRED STOCK") out of the class of 2,000,000 shares of preferred stock of the
par value of $.0001 per share (the "PREFERRED STOCK"):
RESOLVED, that pursuant to the authority vested in the Board of
Directors in accordance with the provisions of the Certificate, the Board of
Directors does hereby create, authorize and provide for the issuance of the
Series A Preferred Stock having the voting powers, designation, relative,
participating, optional and other special rights, preferences, and
qualifications, limitations and restrictions thereof that are set forth as
follows:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall
be designated as "Series A Preferred Stock" and the number of shares
constituting such series shall be 100,000.
C-1
Section 2. DIVIDENDS AND DISTRIBUTIONS. (A) Subject to the prior
and superior rights of the holders of any shares of any other series of
Preferred Stock or any other shares of preferred stock of the Corporation
ranking prior and superior to the shares of Series A Preferred Stock with
respect to dividends, each holder of one one-thousandth (1/1,000) of a share
(a "UNIT") of Series A Preferred Stock shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally available for
that purpose, (i) quarterly dividends payable in cash on the last day of
March, June, September and December in each year (each such date being a
"QUARTERLY DIVIDEND PAYMENT DATE"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of such Unit of Series A
Preferred Stock, in an amount per Unit (rounded to the nearest cent) equal to
the greater of (a) $.01 or (b) subject to the provision for adjustment
hereinafter set forth, the aggregate per share amount of all cash dividends
declared on shares of the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of a Unit of Series A
Preferred Stock, and (ii) subject to the provision for adjustment hereinafter
set forth, quarterly distributions (payable in kind) on each Quarterly
Dividend Payment Date in an amount per Unit equal to the aggregate per share
amount of all non-cash dividends or other distributions (other than a
dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock, by reclassification or otherwise)
declared on shares of Common Stock since the immediately preceding Quarterly
Dividend Payment Date, or with respect to the first Quarterly Dividend
Payment Date, since the first issuance of a Unit of Series A Preferred Stock.
In the event that the Corporation shall at any time after July 11, 1990 (the
"RIGHTS DECLARATION DATE") (i) declare any dividend on outstanding shares of
Common Stock payable in shares of Common Stock, (ii) subdivide outstanding
shares of Common Stock or (iii) combine outstanding shares of Common Stock
into a smaller number of shares, then in each such case the amount to which
the holder of a Unit of Series A Preferred Stock was entitled immediately
prior to such event pursuant to the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which shall be the
number of shares of Common Stock that are outstanding immediately after such
event and the denominator of which shall be the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
Units of Series A Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the shares of
Common Stock (other than a dividend payable in shares of Common Stock);
PROVIDED, HOWEVER, that, in the event no dividend or distribution shall have
been declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment
Date, a dividend of $.01 per Unit on the Series A Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
C-2
(C) Dividends shall begin to accrue and shall be cumulative on
each outstanding Unit of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issuance of such Unit of Series A
Preferred Stock, unless the date of issuance of such Unit is prior to the
record date for the first Quarterly Dividend Payment Date, in which case,
dividends on such Unit shall begin to accrue from the date of issuance of
such Unit, or unless the date of issuance is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of holders of
Units of Series A Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events
such dividends shall begin to accrue and be cumulative from such Quarterly
Dividend Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on Units of Series A Preferred Stock in an amount less than
the aggregate amount of all such dividends at the time accrued and payable on
such Units shall be allocated pro rata on a unit-by-unit basis among all
Units of Series A Preferred Stock at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of Units of
Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30
days prior to the date fixed for the payment thereof.
Section 3. VOTING RIGHTS. The holders of Units of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
Unit of Series A Preferred Stock shall entitle the holder thereof to one vote
on all matters submitted to a vote of the stockholders of the Corporation.
In the event the Corporation shall at any time after the Rights Declaration
Date (i) declare any dividend on outstanding shares of Common Stock payable
in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock
or (iii) combine the outstanding shares of Common Stock into a smaller number
of shares, then in each such case the number of votes per Unit to which
holders of Units of Series A Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by a fraction the
numerator of which shall be the number of shares of Common Stock outstanding
immediately after such event and the denominator of which shall be the number
of shares of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein or by law, the holders of Units
of Series A Preferred Stock and the holders of shares of Common Stock shall
vote together as one class on all matters submitted to a vote of stockholders
of the Corporation.
(C) (i) If at any time dividends on any Units of Series A Preferred
Stock shall be in arrears in an amount equal to six quarterly dividends
thereon, then during the period (a "DEFAULT PERIOD") from the occurrence of
such event until such time as all accrued and unpaid dividends for all
previous quarterly dividend periods and for the current quarterly dividend
C-3
period on all Units of Series A Preferred Stock then outstanding shall have
been declared and paid or set apart for payment, all holders of Units of
Series A Preferred Stock, voting separately as a class, shall have the right
to elect two Directors.
