EXHIBIT 2.1
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THE BISYS GROUP, INC.
and
THE BANK OF NEW YORK
Rights Agent
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RIGHTS AGREEMENT
Dated as of May 8, 1997
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TABLE OF CONTENTS
Page
SECTION 1. Certain Definitions.............................................1
SECTION 2. Appointment of Rights Agent.....................................6
SECTION 3. Issue of Rights Certificates....................................6
SECTION 4. Form of Rights Certificates.....................................8
SECTION 5. Countersignature and Registration...............................9
SECTION 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates......................................9
SECTION 7. Exercise of Rights; Purchase Price; Expiration Date of Rights..10
SECTION 8. Cancellation and Destruction of Rights Certificates............12
SECTION 9. Reservation and Availability of Capital Stock..................12
SECTION 10. Record Date for Securities Issued Upon Exercise...............13
SECTION 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights....................................14
SECTION 12. Certificate of Adjusted Purchase Price or Number of Shares....23
SECTION 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power..............................................23
SECTION 14. Fractional Rights and Fractional Shares.......................26
SECTION 15. Rights of Action..............................................27
SECTION 16. Agreement of Rights Holders...................................28
SECTION 17. Rights Certificate Holder Not Deemed a Stockholder............28
SECTION 18. Concerning the Rights Agent...................................29
SECTION 19. Merger or Consolidation or Change of Name of Rights Agent.....29
SECTION 20. Duties of Rights Agent........................................30
SECTION 21. Change of Rights Agent........................................32
SECTION 22. Issuance of New Rights Certificates...........................33
SECTION 23. Redemption and Termination....................................33
SECTION 24. Notice of Certain Events......................................34
SECTION 25. Notices.......................................................35
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SECTION 26. Supplements and Amendments.....................................35
SECTION 27. Successors.....................................................36
SECTION 28. Determinations and Actions by the Board of Directors, Etc. ....36
SECTION 29. Benefits of this Agreement.....................................36
SECTION 30. Severability...................................................37
SECTION 31. Governing Law..................................................37
SECTION 32. Counterparts...................................................37
SECTION 33. Captions.......................................................37
SECTION 34. Exchange.......................................................37
EXHIBITS
EXHIBIT A. Form of Rights Certificate..................................... A-1
EXHIBIT B. Summary of Rights to Purchase Common Stock..................... B-1
ii
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of May 8, 1997 (the "AGREEMENT"), between
The BISYS Group, Inc., a Delaware corporation (the "COMPANY"), and The Bank of
New York, a national banking association (the "RIGHTS AGENT").
WHEREAS, effective May 7, 1997 (the "RIGHTS DIVIDEND DECLARATION
DATE"), the Board of Directors of the Company authorized and declared a dividend
distribution of one right ("RIGHT") for each share of common stock, par value
$.02 per share, of the Company (the "COMPANY COMMON STOCK") outstanding at the
Close of Business on May 16, 1997 (the "Record Date"), and has authorized the
issuance of one Right (as such number may hereinafter be adjusted pursuant
hereto) for each share of Company Common Stock issued between the Record Date
(whether originally issued or delivered from the Company's treasury) and, except
as otherwise provided in Section 22, the Distribution Date, each Right initially
representing the right to purchase one share of Company Common Stock upon the
terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement,
the following terms have the meanings indicated:
"ACQUIRING PERSON" shall mean any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan maintained by the Company
or any of its Subsidiaries or any trustee or fiduciary with respect to such a
plan acting in such capacity) who or which, alone or together with all
Affiliates and Associates of such Person, is the Beneficial Owner of 15% or more
of the shares of Company Common Stock then outstanding, which shares were
acquired by such Person other than pursuant to a Permitted Offer.
Notwithstanding the foregoing, (i) no Person shall become an "Acquiring Person"
as a result of an acquisition of Company Common Stock by the Company which, by
reducing the number of shares of the Company Common Stock outstanding, increases
the proportionate number of shares Beneficially Owned by such Person to 15% or
more of the Company Common Stock then outstanding; PROVIDED, HOWEVER, that if a
Person shall become the Beneficial Owner of 15% or more of the Company Common
Stock by reason of share purchases by the Company and shall, after such share
purchases by the Company, become the Beneficial Owner of any additional Company
Common Stock other than as a direct or indirect result of any corporate action
taken by the Company, then such Person shall be deemed to be an "Acquiring
Person"; and (ii) if a majority of the Continuing Directors determines in good
faith that a Person who would otherwise be an "Acquiring Person," as defined
pursuant to the first sentence of this definition, has become such inadvertently
(including, without limitation, because (a) such Person was unaware that it
Beneficially Owned 15% or more of the Company Common Stock or (b) such Person
was aware of the extent of such Beneficial Ownership but such Person acquired
Beneficial Ownership of such shares of Company Common Stock without the
intention to change or influence the control
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of the Company and without actual knowledge of the consequences of such
Beneficial Ownership under this Agreement), and such Person divests itself as
promptly as practicable of a sufficient number of shares of Company Common Stock
so that such Person would no longer be an "Acquiring Person," as defined
pursuant to the first sentence of this definition, then such Person shall not be
deemed to be, or have been, an "Acquiring Person" for any purposes of this
Agreement, and no Stock Acquisition Date shall be deemed to have occurred. All
questions as to whether a Person who would otherwise be an Acquiring Person has
become such inadvertently shall be determined in good faith by a majority of the
Continuing Directors, which determination shall be conclusive for all purposes.
"ADVERSE PERSON" shall mean any Person declared to be an Adverse Person
by a majority of the Continuing Directors upon determination that the criteria
set forth in Section 11(a)(ii)(B) apply to such Person.
"AFFILIATE" and "ASSOCIATE" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act, as in effect on the date hereof.
A Person shall be deemed the "BENEFICIAL OWNER" of, and shall be deemed
to "beneficially own," any securities:
(i) of which such Person or any of such Person's Affiliates or
Associates is considered to be a "beneficial owner" under Rule 13d-3 of
the General Rules and Regulations under the Exchange Act (the "EXCHANGE
ACT REGULATIONS") as in effect on the date hereof; PROVIDED, HOWEVER,
that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any securities under this subparagraph (i) as a
result of an agreement, arrangement or understanding to vote such
securities if such agreement, arrangement or understanding (A) arises
solely from a revocable proxy given in response to a proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
provisions of the Exchange Act and the Exchange Act Regulations, and
(B) is not reportable by such Person on Schedule 13D under the Exchange
Act (or any comparable or successor form);
(ii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate of such 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
pursuant to a revocable proxy as described in the proviso to
subparagraph (i) above) or disposing of such securities; or
(iii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether
such right is exercisable immediately or only after the passage of time
or upon the satisfaction of conditions) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise; PROVIDED, HOWEVER, that under this definition a
Person shall not be deemed the "Beneficial
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Owner" of, or to "beneficially own," (A) securities tendered pursuant
to a tender or exchange offer made in accordance with the Exchange Act
Regulations by such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or
exchange, (B) securities that may be issued upon exercise of Rights at
any time prior to the occurrence of a Triggering Event, or (C)
securities that may be issued upon exercise of Rights from and after
the occurrence of a Triggering Event, which Rights were acquired by
such Person or any of such Person's Affiliates or Associates prior to
the Distribution Date or pursuant to Section 3(c) or Section 22 (the
"ORIGINAL RIGHTS") or pursuant to Section 11(i) in connection with an
adjustment made with respect to any Original Rights.
Notwithstanding the foregoing, nothing contained in this
definition shall cause a Person ordinarily engaged in business as an
underwriter of securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired in a BONA FIDE firm
commitment underwriting pursuant to an underwriting agreement between
such Person and the Company, unless such Person shall make a filing on
Schedule 13D (or any comparable or successor form) with respect to such
securities.
"BOARD" means the Board of Directors of the Company.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in New York City are authorized or obligated
by law or executive order to close.
"CLOSE OF BUSINESS" on any given date shall mean 5:00 p.m., New York
City time, on such date; PROVIDED, HOWEVER, that if such date is not a Business
Day it shall mean 5:00 p.m., New York City time, on the next succeeding Business
Day.
"COMMON STOCK" of any Person other than the Company shall mean the
capital stock of such Person with the greatest voting power, or, if such Person
shall have no capital stock, the equity securities or other equity interest
having power to control or direct the management of such Person.
"COMPANY COMMON STOCK" has the meaning set forth in the Whereas Clause.
"CONTINUING DIRECTOR" shall mean (i) any member of the Board who was a
member of the Board prior to the date of this Agreement, while such Person is a
member of the Board, so long as such Person 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, (ii) any Person who
becomes a member of the Board after the date of this Agreement, pursuant to a
nomination for election or election to the Board that is recommended or approved
by a majority of the Continuing Directors, while such Person is a member of the
Board, so long as such Person 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, (iii) any Person who has been a
member of the Board for at least 18 months, or (iv) any Specially Approved
Director. "SPECIALLY APPROVED DIRECTOR" shall mean any Person who was
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(x) duly nominated for election to the Board in accordance with the applicable
requirements of the Company's By-Laws and the Delaware General Corporation Law
after timely written notice ("SPECIAL NOMINATION NOTICE") delivered to the
Company by the record owners of not less than 10% of the Company Common Stock
then outstanding, which notice contained all the information described in the
remainder of this paragraph, and (y) elected to the Board at an annual meeting
of stockholders of the Company by the affirmative vote of the holders of not
less than 85% of the Company Common Stock then outstanding. To be timely, a
Special Nomination Notice shall be delivered to the principal executive offices
of the Company not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting of stockholders; PROVIDED,
HOWEVER, that in the event that the date of the annual meeting is advanced by
more than 30 days or delayed by more than 60 days from such anniversary date, to
be timely the Special Nomination Notice must be so delivered not earlier than
the 90th day prior to such annual meeting and not later than the close of
business on the later of the 60th day prior to such annual meeting or the tenth
day following the day on which public announcement of the date of such meeting
is first made. Such stockholder's notice shall set forth (i) as to each nominee
for election or reelection as a Specially Approved Director all information
relating to such Person that is required to be disclosed in solicitations of
proxies for election of directors or is otherwise required, in each case
pursuant to Regulation 14A under the Exchange Act (including such Person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected) and (ii) as to the stockholder giving notice
and the beneficial owner, if any, on whose behalf the nomination or proposal is
made, (x) the name and address of such stockholder, as they appear on the
Company's books, and of such beneficial owner and (y) the number of each class
of shares of the Company Common Stock which are owned beneficially and of record
by such stockholder and such beneficial owner.
"CURRENT MARKET PRICE" has the meaning set forth in Section 11(d).
