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EDMARK CORPORATION
SHAREHOLDER RIGHTS AGREEMENT
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TABLE OF CONTENTS
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SECTION 1. CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. APPOINTMENT OF RIGHTS AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3. ISSUE 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 COMMON SHARES . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 10. COMMON SHARES RECORD DATE . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 14
SECTION 11. CERTAIN ADJUSTMENTS IN RIGHTS; EXCHANGE OF
RIGHTS FOR SHARES; BUSINESS COMBINATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 12. CERTAIN ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 13. CERTIFICATE OF ADJUSTMENT . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 14. ADDITIONAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 20
SECTION 16. RIGHTS OF ACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 17. TRANSFER AND OWNERSHIP OF RIGHTS AND RIGHT
CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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SECTION 18. RIGHT CERTIFICATE HOLDER NOT DEEMED A
SHAREHOLDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 19. CONCERNING THE RIGHTS AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 20. MERGER OR CONSOLIDATION OR CHANGE OF RIGHTS
AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 21. DUTIES OF RIGHTS AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 22. CHANGE OF RIGHTS AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 23. ISSUANCE OF ADDITIONAL RIGHTS AND RIGHT
CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 24. REDEMPTION AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 25. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 26. SUPPLEMENTS AND AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 27. SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 28. BENEFITS OF THIS RIGHTS AGREEMENT;
DETERMINATIONS AND ACTIONS BY THE COMPANY'S
BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 29. SEVERABILITY; CONFLICT WITH OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 30. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 31. DESCRIPTIVE HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-A
Form of Rights Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-A
Form of Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-A
Form of Election to Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-A
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EDMARK CORPORATION
SHAREHOLDER RIGHTS AGREEMENT
THIS SHAREHOLDER RIGHTS AGREEMENT is dated as of November 29, 1995 and
is between Edmark Corporation, a Washington corporation (the "Company"), and
First Interstate Bank of Washington, N.A., as Rights Agent (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one Right (as hereinafter defined) for each share of Common Stock,
no par value of the Company (the "Common Stock") outstanding at the Close of
Business (as hereinafter defined) on November 29, 1995 (the "Record Date") and
has authorized the issuance of one Right (as such number may hereafter be
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 or the Expiration
Date (as such terms are hereinafter defined); provided however, that Rights may
be issued with respect to shares of Common Stock that shall become outstanding
after the Distribution Date and prior to the earlier of the Redemption Date or
the Expiration Date in accordance with the provisions of Section 23. Each Right
shall initially represent the right to purchase one Common Share.
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 which, alone or together with
all Affiliates and Associates of such Person, shall be the Beneficial Owner of
20% or more of the Common Shares then outstanding, but shall not include (a) the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or any of its Subsidiaries, or any Person holding Common Shares for or pursuant
to the terms of any such employee benefit plan or (b) any such Person who has
become such a Beneficial Owner solely because (i) of 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 or (ii) it acquired such
Beneficial Ownership in the good-faith belief that such acquisition would not
(y) cause such Beneficial Ownership to exceed [20]% of the Common Shares then
outstanding and such Person relied in good faith in computing the percentage of
its Beneficial Ownership on publicly filed reports or documents of the Company
that are inaccurate or out-of-date or (z) otherwise cause a Distribution Date or
the adjustment provided for in Section 11(a) to occur. Notwithstanding clause
(b) of the prior sentence, if any Person that is not an Acquiring Person due to
such clause (b) does not reduce its percentage of Beneficial Ownership of Common
Shares to below 15% by the Close of Business on the fifth Business Day after
notice from the Company (the date of notice being the
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first day) that such Person's Beneficial Ownership of Common Stock so exceeds
15%, such Person shall, at the end of such five Business Day period, become an
Acquiring Person (and such clause (b) shall no longer apply to such Person). For
purposes of this definition, the determination whether any Person acted in "good
faith" shall be conclusively determined by the Company's Board of Directors,
acting by a vote of those directors of the Company whose approval would be
required to redeem the Rights under Section 24.
"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 in effect on the date
of this Rights Agreement.