(ii) During any default period, such voting rights of the holders of
Units of Series A Preferred Stock may be exercised initially at a special
meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any
annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting rights nor any right of the
holders of Units of Series A Preferred Stock to increase, in certain cases,
the authorized number of Directors may be exercised at any meeting unless
one-third of the outstanding Units of Preferred Stock shall be present at
such meeting in person or by proxy. The absence of a quorum of the holders of
Common Stock shall not affect the exercise by the holders of Units of Series
A Preferred Stock of such rights. At any meeting at which the holders of
Units of Series A Preferred Stock shall exercise such voting rights initially
during an existing default period, they shall have the right, voting
separately as a class, to elect Directors to fill up to two vacancies in the
Board of Directors, if any such vacancies may then exist, or, if such right
is exercised at an annual meeting, to elect two Directors. If the number
which may be so elected at any special meeting does not amount to the
required number, the holders of the Series A Preferred Stock shall have the
right to make such increase in the number of Directors as shall be necessary
to permit the election by them of the required number. After the holders of
Units of Series A Preferred Stock shall have exercised their right to elect
Directors during any default period, the number of Directors shall not be
increased or decreased except as approved by a vote of the holders of Units
of Series A Preferred Stock as herein provided or pursuant to the rights of
any equity securities ranking senior to the Series A Preferred Stock.
(iii) Unless the holders of Series A Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than 25% of the total number of
the Units of Series A Preferred Stock outstanding may request, the calling of
a special meeting of the holders of Units of Series A Preferred Stock, which
meeting shall thereupon be called by the Secretary of the Corporation.
Notice of such meeting and of any annual meeting at which holders of Units of
Series A Preferred Stock are entitled to vote pursuant to this paragraph
(C)(iii) shall be given to each holder of record of Units of Series A
Preferred Stock by mailing a copy of such notice to him at his last address
as the same appears on the books of the Corporation. Such meeting shall be
called for a time not earlier than 20 days and not later then 60 days after
such order or request or in default of the calling of such meeting within 60
days after such order or request, such meeting may be called on similar
notice by any stockholder or stockholders owning in the aggregate not less
than 25% of the total number of outstanding Units of Series A Preferred
Stock. Notwithstanding the provisions of this paragraph (C)(iii), no such
special meeting shall be called during the 60 days immediately preceding the
date fixed for the next annual meeting of the stockholders.
C-4
(iv) During any default period, the holders of shares of Common Stock
and Units of Series A Preferred Stock, and other classes or series of stock
of the Corporation, if applicable, shall continue to be entitled to elect all
the Directors until holders of the Units of Series A Preferred Stock shall
have exercised their right to elect two Directors voting as a separate class,
after the exercise of which right (x) the Directors so elected by the holders
of Units of Series A Preferred Stock shall continue in office until their
successors shall have been elected by such holders or until the expiration of
the default period, and (y) any vacancy in the Board of Directors may (except
as provided in paragraph (C)(ii) of this Section 3) be filled by vote of a
majority of the remaining Directors theretofore elected by the holders of the
class of capital stock which elected the Director whose office shall have
become vacant. References in this paragraph (C) to Directors elected by the
holders of a particular class of capital stock shall include Directors
elected by such Directors to fill vacancies as provided in clause (y) of the
foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the right
of the holders of Units of Series A Preferred Stock as a separate class to
elect Directors shall cease, (y) the term of any Directors elected by the
holders of Units of Series A Preferred Stock as a separate class shall
terminate, and (z) the number of Directors shall be such number as may be
provided for in the Certificate or by-laws irrespective of any increase made
pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such
number being subject, however, to change thereafter in any manner provided by
law or in the Certificate or by-laws). Any vacancies in the Board of
Directors effected by the provisions of clauses (y) and (z) in the preceding
sentence may be filled by a majority of the remaining Directors.
(vi) The provisions of this paragraph (C) shall govern the election of
Directors by holders of Units of Preferred Stock during any default period
notwithstanding any provisions of the Certificate to the contrary, including,
without limitation, the provisions of Article V of the Certificate.
(D) Except as set forth herein, holders of Units of Series A
Preferred Stock shall have no special voting rights and their consents shall
not be required (except to the extent they are entitled to vote with holders
of shares of Common Stock as set forth herein) for taking any corporate
action.
