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RIGHTS AGREEMENT
Dated as of November 6, 1998
between
UTILX CORPORATION
and
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Rights Agent
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CONTENTS
SECTION 1. CERTAIN DEFINITIONS........................................ 1
SECTION 2. APPOINTMENT OF RIGHTS AGENT................................ 7
SECTION 3. ISSUANCE OF RIGHTS AND RIGHT CERTIFICATES.................. 8
SECTION 4. FORM OF RIGHT CERTIFICATES................................. 9
SECTION 5. EXECUTION, COUNTERSIGNATURE AND REGISTRATION............... 10
SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; LOST, STOLEN, DESTROYED OR MUTILATED RIGHT
CERTIFICATES; UNCERTIFICATED RIGHTS........................ 10
SECTION 7. EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS.............. 11
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES......... 13
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES........... 14
SECTION 10. PREFERRED SHARES RECORD DATE............................... 15
SECTION 11. ADJUSTMENTS IN RIGHTS AFTER THERE IS AN ACQUIRING PERSON;
EXCHANGE OF RIGHTS FOR SHARES; BUSINESS COMBINATIONS....... 15
SECTION 12. CERTAIN ADJUSTMENTS........................................ 19
SECTION 13. CERTIFICATE OF ADJUSTMENT.................................. 20
SECTION 14. ADDITIONAL COVENANTS....................................... 21
SECTION 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.................... 21
SECTION 16. RIGHTS OF ACTION........................................... 22
SECTION 17. AGREEMENT OF RIGHT HOLDERS................................. 23
SECTION 18. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.......... 23
SECTION 19. CONCERNING THE RIGHTS AGENT................................ 23
RIGHTS AGREEMENT PAGE i
SECTION 20. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.. 24
SECTION 21. DUTIES OF RIGHTS AGENT..................................... 24
SECTION 22. CHANGE OF RIGHTS AGENT..................................... 27
SECTION 23. ISSUANCE OF ADDITIONAL RIGHTS AND RIGHT CERTIFICATES....... 28
SECTION 24. REDEMPTION AND TERMINATION................................. 28
SECTION 25. NOTICES.................................................... 29
SECTION 26. SUPPLEMENTS AND AMENDMENTS................................. 29
SECTION 27. SUCCESSORS................................................. 30
SECTION 28. BENEFITS OF THIS RIGHTS AGREEMENT; DETERMINATIONS AND
ACTIONS BY THE COMPANY'S BOARD OF DIRECTORS................ 30
SECTION 29. SEVERABILITY............................................... 31
SECTION 30. GOVERNING LAW.............................................. 31
SECTION 31. COUNTERPARTS; EFFECTIVENESS................................ 31
SECTION 32. DESCRIPTIVE HEADINGS....................................... 31
RIGHTS AGREEMENT PAGE ii
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of November 6, 1998 between UTILX CORPORATION, a
Delaware corporation (the "Company"), and AMERICAN STOCK TRANSFER & TRUST
COMPANY, as Rights Agent (the "Rights Agent").
The Company's Board of Directors has authorized and declared a dividend of
one Right (as hereinafter defined) for each share of Common Stock, par value
$.01 per share, of the Company (the "Common Stock") outstanding at the Close of
Business (as hereinafter defined) on November 9, 1998 (the "Record Date"). The
Board of Directors has further authorized the issuance of one Right (as such
number may be hereinafter adjusted pursuant to the provisions of this Rights
Agreement) with respect to each share of Common Stock that shall become
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date and the Expiration Date (as such terms are hereinafter
defined); PROVIDED, HOWEVER, that the Company may issue Rights with respect to
shares of Common Stock that shall become outstanding after the Distribution Date
and prior to the earlier of the Redemption Date and the Expiration Date in
accordance with the provisions of Section 23. Each Right shall initially
represent the right to purchase one one-hundredth (1/100) of a share of Series D
Preferred Shares, par value $.01 per share, of the Company (the "Preferred
Shares"), having the powers, rights and preferences set forth in the Certificate
of Designation (as hereinafter defined) attached as Exhibit A.
Accordingly, in consideration of the premises and the mutual agreements set
forth in this Rights Agreement, the Company and the Rights Agent hereby agree as
follows:
SECTION 1. CERTAIN DEFINITIONS
For purposes of this Rights Agreement, the following terms have the
meanings indicated:
"ACQUIRING PERSON" shall mean any Person who or which, alone or together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of more than 15% of the Common Shares then outstanding, but shall not include
(a) the Company, any Subsidiary of the Company, any employee benefit or
compensation plan of the Company or of any of its Subsidiaries, or any Person
holding Common Shares for or pursuant to the terms of any such employee benefit
or compensation plan or (b) any Person who has become and is the Beneficial
Owner of more than 15% of the Common Shares outstanding at the time solely as
the result of (i) a change in the aggregate number of Common Shares outstanding
since the last date on which such Person acquired Beneficial Ownership of any
Common Shares, (ii) the acquisition by such Person or one or more of its
Affiliates or Associates of Beneficial Ownership of additional Common Shares if
such acquisition was made in the good faith belief that such acquisition would
not (A) cause the Beneficial Ownership by such Person, together with its
Affiliates and Associates, to exceed 15% of the Common Shares outstanding at the
time of such acquisition and such good faith belief was based on the good faith
reliance on information
RIGHTS AGREEMENT PAGE 1
contained in publicly filed reports or documents of the Company that are
inaccurate or out-of-date or (B) otherwise cause a Distribution Date or the
adjustment provided for in Section 11(a) to occur or (iii) the acquisition by
such Person or one or more of its Affiliates or Associates of Beneficial
Ownership of additional Common Shares if the Board of Directors of the
Company determines that such acquisition was made in good faith without the
knowledge by such Person or Affiliates or Associates that such Person would
thereby become an Acquiring Person (which determination of the Board of
Directors of the Company shall be conclusive and binding on such Person, the
Rights Agent, the holders of the Rights and all other Persons).
Notwithstanding clause (b)(ii) or (b)(iii) of the prior sentence, if any
Person that is not an Acquiring Person due to such clause (b)(ii) or (b)(iii)
does not reduce its percentage of Beneficial Ownership of Common Shares to
15% or less by the Close of business on the tenth calendar day after notice
from the Company (the date of notice being the first day) that such Person's
Beneficial Ownership of Common Shares would make it an Acquiring Person, such
Person shall, at the end of such ten calendar day period, become an Acquiring
Person (and such clause (b)(ii) or (b)(iii) shall no longer apply to such
Person). For purposes of this definition, the determination whether any
Person acted in "good faith" shall be conclusively determined by the Board of
Directors of the Company.
"AFFILIATE" and "ASSOCIATE," when used with reference to any Person, shall
have the respective meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act (as hereinafter defined), as in
effect on the date of this Rights Agreement.
A Person shall be deemed to be the "BENEFICIAL OWNER" of, to "BENEFICIALLY
OWN," and to have "BENEFICIAL OWNERSHIP" of, any securities:
(a) that such Person or any of such Person's Affiliates or Associates
is deemed to "beneficially own" within the meaning of Rule 13d-3 of the General
Rules and Regulations under the Exchange Act, as in effect on the date of this
Rights Agreement;
(b) that such Person or any of such Person's Affiliates or Associates
have (i) the right to acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement, arrangement or
understanding (written or oral), or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or options, or
otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed to be the
Beneficial Owner of, to beneficially own, or to have Beneficial Ownership of,
any securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange thereunder or
(ii) the right to vote pursuant to any agreement, arrangement or understanding
(written or oral); PROVIDED, HOWEVER, that a Person shall not be deemed to be
the Beneficial Owner of, to beneficially own, or to have Beneficial Ownership
of, any security if (A) the agreement, arrangement or understanding (written or
oral) to vote such security arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations under
the Exchange Act and (B) the beneficial ownership of such security is not
RIGHTS AGREEMENT PAGE 2
also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(c) that are beneficially owned, directly or indirectly, by any other
Person with which such Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding (written or oral) for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as
described in clause (b)(ii) of this definition) or disposing of any securities
of the Company.
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 with the Company.
Notwithstanding anything in this definition to the contrary, the phrase
"then outstanding," when used with reference to a Person's Beneficial Ownership
of securities of the Company, shall mean the number of such securities then
issued and outstanding, together with the number of such securities not then
actually issued and outstanding which such Person would be deemed to own
beneficially hereunder.
"BOOK VALUE," when used with reference to Common Shares issued by any
Person, shall mean the amount of such Person's equity applicable to each Common
Share, determined (a) in accordance with generally accepted accounting
principles in effect on the date as of which such Book Value is to be
determined, (b) using all the consolidated assets and all the consolidated
liabilities of such Person on the date as of which such Book Value is to be
determined, except that no value shall be included in such assets for goodwill
arising from consummation of a business combination, and (c) after giving effect
to (i) the exercise of all rights, options and warrants to purchase such Common
Shares (other than the Rights), and the conversion of all securities convertible
into such Common Shares, at an exercise or conversion price per Common Share
that is less than such Book Value before the exercise or conversion (whether or
not exercisability or convertibility is conditioned upon occurrence of a future
event), (ii) all dividends and other distributions on the capital stock of such
Person declared prior to the date as of which such Book Value is to be
determined and to be paid or made after such date, and (iii) any other
agreement, arrangement or understanding (written or oral), transaction or other
action prior to the date as of which such Book Value is to be determined that
would have the effect of thereafter reducing such Book Value.
"BUSINESS COMBINATION" shall have the meaning set forth in Section
11(c)(i).
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in New York, New York, or Kent, Washington, are
authorized or obligated by law or executive order to close.
"CERTIFICATE OF DESIGNATION" shall mean the Certificate of Designation of
Series D Participating Cumulative Preferred Stock setting forth the powers,
preferences, rights, qualifications, limitations and restrictions of such series
of Preferred Stock of the Company, a
RIGHTS AGREEMENT PAGE 3
copy of which is attached to this Rights Agreement as Exhibit A.
"CLOSE OF BUSINESS" on any given date shall mean 5 p.m., Eastern time, on
such date; PROVIDED, HOWEVER, that if such date is not a Business Day, "Close of
Business" shall mean 5 p.m., Eastern time, on the next succeeding Business Day.
"COMMON SHARES," when used with reference to the Company prior to a
Business Combination, shall mean the shares of Common Stock of the Company or
any other shares of capital stock of the Company into which the Common Stock
shall be reclassified or changed. "Common Shares," when used with reference to
any Person (other than the Company prior to a Business Combination), shall mean
shares of capital stock of such Person (if such Person is a corporation) of any
class or series, or units of equity interests in such Person (if such Person is
not a corporation) of any class or series, the terms of which (i) do not limit
(as a maximum amount and not merely in proportional terms) the amount of
dividends or income payable or distributable on such class or series or the
amount of assets distributable on such class or series upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person and (ii) do
not provide that such class or series is subject to redemption at the option of
such Person, or any shares of capital stock or units of equity interests into
which the foregoing shall be reclassified or changed; PROVIDED, HOWEVER, that,
if at any time there shall be more than one such class or series of capital
stock or equity interests of such Person, "Common Shares" of such Person shall
include all such classes and series substantially in the proportion of the total
number of shares or other units of each such class or series outstanding at such
time.
"COMMON STOCK" shall have the meaning set forth in the second paragraph of
this Rights Agreement.