A Person shall be deemed the "Beneficial Owner" of, and shall be deemed
to "beneficially own" and shall be deemed to have "Beneficial Ownership" of, any
securities:
(a) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire within 60
days of such time pursuant to any agreement, arrangement or
understanding (whether or not in writing), or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise);
provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," 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 payment or exchange;
(b) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of
or has "beneficial ownership" of (as determined pursuant to Rule 13d-3
of the General Rules and Regulations under the Exchange Act), including
pursuant to any agreement, arrangement or understanding (whether or not
in writing); provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security under
this subparagraph (b) as a result of an agreement, arrangement or
understanding to vote such security (1) arising solely from a revocable
proxy or consent given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the Exchange Act
and the applicable rules and regulations thereunder, or (2) made in
connection with the Exchange Act and the applicable rules and
regulations thereunder, or (3) made in connection with, or to otherwise
participate in, a proxy or consent solicitation made, or to be made,
pursuant to, and in accordance with, the applicable provisions of the
Exchange Act and the applicable rules and regulations thereunder,
whether or not such agreement, arrangement or understanding described
in clause (1) or (2) above is also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(c) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliates or Associate thereof) with which
such Person or any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in writing) for
the purpose of acquiring, holding, voting (except pursuant to a
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revocable proxy as described in clause (1) to subparagraph (b) of this
definition) or disposing of any voting securities of the Company;
provided, however, that nothing in this definition shall cause a person
engaged in business as an underwriter of securities to be the
"Beneficial Owner" of, or to "beneficially own," any securities
acquired through such person's participation in good faith in a firm
commitment underwriting until the expiration of forty days after the
date of such acquisition.
"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 given 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 giving effect to such 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), or 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 each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in New York, New York, or
Seattle, Washington, are authorized or obligated by law or executive order to
close.
"Close of Business" on any given date shall mean 5:00 p.m., New York
City time, on such date; provided, however, that if such date is not a Business
Day, "Close of Business" shall mean 5:00 p.m., New York City 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, no
par value, 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 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 do not provide that such class or series is subject to redemption at the
option of such Person,
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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 introductory
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).
The term "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; and the
term "controlling" and "controlled" shall have meanings correlative to the
foregoing.
"Continuing Director" shall mean any member of the Board of Directors
of the Company, while such Person is a member of the Board of Directors of the
Company, who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a nominee or representative of an Acquiring Person or of
any such Affiliate or Associate, if (i) such Person was a member of the Board of
Directors of the Company prior to the date of this Agreement or (ii) such
Person's nomination for election or election to the Board of Directors of the
Company is recommended or approved by a majority of the then Continuing
Directors.
"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).
"Fully Diluted Basis" shall mean that, for purposes of calculating any
Person's percentage ownership of the Common Stock, except as described below,
all outstanding options or warrants to acquire Common Stock, or securities
convertible or exchangeable into Common Stock, shall be assumed to be exercised,
converted and exchanged into the shares of Common Stock into which they,
pursuant to their terms, may then or thereafter upon the passage of time be
exercised, converted or exchanged. For purposes of determining the aggregate
shares of outstanding Common Stock, unexercised stock options issued to
employees or directors for compensatory purposes pursuant to an employee stock
option or other stock incentive plan
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approved by a majority of the Continuing Directors of the Board of Directors of
the Common Stock shall not be deemed to have been exercised except that for
purposes of determining the aggregate shares of Common Stock held by such
Person, all such stock options held by such Person shall be deemed to be
exercised.
"Group" shall mean any Group as defined by Sections 13(d)(3) and
14(d)(2) of the Exchange Act.
"Involuntary Acquisition" shall mean, with respect to any Person, the
purchase or acquisition of beneficial ownership of Common Stock by such Person
as a result of any stock split, dividend, distribution, rights offering by the
Company or any Subsidiary of the Company, recapitalization of the Company,
reclassification or other change in the terms of the Securities held by such
Person, adjustment in the conversion or exchange ratio of any convertible or
exchangeable security or exercise, conversion or exchange of any option, right,
warrant or convertible or exchangeable security held by such Person.