"CURRENT VALUE" has the meaning set forth in Section 11(a)(iii).
"DISTRIBUTION DATE" has the meaning set forth in Section 3(a).
"EQUIVALENT COMPANY COMMON STOCK" has the meaning set forth in
Section 11(b).
"EXCHANGE ACT" shall mean the Securities and Exchange Act of 1934, as
amended.
"EXCHANGE RATIO" has the meaning set forth in Section 34(a).
"EXPIRATION DATE" shall mean the earliest of (i) the Final Expiration
Date, (ii) the time at which the Rights are redeemed (or deemed redeemed) as
provided in Section 23 and (iii) the time at which all Rights then outstanding
and exercisable are exchanged (or deemed exchanged) pursuant to Section 34.
"FINAL EXPIRATION DATE" shall mean the Close of Business on May 16,
2007.
"40% PERSON" shall mean any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan maintained by the Company
or any of its Subsidiaries or
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any trustee or fiduciary with respect to such a plan acting in such capacity)
who or which, alone or together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner of 40% or more of the shares of Company
Common Stock then outstanding, which shares were acquired by such Person other
than pursuant to a Permitted Offer; PROVIDED, HOWEVER, that the term "40%
Person" shall not include any Person who is the Beneficial Owner of 40% or more
of the Company Common Stock then outstanding by virtue of ownership of Company
Common Stock by such Person's Affiliates and/or Associates, which Affiliates
and/or Associates are deemed to be Affiliates and/or Associates solely by reason
of each of them being directors or officers of the Company or members of a slate
of directors, proposed by management, standing for election to such Board.
"PERMITTED OFFER" shall mean a tender or exchange offer by any Person
for all outstanding shares of Company Common Stock which a majority of the
Continuing Directors determines, based upon the advice of a nationally
recognized investment banking firm and such other advice as the Continuing
Directors deem appropriate, is fair from a financial point of view to the
stockholders of the Company (other than such Person) and otherwise in the best
interests of the Company and its stockholders (other than such Person). A
Permitted Offer will cease to be such if, prior to the acquisition of Beneficial
Ownership of any Company Common Stock pursuant thereto, a majority of the
Continuing Directors so determines, and in such event the tender or exchange
offer shall be deemed for purposes of Section 3 commenced on the date of such
determination.
"PERSON" shall mean any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange
Act.
"PRINCIPAL PARTY" has the meaning set forth in Section 13(b).
"PURCHASE PRICE" has the meaning set forth in Section 7(b).
"RECORD DATE" has the meaning set forth in the Whereas Clause.
"REDEMPTION PRICE" has the meaning set forth in Section 23(a).
"REGISTERED COMMON STOCK" has the meaning set forth in Section 13(b).
"REGISTRATION DATE" has the meaning set forth in Section 9(c).
"REGISTRATION STATEMENT" has the meaning set forth in Section 9(c).
"RIGHT" has the meaning set forth in the Whereas Clause.
"RIGHTS CERTIFICATE" has the meaning set forth in Section 3(a).
"RIGHTS DIVIDEND DECLARATION DATE" has the meaning set forth in the
Whereas Clause.
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"SECTION 11(A)(II) EVENT" shall mean any event described in Section
11(a)(ii)(A), (B), (C) or (D).
"SECTION 13 EVENT" shall mean any event described in clause (x), (y)
or (z) of Section 13(a).
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SPREAD" has the meaning specified in Section 11(a)(iii).
"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 by the Company that an Adverse Person has
become such.
"SUBSIDIARY" shall mean, with respect to any Person, any other Person
of which an amount of voting securities or equity interests sufficient to elect
at least a majority of the directors or equivalent governing body of such other
Person is beneficially owned, directly or indirectly, by such first-mentioned
Person, or otherwise controlled by such first-mentioned Person.
"SUBSTITUTION PERIOD" has the meaning set forth in Section 11(a)(iii).
"SUMMARY OF RIGHTS" has the meaning set forth in Section 3(b).
"TRIGGERING EVENT" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
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. ISSUE OF RIGHTS CERTIFICATES. (a) Until the earliest of (i)
the Close of Business on the tenth Business Day after the Stock Acquisition
Date, (ii) the Close of Business on the tenth Business Day (or such later date
as may be determined by action of a majority of the Continuing Directors prior
to such time) after the date that a tender or exchange offer (other than a
Permitted Offer) by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such a plan acting in
such capacity) 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 Company Common Stock then outstanding, and (iii) 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 a 40% Person
that a 40% Person has become such (the earliest of (i), (ii) and (iii) above
being the "DISTRIBUTION DATE"), (x) the Rights
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will be evidenced (subject to the provisions of paragraph (b) of this Section 3)
by the certificates for shares of Company Common Stock registered in the names
of the holders of shares of Company Common Stock as of and subsequent to the
Record Date (which certificates for shares of Company Common Stock shall be
deemed also to be certificates for Rights) and not by separate certificates, and
(y) the Rights will be transferable only in connection with the transfer of the
underlying shares of Company Common Stock (including a transfer to the Company).
As soon as practicable after the Distribution Date, the Rights Agent will send,
by first-class, insured, postage-prepaid mail, to each record holder of shares
of Company Common Stock as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, one or more
rights certificates, in substantially the form attached as EXHIBIT A hereto (the
"RIGHTS CERTIFICATES"), evidencing one Right for each share of Company Common
Stock so held, subject to adjustment as provided herein. In the event that an
adjustment in the number of Rights per share of Company Common Stock 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 Rights Certificates.
(b) As promptly as practicable following the Record Date, the Company
will send a copy of a Summary of Rights, in a form which may be appended to
certificates that represent shares of Company Common Stock, in substantially the
form of EXHIBIT B attached hereto (the "SUMMARY OF RIGHTS"), by first-class,
postage-prepaid mail, to each record holder of shares of Company Common Stock as
of the Close of Business on the Record Date, at the address of such holder shown
on the records of the Company.
(c) Rights shall, without any further action, be issued in respect of
all shares of Company Common Stock which are issued (including any shares of
Company Common Stock held in treasury) after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date. To the extent
practicable, certificates representing such shares of Company Common Stock and
issued after the Record Date shall bear the following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in the Rights Agreement between
The BISYS Group, Inc. (the "COMPANY") and The Bank of New York
(the "RIGHTS AGENT") dated as of May 8, 1997 as it may be
amended from time to time (the "RIGHTS AGREEMENT"), the terms
of which are hereby incorporated herein by reference and a
copy of which is on file at the principal executive offices of
the Company. Under certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge promptly after receipt of
a written request therefor. Under certain circumstances set
forth in the Rights Agreement, Rights issued to,
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or held by, any Person who is, was or becomes an Acquiring
Person or an Adverse Person or any Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement),
whether currently held by or on behalf of such Person or by
any subsequent holder, may become null and void and
nontransferable.
With respect to certificates representing shares of Company Common Stock
(whether or not such certificates include the foregoing legend or have appended
to them the Summary of Rights), until the earlier of the Distribution Date and
the Expiration Date, the Rights associated with the shares of Company Common
Stock represented by such certificates shall be evidenced by such certificates
alone and registered holders of the shares of Company Common Stock shall also be
the registered holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the shares of Company Common Stock represented by such certificates.
SECTION 4. FORM OF RIGHTS CERTIFICATES. (a) The Rights Certificates
(and the form of election to purchase and the form of assignment to be printed
on the reverse side thereof) shall each be substantially in the form set forth
in EXHIBIT A attached 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 Agreement, or as may be required to comply with any applicable law or any
rule or regulation thereunder or with any rule or regulation of any stock
exchange or automated quotation system on which the Rights may from time to time
be listed or to conform to usage. Subject to the provisions of Section 11 and
Section 22, the Rights Certificates, whenever distributed, shall be dated as of
the Record Date and on their face shall entitle the holders thereof to purchase
such number of shares of Company Common Stock as shall be set forth therein at
the price set forth therein, but the amount and type of securities, cash or
other assets that may be acquired upon the exercise of each Right and the
Purchase Price thereof shall be subject to adjustment as provided in this
Agreement.
(b) Any Rights Certificate issued pursuant to this Agreement that
represents Rights beneficially owned by: (i) an Acquiring Person or any
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 either the
transferred Rights, shares of Company 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(e) hereof shall, upon the written direction of a
majority of the Continuing Directors, contain (to the extent feasible) the
following legend:
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The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Adverse Person or an Affiliate or Associate of an
Acquiring Person or an Adverse Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights
Certificate and the Rights represented hereby may become null
and void and nontransferable in the circumstances specified in
Section 7(e) of the Rights Agreement.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION. (a) Rights Certificates
shall be executed on behalf of the Company by its Chairman of the Board, the
President or one of its Vice Presidents under its corporate seal reproduced
thereon attested by its Secretary, Treasurer or one of its Assistant
Secretaries. The signature of any of these officers on the Rights Certificates
may be manual or facsimile. Rights Certificates bearing the manual or facsimile
signatures of the individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the countersignature of such
Rights Certificates or did not hold such offices at the date of such Rights
Certificates. No Rights Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose unless there appears on such Rights
Certificate a countersignature duly executed by the Rights Agent by manual
signature of an authorized signatory, and such countersignature upon any Rights
Certificate shall be conclusive evidence, and the only evidence, that such
Rights Certificate has been duly countersigned as required hereunder.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office designated for surrender of Rights Certificates
upon exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the name and address of
each holder of the Rights Certificates, the number of Rights evidenced on its
face by each Rights Certificate and the date of each Rights Certificate.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES. (a)
Subject to the provisions of Sections 4(b), 7(e) and 14, at any time after the
Close of Business on the Distribution Date, and at or prior to the Close of
Business on the Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a like number of
shares of Company Common Stock (or, following a Triggering Event, other
securities, cash or other assets, as the case may be) as the Rights Certificate
or Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have completed
and executed the certificate set forth in the form of assignment on the reverse
side of such Rights Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) of the
Rights represented by such Rights
9
Certificate or Affiliates or Associates thereof as the Company shall reasonably
request; whereupon the Rights Agent shall, subject to the provisions of Section
4(b), Section 7(e) and Section 14, countersign and deliver to the Person
entitled thereto a Rights Certificate or Rights 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 Rights Certificates.