"COMPANY" shall have the meaning set forth in the introductory paragraph of
this Rights Agreement; PROVIDED, HOWEVER, that if there is a Business
Combination, "Company" shall have the meaning set forth in Section 11(c)(iii).
"CONTROL" with respect to any Person shall mean the power to direct the
management and policies of such Person, directly or indirectly, by or through
stock ownership, agency or otherwise, or pursuant to or in connection with an
agreement, arrangement or understanding (written or oral) with one or more other
Persons by or through stock ownership, agency or otherwise. The terms
"controlling" and "controlled" shall have meanings correlative to the foregoing.
"DISTRIBUTION DATE" shall have the meaning set forth in Section 3(b).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as in effect
on the date in question, unless otherwise specifically provided in this Rights
Agreement.
"EXCHANGE CONSIDERATION" shall have the meaning set forth in Section
11(b)(i).
"EXPIRATION DATE" shall have the meaning set forth in Section 7(a).
RIGHTS AGREEMENT PAGE 4
"FORMULA NUMBER" shall have the meaning set forth in the Certificate of
Designation.
"MAJOR PART," when used with reference to the assets of the Company and its
Subsidiaries as of any date, shall mean assets (a) having a fair market value
aggregating 50% or more of the total fair market value of all the assets of the
Company and its Subsidiaries (taken as a whole) as of the date in question, (b)
accounting for 50% or more of the total value (net of depreciation and
amortization) of all the assets of the Company and its Subsidiaries (taken as a
whole) as would be shown on a consolidated or combined balance sheet of the
Company and its Subsidiaries as of the date in question, prepared in accordance
with generally accepted accounting principles then in effect, or (c) accounting
for 50% or more of the total amount of net income or revenues of the Company and
its Subsidiaries (taken as a whole) as would be shown on or derived from a
consolidated or combined statement of income of the Company and its Subsidiaries
for the period of 12 months ending on the last day of the Company's monthly
accounting period next preceding the date in question, prepared in accordance
with generally accepted accounting principles then in effect.
"MARKET VALUE," when used with reference to any securities on any date,
shall mean the average of the daily per share closing prices of such securities
for the period that is the shorter of (a) 30 consecutive Trading Days (as
hereinafter defined) immediately prior to the date in question and (b) the
number of consecutive Trading Days beginning on the Trading Day immediately
after the date of the first public announcement of the event requiring a
determination of the Market Value and ending on the Trading Day immediately
prior to the record date of such event; PROVIDED, HOWEVER, that, in the event
that the Market Value of such securities is to be determined in whole or in part
during a period following the announcement by the issuer of such securities of
any action of the type described in Section 12(a) that would require an
adjustment thereunder, then, and in each such case, the Market Value of such
securities shall be appropriately adjusted to reflect the effect of such action
on the market price of such securities. The closing price for each Trading Day
shall be the closing price quoted on the composite tape for securities listed on
the New York Stock Exchange or, if such securities are not quoted on such
composite tape or if such securities are not listed on such exchange, on the
principal United States securities exchange registered under the Exchange Act
(or any recognized foreign stock exchange) on which such securities are listed,
or if such securities are not listed on any such exchange, the closing price
quoted on the Nasdaq Stock Market or, if such securities are not so quoted, the
average of the closing bid and asked quotations with respect to a share of such
securities on the Nasdaq Stock Market or such other system then in use or, if no
such quotations are available, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in such securities
selected by the Company's Board of Directors. If on any such Trading Day no
market maker is making a market in such securities, the closing price of such
securities on such Trading Day shall be deemed to be the fair value of such
securities as determined in good faith by the Company's Board of Directors
(whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent, the holders of Rights and all
other Persons); PROVIDED, HOWEVER, that for the purpose of determining the
closing price of the Preferred Shares for any Trading Day on which there is no
public market for the Preferred Shares or there is no such market maker for the
Preferred Shares, the closing price on such Trading Day
RIGHTS AGREEMENT PAGE 5
shall be deemed to be the Formula Number times the closing price of the
Common Stock on such Trading Day.
"PERSON" shall mean an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity and shall include any successor (by merger or
otherwise) of such entity.
"PREFERRED SHARES" shall have the meaning set forth in the second paragraph
of this Rights Agreement. Any reference in this Rights Agreement to Preferred
Shares shall be deemed to include any authorized fraction of a Preferred Share,
unless the context otherwise requires.
"PRINCIPAL PARTY" shall mean the Surviving Person (as hereinafter defined)
in a Business Combination; PROVIDED, HOWEVER, that if such Surviving Person is a
direct or indirect Subsidiary of any other Person, "Principal Party" shall mean
the Person which is the ultimate parent of such Surviving Person and which is
not itself a Subsidiary of another Person. In the event ultimate control of
such Surviving Person is shared by two or more Persons, "Principal Party" shall
mean that Person which is immediately controlled by such two or more Persons.
"PURCHASE PRICE" with respect to each Right shall mean $8.00, subject to
adjustment as provided herein, and shall be payable in lawful money of the
United States of America. All references herein to the Purchase Price shall
mean the Purchase Price as in effect at the time in question.
"RECORD DATE" shall have the meaning set forth in the second paragraph of
this Rights Agreement.
"REDEMPTION DATE" shall have the meaning set forth in Section 24(a).
"REDEMPTION PRICE" with respect to each Right shall mean $.01, as such
amount may from time to time be adjusted in accordance with Section 12. All
references in this Rights Agreement to the Redemption Price shall mean the
Redemption Price as in effect at the time in question.
"REGISTERED COMMON SHARES" shall mean Common Shares that are, as of the
date of consummation of a Business Combination, and have continuously been for
the 12 months immediately preceding such date, registered under Section 12 of
the Exchange Act.
"RIGHT" shall mean the right to purchase Preferred Shares (or other
securities) as provided in this Rights Agreement.
"RIGHT CERTIFICATE" shall mean a certificate evidencing a Right in
substantially the form attached to this Rights Agreement as Exhibit B.
"SECURITIES ACT" shall mean the Securities Act of 1933, as in effect on the
date in question, unless otherwise specifically provided in this Rights
Agreement.
RIGHTS AGREEMENT PAGE 6
"SHARES ACQUISITION DATE" shall mean the first date of public announcement
by the Company or an Acquiring Person that an Acquiring Person has become such.
"SUBSIDIARY" shall mean a Person, at least a majority of the total
outstanding voting power (being the power under ordinary circumstances and not
merely upon the happening of a contingency) to vote in the election of directors
of such Person (if such Person is a corporation) or to participate in the
management and control of such Person (if such Person is not a corporation)) of
which is owned, directly or indirectly, by another Person or by one or more
other subsidiaries of such other Person or by such other Person or by one or
more other subsidiaries of such other Person.
"SUMMARY OF RIGHTS" shall mean the Summary of Rights to Purchase Preferred
Shares in substantially the form of Exhibit C.
"SURVIVING PERSON" shall mean (a) the Person which is the continuing or
surviving Person in a consolidation or merger specified in Section 11(c)(i)(A)
or 11(c)(i)(B) or (b) the Person to which the Major Part of the assets of the
Company and its Subsidiaries is sold, leased, exchanged or otherwise transferred
or disposed of in a transaction specified in Section 11(c)(i)(C); PROVIDED,
HOWEVER, that if the Major Part of the assets of the Company and its
Subsidiaries is sold, leased, exchanged or otherwise transferred or disposed of
in one or more related transactions specified in Section 11(c)(i)(C) to more
than one Person, the "Surviving Person" in such case shall mean the Person that
acquired assets of the Company and/or its Subsidiaries with the greatest fair
market value in such transaction or transactions.
"TRADING DAY" shall mean a day on which the principal national securities
exchange (or principal recognized foreign stock exchange, as the case may be) on
which any securities or Rights, as the case may be, are listed or admitted to
trading is open for the transaction of business or, if the securities or Rights
in question are not listed or admitted to trading on any national securities
exchange (or recognized foreign stock exchange, as the case may be), a Business
Day.
SECTION 2. APPOINTMENT OF RIGHTS AGENT
The Company hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who prior to the Distribution Date shall
also be the holders of the Common Stock) in accordance with the terms and
conditions of this Rights Agreement, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint one or more co-Rights
Agents as it may deem necessary or desirable (the term "Rights Agent" being used
in this Rights Agreement to refer, collectively, to the Rights Agent together
with any such co-Rights Agents). In the event the Company appoints one or more
co-Rights Agents, the respective duties of the Rights Agent and any co-Rights
Agents shall be as the Company shall determine.
RIGHTS AGREEMENT PAGE 7
SECTION 3. ISSUANCE OF RIGHTS AND RIGHT CERTIFICATES
(a) One Right shall be associated with each share of Common Stock
outstanding on the Record Date, each additional share of Common Stock that shall
become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date and the Expiration Date and each additional share of
Common Stock with which Rights are issued after the Distribution Date but prior
to the earlier of the Redemption Date and the Expiration Date as provided in
Section 23; PROVIDED, HOWEVER, that if the number of outstanding Rights are
combined into a smaller number of outstanding Rights pursuant to Section 12(a),
the appropriate fractional Right determined pursuant to such Section shall
thereafter be associated with each such share of Common Stock.
(b) Until the earlier of (i) the Close of Business on the tenth Business
Day after the Shares Acquisition Date and (ii) the Close of Business on such
date, if any, as may be designated by the Company's Board of Directors following
the commencement of, or first public disclosure of an intent to commence, a
tender or exchange offer by any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of any of its
Subsidiaries, or any Person holding Common Stock for or pursuant to the terms of
any such employee benefit plan) for outstanding Common Stock, if upon
consummation of such tender or exchange offer such Person could be the
Beneficial Owner of 15% or more of the outstanding Common Stock (the Close of
Business on the earlier of such dates being the "Distribution Date"), (x) the
Rights will be evidenced by the certificates for Common Stock registered in the
names of the holders thereof and not by separate Right Certificates, (y) the
Rights, including the right to receive Right Certificates, will be transferable
only in connection with the transfer of Common Stock, and (z) the Company will
notify the Rights Agent as promptly as practicable that such Distribution Date
has occurred. As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign, and the Company
will send or cause to be sent (and the Rights Agent, if requested, will send) by
first-class, postage-prepaid mail to each record holder of Common Stock as of
the Distribution Date, at the address of such holder shown on the records of the
Company, a Right Certificate evidencing one whole Right for each share of Common
Stock (or for the number of shares of Common Stock with which one whole Right is
then associated if the number of Rights per share of Common Stock held by such
record holder has been adjusted in accordance with the proviso in Section 3(a)).
If the number of Rights associated with each share of Common Stock has been
adjusted in accordance with the proviso in Section 3(a), at the time of
distributing the Right Certificates the Company may make any necessary and
appropriate rounding adjustments so that Right Certificates representing only
whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Right in accordance with Section 15(a). The Company will notify the
Rights Agent as promptly as practicable of any such adjustments. As of and
after the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(c) As soon as practicable, and in any event no later than 30 days,
after the Record Date, the Company will send a copy of a Summary of Rights, by
first-class, postage-prepaid mail, to each record holder of Common Stock as of
the close of business on the Record Date
RIGHTS AGREEMENT PAGE 8
at the address of such holder shown on the records of the Company. With
respect to certificates for Common Stock outstanding as of the Record Date,
until earliest of the Distribution Date, the Redemption Date and the
Expiration Date, (i) the Rights will be evidenced by such certificates
registered in the names of the holders thereof, together with a copy of the
Summary of Rights attached thereto and the registered holders of the Common
Stock shall also be the registered holders of the associated Rights, and (ii)
the surrender for transfer of any such certificate, even without a copy of
the Summary of Rights attached thereto, shall also constitute the transfer of
the Rights associated with the Common Stock represented thereby.