"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 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 Common Shares on any date,
shall mean the average of the daily closing prices, par share, of such Common
Shares for the period that is the shorter of (a) 30 consecutive Trading Days
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
Common Shares is to be determined in whole or in part during a period following
the announcement by the issuer of such Common Shares 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 Common Shares shall be
appropriately adjusted to reflect the effect of such action on the market price
of such Common Shares. 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 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
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listed or, if such securities are not listed on any such exchange, the average
of the closing bid and asked quotations with respect to a share of such
securities on the National Association of Securities Dealers, Inc. Automated
Quotations System 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).
"Permitted Offer" shall mean (i) a tender offer or an exchange offer
for all outstanding shares of Common Stock at a price and on terms determined by
at least a majority of the Continuing Directors who are not officers or
employees of the Company, after receiving advice from one or more investment
banking firms, to be (a) at a price and on terms that are fair to and in the
best interests of the Company's shareholders (taking into account all factors
that such members of the Board deem relevant including, without limitation,
prices that could reasonably be achieved if the Company or its assets were sold
in an orderly basis designed to realize maximum value) and (b) otherwise in the
best interests of the Company and its shareholders, or (ii) a tender offer or
exchange offer resulting in acceptance by shareholders holding, in aggregate,
90% or more of the outstanding Common Stock (other than shares beneficially
owned by the Acquiring Person, by its Affiliate, and by officers and directors
of the Company).
"Person" shall mean an individual, corporation, limited liability
company, partnership, joint venture, association, trust, unincorporated
organization or other entity.
"Principal Party" shall mean the Surviving Person 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 $100.00, 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 introductory
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 $.001, as such
amount may from time to time be adjusted in accordance with Section 12. All
references in this Rights
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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 Certificate" shall mean a certificate evidencing a Right in
substantially the form attached to this Rights Agreement as Exhibit A.
"Right" shall mean the right to purchase Common Shares (or other
securities) as provided in this Rights Agreement.
"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.
"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 or directors
of such Person (if such Person is 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.
"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, exchange 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 Person 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
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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.
SECTION 3. ISSUE OF RIGHTS AND RIGHT CERTIFICATES
(a) One Right shall be associated with each Common Share outstanding on
the Record Date, each additional Common Share 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 Common Share 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 Common Share.
(b) Until the earlier of (i) the Close of Business on the tenth
Business Day after the Date that the Company learns that a Person has become an
Acquiring Person 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 any of its Subsidiaries, or any Person holding
Common Shares for or pursuant to the terms of any such employee benefit plan)
for outstanding Common Shares, if upon consummation of such tender or exchange
offer such Person could be the Beneficial Owner of 20% or more of the
outstanding Common Shares (the Close of Business on the earlier of dates set
forth in (i) and (ii) being the "Distribution Date"), (y) the Rights will be
evidenced by the certificates for Common Shares registered in the names of the
holders thereof and not by separate Right Certificates and (z) the Rights,
including the right to receive Right Certificates, will be transferable only in
connection with the transfer of Common Shares. As soon as practicable after the
Distribution Date, the Rights Agent will send, by first-class, postage-prepaid
mail, to each record holder of Common Shares 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 Common Share (or for the number of Common
Shares with which one whole Right is then associated if the number of Rights per
Common Share 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 Common
Share 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). As of and after the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
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(c) With respect to any certificate for Common Shares, until the
earliest of the Distribution Date, the Redemption Date and the Expiration Date,
the Rights associated with the Common Shares represented by any such certificate
shall be evidenced by such certificate alone, the registered holders of the
associated Rights and the surrender for transfer of any such certificate shall
also constitute the transfer of the Rights associated with the Common Shares
represented thereby.
(d) Certificates issued for Common Shares after the Record Date
(including, without limitation, upon transfer or exchange of outstanding Common
Shares), 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 evidence and entities the holder hereof
to certain Rights as set forth in the Edmark Corporation Shareholder
Rights Agreement dated as of November 29, 1995, as it may be amended
from time to time (the "Rights Agreement"), between Edmark Corporation
("Edmark") and First Interstate Bank of Washington, N.A., as Rights
Agent (or between Edmark 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 Edmark. 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.