(b) If a Rights Certificate shall be mutilated, lost, stolen or
destroyed, then upon request by the registered holder of the Rights represented
thereby and upon payment to the Company and the Rights Agent of all reasonable
expenses incident thereto, there shall be issued, in exchange for and upon
cancellation of the mutilated Rights Certificate, or in substitution for the
lost, stolen or destroyed Rights Certificate, a new Rights Certificate, in
substantially the form of the prior Rights Certificate, of like tenor and
representing the equivalent number of Rights, but, in the case of loss, theft or
destruction, only upon receipt of evidence satisfactory to the Company and the
Rights Agent of such loss, theft or destruction of such Rights Certificate and,
if requested by the Company or the Rights Agent, indemnity also satisfactory to
it.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS. (a) Prior to the Expiration Date, the registered holder of any Rights
Certificate may, subject to the provisions of Sections 7(e) and 9(c), exercise
the Rights evidenced thereby in whole or in part at any time after the
Distribution Date upon surrender of the Rights Certificate, with the form of
election to purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, together with payment of the aggregate Purchase Price (as
hereinafter defined) for the number of shares of Company Common Stock (or,
following a Triggering Event, other securities, cash or other assets, as the
case may be) for which such surrendered Rights are then exercisable.
(b) The purchase price for one share of Company Common Stock pursuant
to the exercise of a Right shall initially be $175.00, subject to adjustment
from time to time as provided in Sections 11 and 13(a) (such purchase price, as
so adjusted, being the "PURCHASE PRICE"), and shall be payable in accordance
with paragraph (c) below.
(c) Upon receipt of a Rights 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 Company Common 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 any transfer
agent for the shares of the Company Common Stock (or make available, if the
Rights Agent is the transfer agent for such shares) certificates for the total
number of shares of Company Common Stock to be purchased and the Company will
direct its transfer agent to comply with all such requests, (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 certificates
for shares of Company Common Stock, cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate, registered in
such name or names as may be designated by such holder,
10
and (iv) after receipt thereof, deliver such cash, if any, to or upon the order
of the registered holder of such Rights Certificate. In the event that the
Company is obligated to issue Company 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 Company Common
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 (adjusted pursuant to Section 11(a)(iii)) may be made in cash or
by certified or bank check or money order payable to the order of the Company.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing the Rights remaining unexercised shall be issued by the Rights Agent
and delivered to, or upon the order of, the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, subject to the provisions of Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of any Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Adverse Person, or an
Associate or Affiliate of an Acquiring Person or an Adverse Person, (ii) a
transferee of an Acquiring Person or an Adverse Person (or of any such Associate
or Affiliate) which becomes a transferee after the Acquiring Person or Adverse
Person becomes such, or (iii) a transferee of an Acquiring Person or an Adverse
Person (or of any such Associate or Affiliate) which becomes a transferee prior
to or concurrently with the Acquiring Person or Adverse Person becoming such and
which receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person or Adverse Person (or any such
Associate or Affiliate) to holders of equity interests in such Acquiring Person
or Adverse Person (or any such Associate or Affiliate) or to any Person with
whom the Acquiring Person or Adverse Person (or such Associate or Affiliate) has
any continuing agreement, arrangement or understanding regarding the transferred
Rights, shares of Company 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(e), 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(e) 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 determination under this Section 7(e) or Section 4(b) with
respect to any Acquiring Person or Adverse Person or any Affiliate, Associate or
transferee of any Acquiring Person or Adverse Person.
(f) Notwithstanding anything in this Agreement or any Rights
Certificate 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 by such registered holder unless such
registered holder shall have (i) completed and executed the certificate
following the form of election to purchase set forth on the reverse side of the
Rights Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the
11
identity of the Beneficial Owner (or former Beneficial Owner) of the Rights
represented by such Rights Certificate or Affiliates or Associates thereof as
the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or 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 Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any Rights
Certificates acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all cancelled Rights Certificates to the Company,
or shall, at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK. (a) The
Company shall at all times following the Distribution Date cause to be reserved
and kept available, out of its authorized and unissued shares of Company Common
Stock (and, following the occurrence of a Triggering Event, out of its
authorized and unissued shares of Company Common Stock or other securities or
out of its authorized and issued shares held in its treasury), the number of
shares of Company Common Stock (and, following a Triggering Event, other
securities) that, as provided in this Agreement, will be sufficient to permit
the exercise in full of all outstanding and exercisable Rights (or, if the
amount of authorized shares of Company Common Stock (or such other securities)
not then issued or reserved for issuance other than upon exercise of the Rights
is not sufficient, the maximum amount of shares of Company Common Stock (or such
other securities) as is then available). Upon the occurrence of any events
resulting in an increase in the aggregate number of shares of Company Common
Stock (or other equity securities of the Company) issuable upon exercise of all
outstanding Rights above the number then reserved, the Company shall make
appropriate increases in the number of shares so reserved.
(b) So long as the shares of Company Common Stock (and, following a
Triggering Event, other securities) to be issued and delivered upon the exercise
of the Rights may be listed on any national securities exchange or automated
quotation system, the Company shall during the period from the Distribution Date
through the Expiration Date use its best efforts to cause all securities
reserved for such issuance to be listed on such exchange or automated quotation
system upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts (i) as soon as practicable
following the occurrence of a Section 11(a)(ii) Event and a determination by the
Company in accordance with Section 11(a)(iii) of the consideration to be
delivered by the Company upon exercise of the Rights or, if so required by law,
as soon as practicable following the Distribution Date (such date being the
"REGISTRATION DATE"), to file a registration statement on an appropriate form
under the Securities Act, with respect to the securities that may be acquired
upon exercise of the Rights (the "REGISTRATION STATEMENT"), (ii) to cause the
Registration Statement to become effective as soon as practicable after such
filing, (iii) to cause the Registration Statement to continue to be effective
(and to include a prospectus complying with the requirements of the Securities
Act)
12
until the earlier of (A) the date as of which the Rights are no longer
exercisable for the securities covered by the Registration Statement and (B) the
Expiration Date, and (iv) to take as soon as practicable following the
Registration Date such action as may be required to ensure that any acquisition
of securities upon exercise of the Rights complies with any applicable state
securities or "blue sky" laws. The Company may temporarily suspend for a period
of time not to exceed 90 days after the date set forth in clause (i) of the
first sentence of this Section 9(c), the exercisability of the Rights in order
to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction shall have been obtained.
(d) The Company shall take such action as may be necessary to ensure
that all shares of Company Common Stock (and, following the occurrence of a
Triggering Event, any other securities that may be delivered upon exercise of
Rights) shall be, at the time of delivery of the certificates for such shares of
Company Common Stock and of such other securities, duly and validly authorized
and issued and fully paid and non-assessable.
(e) The Company shall pay any documentary, stamp or transfer tax
imposed in connection with the issuance or delivery of the Rights Certificates
or upon the exercise of Rights; PROVIDED, HOWEVER, that the Company shall not be
required to pay any such tax imposed in connection with the issuance or delivery
of shares of Company Common Stock, or any certificates for such shares of
Company Common Stock (or, following the occurrence of a Triggering Event, any
other securities, cash or assets, as the case may be) to any person other than
the registered holder of the Rights Certificates evidencing the Rights
surrendered for exercise. The Company shall not be required to issue or deliver
any stock certificates (or, following the occurrence of a Triggering Event, any
other securities, cash or assets, as the case may be) to, or in a name other
than that of, the registered holder upon the exercise of any Rights until any
such tax shall have been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax is due.
SECTION 10. RECORD DATE FOR SECURITIES ISSUED UPON EXERCISE. Each
Person in whose name any certificate for shares of Company Common Stock (or,
following the occurrence of a Triggering Event, other securities) is issued upon
the exercise of Rights shall for all purposes be deemed to have become the
holder of record of the shares of Company Common Stock (or, following the
occurrence of a Triggering Event, other securities) represented thereby on, and
such certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; PROVIDED, HOWEVER, that if the
date of such surrender and payment is a date upon which the Company Common Stock
(or, following the occurrence of a Triggering Event, other securities) transfer
books of the Company are closed, such Person shall be deemed to have become the
record holder of such securities on, and such certificate shall be dated, the
next succeeding Business Day on which the Company Common Stock (or, following
the occurrence
13
of a Triggering Event, other securities) transfer books of the Company are open;
and FURTHER PROVIDED that if delivery of the shares of Company Common Stock is
delayed pursuant to Section 9(c), such Persons shall be deemed to have become
the record holders of such shares of Company Common Stock only when such shares
of Company Common Stock first become deliverable. Prior to the exercise of the
Rights evidenced thereby, the holder of a Rights Certificate shall not be
entitled to any rights of a stockholder of the Company with respect to
securities for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of securities covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Company Common Stock
payable in shares (or fractional shares) of Company Common Stock, (B)
subdivide the outstanding Company Common Stock, (C) combine the
outstanding Company Common Stock into a smaller number of shares, or
(D) issue any shares of its capital stock in a reclassification of the
Company Common 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) and Section 7(e), 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 Company Common Stock (or the number and kind of other
securities, as the case may be), issuable on such date upon exercise of
the Rights, 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 Company Common Stock (or such other securities, as
the case may be), which, if such Right had been exercised immediately
prior to such date, such holder would have owned upon such exercise and
been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would require
an adjustment under both this Section 11(a)(i) and Section 11(a)(ii),
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) In the event:
(A) any Person shall become an Acquiring Person,
other than pursuant to any transaction which constitutes a
Section 13 Event; or
(B) a majority of the Continuing Directors shall
declare by resolution any Person to be an Adverse Person, upon
a determination that such Person, alone or together with its
Affiliates and Associates, has, at any time after this
14
Agreement has been filed with the Securities and Exchange
Commission as an exhibit to a filing under the Exchange Act,
become the Beneficial Owner of a number of shares of Company
Common Stock which the Continuing Directors determine to be
substantial (which number of shares shall in no event
represent less than 10% of the outstanding shares of Company
Common Stock) and a determination by the Continuing Directors,
after reasonable inquiry and investigation, including
consultation with such persons as such directors shall deem
appropriate and consideration of such factors selected by such
directors as are permitted by applicable law, that (a) such
Beneficial Ownership by such Person is intended to cause the
Company to repurchase the shares of Common Stock beneficially
owned by such Person or to cause pressure on the Company to
take action or enter into a transaction or series of
transactions intended to provide such Person with short-term
financial gain under circumstances where the Continuing
Directors determine that the best long-term interests of the
Company would not be served by taking such action or entering
into such transaction or series of transactions at that time,
or (b) such Beneficial Ownership is causing or reasonably
likely to cause a material adverse impact (including, but not
limited to, impairment of relationships with customers or