(d) Certificates representing Common Stock issued after the Record Date
(including, without limitation, upon transfer or exchange of outstanding Common
Stock), but prior to the earliest of the Distribution Date, the Redemption Date
and the Expiration Date, shall have printed on, written on or otherwise affixed
to them the following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in the Rights Agreement
dated as of November 6, 1998 as it may be amended from time to
time (the "Rights Agreement"), between UTILX Corporation
("UTILX") and American Stock Transfer & Trust Company, as Rights
Agent (or between UTILX and any successor Rights Agent under 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 UTILX. 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 Rights Agent will mail to the
holder of this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor. Rights
beneficially owned by Acquiring Persons or their Affiliates or
Associates (as such terms are defined in the Rights Agreement)
and by any subsequent holder of such Rights are null and void and
nontransferable.
Notwithstanding the requirements of this paragraph (d), neither the omission of
this legend nor the inclusion of a legend that refers to a rights agreement
other than the Rights Agreement shall not affect the enforceability of any part
of this Rights Agreement or the rights of any holder of Rights.
SECTION 4. FORM OF RIGHT CERTIFICATES
The Right Certificates (and the form of election to purchase and form of
assignment to be printed on the reverse side thereof) shall be in substantially
the form set forth as Exhibit B and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Rights Agreement, or as may be required to comply with any applicable law
or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Rights may from time to time be
listed, or to
RIGHTS AGREEMENT PAGE 9
conform to usage. Subject to the provisions of Sections 7, 11 and 23, the
Right Certificates, whenever issued, shall be dated as of the Distribution
Date, and on their face shall entitle the holders thereof to purchase such
number of Preferred Shares as shall be set forth therein for the Purchase
Price set forth therein, subject to adjustment from time to time as herein
provided.
SECTION 5. EXECUTION, COUNTERSIGNATURE AND REGISTRATION
(a) The Right Certificates shall be executed on behalf of the Company
by the Chairman of the Board, the Chief Executive Officer, the President, the
Chief Financial Officer, the Treasurer or a Vice President (whether preceded
by any additional title) of the Company, either manually or by facsimile
signature, and shall have affixed thereon the Company's seal or a facsimile
thereof, which shall be attested by the Secretary, an Assistant Secretary or
a Vice President (whether preceded by any additional title, provided that
such Vice President shall not have also executed the Right Certificates) of
the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent and shall
not be valid for any purpose unless so countersigned. In case any officer of
the Company who shall have signed any of the Right Certificates shall cease
to be such an officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates may
nevertheless be countersigned by the Rights Agent and issued and delivered by
the Company with the same force and effect as though the person who signed
such Right Certificates had not ceased to be such an officer of the Company;
and any Right Certificate may be signed on behalf of the Company by any
person who, at the actual date of execution of such Right Certificate, shall
be a proper officer of the Company to sign such Right Certificate, although
at the date of execution of this Rights Agreement any such person was not
such an officer of the Company.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office in New York, New York, books for
registration and transfer of the Right Certificates issued under this Rights
Agreement. Such books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights evidenced by each Right
Certificate, the certificate number of each Right Certificate and the date of
each Right Certificate.
SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; LOST, STOLEN, DESTROYED OR MUTILATED RIGHT
CERTIFICATES; UNCERTIFICATED RIGHTS
(a) Subject to the provisions of Sections 7(e) and 15, at any time
after the Distribution Date, and at or prior to the Close of Business on the
earlier of the Redemption Date and the Expiration Date, any Right Certificate
or Right Certificates (other than Right Certificates representing Rights that
have become void pursuant to Section 7(e) or that have been exchanged
pursuant to Section 11(b)) may be transferred, split up, combined or
exchanged for another Right Certificate or Right Certificates entitling the
registered holder to purchase a like number of one one-hundredths of a
Preferred Share as the Right Certificate or
RIGHTS AGREEMENT PAGE 10
Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any
Right Certificate or Right Certificates shall make such request in writing
delivered to the Rights Agent and shall surrender the Right Certificate or
Right Certificates to be transferred, split up, combined or exchanged at the
principal office of the Rights Agent; PROVIDED, HOWEVER, that neither the
Rights Agent nor the Company shall be obligated to take any action whatsoever
with respect to the transfer of any Right Certificate surrendered for
transfer until the registered holder shall have completed and signed the
certification contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company shall reasonably request. Thereupon the
Rights Agent shall, subject to the provisions of Sections 7(e) and 15,
countersign and deliver to the Person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer, split-up, combination or
exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a valid Right Certificate, and, in case of such loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will make a new
Right Certificate of like tenor and deliver such new Right Certificate to the
Rights Agent for delivery to the registered holder in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
(c) Notwithstanding any other provision of this Rights Agreement to the
contrary, the Company and the Rights Agent may amend this Rights Agreement to
provide for uncertificated Rights in addition to or in place of Rights evidenced
by Right Certificates.
SECTION 7. EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS
(a) Subject to Section 7(e) and except as otherwise provided in this
Rights Agreement (including Section 11), each Right shall entitle the registered
holder thereof, upon exercise thereof as provided in this Rights Agreement, to
purchase for the Purchase Price, at any time after the Distribution Date and at
or prior to the earlier of (i) the Close of Business on the 10th anniversary of
the date of this Rights Agreement (the Close of Business on such date being the
"Expiration Date") and (ii) the Redemption Date, one one-hundredth (1/100) of a
Preferred Share, subject to adjustment from time to time as provided in Sections
11 and l2.
(b) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided in this Rights
Agreement) in whole or in part at any time after the Distribution Date, upon
surrender of the Right Certificate with the form of election to purchase on
the reverse side thereof duly executed, to the Rights Agent at the principal
office of the Rights Agent in New York, New York, together with payment of
the Purchase Price for each one one-hundredth (1/100) of a Preferred Share as
to which the Rights
RIGHTS AGREEMENT PAGE 11
are exercised, at or prior to the earliest of (i) the Expiration Date, (ii)
the Redemption Date, and (iii) the time at which such Rights are exchanged as
provided in Section 11(b).
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the Preferred Shares to be purchased,
together with an amount equal to any applicable transfer tax, by certified
check, cashier's check or money order payable to the order of the Company,
the Rights Agent shall thereupon (i) either (A) promptly requisition from any
transfer agent of the Preferred Shares (or make available, if the Rights
Agent is the transfer agent) certificates for the number of Preferred Shares
to be purchased, and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests, or (B) if the Company shall have
elected to deposit the Preferred Shares with a depositary agent under a
depositary arrangement, promptly requisition from the depositary agent
depositary receipts representing the number of one one-hundredths of a
Preferred Share to be purchased (in which case certificates for the Preferred
Shares to be represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company will direct the depositary
agent to comply with all such requests, (ii) when appropriate, promptly
requisition from the Company the amount of cash to be paid in lieu of the
issuance of fractional shares in accordance with Section 15, (iii) promptly
after receipt of such certificates or depositary receipts, cause the same to
be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, and (iv) when appropriate, after receipt, promptly deliver such cash
to or upon the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise fewer than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent and delivered to the registered holder of such
Right Certificate or to his or her duly authorized assigns, subject to the
provisions of Section 15.
(e) Notwithstanding anything in this Rights Agreement to the
contrary, if the Rights are at any time beneficially owned by (i) an
Acquiring Person or an Affiliate or Associate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Persons
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing arrangement, arrangement or understanding
regarding the transferred rights or (B) a transfer which the Board of
Directors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), such Rights shall be null and void and nontransferable and no
holder of any such Right (including any purported transferee or subsequent
holder) shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Rights Agreement or otherwise. No Right
Certificate shall be
RIGHTS AGREEMENT PAGE 12
issued at any time upon the transfer of any Rights to an Acquiring Person
whose Rights would be void pursuant to the preceding sentence or any
Associate or Affiliate thereof or to any nominee of such Acquiring Person,
Associate or Affiliate; and any Right Certificate delivered to the Rights
Agent for transfer to an Acquiring Person whose Rights would be void pursuant
to the preceding sentence shall be canceled. The Company shall use all
reasonable efforts to ensure that the provisions of this Section 7(e) are
complied with, but shall have no liability to any holder of any Right
Certificate or any other Person as a result of its failure to make any
determinations with respect to an Acquiring Xxxxx or its Affiliate or
Associate, or any transferee thereof, hereunder.
(f) Notwithstanding anything in this Rights Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of any Right Certificates upon the
occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the certificate contained
in the form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
(g) The Company may temporarily suspend, for a period of time not to
exceed 90 calendar days after the Distribution Date, the exercisability of the
Rights in order to prepare and file a registration statement under the
Securities Act, on an appropriate form, with respect to the Preferred Shares
purchasable upon exercise of the Rights and permit such registration statement
to become effective; PROVIDED, HOWEVER, that no such suspension shall remain
effective after, and the Rights shall without any further action by the Company
or any other Person become exercisable immediately upon, the effectiveness of
such registration statement. Upon any such suspension, the Company shall issue
a public announcement stating that the exercisability of the Rights has been
temporarily suspended and shall issue a further public announcement at such time
as the suspension is no longer in effect. Notwithstanding any provision in this
Rights Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction if the requisite qualification under the blue sky or securities
laws of such jurisdiction shall not have been obtained or the exercise of the
Rights shall not be permitted under applicable law.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES
All Right Certificates surrendered or presented for the purpose of
exercise, transfer, split-up, combination or exchange shall, and any Right
Certificate surrendered or presented for any purpose that represents Rights that
have become null and void and nontransferable pursuant to Section 7(e) shall, if
surrendered or presented to the Company or to any of its agents, be delivered to
the Rights Agent for cancellation or in canceled form, or, if surrendered or
presented to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
this Rights Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so
RIGHTS AGREEMENT PAGE 13
cancel and retire, any Right Certificate purchased or acquired by the
Company. The Rights Agent shall deliver all canceled Right Certificates to
the Company, or shall, at the Company's written request, destroy such
canceled Right Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES
(a) The Company shall cause to be reserved and kept available out of
its authorized and unissued Preferred Shares or any authorized and issued
Preferred Shares held in its treasury, free from preemptive rights or any
right of first refusal, a number of Preferred Shares sufficient to permit the
exercise in full of all outstanding Rights.
(b) In the event that there shall not be sufficient Preferred Shares
authorized but unissued to permit the exercise or exchange of Rights in
accordance with Section 11, the Company shall take all such action as may be
necessary to authorize additional Preferred Shares for issuance upon the
exercise or exchange of Rights pursuant to Section 11; PROVIDED, HOWEVER, that
if the Company is unable to cause the authorization of additional Preferred
Shares, then the company shall, or if action by the Company's stockholders is
necessary to cause such authorization in lieu of seeking any such authorization,
the Company may, to the extent necessary and permitted by applicable law and any
agreements or instruments in effect prior to the Distribution Date to which it
is a party, (i) upon surrender of a Right, pay cash equal to the Purchase Price
in lieu of issuing Preferred Shares and requiring payment therefor, (ii) upon
due exercise of a Right and payment of the Purchase Price for each Preferred
Share as to which such Right is exercised, issue equity securities having a
value equal to the value of the Preferred Shares that otherwise would have been
issuable pursuant to Section 11, which value shall be determined by a nationally
recognized investment banking firm selected by the Board of Directors of the
Company, or (iii) upon due exercise of a Right and payment of the Purchase Price
for each Preferred Share as to which such Right is exercised, distribute a
combination of Preferred Shares, cash and/or other equity and/or debt securities
having an aggregate value equal to the value of the Preferred Shares that
otherwise would have been issuable pursuant to Section 11, which value shall be
determined by a nationally recognized investment banking firm selected by the
Board of Directors of the Company. To the extent that any legal or contractual
restrictions (pursuant to agreements or instruments in effect prior to the
Distribution Date to which it is party) prevent the Company from paying the full
amount payable in accordance with the foregoing sentence, the company shall pay
to holders of the Rights as to which such payments are being made all amounts
that are not then restricted on a pro rata basis as such payments become
permissible under such legal or contractual restrictions until such payments
have been paid in full.