Edmark 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), the omission of a legend
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 A 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 we 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 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.
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SECTION 5. EXECUTION, COUNTERSIGNATURE AND REGISTRATION
(a) The Right Certificates shall be executed on behalf of the Company
by the Chairman and Chief Executive Officer, the Chief Financial Officer or a
Vice President 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 or obligatory 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 by 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 Certificate 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 Seattle, Washington, 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 Section 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 may be transferred, split up, combined or exchanged for another
Right Certificate or Right Certificates representing, in the aggregate, the same
number of Rights as the Right Certificate or the Right Certificates surrendered
then represented. Any registered holder desiring to transfer, split up, combine
or exchange any Right Certificate shall make such request in writing delivered
to the Rights Agent and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchange 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 identify of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonable request. Thereupon the Rights Agent shall, subject to the
provisions of Sections 7(a) 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
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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 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 of like tenor and deliver such new Right
Certificate to the Rights Agent for delivery to the registered owner in lieu of
the Right Certificate so lost, stolen, destroyed or mutilated.
(c) Notwithstanding any other provision of this Rights Agreement, 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(a) and except as otherwise provided in this
Rights Agreement (including Section 11), each Right shall entitled 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
November 29, 2005 (the Close of Business on such date being the "Expiration
Date"), and (ii) the Redemption Date, upon payment of the Purchase Price, one
Common Share, subject to adjustment from time to time as provided in Sections 11
and 12.
(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 Seattle, Washington, together with payment of the Purchase Price for
the Common Shares as to which the Rights are exercised, at or prior to the
earlier of (i) the Expiration Date and (ii) the Redemption Date.
(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 Common Shares to be purchased together
with an amount equal to any applicable transfer tax, in lawful money of the
United States of America, in cash, certified check or money order payable to the
order of the Company, equal to the Purchase Price of the Rights the holder
elects to exercise. The Rights Agent shall thereupon (i) either (A) promptly
requisition from any transfer agent of the Common Shares (or make available, if
the Rights Agent is the transfer agent) certificates for the number of Common
Shares to be purchased and the Company hereby irrevocably authorized its
transfer agent to comply with all such requests or (B) if the Company shall have
elected to deposit the Common Shares with a depositary agent under a depositary
arrangement, promptly requisition from the depositary agent depositary receipts
representing the
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number of Common Shares to be purchased (in which case certificates for the
Common 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,
any Rights that are at any time beneficially owned by an Acquiring Person or any
Affiliate or Associate of an Acquiring Person shall be null and void and
nontransferable, and any holder of any such Right (including any purported
transferee or subsequent holder) shall not have any right to exercise or
transfer any such Right.
(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 Common Shares
purchasable upon exercise of the Rights and permit such registration statement
to become effective, provided, however, that no such suspension shall remain
effect 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 not 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.
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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 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 COMMON SHARES
(a) The Company covenants and agrees that it will use its best efforts
to reserve and that number of authorized and unissued Common Shares sufficient
to permit the exercise in full of all outstanding Rights.
(b) In the event that there shall not be sufficient authorized and
unissued Common Shares to permit the exercise or exchange of Rights in
accordance with Section 11, the Company covenants and agrees that it will use
its best efforts to have authorized additional Common Shares for issuance upon
the exercise or exchange of Rights pursuant to Section 11.
(c) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Common Shares delivered upon exercise or
exchange of Rights shall, at the time of delivery of the certificates for such
Common Shares (subject to the payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and non-assessable shares.
(d) So long as the Common Shares issuable upon the exercise or exchange
of Rights are to be listed on any national securities exchange or on Nasdaq, the
Company covenants and agrees to use its best efforts to cause, from and after
such time as the Rights become exercisable or exchangeable, all Common Shares
reserved for such issuance to be listed on such securities exchange or on
Nasdaq, upon official notice of issuance upon such exercise or exchange.