impairment of the Company's ability to maintain its
competitive position) on the business or prospects of the
Company, on the Company's employees, customers or suppliers or
on the communities in which the Company operates or is
located; or
(C) any Acquiring Person (for purposes of this
Section 11(a)(ii)(C) and of Section 11(a)(ii)(D), the term
"Acquiring Person" shall be deemed to include an Adverse
Person) or any Associate or Affiliate of any Acquiring Person,
at any time after the date of this Agreement, directly or
indirectly, (1) shall merge into the Company or otherwise
combine with the Company and the Company shall be the
continuing or surviving corporation of such merger or
combination and Company Common Stock shall remain outstanding
and unchanged, (2) shall, in one transaction or a series of
transactions, transfer any assets to the Company or to any of
its Subsidiaries in exchange (in whole or in part) for shares
of Company Common Stock, for other equity securities of the
Company or any such Subsidiary, or for securities exercisable
for or convertible into shares of equity securities of the
Company or any of its Subsidiaries (whether Company Common
Stock or otherwise) or otherwise obtain from the Company or
any of its Subsidiaries, with or without consideration, any
additional shares of such equity securities or securities
exercisable for or convertible into such equity securities
(other than pursuant to a PRO RATA distribution to all holders
of Company Common Stock), (3) shall sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise acquire or
dispose of, in one transaction or a series of transactions,
to, from or with the Company or any of its Subsidiaries or any
employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such
a plan acting in such capacity, assets (including securities)
on terms and conditions less favorable to the Company or such
Subsidiary or plan than those that could have been obtained in
arm's-length negotiations with an unaffiliated third party,
other than pursuant to a transaction described in Section
15
13(a), (4) shall sell, purchase, lease, exchange, mortgage,
pledge, transfer or otherwise acquire or dispose of, in one
transaction or a series of transactions, to, from or with the
Company or any of the Company's Subsidiaries or any employee
benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such
a plan acting in such capacity (other than transactions, if
any, consistent with those engaged in, as of the date hereof,
by the Company and such Acquiring Person or such Associate or
Affiliate), assets (including securities) having an aggregate
fair market value of more than $10,000,000, other than
pursuant to a transaction set forth in Section 13(a), (5)
shall sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise acquire or dispose of, in one
transaction or a series of transactions, to, from or with the
Company or any of its Subsidiaries or any employee benefit
plan maintained by the Company or any of its Subsidiaries or
any trustee or fiduciary with respect to such a plan acting in
such capacity, any material trademark or material service
xxxx, other than pursuant to a transaction set forth in
Section 13(a), (6) shall receive, or any designee, agent or
representative of such Acquiring Person or any Affiliate or
Associate of such Acquiring Person shall receive, any
compensation from the Company or any of its Subsidiaries other
than compensation for full-time employment as a regular
employee at rates in accordance with the Company's (or its
Subsidiaries') past practices, or (7) shall receive the
benefit, directly or indirectly (except proportionately as a
holder of Company Common Stock or as required by law or
governmental regulation), of any loans, advances, guarantees,
pledges or other financial assistance or any tax credits or
other tax advantage provided by the Company or any of its
Subsidiaries or any employee benefit plan maintained by the
Company or any of its Subsidiaries or any trustee or fiduciary
with respect to such a plan acting in such capacity; or
(D) during such time as there is an Acquiring Person,
there shall be any reclassification of securities (including
any reverse stock split), or recapitalization of the Company,
or any merger or consolidation of the Company with any of its
Subsidiaries or any other transaction or series of
transactions involving the Company or any of its Subsidiaries,
other than a transaction or transactions to which the
provisions of Section 13(a) apply (whether or not with or into
or otherwise involving an Acquiring Person), which has the
effect, directly or indirectly, of increasing by more than 1%
the proportionate share of the outstanding shares of any class
of equity securities of the Company or any of its Subsidiaries
that is directly or indirectly beneficially owned by any
Acquiring Person or any Associate or Affiliate of any
Acquiring Person;
THEN, immediately upon the date of the occurrence of
an event described in Section 11(a)(ii)(A)-(D) hereof (a
"SECTION 11(A)(II) EVENT"), proper provision shall be made so
that each holder of a Right (except as provided below and in
Section 7(e) hereof) shall thereafter have the right to
receive, upon exercise thereof at the then current Purchase
Price in accordance with the terms of this
16
Agreement, in lieu of the number of shares of Company Common
Stock for which a Right was exercisable immediately prior to
the first occurrence of a Section 11(a)(ii) Event, such number
of shares of Company Common Stock as shall equal the result
obtained by (x) multiplying the then current Purchase Price by
the then number of shares of Company Common Stock for which a
Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event (such product
thereafter being, for all purposes of this Agreement other
than Section 13, the "PURCHASE PRICE"), and (y) dividing that
product by 50% of the then Current Market Price per share of
Company Common Stock on the date of such first occurrence
(such number of shares of Company Common Stock being the
"ADJUSTMENT SHARES"); PROVIDED, that the Purchase Price and
the number of Adjustment Shares shall be further adjusted as
provided in this Agreement to reflect any Section 11(a)(ii)
Event occurring after the initial occurrence of a Section
11(a)(ii) Event.
(iii) In the event that the number of shares of Company
Common Stock that 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 is not sufficient to permit the
exercise in full of the Rights in accordance with Section 11(a)(ii),
the Board, acting by resolution (which resolution shall be effective
only if it is approved by a majority of the Continuing Directors),
shall: (A) determine the excess of (1) the value of the Adjustment
Shares issuable upon the exercise of a Right (the "CURRENT VALUE") over
(2) the Purchase Price (such excess being the "SPREAD"), and (B) with
respect to each Right (subject to Section 7(e)), make adequate
provision to substitute for such Adjustment Shares, upon payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase
Price, (3) other equity securities of the Company, (4) debt securities
of the Company, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value, where
such aggregate value has been determined by a majority of the
Continuing Directors after receiving advice from a nationally
recognized investment banking firm selected by a majority of the
Continuing Directors which has not performed any services for the
Company or any Subsidiary of the Company in the prior five years;
PROVIDED, HOWEVER, that if pursuant to the introductory clause of this
Section 11(a)(iii) the Company shall have elected or been required to
deliver value pursuant to clause (B) above and shall not have made
adequate provision to deliver such value within 30 days following the
later of (x) the first occurrence of a Section 11(a)(ii) Event and (y)
the date on which the Company's right of redemption pursuant to Section
23(a) expires (the later of (x) and (y) being referred to herein as the
"SECTION 11(A)(III) TRIGGER DATE"), then the Company shall be obligated
to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Company Common Stock
(to the extent available) and then, if necessary, cash (to the extent
available) and then, if necessary, debt securities, which shares of
Company Common Stock and/or cash and/or debt securities shall have an
aggregate value equal to the Spread. If the Board, acting by resolution
(which resolution shall be effective only if it is approved by a
majority of Continuing Directors), shall determine in good faith that
it is likely that sufficient additional shares of Company Common Stock
could be authorized for issuance upon exercise in full of the Rights,
the
17
30-day period set forth above may be extended to the extent necessary,
but not more than 90 days after the Section 11(a)(ii) Trigger Date, in
order that the Company may seek stockholder approval for the
authorization of such additional shares (such period, as it may be
extended, the "SUBSTITUTION PERIOD"). To the extent that the Company
determines that some action need be taken pursuant to the first
sentence of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 7(e), that such action shall apply uniformly to all
outstanding Rights and (y) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate
form of distribution to be made pursuant to the first sentence of this
Section 11(a)(iii) and to determine the value thereof. In the event of
any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section
11(a)(iii), the value of a share of the Company Common Stock shall be
the Current Market Price per share of the Company Common Stock on the
date of the first occurrence of the Section 11(a)(iii) Trigger Date.
(b) In the event the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Company
Common Stock entitling them to subscribe for or purchase (for a period
expiring within 45 calendar days after such record date) shares (or
fractional shares) of Company Common Stock (or shares having
substantially the same rights, privileges and preferences as shares of
Company Common Stock ("EQUIVALENT COMPANY COMMON STOCK")) or securities
convertible into Company Common Stock or Equivalent Company Common
Stock at a price per share of Company Common Stock or per share of
Equivalent Company Common Stock (or having a conversion price per
share, if a security convertible into Company Common Stock or
Equivalent Company Common Stock) less than the Current Market Price (as
determined pursuant to Section 11(d)) per share of Company Common Stock
on such record date, then 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 sum of the number of shares of Company
Common Stock outstanding on such record date plus the number of shares
of Company Common Stock which the aggregate offering price of the total
number of shares of Company Common Stock and/or Equivalent Company
Common Stock so to be offered (and/or the aggregate initial conversion
price of the convertible securities so to be offered) would purchase at
such Current Market Price, and the denominator of which shall be the
number of shares of Company Common Stock outstanding on such record
date plus the number of additional shares of Company Common Stock
and/or Equivalent Company Common Stock to be offered for subscription
or purchase (or into which the convertible securities so to be offered
are initially convertible). In the event 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 consideration shall be 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 binding on the Rights Agent and the holders of the
Rights. Shares of Company Common Stock owned by or held for the account
of the Company or any Subsidiary shall not be deemed outstanding for
the
18
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 the event the Company shall fix a record date for a
distribution to all holders of shares of Company Common 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 (other than a regular
quarterly cash dividend paid out of funds legally available therefor),
assets (other than a dividend payable in shares of Company Common
Stock, but including any dividend payable in stock other than Company
Common Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b)), then 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 (as determined
pursuant to Section 11(d)) per share of Company Common Stock on such
record date less the fair market value (as determined in good faith by
the Company, acting by resolution of its Board (which resolution shall
be effective only if it is approved 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
holder of the Rights) of the cash, assets or evidences of indebtedness
so to be distributed or of such subscription rights or warrants
distributable in respect of a share of Company Common Stock, and the
denominator of which shall be such Current Market Price (as determined
pursuant to Section 11(d)) per share of Company Common 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) For the purpose of any computation hereunder, the "Current
Market Price" per share of Company Common Stock or Common Stock on any
date shall be deemed to be the average of the daily closing prices per
share of such shares for the ten consecutive Trading Days (as such term
is hereinafter defined) immediately prior to such date; PROVIDED,
HOWEVER, that if prior to the expiration of such ten Trading Day period
the issuer announces either (A) a dividend or distribution on such
shares payable in such shares or securities convertible into such
shares (other than the Rights), or (B) any subdivision, combination or
reclassification of such shares, then, following the ex-dividend date
for such dividend or the record date for such subdivision, as the case
may be, the "Current Market Price" shall be properly adjusted to take
into account such event. The closing price for each day shall be, if
the shares are listed and admitted to trading on a national securities
exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which such shares are listed or
admitted to trading or, if such shares are not listed or admitted to
trading on any national securities exchange, the last quoted price or,
if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the Nasdaq Stock Market
("NASDAQ") or such
19
other system then in use, or, if on any such date such shares are not
quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a
market in such shares selected by a majority of the Continuing
Directors. If on any such date no market maker is making a market in
such shares, the fair value of such shares on such date as determined
in good faith by a majority of the Continuing Directors shall be used.