(c) The Company shall take all such action as may be necessary to
ensure that all Preferred Shares delivered upon exercise or exchange of
Rights shall, at the time of delivery of the certificates for such Preferred
Shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
RIGHTS AGREEMENT PAGE 14
(d) So long as the Preferred Shares issuable upon the exercise or
exchange of Rights are to be listed on the Nasdaq Stock Market or any
national securities exchange, the Company shall use its commercially
reasonable best efforts to cause, from and after such time as the Rights
become exercisable or exchangeable, all Preferred Shares reserved for such
issuance to be listed on the Nasdaq Stock Market or such securities exchange
upon official notice of issuance.
(e) The Company shall pay when due and payable any and all federal and
state transfer taxes and charges that may be payable in respect of the issuance
or delivery of Right Certificates or of any Preferred Shares upon the exercise
or exchange of Rights. The Company shall not, however, be required to pay any
transfer tax that may be payable in respect of any transfer or delivery of Right
Certificates to a Person other than, or in respect of the issuance or delivery
of certificates representing the Preferred Shares in a name other than that of,
the registered holder of the Right Certificate evidencing Rights surrendered for
exercise or exchange or to issue or deliver any certificates representing
Preferred Shares upon the exercise or exchange of any Rights until any such tax
shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
SECTION 10. PREFERRED SHARES RECORD DATE
Each Person in whose name any certificate for Preferred Shares is issued
upon the exercise or exchange of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Shares represented thereby on, and
such certificate shall be dated, the date on which the Right Certificate
evidencing such Rights was duly surrendered and payment of any Purchase Price
(and any applicable transfer taxes) was made; PROVIDED, HOWEVER, that if the
date of such surrender and payment is a date on which the Preferred Shares
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such Preferred Shares on, and such certificate shall
be dated, the next succeeding Business Day on which the Preferred Shares
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate shall not be entitled to
any rights of a holder of Preferred Shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
SECTION 11. ADJUSTMENTS IN RIGHTS AFTER THERE IS AN ACQUIRING PERSON;
EXCHANGE OF RIGHTS FOR SHARES; BUSINESS COMBINATIONS
(a) Upon a Person's becoming an Acquiring Person, each holder of a
Right, except as provided in Section 7(e), shall thereafter have a right to
receive, upon exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, such number of shares of Common Stock as
shall equal the result obtained by multiplying the Purchase Price by a
fraction, the numerator of which is the number of one one-hundredths of a
Preferred Share for which a Right is then exercisable and the denominator of
which is 50% of the Market
RIGHTS AGREEMENT PAGE 15
Value of the Common Stock on the date on which a Person becomes an Acquiring
Person. As soon as practicable after a Person becomes an Acquiring Person
(provided the Company shall not have elected to make the exchange permitted
by Section 11(b)(i) for all outstanding Rights), the Company shall use its
commercially reasonable best efforts to:
(i) prepare and file a registration statement under the
Securities Act, on an appropriate form, with respect to the securities
purchasable upon exercise of the Rights;
(ii) cause such registration statement to become effective as
soon as practicable after such filing;
(iii) cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities
Act) until the Expiration Date; and
(iv) qualify or register the securities purchasable upon exercise
of the Rights under the blue sky or securities laws of such jurisdictions as
may be necessary or appropriate.
(b) (i) The Company's Board of Directors may, at its option, at any
time after a Person becomes an Acquiring Person, mandatorily exchange all or
part of the then outstanding and exercisable Rights (which shall not include
Rights that shall have become null and void and nontransferable pursuant to
the provisions of Section 7(e)) for consideration per Right consisting of
either (A) one-half of the securities that would be issuable at such time
upon the exercise of one Right in accordance with Section 11(a), or, if
applicable, Section 9(b)(ii) or 9(b)(iii) or (B) if applicable, the cash
consideration specified in Section 9(b)(i) (the consideration issuable per
Right pursuant to this Section 11(b)(i) being the "Exchange Consideration").
The Company's Board of Directors may, at its option, issue, in substitution
for Preferred Shares, Common Shares in an amount per Preferred Share equal to
the Formula Number if there are sufficient Common Shares issued but not
outstanding or authorized but unissued. If the Company's Board of Directors
elects to exchange all the Rights for the Exchange Consideration pursuant to
this Section 11(b)(i) prior to the physical distribution of the Right
Certificates, the Company may distribute the Exchange Consideration in lieu
of distributing Right Certificates, in which case for purposes of this Rights
Agreement holders of Rights shall be deemed to have simultaneously received
and surrendered for exchange Right Certificates on the date of such
distribution. Notwithstanding the foregoing, the Board of Directors of the
Company shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any Person holding
Common Shares for or pursuant to the terms of any such plan), together with
all Affiliates and Associates of such Person, becomes the Beneficial owner of
more than 50% of the Common Shares then outstanding.
(ii) Any action of the Company's Board of Directors ordering the
exchange of any Rights pursuant to Section 11(b)(i) shall be irrevocable and,
immediately upon the taking of such action and without any further action and
without any notice, the right to exercise any such Right pursuant to Section
11(a) shall terminate and the only right thereafter of a holder of such Right
shall be to receive the Exchange Consideration in exchange for each such
Right
RIGHTS AGREEMENT PAGE 16
held by such holder or, if the Exchange Consideration shall not have been
paid or issued, to exercise any such Right pursuant to Section 11(c)(i). 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 holders of such Rights at their last
addresses as they appear on the registry books of the Rights Agent. Any
notice that is mailed in the manner provided in this Rights Agreement 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 the Rights
for the Exchange Consideration will be effected and, in the event of any
partial exchange, the number of Rights that will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights that shall have become null and void and nontransferable pursuant to
the provisions of Section 7(e)) held by each holder of Rights.
(c) (i) In the event that, following a Distribution Date, any
transactions specified in the following clause (A), (B) or (C) of this Section
11(c)(i) (each such transaction being a "Business Combination") shall be
consummated, directly or indirectly:
(A) the Company shall consolidate with, or merge with and
into, any Acquiring Person or any Affiliate or Associate of an Acquiring
Person;
(B) any Acquiring Person or any Affiliate or Associate of
an Acquiring Person shall merge with and into the Company and, in connection
with such merger, all or part of the Common Shares shall be changed into or
exchanged for capital stock or other securities of the Company or of an
Acquiring Person or any Affiliate or Associate of an Acquiring Person or cash
or any other property; or
(C) the Company shall sell, lease, exchange or otherwise
transfer or dispose of (or one or more of its Subsidiaries shall sell, lease,
exchange or otherwise transfer or dispose of), in one or more transactions,
the Major Part of the assets of the Company and its Subsidiaries (taken as a
whole) to an Acquiring Person or any Affiliate or Associate of an Acquiring
Person;
then, in each such case, proper provision shall be made so that each holder of a
Right, except as provided in Section 7(e), shall thereafter have the right to
receive, upon the exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, the securities specified below (or, at such
holder's option, the securities specified in Section 11(a) if the Company is the
surviving corporation in such Business Combination):
(1) If the Principal Party in such Business
Combination has Registered Common Shares outstanding, each Right shall
thereafter represent the right to receive, upon the exercise thereof for the
Purchase Price in accordance with the terms of this Rights Agreement, such
number of Registered Common Shares of such Principal Party, free and clear of
all liens, encumbrances or other adverse claims, as shall have an aggregate
Market Value equal to the result obtained by multiplying the Purchase Price
by two; or
RIGHTS AGREEMENT PAGE 17
(2) If the Principal Party in such Business
Combination does not have Registered Common Shares outstanding, each Right
shall thereafter represent the right to receive, upon the exercise thereof
for the Purchase Price in accordance with the terms of this Rights Agreement,
at the election of the holder of such Right at the time of the exercise
thereof, any of:
(x) such number of Common Shares of the Surviving
Person in such Business Combination as shall have an aggregate Book Value
immediately after giving effect to such Business Combination equal to the
result obtained by multiplying the Purchase Price by two;
(y) such number of Common Shares of the Principal
Party in such Business Combination (if the Principal Party is not also the
Surviving Person in such Business Combination) as shall have an aggregate
Book Value immediately after giving effect to such Business Combination equal
to the result obtained by multiplying the Purchase Price by two; or
(z) if the Principal Party in such Business
Combination is an Affiliate of one or more Persons which has Registered
Common Shares outstanding, such number of Registered Common Shares of
whichever of such Affiliates of the Principal Party has Registered Common
Shares with the greatest aggregate Market Value on the date of consummation
of such Business Combination as shall have an aggregate Market Value on the
date of such Business Combination equal to the result obtained by multiplying
the Purchase Price by two.
(ii) The Company shall not consummate any Business Combination
unless each issuer of Common Shares for which Rights may be exercised, as set
forth in this Section 11(c), shall have sufficient authorized Common Shares
that have not been issued or reserved for issuance (and that shall, when
issued upon exercise thereof in accordance with this Rights Agreement, be
validly issued, fully paid and nonassessable and free of preemptive rights,
rights of first refusal or any other restrictions or limitations on the
transfer or ownership thereof) to permit the exercise in full of the Rights
in accordance with this Section 11(c) and unless prior thereto:
(A) a registration statement under the Securities Act, on
an appropriate form, with respect to the Rights and the Common Shares of such
issuer purchasable upon exercise of the Rights, shall be effective; and
(B) the Company and each such issuer shall have:
(1) executed and delivered to the Rights Agent a
supplemental agreement providing for the assumption by such issuer of the
obligations set forth in this Section 11(c) (including the obligation of such
issuer to issue Common Shares upon the exercise of Rights in accordance with
the terms set forth in Sections 11(c)(i) and 11(c)(iii)) and further
providing that such issuer, at its own expense, will use its best efforts to:
RIGHTS AGREEMENT PAGE 18
(x) cause a registration statement under the
Securities Act, on an appropriate form, with respect to the Rights and the
Common Shares of such issuer purchasable upon exercise of the Rights, to
remain effective (with a prospectus at all times meeting the requirements of
the Securities Act) until the Expiration Date;
(y) qualify or register the Rights and the Common
Shares of such issuer purchasable upon exercise of the Rights under the blue
sky or securities laws of such jurisdictions as may be necessary or
appropriate; and
(z) list the Rights and the Common Shares of such
issuer purchasable upon exercise of the Rights on each national securities
exchange on which the Common Shares were listed prior to the consummation of
the Business Combination or, if the Common Shares were not listed on a
national securities exchange prior to the consummation of the Business
Combination, on a national securities exchange;
(2) furnished to the Rights Agent a written opinion of
independent counsel stating that such supplemental agreement is a valid,
binding and enforceable agreement of such issuer; and
(3) filed with the Rights Agent a certificate of a
nationally recognized firm of independent accountants setting forth the
number of Common Shares of such issuer that may be purchased upon the
exercise of each Right after the consummation of such Business Combination.