(e) The Company further covenants and agrees that it will 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
Common 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 for the Common Shares in a
name other than that of, the registered holder of the Right Certificate
evidencing Rights surrendered for
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exercise or exchange or to issue or deliver any certificates for Common 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. COMMON SHARES RECORD DATE
Each Person in whose name any certificate for Common 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 Common 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 Common Shares transfer
books of the Company are closed, such Person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Common Shares transfer books of the Company
are open.
SECTION 11. CERTAIN ADJUSTMENTS IN RIGHTS; EXCHANGE OF RIGHTS FOR SHARES;
BUSINESS COMBINATIONS
(a) Upon a Person becoming an Acquiring Person unless the event causing
such Person to become an Acquiring Person is a Permitted Offer, or an event
described in Section 11(c), then proper provision shall be made so that each
holder of a Right (except as provided in Section 7(a)), 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 Common Shares as shall
equal the result obtained by multiplying the Purchase Price by a fraction, the
numerator of which is the number of Common Shares for which a Right is then
exercisable and the denominator of which is 50% of the Market Value of the
Common Shares on a 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 covenants and agrees to use its best
efforts to:
(i) Prepare and file a registration statement under the
Securities Act, on an appropriate form, with respect to the Common Shares
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 Common Shares purchasable upon
exercise of the Rights under the blue sky or securities laws of such
jurisdictions as may be necessary or appropriate.
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(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 one-half
of the securities that would be issuable at such time upon the exercise of one
Right in accordance with Section 11(a) (the consideration issuable per Right
pursuant to this Section 11(b)(i) being the "Exchange Consideration"). 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.
(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
held by such holder or, if the Exchange Consideration shall not have been paid,
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 will 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, directly
or indirectly, 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:
(A) the Company shall consolidate with, or merge with
and into, any other Person),
(B) any 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 any other 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
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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 any other Person or Persons,
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, if any Business Combination is consummated at any time after a
Person becomes an Acquiring Person, the securities specified in Section 11(a)):
(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 or 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
(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 and unissued
Common Shares that have not been reserved for issuance (and that shall, when
issued upon exercise thereof in accordance with this Rights
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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 under the
Securities Act; 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:
(x) cause a registration statement
under the Securities Act, on an appropriate form, with respect to the Rights and
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 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 or on Nasdaq;
(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 Sections 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
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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(b)) shall
thereafter be applicable, 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(a) and 12(a), and the provisions of Sections 7, 9 and 10 with
respect to the Common Shares shall apply, as nearly as reasonably may be, on
like terms to any such Common Shares.
(d) In the event that the number of Common Shares that are authorized
by the Company's Articles of Incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights is not sufficient
to permit the exercise in full of the Rights in accordance with Section 11, the
Company shall, to the extent permitted by applicable law and regulation, (a)
determine the excess of (1) the value of the Common Shares issuable upon the
exercise of a Right (computed using the Current Market Price used to determine
the number of Common Shares) (the "Current Value") over (2) the Purchase Price
(such excess is herein referred to as the "Spread"), and (B) with respect to
each Right, make adequate provision to substitute for the Common Shares, upon
the exercise of the Rights and payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the Purchase Price, (3) or other equity securities of
the Company (including, without limitation, shares, or units of shares, of
preferred stock that the Board of Directors of the Company has deemed to have
the same value as shares of Common Stock (such shares of preferred stock are
herein referred to as "Common Share Equivalents")), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the foregoing, having an
aggregate value equal to the Current Value, where such aggregate value has been
determined by the Board of Directors of the Company based upon the advice of a
nationally recognized investment banking firm selected by the Board of Directors
of the Company; provided, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within 30 days following
the later of (x) the first occurrence of the event significant to the rights
specifically and (y) the date on which the Company's right of redemption
pursuant to Section 23(a) expires (the later of (x) and (y) being referred to
herein as the "Trigger Date,") then the Company shall be obligated to deliver,
upon the surrender for exercise of a Right and without requiring payment of the
Purchase Price, Common Shares (to the extent available) and then, if necessary,
cash, which shares and/or cash have an aggregate value equal to the Spread. If
the Board of Directors of the Company shall determine in good faith that it is
likely that sufficient additional Common Shares could be authorized for issuance
upon exercise in full of the Rights, the 30-day period set forth above may be
extended to the extent necessary, but not more than 90 days after the Trigger
Date, in order that the Company may seek Shareholder approval for the
authorization of such additional shares (such period, as it may be extended, the
"Substitution Period"). To the extent that the Company determines that some
action need be taken pursuant to the first and/or second sentences of this
Section 11(d), the Company (x) shall provide, subject to Section 7(e) hereof,
that such action shall apply uniformly to all outstanding Rights, and (y) may
suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
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and/or to decide the appropriate form of distribution to be made pursuant to
such first sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. For purposes
of this Section 11(d), the value of the Common Shares shall be the Current
Market Price per share of the Common Shares on the Trigger Date and the value of
any Common Share Equivalent shall be deemed to have the same value as the Common
Shares on such date.