Section 4. CERTAIN RESTRICTIONS. (A) Whenever quarterly
dividends or other dividends or distributions payable on Units of Series A
Preferred Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared,
on outstanding Units of Series A Preferred Stock shall have been paid in
full, the Corporation shall not
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of
junior stock;
C-5
(ii) declare or pay dividends on or make any other distributions on
any shares of parity stock, except dividends paid ratably on Units of
Series A Preferred Stock and shares of all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to
which the holders of such Units and all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any parity stock, PROVIDED, HOWEVER, that the Corporation may at
any time redeem, purchase or otherwise acquire shares of any such parity
stock in exchange for shares of any junior stock;
(iv) purchase or otherwise acquire for consideration any Units of
Series A Preferred Stock, except in accordance with a purchase offer made
in writing or by publication (as determined by the Board of Directors) to
all holders of such Units.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. REACQUIRED SHARES. Any Units of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such Units shall, upon their cancellation, become authorized
but unissued Units of Preferred Stock and may be reissued as part of a new
series of Preferred Stock to be created by resolution or resolutions of the
Board of Directors, subject to the conditions and restrictions on issuance
set forth herein.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. (A) Upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (i) to the holders of shares of
junior stock unless the holders of Units of Series A Preferred Stock shall
have received, subject to adjustment as hereinafter provided in paragraph
(B), the greater of either (a) $.01 per Unit plus an amount equal to accrued
and unpaid dividends and distributions thereon, whether or not earned or
declared, to the date of such payment, or (b) the amount equal to the
aggregate per share amount to be distributed to holders of shares of Common
Stock, or (ii) to the holders of shares of parity stock, unless
simultaneously therewith distributions are made ratably on Units of Series A
Preferred Stock and all other shares of such parity stock in proportion to
the total amounts to which the holders of Units of Series A Preferred Stock
are entitled under clause (i)(a) of this sentence and to which the holders of
shares of such parity stock are entitled, in each case upon such liquidation,
dissolution or winding up.
C-6
(B) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on outstanding shares of Common Stock
payable in shares of Common Stock, (ii) subdivide outstanding shares of Common
Stock, or (iii) combine outstanding shares of Common Stock into a smaller number
of shares, then in each such case the aggregate amount to which holders of Units
of Series A Preferred Stock were entitled immediately prior to such event
pursuant to clause (i)(b) of paragraph (A) of this Section 6 shall be adjusted
by multiplying such amount by a fraction the numerator of which shall be the
number of shares of Common Stock that are outstanding immediately after such
event and the denominator of which shall be the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction
in which the shares of common stock are exchanged for or converted into other
stock or securities, cash and/or any other property, then in any such case
Units of Series A Preferred Stock shall at the same time be similarly
exchanged for or converted into an amount per Unit (subject to the provision
for adjustment hereinafter set forth) equal to the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is converted or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on outstanding shares of Common
Stock payable in shares of Common Stock, (ii) subdivide outstanding shares of
Common Stock, or (iii) combine outstanding Common Stock into a smaller number
of shares, then in each such case the amount set forth in the immediately
preceding sentence with respect to the exchange or conversion of Units of
Series A Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which shall be the number of shares of Common Stock
that are outstanding immediately after such event and the denominator of
which shall be the number of shares of Common Stock that were outstanding
immediately prior to such event.
Section 8. REDEMPTION. The Units of Series A Preferred Stock
shall not be redeemable.
Section 9. RANKING. The Units of Series A Preferred Stock shall
rank junior to all other series of the Preferred Stock and to any other class
of preferred stock that hereafter may be issued by the Corporation as to the
payment of dividends and the distribution of assets, unless the terms of any
such series or class shall provide otherwise.
Section 10. AMENDMENT. The Certificate, including, without
limitation, this resolution, shall not hereafter be amended, either directly
or indirectly, or through merger or consolidation with another corporations
in any manner that would alter or change the powers, preferences or special
rights of the Series A Preferred Stock so as to affect them adversely
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without the affirmative vote of the holders of a majority or more of the
outstanding Units of Series A Preferred Stock, voting separately as a class.
Section 11. FRACTIONAL SHARES. The Series A Preferred Stock may be
issued in Units or other fractions of a share, which Units or fractions shall
entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A Preferred Stock.
Section 12. CERTAIN DEFINITIONS. As used herein with respect to the
Series A Preferred Stock, the following terms shall have the following meanings:
(A) The term "COMMON STOCK" shall mean the class of stock designated
as the common stock, par value $.0001 per share, of the Corporation at the date
hereof or any other class of stock resulting from successive changes or
reclassification of such common stock.
(B) The term "JUNIOR STOCK" (i) as used in Section 4, shall mean the
Common Stock and any other class or series of capital stock of the Corporation
hereafter authorized or issued over which the Series A Preferred Stock has
preference or priority as to the payment of dividends and (ii) as used in
Section 6, shall mean the Common Stock and any other class or series of capital
stock of the Corporation over which the Series A Preferred Stock has preference
or priority in the distribution of assets on any liquidation, dissolution or
winding up of the Corporation.
(C) The term "PARITY STOCK" (i) as used in Section 4, shall mean any
class or series of stock of the Corporation hereafter authorized or issued
ranking PARI PASSU with the Series A Preferred Stock as to the payment of
dividends and (ii) as used in Section 6, shall mean any class or series of
capital stock ranking PARI PASSU with the Series A Preferred Stock in the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation.
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IN WITNESS WHEREOF, Adobe Systems Incorporated has caused this
Certificate to be signed by its Chairman of the Board and Chief Executive
Officer and attested by its Secretary this 14th day of August, 1997.
ADOBE SYSTEMS INCORPORATED
By: _______________________________
Name: Xxxx X. Xxxxxxx
Title: Chairman of the Board and
Chief Executive Officer
Attest:
_________________________________
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