(iii) After consummation of any Business Combination and subject
to the provisions of Section 11(c)(ii), (A) each issuer of Common Shares for
which Rights may be exercised as set forth in this Section 11(c) shall be
liable for, and shall assume, by virtue of such Business Combination, all the
obligations and duties of the Company pursuant to this Rights Agreement, (B)
the term "Company" shall thereafter be deemed to refer to such issuer, (C)
each such issuer shall take such steps in connection with such consummation
as may be necessary to ensure that the provisions of this Rights Agreement
(including the provisions of Sections 11(a) and 11(c)) shall thereafter
apply, as nearly as reasonably may be, in relation to its Common Shares
thereafter deliverable upon the exercise of the Rights, and (D) the number of
Common Shares of each such issuer thereafter receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions of Sections 11
and 12, and the provisions of Sections 7, 9 and 10 with respect to the
Preferred Shares shall apply, as nearly as reasonably may be, on like terms
to any such Common Shares.
SECTION 12. CERTAIN ADJUSTMENTS
(a) To preserve the actual or potential economic value of the Rights,
if at any time after the date of this Rights Agreement there shall be any
change in the Common Stock or the Preferred Shares, whether by reason of
stock dividends, stock splits, recapitalizations, mergers, consolidations,
combinations or exchanges of securities, split-ups, split-offs, spin-offs,
liquidations, other similar changes in capitalization, any distribution or
issuance of cash, assets,
RIGHTS AGREEMENT PAGE 19
evidences of indebtedness or subscription rights, options or warrants to
holders of Common Stock or Preferred Shares, as the case may be (other than
distribution of the Rights or regular quarterly cash dividends), or
otherwise, then, in each such event the Company's Board of Directors shall
make such appropriate adjustments in the number of Preferred Shares (or the
number and kind of other securities) issuable upon exercise of each Right,
the Purchase Price and Redemption Price in effect at such time and the number
of Rights outstanding at such time (including the number of Rights or
fractional Rights associated with each share of Common Stock) such that
following such adjustment such event shall not have had the effect of
reducing or limiting the benefits the holders of the Rights would have had
absent such event.
(b) If, as a result of an adjustment made pursuant to Section 12(a),
the holder of any Right thereafter exercised shall become entitled to receive
any securities other than Preferred Shares, then the number of such
securities so receivable upon exercise of any Right thereafter shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions of Sections 11 and 12, and the
provisions of Sections 7, 9 and 10 with respect to the Preferred Shares shall
apply, as nearly as reasonably may be possible, on like terms to any such
other securities.
(c) All Rights originally issued by the Company subsequent to any
adjustment made to the amount of Preferred Shares or other securities
relating to a Right shall evidence the right to purchase, for the Purchase
Price, the adjusted number and kind of securities purchasable from time to
time under this Rights Agreement upon exercise of the Rights, all subject to
further adjustment as provided in this Rights Agreement.
(d) Irrespective of any adjustment or change in the Purchase Price or
the number of Preferred Shares or number or kind of other securities issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the terms that were expressed in
the initial Right Certificates issued under this Rights Agreement.
(e) In any case in which action taken pursuant to Section 12(a)
requires that an adjustment be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, issuing to the holder of any Right exercised after such record date
the Preferred Shares and/or other securities, if any, issuable upon such
exercise over and above the Preferred Shares and/or other securities, if any,
issuable before giving effect 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
securities upon the occurrence of the event requiring such adjustment.
SECTION 13. CERTIFICATE OF ADJUSTMENT
Whenever an adjustment is made as provided in Section 11 or 12, 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 Preferred Shares a
copy of such certificate, and (c) mail a brief summary thereof to each holder of
a Right Certificate (or, prior to the Distribution Date, of Common
RIGHTS AGREEMENT PAGE 20
Stock) in accordance with Section 25. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment contained
therein.
SECTION 14. ADDITIONAL COVENANTS
(a) Notwithstanding any other provision of this Rights Agreement, no
adjustment to the number of Preferred Shares (or fraction of a share) or other
securities for which a Right is exercisable or the number of Rights outstanding
or associated with each Common Share or any similar or other adjustment shall be
made or be effective if such adjustment would have the effect of reducing or
limiting the benefits the holders of the Rights would have had absent such
adjustment, including, without limitation, the benefits under Sections 11 and
12, unless the terms of this Rights Agreement are amended so as to preserve such
benefits.
(b) The Company shall not, after the Distribution Date, except as
permitted by Section 26, take (or permit any Subsidiary of the Company to take)
any action if at the time such action is taken it is reasonably foreseeable that
such action will reduce or otherwise limit the benefits the holders of the
Rights would have had absent such action, including, without limitation, the
benefits under Sections 11 and 12. Any action taken by the Company during any
period after any Person becomes an Acquiring Person but prior to the
Distribution Date shall be null and void unless such action could be taken under
this Section 14(b) from and after the Distribution Date. The Company shall not
consummate any Business Combination if any issuer of Common Shares for which
Rights may be exercised after such Business Combination in accordance with
Section 11(c) shall have taken any action that reduces or otherwise limits the
benefits the holders of the rights would have had absent such action, including
the benefits under Sections 11 and 12.
SECTION 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES
(a) The Company may, but shall not be required to, issue fractional
Rights or distribute Right Certificates that evidence fractional Rights. In
lieu of such fractional Rights, the Company may pay to the registered holders
of the Right Certificates with regard to which such fractional Rights would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Right. For purposes of this Section 15(a),
the current market value of a whole Right shall be the closing price of the
Rights (as determined pursuant to the second and third sentences of the
definition of Market Value contained in Section 1) for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable.
(b) The Company may, but shall not be required to, issue fractional
Preferred Shares upon exercise of the Rights or distribute certificates that
evidence fractional Preferred Shares. In lieu of fractional Preferred
Shares, the Company may elect to (i) utilize a depository arrangement as
provided by the terms of the Preferred Shares or (ii) in the case of a
fractional Preferred Share (other than one one-hundredth (1/100th) of a
Preferred Share or any integral multiple thereof), pay to the registered
holders of Right Certificates at the time such Rights are exercised as
provided in this Rights Agreement an amount in cash equal to the same
fraction of the current market value of one Preferred Share, if any are
outstanding and publicly traded (or
RIGHTS AGREEMENT PAGE 21
the Formula Number times the current market value of one share of Common
Stock if the Preferred Shares are not outstanding and publicly traded). For
purposes of this Section 15(b), the current market value of a Preferred Share
(or share of Common Stock) shall be the closing price of a Preferred Share
(or share of Common Stock) (as determined pursuant to the second and third
sentences of the definition of Market Value contained in Section 1) for the
Trading Day immediately prior to the date of such exercise. If, as a result
of an adjustment made pursuant to Section 12(a), the holder of any Right
thereafter exercised shall become entitled to receive any securities other
than Preferred Shares, the provisions of this Section 15(b) shall apply, as
nearly as reasonably may be, on like terms to such other securities.
(c) The Company may, but shall not be required to, issue fractional
Common Shares upon exchange of Rights pursuant to Section 11(b), or to
distribute certificates that evidence fractional Common Shares. In lieu of
such fractional Common Shares, the Company may pay to the registered holders
of Right Certificates with regard to which such fractional Common Shares
would otherwise be issuable an amount in cash equal to the same fraction of
the current Market Value of one Common Share as of the date on which a Person
became an Acquiring Person.
(d) Each holder of Rights, by accepting the Rights, expressly waives
his or her right to receive any fractional Rights or any fractional shares
upon exercise of a Right, except as provided in this Section 15.
SECTION 16. RIGHTS OF ACTION
(a) All rights of action in respect of this Rights Agreement are
vested in the respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the Common Stock),
and any registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his or her own behalf and
for his or her own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in
respect of, his or her right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in the
Rights 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 Rights
Agreement and shall be entitled to specific performance of the obligations of
any Person under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Rights Agreement.
(b) Any holder of Rights who prevails in an action to enforce the
provisions of this Rights Agreement shall be entitled to recover the
reasonable costs and expenses, including attorneys' fees, incurred in such
action.
RIGHTS AGREEMENT PAGE 22
SECTION 17. AGREEMENT OF RIGHT HOLDERS
Every holder of a Right, by accepting the same, consents and agrees with
the Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of the Common Stock, and the Right associated
with each share of Common Stock shall be automatically transferred upon the
transfer of each share of Common Stock;
(b) after the Distribution Date, the Right Certificates will be
transferable, subject to Section 7(e), only on the registry books of the Rights
Agent if surrendered at the principal office of the Rights Agent, duly endorsed
or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person in
which name a Right Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Right Certificates or the associated 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 shall be affected by
any notice to the contrary.
SECTION 18. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER
No holder, as such, of any Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company that may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained in this Rights Agreement or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the rights of a
stockholder of the Company, including, without limitation, any right to vote for
the election of directors or on 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, or to
receive dividends or other distributions or subscription rights, or otherwise,
until the Right or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions of this Rights Agreement.
SECTION 19. CONCERNING THE RIGHTS AGENT
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it under this Rights Agreement and, from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in administering and executing this Rights
Agreement and exercising and performing its duties under this Rights Agreement,
including any taxes or governmental changes imposed as a result of the action
taken by it hereunder (other than taxes on the fees payable to it).
RIGHTS AGREEMENT PAGE 23
(b) The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
its administration of this Rights Agreement in reliance on any Right Certificate
or certificate for the 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 be signed, executed and, where
necessary, verified or acknowledged by the proper Person or Persons.
SECTION 20. 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
stock transfer or corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Rights
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties to this Rights Agreement; PROVIDED, HOWEVER, that
such corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 22. In case at the time such successor Rights
Agent shall succeed to the agency created by this Rights Agreement, any of the
Right Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and, in case at that
time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and, in all such cases, such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and, in case at that time any
of the Right Certificates shall not have been countersigned, the Rights Agent
may countersign such Right Certificates either in its prior name or in its
changed name; and, in all such cases, such Right Certificates shall have the
full force provided in the Right Certificates and in this Rights Agreement.
SECTION 21. DUTIES OF RIGHTS AGENT
The Rights Agent undertakes the duties and obligations imposed by this
Rights Agreement upon the following terms and conditions, by all of which the
Company and the holders of the Right Certificates (or, prior to the Distribution
Date, of the Common Stock), 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
RIGHTS AGREEMENT PAGE 24
protection to the Rights Agent as to any action taken, suffered or omitted by
it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Rights Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person) be proved
or established by the Company prior to taking, refraining from taking or
suffering any action under this Rights Agreement, such fact or matter (unless
other evidence in respect thereof be specifically prescribed in this Rights
Agreement) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board, any Vice Chairman of
the Board, the Chief Executive Officer, the President, the Chief Financial
Officer, a Vice President (whether preceded by any additional title), the
Treasurer or the Secretary of the Company and delivered to the Rights Agent, and
such certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Rights
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable under this Rights 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 Rights Agreement or in the
Right Certificates (except as to its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Rights Agreement or the execution and delivery hereof
(except the due execution of this Rights Agreement by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); it shall not be responsible for any breach by the
Company of any covenant or condition contained in this Rights Agreement or in
any Right Certificate; it shall not be responsible for any adjustment required
under the provisions of Section 11 or 12 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 Right Certificates after actual notice of any such adjustment); and
it shall not by any act under this Rights Agreement be deemed to make any
representation or warranty as to the authorization or reservation of any
Preferred Shares or Common Stock to be issued pursuant to this Rights Agreement
or any Right Certificate or as to whether any Preferred Shares or Common Stock
will, when so issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it shall perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties under this Rights
Agreement from any one of the
RIGHTS AGREEMENT PAGE 25
Chairman of the Board, any Vice Chairman of the Board, the Chief Executive
Officer, the President, the Chief Financial Officer, a Vice President (whether
preceded by any additional title), the Treasurer or the Secretary of the
Company 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
the instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not the Rights Agent under
this Rights Agreement. Nothing in this Rights Agreement 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 under this Rights Agreement either
itself or by or through its attorneys or agents, and the Rights Agent shall not
be answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct provided reasonable care was exercised in
the selection and continued employment thereof.