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 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,
evidences of indebtedness or subscription rights, options or warrants to holders
of Common Shares (other than 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 Common 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 Common Share) 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 Common 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(a) and 12(a), and the provisions of Sections 7,
9 and 10 with respect to the Common Shares shall apply, as nearly as reasonably
may be, 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 Common 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 Common 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.
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(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 the issuing to the holder of any Right exercised after such record date
the Common Shares and/or other securities, if any, issuable upon such exercise
over and above the Common 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 adjustments, (b) promptly
file with the Rights Agent and with each transfer agent for the Common Shares a
copy of such certificate, and (c) mail a brief summary thereof to each holder of
a Right Certificate (or, prior to the Distribution Date, of the Common Shares)
in accordance with Section 25. The Rights Agent shall be fully protected is
relying on any such certificate and on any adjustment therein contained.
SECTION 14. ADDITIONAL COVENANTS
(a) Notwithstanding any other provision of this Rights Agreement, no
adjustment to the number of Common Shares (or fractions 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 covenants and agrees that, after the Distribution Date,
except as permitted by Section 26, it will not 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.
SECTION 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES
(a) The Company may, but shall not be required to, issue fractions of
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
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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 fractions of
Common Shares upon exercise of the Rights or distribute certificates that
evidence fractional Common Shares. In lieu of fractional Common Shares, the
Company may elect to (i) utilize a depository arrangement as provided by the
terms of the Common Shares or (ii) in the case of a fraction of a Common Share,
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 Common Share. For purposes of
this Section 15(b), the current Market Value of a Common Share shall be the
closing price of a Common Share (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 Common
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 holder of Rights by the acceptance of 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 Shares), and any
registered holder of any Right Certificate (or, prior to the Distribution Date,
of the Common Shares), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution Date, of the
Common Shares) 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 in 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.
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SECTION 17. TRANSFER AND OWNERSHIP OF RIGHTS AND RIGHT CERTIFICATES
(a) Prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares.
(b) After the Distribution Date, the Right Certificates will be
transferable, subject to Section 7(a), 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.
(c) The Company and the Rights Agent may deem and treat the Person
in whose name a Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate or the associated certificate for
Common Shares 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 SHAREHOLDER
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 Common
Shares or of any other securities of the Company that may at any time be
issuable on the exercise of the Rights represented thereby.
SECTION 19. CONCERNING THE RIGHTS AGENT
(a) The Company agrees to pay to the Rights Agent reasonable and
customary 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.
(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 Shares 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 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
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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 ineligible 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 Rights
Certificate so countersigned; and, in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and, in all such
cases, such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and, in case at
that time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and, in all such cases, such Rights Certificates shall
have the full force provided in the Rights Certificates and in this 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 Rights Certificates (or, prior to the Distribution
Date, of the Common Shares), by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action
taken, 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 and Chief Executive Officer, the
Chief Financial Officer, any Vice President, 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.
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(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
Rights 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 executions of any Rights Certificates (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Rights Agreement or in
any Rights Certificate; nor shall it be responsible for any adjustment required
under the provisions of Section 11 or 12 or responsible for the manner, method
or amount of any such adjustment or the ascertaining of the existence of facts
that would require any such adjustment (except with respect to the exercise of
Rights evidenced by Rights Certificates after actual notice of any such
adjustment); nor shall it by any act under this Rights Agreement be deemed to
make any representation or warranty as to the authorization or reservation of
any Common Shares or other such securities to be issued pursuant to this Rights
Agreement or any Rights Certificate or as to whether any Common Shares or other
securities will, when so issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performance 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 Chairman and Chief Executive Officer, the Chief
Financial Officer, any Vice President, the Secretary or the Treasurer 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.