If such shares are 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 for all purposes. The term
"TRADING DAY" shall mean, if such shares are listed or admitted to
trading on any national securities exchange, a day on which the
principal national securities exchange on which such shares are listed
or admitted to trading is open for the transaction of business or, if
such shares are not so listed or admitted, a Business Day.
(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 1% 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 one-thousandth of a share of Company Common Stock or
Common Stock or other 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 and
(ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or 13(a), the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other than
Company Common 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 Company Common Stock contained in Sections 11(a), (b),
(c), (d), (e), (g), (h), (i), (j), (k), (l) and (m), and the provisions
of Sections 7, 9, 10, 13 and 14 with respect to the Company Common
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, that number of
shares of Company Common Stock (or other securities or amount of cash
or combination thereof) that may be acquired from time to time pursuant
to this Agreement upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price
as a result of the calculations made in Sections 11(b) and (c), each
Right outstanding immediately prior to the making
20
of such adjustment shall thereafter evidence the right to purchase, at
the adjusted Purchase Price, that number of shares of Company Common
Stock (calculated to the nearest ten-thousandth of a share obtained by
(i) multiplying (x) the number or amount of shares (or cash or other
securities) issuable upon exercise of a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to
such adjustment of the Purchase Price, and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
lieu of any adjustment in the number of shares of Company Common Stock
or other securities that may be acquired upon the exercise of a Right.
Each of the Rights outstanding after the adjustment in the number of
Rights shall be exercisable for that number of shares of Company Common
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 Rights Certificates have
been issued, shall be at least ten days later than the date of such
public announcement. If Rights 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 Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14, 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 Rights
Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights
Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates to be so
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 Rights Certificates on the record date specified
in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the shares of Company Common Stock issuable upon the exercise
of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per share and the
number of shares which were expressed in the initial Rights
Certificates 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
shares of Company Common Stock issuable upon exercise of the Rights,
the Company shall take any corporate action
21
which may, in the opinion of its counsel, be necessary in order that
the Company may validly and legally issue such fully paid and
non-assessable shares of Company Common Stock at such adjusted Purchase
Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right
exercised after such record date of the shares of Company Common Stock
and shares of other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the shares of Company Common
Stock and shares of 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) or securities upon the occurrence of the
event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that in their good
faith judgment a majority of the Continuing Directors shall determine
to be advisable in order that any (i) consolidation or subdivision of
the Company Common Stock, (ii) issuance wholly for cash of any shares
of Company Common Stock at less than the current market price, (iii)
issuance wholly for cash of shares of Company Common Stock or
securities which by their terms are convertible into or exchangeable
for shares of Company Common 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 Company Common Stock,
shall not be taxable to such holders or shall reduce the taxes payable
by such holders.
(n) The Company shall not, at any time after the Distribution
Date, (i) consolidate with any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o)), (ii)
merge with or into any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o)), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of 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 in one or more
transactions each of which complies with Section 11(o)), if (x) at the
time of or immediately after such consolidation, merger or sale there
are any rights, warrants or other instruments or securities outstanding
or agreements in effect which would 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 Person which constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) shall have distributed
or otherwise transferred to its stockholders or other persons holding
an equity interest in such Person Rights previously owned by such
Person or any of its Affiliates and Associates; PROVIDED,
22
HOWEVER, this Section 11(n) shall not affect the ability of any
Subsidiary of the Company to consolidate with, merge with or into, or
sell or transfer assets or earning power to, any other Subsidiary of
the Company.
(o) After the Distribution Date, the Company shall not, except
as permitted by Section 23 or Section 26, take (or permit any
Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially
or otherwise eliminate the benefits intended to be afforded by the
Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after
the Rights Dividend Declaration Date and prior to the Distribution Date
(i) declare a dividend on the outstanding shares of Company Common
Stock payable in shares of Company Common Stock, (ii) subdivide the
outstanding shares of Company Common Stock, (iii) combine the
outstanding shares of Company Common Stock into a smaller number of
shares, or (iv) issue any shares of its capital stock in a
reclassification of Company 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 Company 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 Company Common Stock
following any such event shall equal the result obtained by multiplying
the number of Rights associated with each share of Company Common Stock
immediately prior to such event by a fraction the numerator of which
shall be the total number of shares of Company Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of
which shall be the total number of shares of Company Common Stock
outstanding immediately following the occurrence of such event.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or Section 13, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent, and with each transfer agent for the Company Common
Stock, a copy of such certificate, and mail a brief summary thereof to each
holder of a Rights Certificate (or, if prior to the Distribution Date, to each
holder of a certificate representing shares of Company Common Stock) in
accordance with Section 25. The Rights Agent shall be fully protected in relying
on any such certificate 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.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER. (a) In the event that, following the Stock Acquisition Date,
directly or indirectly, either (x) the Company shall consolidate with, or merge
with and into, any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o)), and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, (y) any
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o)) shall consolidate with, or merge with or into, the Company,
and the Company
23
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 Company Common Stock shall be converted into or exchanged
for stock or other securities of any other Person or cash or any other property,
or (z) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer) to any Person or Persons (other
than the Company or any of its Subsidiaries in one or more transactions each of
which complies with Section 11(o)), in one or more transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) (any such event being a "SECTION
13 EVENT"), then, and in each such case, proper provision shall be made so that:
(i) each holder of a Right, except as provided in Section 7(e), shall thereafter
have the right to receive, upon the exercise thereof at the then current
Purchase Price, such number of validly authorized and issued, fully paid and
non-assessable shares of Common Stock of the Principal Party (as such term is
hereinafter defined), which shares shall not be subject to any liens,
encumbrances, rights of first refusal, transfer restrictions or other adverse
claims, as shall be equal to the result obtained by (1) multiplying the then
current Purchase Price by the number of shares of Company Common Stock for which
a Right is exercisable immediately prior to the first occurrence of a Section 13
Event (or, if a Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of such shares of
Company Common Stock for which a Right would be exercisable hereunder but for
the occurrence of such Section 11(a)(ii) Event by the Purchase Price which would
be in effect hereunder but for such first occurrence) and (2) dividing that
product (which, following the first occurrence of a Section 13 Event, shall be
the "PURCHASE PRICE" for all purposes of this Agreement) by 50% of the Current
Market Price (determined pursuant to Section 11(d)) per share of the Common
Stock of such Principal Party on the date of consummation of such Section 13
Event; (ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 shall apply only to such Principal
Party following the first occurrence of a Section 13 Event; (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 connection with the
consummation of any such transaction as may be necessary to ensure that the
provisions of this Agreement shall thereafter be applicable to its shares of
Common Stock thereafter deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) shall be of no further effect following the
first occurrence of any Section 13 Event.
(b) "PRINCIPAL PARTY" shall mean:
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a), (A) the Person that is the
issuer of any securities into which shares of Company Common Stock are
converted in such merger or consolidation, or, if there is more than
one such issuer, the issuer of Common Stock that has the highest
aggregate Current Market Price (determined pursuant to Section 11(d))
and (B) if no securities are so issued, the Person that is the other
party to such merger or consolidation, or, if there is more than one
such Person, the Person the Common Stock of which has the highest
aggregate Current Market Price (determined pursuant to Section 11(d));
and
24
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a), the Person that is the party
receiving the largest 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 transferred pursuant to
such transaction or transactions or if the Person receiving the largest
portion of the assets or earning power cannot be determined, whichever
Person the Common Stock of which has the highest aggregate Current
Market Price (determined pursuant to Section 11(d));
PROVIDED, HOWEVER, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding
twelve-month period registered under Section 12 of the Exchange Act ("REGISTERED
COMMON STOCK"), or such Person is not a corporation, and such Person is a direct
or indirect Subsidiary of another Person that has Registered Common Stock
outstanding, "Principal Party" shall refer to such other Person; (2) if the
Common Stock of such Person is not Registered Common Stock or such Person is not
a corporation, and such Person is a direct or indirect Subsidiary of another
Person but is not a direct or indirect Subsidiary of another Person which has
Registered Common Stock outstanding, "Principal Party" shall refer to the
ultimate parent entity of such first-mentioned Person; (3) if the Common Stock
of such Person is not Registered Common Stock or such Person is not a
corporation, and such Person is directly or indirectly controlled by more than
one Person, and one or more of such other Persons has Registered Common Stock
outstanding, "Principal Party" shall refer to whichever of such other Persons is
the issuer of the Registered Common Stock having the highest aggregate Current
Market Price (determined pursuant to Section 11(d)); and (4) if the Common Stock
of such Person is not Registered Common Stock or such Person is not a
corporation, and such Person is directly or indirectly controlled by more than
one Person, and none of such other Persons have Registered Common Stock
outstanding, "Principal Party" shall refer to whichever ultimate parent entity
is the corporation having the greatest stockholders equity or, if no such
ultimate parent entity is a corporation, shall refer to whichever ultimate
parent entity is the entity having the greatest net assets.
(c) The Company shall not consummate any Section 13 Event transfer
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 in full of the Rights in accordance with this Section 13,
and unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in paragraphs (a) and (b) of this Section 13 and further
providing that the Principal Party, at its own expense, will:
(i) (A) file on an appropriate form, as soon as practicable
following the execution of such agreement, a registration statement
under the Securities Act with respect to the Common Stock that may be
acquired upon exercise of the Rights, (B) cause such registration
statement to remain effective (and to include a prospectus complying
with the requirements of the Securities Act) until the Expiration Date,
and (C) as soon as practicable following the execution of such
agreement, take such action as may be required to ensure that any
acquisition of such Common Stock upon the exercise of the Rights
complies with any applicable state security or "blue sky" laws; and
25
(ii) use its best efforts either (A) to list (or continue the
listing of) the Common Stock of the Principal Party on a national
securities exchange or (B) to cause such Common Stock to be reported by
NASDAQ or such other comparable transaction reporting system as may
then be in use; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form
10 under the Exchange Act.
(d) If 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)) 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 this Section 13; then, in such event, the Company
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.
(e) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights which have not theretofore been exercised
shall thereafter become exercisable in the manner described in Section 13(a).