(j) The Company agrees to indemnify and to hold the Rights Agent harmless
against any loss, liability, damage or expense (including reasonable fees and
expenses of legal counsel) which the Rights Agent may incur resulting from its
actions as Rights Agent pursuant to this Rights Agreement; PROVIDED, HOWEVER,
that the Rights Agent shall not be indemnified or held harmless with respect to
any such loss, liability, damage or expense incurred by the Rights Agent as a
result or, or arising out of, its own negligence, bad faith or willful
misconduct. In no case shall the Company be liable with respect to any action,
proceeding, suit or claim against the Rights Agent unless the Rights Agent shall
have notified the Company, by letter or by facsimile confirmed by letter, of the
assertion of any action, proceeding, suit or claim against the Rights Agent,
promptly after the rights Agent shall have notice of any such assertion of an
action, proceeding, suit or claim or have been served with the summons or other
first legal process giving information as to the nature and basis of the action,
proceeding, suit or claim. The Company shall be entitled to participate at its
own expense in the defense of any such action, proceeding, suit or claim, and,
if the Company so elects, the Company shall assume the defense of any such
action, proceeding, suit or claim. In the event that the Company assumes such
defense, the Company shall not thereafter be liable for the fees and expenses of
any additional counsel retained by the Rights Agent, so long as the Company
shall retain counsel satisfactory to the Rights Agent, in the exercise of its
reasonable judgment, to defense such action, proceeding, suit or claim. The
Rights Agent agrees not to settle any litigation in connection with any action,
proceeding, suit or claim with respect to which it may seek indemnification from
the Company without the prior written consent of the Company.
RIGHTS AGREEMENT PAGE 26
SECTION 22. CHANGE OF RIGHTS AGENT
The Rights Agent or any successor Rights Agent may resign and be discharged
from its duties under this Rights Agreement upon thirty (30) days' notice in
writing mailed to the Company and to each transfer agent of the Common Stock and
the Preferred Shares by registered or certified mail, and to the holders of the
Right Certificates (or, prior to the Distribution Date, of the Common Stock) by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty (30) days' notice in writing mailed to the Rights Agent
or successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and the Preferred Shares by registered or certified mail, and to
the holders of the Right Certificates (or, prior to the Distribution Date, of
the Common Stock) 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 thirty (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
Right Certificate (or, prior to the Distribution Date, of Common Stock) (who
shall, with such notice, submit his or her Right Certificate or, prior to the
Distribution Date, the certificate representing his or her Common Stock, for
inspection by the Company), then the registered holder of any Right Certificate
(or, prior to the Distribution Date, of the Common Stock) 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 either (A) a corporation in good standing organized and doing business
under the laws of the United States or of the state of Delaware or of any other
state of the United States so long as such corporation is authorized to conduct
a stock transfer or corporate trust business in the state of Delaware, which is
authorized under such laws to exercise stock transfer or corporate trust powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least fifty million dollars ($50,000,000), or (B) an affiliate of
a corporation described in clause (A) of this sentence; PROVIDED THAT the
principal transfer agent for the Common Stock shall in any event be qualified to
be the Rights Agent. 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; PROVIDED,
HOWEVER, that the predecessor Rights Agent shall deliver and transfer to the
successor Rights Agent any property at the time held by it under this Rights
Agreement, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock and the
Preferred Shares, and mail a notice thereof in writing to the registered holders
of the Right Certificates (or, prior to the Distribution Date, of the Common
Stock). Failure to give any notice provided for in this Section 22, however, or
any defect therein shall not affect the legality or validity of the resignation
or removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.
RIGHTS AGREEMENT PAGE 27
SECTION 23. ISSUANCE OF ADDITIONAL RIGHTS AND RIGHT CERTIFICATES
Notwithstanding any of the provisions of this Rights Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change made in accordance with the
provisions of this Rights Agreement. In addition, in connection with the
issuance or sale of Common Stock following the Distribution Date and prior to
the earlier of the Redemption Date and the Expiration Date, the Company (a)
shall issue, with respect to 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, notes or debentures issued by
the Company, and (b) may issue, in any other case, if deemed necessary or
appropriate by the Company's Board of Directors, Right Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
PROVIDED, HOWEVER, that (i) no such Right Certificate shall be issued if, and to
the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Right Certificate would be issued, (ii) no
such Right Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof, and
(iii) no such Right Certificate shall be issued to an Acquiring Person or an
Affiliate or Associate of any Acquiring Person.
SECTION 24. REDEMPTION AND TERMINATION
(a) The Company's Board of Directors may, at its option, at any time prior
to the earlier of (i) such time as any Person becomes an Acquiring Person and
(ii) the Expiration Date, order the redemption of all, but not fewer than all,
the then outstanding Rights at the Redemption Price (the date of such redemption
being the "Redemption Date"), and the Company, at its option, may pay the
Redemption Price either in cash or in Common Shares or other securities of the
Company deemed by the Board of Directors of the Company, in the exercise of its
sole discretion, to be at least equivalent in value to the Redemption Price.
The redemption of the Rights by the Board of Directors may be made effective at
such time, on such basis and with such conditions as the Board of Directors in
its sole discretion may establish.
(b) Immediately upon the action of the Company's Board of Directors
ordering the redemption of the Rights, 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. Within ten (10) Business Days after the action of the Company's Board of
Directors ordering the redemption of the Rights, the Company shall give notice
of such redemption to the holders of the then outstanding Rights by mailing such
notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Stock. Each such notice of
redemption will state the method by which payment of the Redemption Price will
be made. The notice, if mailed in the manner provided in this Rights
RIGHTS AGREEMENT PAGE 28
Agreement, shall be conclusively presumed to have been duly given, whether or
not the holder of Rights receives such notice. In any case, failure to give
such notice by mail, or any defect in the notice, to any particular holder of
Rights shall not affect the sufficiency of the notice to other holders of
Rights.
SECTION 25. NOTICES
Notices or demands authorized by this Rights Agreement to be given or made
by the Rights Agent or by the holder of a Right Certificate (or, prior to the
Distribution Date, of Common Stock) to or on the Company shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Rights Agent) as follows:
UTILX Corporation
00000 Xxxxxxx Xxxx
X.X. Xxx 00000
Xxxx, Xxxxxxxxxx 00000-0000
Attention: Corporate Secretary
Subject to the provisions of Section 22, notices or demands authorized by this
Rights Agreement to be given or made by the Company or by the holder of a Right
Certificate (or, prior to the Distribution Date, of Common Stock) to or on the
Rights Agent shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Stock Transfer Department
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to any holder of a Right Certificate (or, prior
to the Distribution Date, of Common Stock) shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed to such holder at such
holder's address as shown on the registry books of the Rights Agent or, prior to
the Distribution Date, on the registry books of the transfer agent for the
Common Stock.
SECTION 26. SUPPLEMENTS AND AMENDMENTS
At any time prior to the time any Person becomes an Acquiring Person and
subject to the last sentence of this Section 26, the Company may, and the Rights
Agent shall if the Company so directs, supplement or amend any provision of this
Rights Agreement (including, without limitation, the date on which the
Distribution Date or the Expiration Date shall occur, the amount of the Purchase
Price, the definition of "Acquiring Person," the time during which the Rights
may be redeemed pursuant to Section 24 or any provision of the Certificate of
Designation) without the approval of any holder of the Rights. From and after
the time any
RIGHTS AGREEMENT PAGE 29
Person becomes an Acquiring Person and subject to applicable law, the Company
may, and the Rights Agent shall if the Company so directs, amend this Rights
Agreement without the approval of any holder of Right Certificates to (a) cure
any ambiguity or correct or supplement any provision contained in this Rights
Agreement that may be defective or inconsistent with any other provision of
this Rights Agreement or (b) make any other provision in regard to matters or
questions arising under this Rights Agreement that the Company may deem
necessary or desirable and that shall not adversely affect the interests of
the holders of Right Certificates (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person). Any supplement or amendment
adopted during any period after any Person has become an Acquiring Person but
prior to the Distribution Date shall be null and void unless such supplement
or amendment could have been adopted under the prior sentence from and after
the Distribution Date. Any supplement or amendment to this Rights Agreement
duly approved by the Company that does not amend Sections 19, 20, 21 or 22 in
a manner adverse to the Rights Agent shall become effective immediately upon
execution by the Company, whether or not also executed by the Rights Agent.
In addition, notwithstanding anything to the contrary contained in this Rights
Agreement, no supplement or amendment to this Rights Agreement shall be made
which reduces the Redemption Price (except as required by Section 12(a)).
SECTION 27. SUCCESSORS
All the covenants and provisions of this Rights Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns under this Rights Agreement.
SECTION 28. BENEFITS OF THIS RIGHTS AGREEMENT; DETERMINATIONS AND
ACTIONS BY THE COMPANY'S BOARD OF DIRECTORS
(a) Nothing in this Rights Agreement shall be construed to give to any
Person other than the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, of the Common
Stock) any legal or equitable right, remedy or claim under this Rights
Agreement; PROVIDED, HOWEVER, that this Rights Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, of the
Common Stock).
(b) Except as explicitly otherwise provided in this Rights Agreement, the
Company's Board of Directors shall have the exclusive power and authority to
administer this Rights Agreement and to exercise all rights and powers
specifically granted to the Company's Board of Directors or to the Company, or
as may be necessary or advisable in the administration of this Rights Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Rights Agreement and (ii) make all determinations deemed
necessary or advisable for the administration of this Rights Agreement
(including, without limitation, a determination to redeem or not redeem the
Rights or to amend this Rights Agreement and a determination of whether there is
an Acquiring Person).
RIGHTS AGREEMENT PAGE 30
(c) Nothing contained in this Rights Agreement shall be deemed to be in
derogation of the obligation of the Board of Directors of the Company to
exercise its fiduciary duty. Without limiting the foregoing, nothing contained
herein shall be construed to suggest or imply that the Board of Directors shall
not be entitled to reject any tender offer, or to take any other action
(including the commencement, prosecution, defense or settlement of any
litigation and the submission of additional or alternative offers or other
proposals) with respect to any tender offer or other acquisition proposal that
the Board of Directors believes is necessary or appropriate in the exercise of
such fiduciary duty.
SECTION 29. SEVERABILITY
If any term, provision, covenant or restriction of this Rights Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Rights Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.
SECTION 30. GOVERNING LAW
This Rights Agreement and each Right Certificate issued under this Rights
Agreement shall be deemed to be a contract made under the laws of the state of
Delaware and for all purposes shall be governed by and construed in accordance
with the law of Delaware applicable to contracts to be made and performed
entirely within Delaware.
SECTION 31. COUNTERPARTS; EFFECTIVENESS
This Rights Agreement may be executed in any number of counterparts, each
of which shall for all purposes be deemed to be an original, and all of which
shall together constitute but one and the same instrument. This Rights
Agreement shall be effective as of the Close of Business on the date of this
Rights Agreement first set forth above.
SECTION 32. DESCRIPTIVE HEADINGS
Descriptive headings of the several Sections of this Rights Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Rights Agreement.
RIGHTS AGREEMENT PAGE 31
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to
be duly executed as of the day and year first above written.
UTILX CORPORATION
By: /s/ Xxxxx X. Xxxx
----------------------------------------------
Name: Xxxxx X. Xxxx
Its: Vice President, Chief Financial Officer,
Controller and Treasurer
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Its: Vice President
RIGHTS AGREEMENT PAGE 32
UTILX CORPORATION
SERIES D PARTICIPATING
CUMULATIVE PREFERRED STOCK
CERTIFICATE OF THE DESIGNATIONS AND THE POWERS, PREFERENCES AND RIGHTS, AND THE
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS WHICH HAVE NOT BEEN SET FORTH IN THE
CERTIFICATE OF INCORPORATION OR IN ANY AMENDMENT THERETO
Pursuant to Section 151 of the General Corporation Law of the state of
Delaware, the undersigned, Xxxxx X. Xxxx, Vice President, Chief Financial
Officer, Controller and Treasurer of UTILX Corporation, a Delaware corporation
(the "Corporation"), does hereby certify that the Corporation's Board of
Directors duly approved the following resolution on October 29, 1998.
DESIGNATION OF SERIES D PREFERRED STOCK
RESOLVED, that, pursuant to the authority granted to and vested in the
Corporation's Board of Directors in accordance with the Corporation's
Certificate of Incorporation, this Board of Directors hereby creates a series of
Preferred Stock, par value $.01 per share, called "the Series D Participating
Cumulative Preferred Stock," and hereby fixes the relative rights, preferences
and limitations thereof (in addition to the rights and preferences set forth in
the Certificate of Incorporation of the Corporation which are applicable to the
preferred stock of the Corporation generally), as set forth in the Designation
of Rights and Preferences of the Series D Participating Cumulative Preferred
Stock attached hereto.
IN WITNESS WHEREOF, this Certificate of Designation has been signed by its
Vice President, Chief Financial Officer, Controller and Treasurer this 6th day
of November, 1998.
UTILX CORPORATION
By /s/ Xxxxx X. Xxxx
--------------------------------------
Xxxxx X. Xxxx, Vice President, Chief
Financial Officer, Controller
and Treasurer
EXHIBIT A
SERIES D PARTICIPATING
CUMULATIVE PREFERRED STOCK
THE DESIGNATIONS AND THE POWERS, PREFERENCES AND RIGHTS, AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS WHICH HAVE NOT BEEN SET FORTH IN THE CERTIFICATE OF
INCORPORATION OR IN ANY AMENDMENT THERETO
SECTION 1. DESIGNATION AND NUMBER OF SHARES
The shares of such series shall be designated the "Series D Participating
Cumulative Preferred Stock" (the "Series D Preferred Stock"), par value $.01 per
share. The number of shares initially constituting the Series D Preferred Stock
shall be 150,000; PROVIDED, HOWEVER, that if more than a total of 150,000 shares
of Series D Preferred Stock shall be issuable upon the exercise of Rights (the
"Rights") issued pursuant to the Rights Agreement dated as of November 6, 1998
between the Corporation and American Stock Transfer & Trust Company, as Rights
Agent (the "Rights Agreement"), the Corporation's Board of Directors, pursuant
to Section 151(g) of the General Corporation Law of the state of Delaware, shall
direct by resolution or resolutions that a certificate be properly executed,
acknowledged, filed and recorded, in accordance with the provisions of Section
103 thereof, providing for the total number of shares of Series D Preferred
Stock authorized to be issued to be increased (to the extent that the
Certificate of Incorporation then permits) to the largest number of whole shares
(rounded up to the nearest whole number) issuable upon exercise of such Rights.
SECTION 2. DIVIDENDS OR DISTRIBUTIONS
(a) Subject to the prior and superior rights of the holders of shares of
any other series of Preferred Stock or other class of capital stock of the
Corporation ranking prior and superior to the shares of Series D Preferred Stock
with respect to dividends, the holders of shares of Series D Preferred Stock
shall be entitled to receive, when, as, and if declared by the Board of
Directors, out of the assets of the Corporation legally available therefor,
quarterly dividends payable in cash on the last day of each fiscal quarter in
each year, or such other dates as the Corporation's Board of Directors shall
approve (each such date being referred to in this Certificate of Designation as
a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or a fraction of a
-2-
share of Series D Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (i) $.01 and (ii) the Formula Number (as
hereinafter defined) then in effect times the cash dividends then to be paid
on each share of Common Stock. In addition, if the Corporation shall pay any
dividend or make any distribution on the Common Stock payable in assets,
securities or other forms of noncash consideration (other than dividends or
distributions solely in shares of Common Stock), then, in each such case, the
Corporation shall simultaneously pay or make on each outstanding whole share
of Series D Preferred Stock a dividend or distribution in like kind equal to
the Formula Number then in effect times such dividend or distribution on each
share of Common Stock. As used in this Certificate of Designation and in the
Rights Agreement, the "Formula Number" shall be 100; PROVIDED, HOWEVER, that
if at any time after November 9, 1998 the Corporation shall (i) declare or pay
any dividend on the Common Stock payable in shares of Common Stock or make any
distribution on the Common Stock in shares of Common Stock, (ii) subdivide (by
a stock split or otherwise) the outstanding shares of Common Stock into a
larger number of shares of Common Stock, or (iii) combine (by a reverse stock
split or otherwise) the outstanding shares of Common Stock into a smaller
number of shares of Common Stock, then in each such event the Formula Number
shall be adjusted to a number determined by multiplying the Formula Number in
effect immediately prior to such event by a fraction, the numerator of which
is the number of shares of Common Stock that are outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that are outstanding immediately prior to such event (and rounding the
result to the nearest whole number); and PROVIDED FURTHER, that if at any time
after November 9, 1998 the Corporation shall issue any shares of its capital
stock in a merger, reclassification or change of the outstanding shares of
Common Stock, then in each such event the Formula Number shall be
appropriately adjusted to reflect such merger, reclassification or change so
that each share of Preferred Stock continues to be the economic equivalent of
a Formula Number of shares of Common Stock prior to such merger,
reclassification or change.
(b) The Corporation shall declare a dividend or distribution on the Series
D Preferred Stock as provided in Section 2(a) immediately prior to or at the
same time it declares a dividend or distribution on the Common Stock (other than
a dividend or distribution solely in shares of Common Stock); PROVIDED, HOWEVER,
that in the event no dividend or distribution (other than a dividend or
distribution in shares of Common Stock) shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $.01 per share on the
Series D Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date. The Corporation's Board of Directors may fix a
record date for the determination of
-3-
holders of shares of Series D Preferred Stock entitled to receive a dividend
or distribution declared thereon, which record date shall be the same as the
record date for any corresponding dividend or distribution on the Common Stock
and which shall not be more than 60 days prior to the date fixed for payment
thereof.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series D Preferred Stock from and after the Quarterly Dividend Payment
Date next preceding the date of original issue of such shares of Series D
Preferred Stock; PROVIDED, HOWEVER, that dividends on such shares that are
originally issued after the record date for the determination of holders of
shares of Series D Preferred Stock entitled to receive a quarterly dividend
on or prior to the next succeeding Quarterly Dividend Payment Date shall begin
to accrue and be cumulative from and after such Quarterly Dividend Payment Date.
Notwithstanding the foregoing, dividends on shares of Series D Preferred Stock
that are originally issued prior to the record date for the first Quarterly
Dividend Payment shall be calculated as if cumulative from and after the last
day of the fiscal quarter (or such other Quarterly Dividend Payment Date as the
Corporation's Board of Directors shall approve) next preceding the date of
original issuance of such shares. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series D Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding.
(d) So long as any shares of Series D Preferred Stock are outstanding, no
dividends or other distributions shall be declared, paid or distributed, or set
aside for payment or distribution, on the Common Stock unless, in each case, the
dividend required by this Section 2 to be declared on the Series D Preferred
Stock shall have been declared.
(e) The holders of shares of Series D Preferred Stock shall not be
entitled to receive any dividends or other distributions except as provided in
this Certificate of Designation.
SECTION 3. VOTING RIGHTS
The holders of shares of Series D Preferred Stock shall have the following
voting rights:
(a) Each holder of Series D Preferred Stock shall be entitled to a number
of votes equal to the Formula Number then in effect for each share of Series D
Preferred Stock held of record on each matter on which holders of the Common
Stock or stockholders generally are entitled to vote, multiplied by the maximum
number of
-4-
votes per share that any holders of the Common Stock or stockholders generally
then have with respect to such matter (assuming any holding period or other
requirement to vote a greater number of shares is satisfied).
(b) Except as otherwise provided in this Certificate of Designation or by
applicable law, the holders of shares of Series D Preferred Stock and the
holders of shares of Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one class for the election
of directors of the Corporation and on all other matters submitted to a vote of
stockholders of the Corporation.
(c) Except as provided in this Certificate of Designation or by applicable
law, holders of Series D Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth in this Certificate of
Designation) for authorizing or taking any corporate action.
SECTION 4. CERTAIN RESTRICTIONS
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Series D Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series D Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares
of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series D Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series D Preferred
Stock, except dividends paid ratably on the Series D Preferred Stock
and all such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) with the Series D
-5-
Preferred Stock; PROVIDED, HOWEVER, that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such junior
stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Series D Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any shares
of Series D Preferred Stock, or any shares of stock ranking on a
parity with the Series D Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by
the Corporation's Board of Directors) to all holders of such shares
upon such terms as the Corporation's Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective Series Dnd classes,
shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(b) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
SECTION 5. LIQUIDATION RIGHTS
Upon the liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, no distribution shall be made to (a) the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series D Preferred Stock unless, prior
thereto, the holders of shares of Series D Preferred Stock shall have received
an amount equal to the greater of (i) $.01 per share and (ii) the accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment, plus an aggregate amount per share equal to the Formula Number
then in effect times the aggregate amount to be distributed per share to holders
of Common Stock or (b) the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series D Preferred Stock, except distributions made ratably on the Series D
Preferred Stock and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up.
-6-
SECTION 6. CONSOLIDATION, MERGER, ETC.
In case the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case the then outstanding shares of Series D
Preferred Stock shall at the same time be similarly exchanged or changed into an
amount per share equal to the Formula Number then in effect times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
exchanged or changed. In the event both this Section 6 and Section 2 appear to
apply to a transaction, this Section 6 will control.
SECTION 7. NO REDEMPTION; NO SINKING FUND
(a) The shares of Series D Preferred Stock shall not be subject to
redemption by the Corporation or at the option of any holder of Series D
Preferred Stock; PROVIDED, HOWEVER, that the Corporation may purchase or
otherwise acquire outstanding shares of Series D Preferred Stock in the open
market or by offer to any holder or holders of shares of Series D Preferred
Stock.
(b) The shares of Series D Preferred Stock shall not be subject to or
entitled to the operation of a retirement or sinking fund.