(f) Notwithstanding anything in this Agreement to the contrary, the
provisions of this Section 13 shall not be applicable to a transaction described
in clause (x) or (y) of Section 13(a) if (i) such transaction is consummated
with a Person or Persons who acquired shares of Company Common Stock pursuant to
a Permitted Offer (or a wholly-owned Subsidiary of any such Person or Persons),
(ii) the price per share of Company Common Stock being offered in such
transaction is not less than the price per share of Company Common Stock paid to
all holders of Company Common Stock whose shares were purchased pursuant to such
Permitted Offer, and (iii) the form of consideration being offered to the
remaining holders of shares of Company Common Stock pursuant to such transaction
is the same as the form of consideration paid to holders of the Company Common
Stock pursuant to such Permitted Offer.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company
shall not be required to issue fractions of Rights or to distribute Rights
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the Persons to which such fractional Rights would
otherwise be issuable, an amount in cash equal to such fraction of the
26
market value of a whole Right. For purposes of this Section 14(a), the market
value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price of the Rights for any day shall be,
if the Rights are listed or admitted to trading on a national securities
exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Company
(acting by resolution of its Board, which resolution shall be effective only if
it is approved by the Continuing Directors). If on any such date no such market
maker is making a market in the Rights, the fair value of the Rights on such
date as determined in good faith by the Company (acting by resolution of its
Board, which resolution shall be effective only if it is approved by the
Continuing Directors) shall be used and such determination shall be described in
a statement filed with the Rights Agent and the holders of the Rights.
(b) The Company shall not be required to issue fractions of shares of
Company Common Stock upon exercise of the Rights or to distribute certificates
which evidence such fractional shares of Company Common Stock. In lieu of such
fractional shares of Company Common Stock, the Company may pay to the registered
holders of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the then Current Market
Price of a share of Company Common Stock on the day of exercise, determined in
accordance with Section 11(d).
(c) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, other than rights of action vested in the Rights Agent pursuant to
Section 18, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
certificates representing shares of Company Common Stock); and any registered
holder of a Rights Certificate (or, prior to the Distribution Date, of a
certificate representing shares of Company Common Stock), without the consent of
the Rights Agent or of the holder of any other Rights Certificate (or, prior to
the Distribution Date, of a certificate representing shares of Company Common
Stock), may, on 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 Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance
27
of the obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Company Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purposes, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates duly executed;
(c) subject to Section 6(a) and Section 7(f), the Company and the
Rights Agent may deem and treat the person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated Company Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Company Common Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e), shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or any other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; PROVIDED, HOWEVER, that the Company must use its
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as promptly as practicable.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of shares of
Company Common Stock or any other securities of the Company which may at any
time be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or, except as provided in Section 24,
to receive notice of meetings or other actions affecting stockholders, or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
28
SECTION 18. CONCERNING THE RIGHTS AGENT. (a) The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, promptly following demand of the Rights Agent,
its reasonable expenses, including reasonable fees and disbursements of its
counsel, incurred in connection with the execution and administration of this
Agreement and the exercise and performance of its duties hereunder. The Company
shall indemnify the Rights Agent for, and hold it harmless against, any loss,
liability, or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability hereunder.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Company Common Stock or for 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 have
been signed, executed and, where necessary, verified or acknowledged by the
proper Person or Persons. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Rights Agent be liable for special,
indirect or consequential loss or damage of any kind whatsoever (including but
not limited to lost profits), even if the Rights Agent has been advised of the
likelihood of such loss or damage and regardless of the form of the action.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the corporate
trust or stockholder services businesses of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any document or any further act on the part
of any of the parties hereto; PROVIDED, HOWEVER, that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
29
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "Current Market Price") be proved or established by the Company
prior to taking or suffering any action under this Agreement, such fact or
matter (unless other evidence in respect thereof be specified herein) may be
deemed to be conclusively proved and established by a certificate signed by the
Chairman of the Board, the President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; PROVIDED, HOWEVER, that so long as any Person is
an Acquiring Person under this Agreement, such certificate shall be signed and
delivered by a majority of the Continuing Directors; and such certificate shall
be full authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable under this Agreement only for its
own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), 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 have any responsibility for the validity
of this Agreement or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or for the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or failure by the Company to
satisfy conditions contained in this Agreement or in any Rights Certificate; nor
shall it be responsible for any adjustment required under the provisions of
Section 11 or Section 13 or 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
Rights Certificates after receipt by the Rights Agent of the certificate
describing any such adjustment contemplated by Section 12); nor shall it by any
act under this Agreement be deemed to make any representation or warranty as to
the authorization or reservation of any shares of Company Common Stock or any
other securities to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Company
30
Common Stock or any other securities will, when so issued, be validly authorized
and issued, fully paid and non-assessable.
(f) The Company shall perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such further
acts, instruments and assurances as may reasonably be required by the Rights
Agent for the performance by the Rights Agent of its duties under this
Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such officer;
PROVIDED, HOWEVER, that so long as any Person is an Acquiring Person under this
Agreement, the Rights Agent shall accept such instructions and advice only from
a majority of the Continuing Directors and shall not be liable for any action
taken or suffered to be taken by it in good faith in accordance with such
instructions of the majority of the Continuing Directors. 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. 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 5 Business Days
after the date any such officer of the Company actually receives such
application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken
or omitted.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents.
(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 or in the exercise of its rights hereunder if
the Rights Agent shall have reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
31
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed, not signed 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. If such certificate has been completed and signed and shows a negative
response to clauses 1 and 2 of such certificate, unless previously instructed
otherwise in writing by the Company (which instructions may impose on the Rights
Agent additional ministerial responsibilities, but no discretionary
responsibilities), the Rights Agent may assume without further inquiry that the
Rights Certificate is not owned by a person described in Section 4(b) or Section
7(e) and shall not be charged with any knowledge to the contrary.
(l) The Rights Agent shall have no duties or obligations other than
those specifically set forth in this Agreement, or as may subsequently be agreed
to in writing by the Company and the Rights Agent.
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' prior notice in writing mailed to the Company, and to each
transfer agent of the Company Common Stock, by registered or certified mail, and
to the holders of the Rights Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' prior notice
in writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Company Common Stock, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then any registered holder of
any Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a corporation organized and
doing business under the laws of the United States or any state of the United
States in good standing, shall be authorized to do business as a banking
institution in the State of New York, shall be authorized under such laws to
exercise corporate trust or stock transfer powers, shall be subject to
supervision or examination by federal or state authorities and shall have at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $100,000,000 or (b) an Affiliate of a corporation described in clause (a)
of this sentence. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for that 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 Company Common Stock, and mail a notice thereof in writing to the registered
holders of the Rights Certificates. Failure to give any notice provided for in
this
32
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent.
SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by resolution of its Board (which resolution shall be effective
only if it is approved by a majority of Continuing Directors) to reflect any
adjustment or change made in accordance with the provisions of this Agreement in
the Purchase Price or the number or kind or class of shares or other securities
or property that may be acquired under the Rights Certificates. In addition, in
connection with the issuance or sale of shares of Company Common Stock following
the Distribution Date and prior to the Expiration Date, the Company (a) shall,
with respect to shares of Company 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 a
majority of the Continuing Directors, issue Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale; PROVIDED,
HOWEVER, that (i) no such Rights 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 Rights Certificate would be issued, and (ii) no such
Rights 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 AND TERMINATION. (a) The Company, acting by
resolution of its Board (which resolution shall be effective only if it is
approved by a majority of Continuing Directors) may, at its option, at any time
prior to the earlier of (i) the Distribution Date or (ii) the Final Expiration
Date, redeem all but not less than all of the then outstanding Rights at a
redemption price of $.0025 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 the "REDEMPTION
PRICE"). The Company may, at its option, pay the Redemption Price in cash,
shares of Company Common Stock (based on the "Current Market Price," as defined
in Section 11(d), of the shares of Company Common Stock at the time of
redemption), or such other form of consideration as a majority of the Continuing
Directors deems appropriate.
(b) Immediately upon an action by the Board in accordance with Section
23(a) ordering the redemption of the Rights, evidence of which shall be filed
with the Rights Agent, and without any further action and without any notice,
the right to exercise the Rights will terminate and the only right thereafter of
the holders of Rights shall be to receive the Redemption Price for each Right so
held. Promptly after the action of a majority of the Continuing Directors
ordering the redemption of the Rights, 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 each holder's last address 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 for Company
Common Stock. Any notice which is mailed in the manner herein provided shall
33
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.
SECTION 24. NOTICE OF CERTAIN EVENTS. (a) In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Company Common Stock or to make
any other distribution to the holders of Company Common Stock (other than a
regular quarterly cash dividend paid out of funds legally available therefor),
(ii) to offer to the holders of Company Common Stock rights or warrants to
subscribe for or to purchase any additional shares of Company Common Stock or
shares of stock of any class or any other securities, rights or options, (iii)
to effect any reclassification of its Company Common Stock (other than a
reclassification involving only the subdivision of outstanding shares of Company
Common Stock), (iv) to effect any consolidation or merger into or with any other
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o)), 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
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o)), or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Rights Certificate, to the extent
feasible and in accordance with Section 25, a notice of such proposed action,
which shall specify the record date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
shares of Company 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 20 days prior to the record date for determining holders of the shares
of Company Common Stock for purposes of such action, and in the case of any such
other action, at least 20 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of the shares of
Company Common Stock whichever shall be the earlier; PROVIDED, HOWEVER, no such
notice shall be required pursuant to this Section 24, if any Subsidiary of the
Company effects a consolidation or merger with or into, or effects a sale or
other transfer of assets or earnings power to, any other Subsidiary of the
Company.
(b) In case any Section 11(a)(ii) Event shall occur, then, in any such
case, the Company shall as soon as practicable thereafter give to each holder of
a Rights Certificate, to the extent feasible and in accordance with Section 25,
a notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii).
34
SECTION 25. NOTICES. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including by
telex, telegram or cable) and mailed or sent or delivered, if to the Company, at
its address at:
The BISYS Group, Inc.
Overlook at Great Notch
000 Xxxxx Xxxx
Xxxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Tel No.: (000) 000-0000
Fax No.: (000) 000-0000
and if to the Rights Agent, at its address at:
The Bank of New York
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxxxxx
Tel No.: (000) 000-0000
Fax No.: (000) 000-0000
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Company Common Stock) 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 shown on the registry books of the Company.
SECTION 26. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date
and subject to the penultimate sentence of this Section 26, the Company may by
resolution of its Board (which resolution if adopted following the Stock
Acquisition Date shall be effective only if at the time of its adoption
Continuing Directors constitute a majority of the number of directors then in
office), and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement without the approval of any holders of
certificates representing shares of Company Common Stock. From and after the
Distribution Date and subject to the penultimate sentence of this Section 26,
the Company may by resolution of its Board (which resolution if adopted
following the Stock Acquisition Date shall be effective only if at the time of
its adoption the Continuing Directors constitute a majority of the number of
directors then in office), and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Rights Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, (iii) to shorten or lengthen any time period
hereunder, or (iv) to change 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 Rights Certificates (other than
an Acquiring Person or an Adverse Person or an Affiliate or Associate of an
Acquiring Person or an Adverse Person); PROVIDED, HOWEVER, that this Agreement
may not be supplemented or amended to lengthen, pursuant to clause (iii) of this
35
sentence, (A) subject to Section 30, a time period relating to when the Rights
may be redeemed at such time as the Rights are not then redeemable, or (B) any
other time period unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the holders of
Rights. Upon the 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 26, the Rights
Agent shall execute such supplement or amendment. Notwithstanding anything
contained in this Agreement to the contrary, no supplement or amendment shall be
made which changes the Redemption Price, the Purchase Price, the Expiration Date
or the number of shares of Company Common Stock for which a Right is
exercisable, or which has the effect of exempting from any provision of this
Agreement, or of rendering any otherwise applicable provision of this Agreement
inapplicable to, any acquisition by any Person of Beneficial Ownership of
Company Common Stock or any transaction between any Person, on the one hand, and
the Company or any Subsidiary of or successor to the Company, on the other hand,
without in each such case the approval of a majority of the Continuing
Directors. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of Company
Common Stock.
SECTION 27. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 28. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
For all purposes of this Agreement, any calculation of the number of shares of
Company Common Stock outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding shares of Company
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, the Board (and, where specifically provided for herein, the
Board and a majority of the Continuing Directors) shall have the exclusive power
and authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board (or, as expressly provided, the Board and a
majority of Continuing Directors) 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 or any member
thereof to any liability to the holders of the Rights.
SECTION 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of shares of Company Common Stock) any
legal or equitable right, remedy or claim under this Agreement;
36
but this Agreement shall be for the sole and exclusive benefit of the Company,
the Rights Agent and the registered holders of the Rights Certificates (and,
prior to the Distribution Date, registered holders of shares of Company Common
Stock).
SECTION 30. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
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, then the
right of redemption set forth in Section 23 hereof 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.
SECTION 31. GOVERNING LAW. This Agreement, each Right and each Rights
Certificate issued under this Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware applicable to contracts
executed in and to be performed entirely in such State.
SECTION 32. COUNTERPARTS. This Agreement may be executed (including by
facsimile) in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
instrument.
SECTION 33. CAPTIONS. The captions contained in this Agreement are
for descriptive purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 34. EXCHANGE. (a) The Company may at any time prior to the
Distribution Date, upon resolution of the Board (which resolution shall be
effective only if at the time of its adoption Continuing Directors constitute a
majority of the number of directors then in office and a majority of the
Continuing Directors approve of such exchange), exchange all or part of the then
outstanding Rights (which shall not include Rights that have become void
pursuant to Section 7(e)) for shares of Company Common 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 shares of Company Common Stock obtained by dividing the Adjustment Spread (as
defined below) by the then Current Market Price (determined pursuant to Section
11(d)) per share of Company Common Stock on the earlier of (i) the Stock
Acquisition Date and (ii) the date on which a tender or exchange offer (other
than a Permitted Offer) by any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such a plan acting in
such capacity) 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
37
consummation thereof such Person would be the Beneficial Owner of 15% or more of
the shares of Company Common Stock then outstanding (such exchange ratio being
the "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.
(b) Immediately upon the action of the Board, in accordance with
Section 34(a), ordering the exchange of any Rights and without any further
action and without any notice, the right to exercise such Rights shall terminate
and the only right thereafter of a holder of such Rights shall be to receive
that number of shares of Company Common Stock equal to the number of such Rights
held by such holder multiplied by the Exchange Ratio. The Company shall promptly
give public notice of any such exchange; PROVIDED, HOWEVER, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange. The Company promptly shall mail a notice of any such exchange to all
of the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange shall state the method by which the
exchange of shares of Company Common Stock for Rights will be effected and, in
the event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected PRO RATA based on the number of Rights
(other than Rights which have become void pursuant to the provisions of Section
7(e)) held by each holder of Rights.
(c) In the event that the number of shares of Company Common 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 34, the Company shall take all such action as
may be necessary to authorize additional shares of Company Common Stock for
issuance upon exchange of the Rights or make adequate provision to substitute
(i) cash, (ii) debt securities of the Company, (iii) other assets, or (iv) 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 shares of
Company Common Stock or to distribute certificates which evidence fractional
shares. In lieu of fractional shares, the Company may pay to the registered
holders of Rights 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 share of Company Common
Stock.
38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the date first above written.
THE BISYS GROUP, INC.
By: /s/ Xxxxxx X. XxXxxxxx
-----------------------------
Xxxxxx X. XxXxxxxx
Executive Vice President and
Chief Financial Officer
THE BANK OF NEW YORK
By: /s/ Xxxxxxxx Xxxxxxxx
-----------------------------
Xxxxxxxx Xxxxxxxx
Assistant Vice President
39
EXHIBIT A
TO RIGHTS AGREEMENT
[Form of Rights Certificate]
Certificate No. R-_________ __________ Rights
NOT EXERCISABLE AFTER MAY 16, 2007 OR EARLIER IF THE RIGHTS EXPIRE
UNDER CERTAIN CIRCUMSTANCES OR ARE REDEEMED OR EXCHANGED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.0025 PER RIGHT, ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN ADVERSE PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR
AN ADVERSE PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON
OR AN ADVERSE PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF SUCH AGREEMENT.]*
RIGHTS CERTIFICATE
THE BISYS GROUP, INC.
This certifies that ___________________________, or registered assigns,
is the registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms and conditions of
the Rights Agreement, dated as of May 8, 1997 (the "RIGHTS AGREEMENT"), between
The BISYS Group, Inc., a Delaware corporation (the "COMPANY"), and The Bank of
New York, a national banking association, as Rights Agent (the "RIGHTS AGENT"),
to purchase from the Company at any time after the Distribution Date and prior
to the Expiration Date (each as defined in the Rights Agreement), at the office
of the Rights Agent, one share of fully paid and non-assessable common stock,
par value $.02 per share (the
------------------
* THE PORTION OF THE LEGEND IN BRACKETS SHALL BE INSERTED ONLY IF
APPLICABLE AND SHALL REPLACE THE PRECEDING SENTENCE.
A-1
"COMPANY COMMON STOCK"), of the Company at a purchase price (the "PURCHASE
PRICE") of $175.00, in cash, per share, upon presentation and surrender of this
Rights Certificate with the Election to Purchase and related certificate duly
executed. In certain circumstances described in the Rights Agreement, the Board
may elect to issue cash, assets or other equity or debt securities to the holder
hereof in lieu of Company Common Stock. Capitalized terms used but not defined
in this Rights Certificate that are defined in the Rights Agreement shall have
the meanings ascribed to them in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights
evidenced by this Rights Certificate are beneficially owned by (i) an Acquiring
Person or an Adverse Person or an Affiliate or Associate of any such Acquiring
Person or Adverse Person, (ii) under certain circumstances specified in the
Rights Agreement, a transferee of any such Acquiring Person or Adverse Person,
or Associate or Affiliate of any such Acquiring Person or Adverse Person, or
(iii) under certain circumstances specified in the Rights Agreement, a
transferee of a person who, after such transfer, became an Acquiring Person or
an Adverse Person, or an Affiliate or Associate of an Acquiring Person or an
Adverse Person, such Rights shall become null and void and no holder hereof
shall have any right with respect to such Rights from and after the occurrence
of such Section 11(a)(ii) Event.
THE NUMBER OF RIGHTS EVIDENCED BY THIS RIGHTS CERTIFICATE (AND THE
NUMBER OF SHARES OF COMPANY COMMON STOCK WHICH MAY BE PURCHASED UPON EXERCISE
THEREOF) SET FORTH ABOVE, AND THE PURCHASE PRICE PER SHARE OF COMPANY COMMON
STOCK SET FORTH ABOVE, ARE SUBJECT TO MODIFICATION AND ADJUSTMENT UPON THE
OCCURRENCE OF CERTAIN EVENTS AS PROVIDED IN THE RIGHTS AGREEMENT.
In certain circumstances, the Rights evidenced hereby may entitle the
registered holder thereof to purchase capital stock of an entity other than the
Company or receive common stock, cash or other assets, all as provided in the
Rights Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal office of the Company and are
available from the Company upon written request.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing an aggregate number of Rights equal to the aggregate
number of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
A-2
Subject to the provisions of the Rights Agreement, at any time prior to
the earlier of (i) the Stock Acquisition Date or (ii) the Final Expiration Date,
the Rights evidenced by this Certificate may be redeemed by the Company, at its
option, by resolution (which resolution shall, if adopted following the Stock
Acquisition Date, be effective only with the approval of a majority of the
Continuing Directors, and only if the Continuing Directors constitute a majority
of the number of directors then in office) at a redemption price of $.0025 per
Right, payable at the Company's option in cash, common stock of the Company or
other consideration, subject to adjustment in certain events as provided in the
Rights Agreement.
No fractional shares of Company Common Stock will be issued upon the
exercise of any Right or Rights evidenced hereby, but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Company
Common Stock or of any other securities which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
A-3
WITNESS the facsimile signature of the proper officers of the Company.
Dated as of ______________________, _______
ATTEST: THE BISYS GROUP, INC.
_________________________ By:_____________________
Name: Name:
Title: Title:
Countersigned:
THE BANK OF NEW YORK,
as Rights Agent
By:_____________________
Authorized Signatory
A-4
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the Rights Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_______________________________________________________________________________
(Please print name of transferee)
_______________________________________________________________________________
(Please print address of transferee)
this Rights evidenced by this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
______________________________________, with full power of substitution, to
transfer said Rights on the books of the within-named
Company.
Dated: _______________________, _____
Signature:________________________
(Sign exactly as your
name appears on the
other side of this
Rights Certificate)
Signature Guarantee: _________________
A-5
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ]
are not being sold, assigned and transferred by or on behalf of a Person who
is or was an Acquiring Person or an Adverse Person or an Affiliate or Associate
of any such Acquiring Person or Adverse Person (as such terms are defined in the
Rights 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 Rights Certificate from any Person who is, was or subsequently became
an Acquiring Person or an Adverse Person or an Affiliate or Associate of an
Acquiring Person or an Adverse Person.