SECTION 8. RANKING
The Series D Preferred Stock shall rank junior to all other series of
Preferred Stock of the Corporation, unless the Corporation's Board of Directors
shall specifically determine otherwise in fixing the powers, preferences and
relative, participating, optional and other special rights of the shares of such
Series D and the qualifications, limitations and restrictions thereof.
SECTION 9. FRACTIONAL SHARES
The Series D Preferred Stock shall be issuable upon exercise of the Rights
issued pursuant to the Rights Agreement in whole shares or in any fractional
share that is one one-hundredth (1/100th) of a share or any integral multiple of
such fraction, and shall entitle the holder, in proportion to such holder's
fractional shares, to receive dividends, exercise voting rights, participate in
distributions and have the benefit of all other rights of holders of Series D
Preferred Stock. In lieu of fractional shares, the Corporation, prior to the
first issuance of a share or a fractional share of Series D Preferred Stock, may
elect to (a) make a cash payment as provided in the Rights Agreement for a
fractional share other than one one-hundredth (1/100th) of a
-7-
share or any integral multiple thereof or (b) issue depository receipts
evidencing such authorized fractional share of Series D Preferred Stock
pursuant to an appropriate agreement between the Corporation and a depository
selected by the Corporation; PROVIDED, HOWEVER, that such agreement shall
provide that the holders of such depository receipts shall have all the
rights, privileges and preferences to which they are entitled as holders of
the Series D Preferred Stock.
SECTION 10. REACQUIRED SHARES
Any shares of Series D Preferred Stock purchased or otherwise acquired by
the Corporation in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock, without designation as
to series until such shares are once more designated as part of a particular
series by the Corporation's Board of Directors pursuant to the provisions of
Article 4 of the Certificate of Incorporation.
SECTION 11. AMENDMENT
None of the powers, preferences and relative, participating, optional and
other special rights of the Series D Preferred Stock as provided in this
Certificate of Designation or in the Certificate of Incorporation shall be
amended in any manner that would alter or change the powers, preferences, rights
or privileges of the holders of Series D Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of at least 66-2/3% of the
outstanding shares of Series D Preferred Stock, voting as a separate class.
-8-
EXHIBIT B
[FORM OF RIGHT CERTIFICATE]
Certificate No. [R] -
___________ Rights
NOT EXERCISABLE AFTER NOVEMBER 9, 2008, OR EARLIER IF REDEEMED BY
THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION
OF THE COMPANY, AT $.01 PER RIGHT, ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT.
RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE
OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT) AND BY ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
ARE NULL AND VOID AND NONTRANSFERABLE.
RIGHT CERTIFICATE
UTILX CORPORATION
This certifies that ____________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of November 6, 1998 (the "Rights Agreement"), between UTILX
Corporation, a Delaware corporation (the "Company"), and American Stock Transfer
& Trust Company, as Rights Agent (the "Rights Agent"), unless the Rights
evidenced hereby shall have been previously redeemed by the Company, to purchase
from the Company at any time after the Distribution Date (as defined in the
Rights Agreement) and prior to 5 p.m., New York City time, on November 9, 2008,
at the principal office of the Rights Agent, or its successors as Rights Agent,
one one-hundredth (1/100) of a fully paid, nonassessable share of Series D
Participating Cumulative Preferred Stock, par value $.01 per share, of the
Company (the "Preferred Shares"), at a purchase price per one one-hundredth
(1/100) of a share equal to $8 (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly executed.
The Purchase Price and the number and kind of shares that may be purchased
upon exercise of each Right evidenced by this Right Certificate, as set forth
above, are the Purchase Price and the number and kind of shares that may be so
purchased as of November 9, 1998. As provided in the Rights Agreement, the
Purchase Price and the number and kind of shares that may be purchased upon the
exercise of each Right evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
If the Rights evidenced by this Right Certificate are at any time
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement), such
Rights shall be null and void and nontransferable and the holder of any such
Right (including any purported transferee or subsequent holder) shall not have
any right to exercise or transfer any such Right.
This Right Certificate is subject to all the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated in this Right Certificate 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 under this Right Certificate of the Rights Agent, the Company and the
holders of the Right Certificates. Copies of the Rights Agreement are on file
at the above-mentioned office of the Rights Agent and are also available from
the Company upon written request.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal stock transfer or corporate trust office of the
Rights Agent, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number and kind of shares as the Rights evidenced by
the Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Right Certificate may be (i) redeemed by the Company at its option at a
redemption price (in cash or shares of Common Stock or other securities of the
Company deemed by the Company's Board of Directors to be at least equivalent in
value) of $.01 per Right (which amount shall be subject to adjustment as
provided in the Rights
Agreement) or (ii) exchanged in whole or in part for shares of Common Stock or
other securities of the Company.
The Company may, but shall not be required to, issue fractions of Preferred
Shares or distribute certificates that evidence fractions of Preferred Shares
upon the exercise of any Right or Rights evidenced hereby. In lieu of issuing
fractional shares, the Company may elect to make a cash payment as provided in
the Rights Agreement for fractions of a share other than one one-hundredth
(1/100) of a share or any integral multiple thereof or to issue certificates or
utilize a depository arrangement as provided in the terms of the Rights
Agreement and the Preferred Shares.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Company that may at any time be issuable on the
exercise of the Right or Rights evidenced by this Right Certificate, nor shall
anything contained in the Rights Agreement or in this Right Certificate be
construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company, including, without limitation, any right to vote for
the election of directors or on 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 other distributions
or subscription rights, or otherwise, until the Right or Rights evidenced by
this Right Certificate shall have been exercised as provided in accordance with
the provisions of the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of: _______________
UTILX CORPORATION
By:
-----------------------------------
Name:
Its:
Attest:
--------------------------------------
Name:
Countersigned:
American Stock Transfer & Trust Company,
as Rights Agent
By:
-----------------------------------
Name:
Its:
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _____________________________________________________
hereby sells, assigns and transfers unto ____________________________________
_____________________________________________________________________________
(Please print name and address of transferee)
_____________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ___________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: _______________________
--------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
-------------------------------------------------------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by this
Right Certificate are not being sold, assigned or transferred by or on behalf of
a Person who is or was an Acquiring Person or an Affiliate or Associate thereof
(as such terms are defined in the Rights Agreement), (2) this Right Certificate
is not being sold, assigned or transferred to or on behalf of any such Acquiring
Person, Affiliate or Associate, and (3) after inquiry and to the best knowledge
of the undersigned, the undersigned did not acquire the Rights evidenced by this
Right Certificate from any Person who is or was an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement).
--------------------------------------
Signature
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder desires to
exercise Rights represented by the Right Certificate.)
To: The Rights Agent
The undersigned hereby irrevocably elects to exercise ___________________
Rights represented by this Right Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights and requests that certificates for
such Preferred Shares be issued in the name of:
Please insert social security
or other identifying number
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
Dated: _______________________
--------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
-------------------------------------------------------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement), and (2) after inquiry and to the best knowledge of the undersigned,
the undersigned did not acquire the Rights evidenced by this Right Certificate
from any Person who is or was an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement).
--------------------------------------
Signature
NOTICE
The signature on the foregoing Form of Assignment or Form of Election to
Purchase must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
EXHIBIT C
UTILX CORPORATION
STOCKHOLDER RIGHTS PLAN
SUMMARY OF RIGHTS
DISTRIBUTION AND TRANSFER OF RIGHTS; RIGHT CERTIFICATES:
On October 29, 1998, the Board of Directors (the Board of Directors) of UTILX
Corporation (the Company) declared a dividend of one preferred share purchase
right (a Right) for each outstanding share of Common Stock, par value $.01 per
share (the Common Shares), of the Company. Prior to the Distribution Date
referred to below, if any, the Rights will be evidenced by and trade with the
certificates for the Common Stock. After the Distribution Date, if any, the
Company will mail Right certificates to the Company's stockholders and the
Rights will become transferable apart from the Common Stock.
DISTRIBUTION DATE:
The Rights will separate from the Common Stock and become exercisable
following the earlier of (i) the close of business on the tenth business day
after a public announcement that a person or group (including any affiliate or
associate of such person or group) has acquired beneficial ownership of 15% or
more of the outstanding Common Shares (such person or group being an Acquiring
Person) and (ii) such date, if any, as may be designated by the Board of
Directors following the commencement of, or first public disclosure of an
intent to commence, a tender or exchange offer for outstanding Common Shares
which could result in the offeror becoming the beneficial owner of 15% or more
of the outstanding Common Shares (the earlier of such dates being the
Distribution Date).
PREFERRED STOCK PURCHASABLE UPON EXERCISE OF RIGHTS:
After the Distribution Date, each Right will entitle the holder to purchase,
for $8 (the Purchase Price), one one-hundredth (1/100) of a share of preferred
stock of Company stock with economic terms similar to that of one share of the
Company's Common Stock.
FLIP-IN:
In the event a person becomes an Acquiring Person, the Rights will entitle
each holder of a Right (other than an Acquiring Person (or any affiliate or
associate of such Acquiring Person)) to purchase, for the Purchase Price, that
number of Common Shares equivalent to the number of
Common Shares which at the time of the transaction would have a market value
of twice the Purchase Price. Any Rights that are at any time beneficially
owned by an Acquiring Person (or any affiliate or associate of an Acquiring
Person) will be null and void and nontransferable and any holder of any such
Right (including any purported transferee or subsequent holder) will be unable
to exercise or transfer any such Right.
FLIP-OVER:
If the Company is acquired in a merger or other business combination with
another entity, or if 50% or more of its assets or assets accounting for 50%
or more of its net income or revenues are transferred (in one or more
transactions), each Right will entitle its holder to purchase, for the
Purchase Price, that number of shares of common stock of the person engaging
in the transaction having a then current market value of twice the Purchase
Price.
EXCHANGE PROVISIONS:
After there is an Acquiring Person, the Board of Directors may elect to
exchange each Right (other than Rights that have become null and void and
nontransferable as described above) for consideration per Right consisting of
one-half of the number of Common Shares that would be issuable at such time
upon the exercise of one Right and without payment of the Purchase Price.
REDEMPTION OF RIGHTS:
At any time prior to any person or group becoming an Acquiring Person, the
Board of Directors may redeem the Rights in whole, but not in part, at a price
of $.01 per Right, subject to adjustment as provided in the Rights Agreement
(the Redemption Price).
EXPIRATION OF RIGHTS:
The Rights are not exercisable until the Distribution Date and will expire on
November 9, 2008, unless earlier redeemed or exchanged by the Company.
AMENDMENT OF TERMS OF RIGHTS:
The terms of the Rights and the Rights Agreement may be amended in any
respect, without the approval of any holder of the Rights, at any time prior
to the Distribution Date.
VOTING RIGHTS:
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 receive dividends.
ANTIDILUTION PROVISIONS:
In order to preserve the actual or potential economic value of the Rights, the
number of Preferred Shares or other securities
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issuable upon exercise of the Right, the Purchase Price, the Redemption Price
and the number of Rights associated with each outstanding Common Share are all
subject to adjustment by the Board of Directors pursuant to certain customary
antidilution provisions.
TAXES:
The Rights distribution should not be taxable for federal income tax purposes.
Following an event that renders the Rights exercisable or upon redemption
of the Rights, stockholders may recognize taxable income.
The foregoing is a summary of certain principal terms of the Stockholder
Rights Plan and is qualified in its entirety by reference to the detailed terms
of the Rights Agreement. A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an exhibit to a Registration Statement on
Form 8-A dated November 9, 1998 and is available free of charge from the
Company.
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