Dated: __________________, ______
Signature: ______________________
(Sign exactly as your name
appears on the other side
of this Rights Certificate)
Signature Guarantee: ____________________
NOTICE
The signature to the foregoing Assignment and related Certificate must
correspond to the name as written upon the face of this Rights 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 or by a
participant in the Securities Transfer Agents Medallion Program, the Stock
Exchange Medallion Program or the New York Stock Exchange Medallion Program.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Adverse Person or an Affiliate or
Associate thereof and, in the case of an Assignment, will affix a legend to that
effect on any Rights Certificates issued in exchange for this Rights
Certificate.
A-6
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such
holder desires to exercise the Rights evidenced by this
Rights Certificate)
To: THE BISYS GROUP, INC.
The undersigned hereby irrevocably elects to exercise ________________
Rights evidenced by this Rights Certificate to purchase the shares of Company
Common Stock issuable upon the exercise of the Rights (or such other securities,
cash or property of the Company or of any other person which may be issuable
upon the exercise of the Rights) and requests that certificates for such Company
Common Stock (or such other securities which may be issuable upon the exercise
of the Rights) be issued in the name of and delivered to:
Please insert social security
or other identifying number: ____________________________
_______________________________________________________________________________
(Please print name)
_______________________________________________________________________________
_______________________________________________________________________________
(Please print address)
If such number of Rights shall not be all of the Rights evidenced by
this Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number: __________________________
_______________________________________________________________________________
(Please print name)
_______________________________________________________________________________
_______________________________________________________________________________
(Please print address)
Dated: ___________________, _______
Signature: ____________________________
(Sign exactly as your name
appears on the other side of
this Rights Certificate)
Signature Guarantee: ___________________
A-7
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ]
are not beneficially owned or being exercised by or on behalf of a Person who
is or was an Acquiring Person or an Adverse Person or an Affiliate or Associate
of any such Acquiring Person or Adverse Person (as such terms are defined in the
Rights 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 Rights Certificate from any Person who is, was or subsequently became
an Acquiring Person or an Adverse Person or an Affiliate or Associate of an
Acquiring Person or an Adverse Person.
Dated:_______________________, _____
Signature:______________________
(Sign exactly as your name appears
on the other side of this Rights
Certificate)
Signature Guarantee:_____________________
NOTICE
The signature to the foregoing Election to Purchase and related
Certificate must correspond to the name as written upon the face of this Rights
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 or by a
participant in the Securities Transfer Agents Medallion Program, the Stock
Exchange Medallion Program or the New York Stock Exchange Medallion Program.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Adverse Person or an Affiliate or
Associate thereof and, in the case of an exercise of less than all of the Rights
evidenced by this Rights Certificate, will affix a legend to that effect on any
Rights Certificates issued for the balance of such Rights in exchange for this
Rights Certificate.
A-8
EXHIBIT B
TO RIGHTS AGREEMENT
--------------------
SUMMARY OF
RIGHTS TO PURCHASE COMMON STOCK
On May 7, 1997, the Board of Directors of The BISYS Group, Inc. (the
"COMPANY") declared a dividend of one right ("RIGHT") for each outstanding
share of the Company's Common Stock, par value $.02 per share ("COMPANY
COMMON STOCK"), to stockholders of record at the close of business on May 16,
1997 (the "RECORD DATE") and for each share of Company Common Stock issued
(including shares distributed from the Company's treasury) by the Company
thereafter and prior to the Distribution Date (as defined below). Each Right
entitles the registered holder, subject to the terms of the Rights Agreement
(as defined below), to purchase from the Company one share of Company Common
Stock, at a purchase price of $175.00 per share, in cash (the "PURCHASE
PRICE"), subject to adjustment. The description and terms of the Rights are
set forth in a Rights Agreement (the "RIGHTS AGREEMENT") between the Company
and The Bank of New York, as Rights Agent.
Copies of the Rights Agreement have been filed with the Securities
and Exchange Commission as exhibits to a Registration Statement on Form 8-A
dated May 8, 1997 (the "FORM 8-A") and are publicly available. Copies of the
Rights Agreement are also available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to all the provisions of the Rights
Agreement including the definitions therein of certain terms, which Rights
Agreement is incorporated herein by reference.
DESCRIPTION OF THE RIGHTS
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights
certificates will be distributed. The Rights will separate from the Company
Common Stock and the "DISTRIBUTION DATE" will occur upon the earliest of (i)
10 business days following a public announcement (the date of such
announcement being the "STOCK ACQUISITION DATE") that (a) a person or group
of affiliated or associated persons (an "ACQUIRING PERSON") has acquired,
obtained the right to acquire, or otherwise obtained beneficial ownership of
15% or more of the then outstanding shares of Company Common Stock or (b) a
majority of the Continuing Directors (as defined in the Rights Agreement) of
the Company has, in accordance with the criteria set forth in the Rights
Agreement, declared a person who beneficially owns at least 10% of the then
outstanding shares of Company Common Stock to be an "ADVERSE PERSON," (ii) 10
business days (or such later date as may be determined by action of the Board
of Directors prior to such time as any person becomes an Acquiring Person)
following the commencement of a tender offer or exchange offer that would
result in a person or group beneficially owning 15% or more of the then
outstanding shares of Company Common Stock (other than a tender or exchange
offer for all outstanding shares of Company Common Stock at a price and on
terms that a majority of the Continuing Directors (as defined
B-1
in the Rights Agreement) of the Company determines to be fair to and
otherwise in the best interests of the Company and its stockholders), and
(iii) the date on which it is publicly announced that a person or group has
acquired beneficial ownership of 40% or more of the then outstanding shares
of Company Common Stock. Until the Distribution Date, (i) the Rights will be
evidenced by Company Common Stock certificates and will be transferred with
and only with such Company Common Stock certificates, (ii) new Company Common
Stock certificates issued after the Record Date (including shares distributed
from the Company's treasury) will contain a notation incorporating the Rights
Agreement by reference and (iii) the surrender for transfer of any
certificates evidencing outstanding Company Common Stock will also constitute
the transfer of the Rights associated with the Company Common Stock evidence
by such certificates.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on May 16, 2007 unless the Rights are
earlier redeemed or exchanged by the Company.
As soon as practicable after the Distribution Date, separate
Certificates evidencing the Rights ("RIGHTS CERTIFICATES") will be mailed to
holders of record of Company Common Stock as of the close of business on the
Distribution Date and, thereafter, the separate Rights Certificates alone
will represent the Rights.
In the event (a "FLIP-IN EVENT") that (i) a person becomes an
Acquiring Person (other than pursuant to a Flip-Over Event (as defined
below)), (ii) a majority of the Continuing Directors of the Company declares
a person to be an Adverse Person, (iii) the Company is the surviving
corporation in a merger with an Acquiring Person and shares of Company Common
Stock shall remain outstanding, (iv) an Acquiring Person or an Adverse Person
engages in one or more "self-dealing" transactions specified in the Rights
Agreement, or (v) during such time as there is an Acquiring Person or an
Adverse Person, an event occurs which results in such Acquiring Person's or
Adverse Person's ownership interest being increased by more than 1% (E.G., by
means of a reverse stock split or recapitalization), THEN, in each such case,
each holder of a Right will thereafter have the right to receive, upon
exercise, shares of Company Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to two
times the exercise price of the Right. The exercise price is the Purchase
Price multiplied by the number of shares of Company Common Stock issuable
upon exercise of a Right prior to the Flip-In Event. Notwithstanding the
foregoing, following the occurrence of any Flip-In Event all Rights that are,
or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or Adverse Person (or by certain
related parties) will be null and void.
For example, at an exercise price of $100.00 per Right, each Right
not owned by an Acquiring Person or an Adverse Person (or by certain related
parties) following a Flip-In Event would entitle its holder to purchase
$200.00 worth of Company Common Stock (or other consideration, as noted
above), based upon its then current market price (determined based upon
the market price of the Company Common Stock), for $100.00. Assuming that the
Company Common Stock had a current market price of $50.00 per share at such
time, the holder of each valid Right would be entitled to purchase 4 shares
of Company Common Stock for $100.00.
B-2
In the event (a "FLIP-OVER EVENT") that, at any time following the
Stock Acquisition Date, (i) the Company is acquired in a merger or other
business combination transaction and the Company is not the surviving
corporation, (ii) any person consolidates or merges with the Company and all
or part of the Company Common Stock is converted or exchanged for securities,
cash or property of any other Person, or (iii) 50% or more of the Company's
assets or earning power is sold or transferred, THEN, in each such case, each
holder of a Right (except Rights which previously have been voided as
described above) shall thereafter have the right to receive, upon exercise,
common stock of the Acquiring Person or Adverse Person having a value equal
to two times the exercise price of the Right.
The Purchase Price payable, and the number the shares of Company
Common Stock 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 Company Common
Stock, (ii) if holders of the Company Common Stock are granted certain rights
or warrants to subscribe for Company Common Stock or convertible securities
at less than the current market price of the Company Common Stock, or (iii)
upon the distribution to the holders of the Company Common Stock of evidences
of indebtedness, cash or assets (excluding regular quarterly cash dividends)
or of subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company is not required to issue fractional shares of Company
Common Stock. In lieu thereof, an adjustment in cash may be made based on the
market price of the Company Common Stock prior to the date of exercise.
At any time prior to the Distribution Date, a majority of the
Continuing Directors of the Company may redeem the Rights in whole, but not
in part, at a price of $.0025 per Right (the "REDEMPTION PRICE"), subject to
adjustment in certain events, payable, at the election of such majority of
the Continuing Directors, in cash, shares of Company Common Stock or such
other form of consideration as the Continuing Directors may determine.
Immediately upon effectiveness of the action of a majority of Continuing
Directors ordering the redemption of the Rights, the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption
Price.
At any time prior to the Distribution Date, the Company may exchange
the Rights (other than Rights owned by an Acquiring Person or an Adverse
Person, or an affiliate or an associate of an Acquiring Person or an Adverse
Person, which will have become void), in whole or in part, for shares of
Company Common Stock at an exchange ratio determined as provided in the
Rights Agreement.
Until a Right is exercised, the holder thereof, as such will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends. Following exercise, the holder's
rights will be determined by the type of consideration received upon the
exercise. Although the distribution of the Rights should not be taxable to
stockholders or to the Company, stockholders may, depending upon the
circumstances,
B-3
recognize taxable income in the event that the Rights become exercisable for
shares of Company Common Stock (or other consideration) or are exchanged as
provided in the preceding paragraph.
The provisions of the Rights Agreement may be amended without the
approval of the holders of Company Common Stock at any time prior to the
Distribution Date. After the Distribution Date, the provisions of the Rights
Agreement may be amended in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person or Adverse
Person), or to shorten or lengthen any time period under the Rights
Agreement; PROVIDED, HOWEVER, that no amendment to adjust the time period
governing redemption shall be made at such time as the Rights are not
redeemable.
B-4