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 30 days' notice in
writing mailed to the Company and to each transfer agent of the Common Shares by
registered or certified mail, and to the holders of the Rights Certificates (or,
prior to the Distribution Date, of the Common Shares) by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon 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 Shares by registered or
certified mail, and to the holders of the Rights Certificates (or, prior to the
Distribution Date, of the Common
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Shares) by first-class mail. If the Rights Agent shall resign or be removed or
shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Rights Certificate
(or, prior to the Distribution Date, of the Common Shares) (who shall, with such
notice, submit his or her Rights Certificate or, prior to the Distribution Date,
the certificate representing his or her Distribution Date, for inspection by the
Company), then the registered holder of any Rights Certificate (or, prior to the
Distribution Date, of the Common Shares) may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation in good standing organized and doing business under the laws of the
United States, 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 which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it has 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 of the Common Shares
and mail a notice thereof in writing to the registered holders of the Rights
Certificates (or, prior to the Distribution Date, of the Common Shares). 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.
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 Rights
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 Shares 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 Shares so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon the
exercise, conversions 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, Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (i) no such Rights Certificate shall be issued
if, and to the extent that, the Company shall be advised by counsel that such
issuance would create a significant risk of material adverse tax consequences to
the Company or the Person to whom such Rights Certificate would be issued, and
(ii) no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
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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) the Distribution Date, 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 Common Shares or other securities of the Company deemed by the Company's
Board of Directors, in the exercise of its sole discretion, to be at least
equivalent in value to the Redemption Price; provided, however, that in addition
to any other limitation contained in this Rights Agreement on the right to
redeem outstanding Rights (including the occurrence of any event or the
expiration of any period after which the Rights may no longer be redeemed), for
the 120-day period after any date of a change (resulting from a proxy, or
consent solicitation) in the Company's Board of Directors which results in
Continuing Directors ceasing to constitute a majority of the Board of Directors,
the Rights may only be redeemed if the Company's Board of Directors, with the
concurrence of a majority of the Continuing Directors then in office, determines
that such redemption is, in its judgment, in the best interests of the Company
and its shareholders provided that, for purposes of this Section 24, the Person
or Group of Persons conducting such proxy or consent solicitation, shall be
deemed an Acquiring Person.
(b) Immediately upon the action of the Company's Board of Directors
ordering the redemption of the Rights in accordance with Section 24(a), 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 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 Shares. Each such notice or 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 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.
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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 the Common Shares) 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:
Edmark Corporation
0000 - 000xx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
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 the Common Shares) 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:
First Interstate Bank of Washington, N.A.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
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 the Common Shares) 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 Shares.
SECTION 26. SUPPLEMENTS AND AMENDMENTS
At any time prior to the Distribution Date 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 shall
occur, the time during which the Rights may be redeemed pursuant to Section 24)
without the approval of any holder of the Rights. From and after the
Distribution Date 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,
(b) shorten or lengthen any time period, or (c) make any other provisions 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
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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 shall become effective
immediately upon execution of the Company, whether or not also executed by the
Rights Agent. Notwithstanding anything contained in this Rights Agreement to the
contrary (i) during the 120-day period after any date of a change (resulting
from a proxy or consent solicitation) in the Company's Board of Directors which
results in Continuing Directors constituting less than a majority of the Board
of Directors, this Rights Agreement may be supplemented or amended only if the
Company's Board of Directors, with the concurrence of a majority of the
Continuing Directors then in office, determines that such supplement or
amendment is, in its judgment, in the best interests of the Company and its
shareholders and, after the Distribution Date, the holders of the Rights,
provided that, for purposes of this Section 26, the Person or Persons conducting
such proxy or consent solicitation, shall be deemed an Acquiring Person, and
(ii) at any time after the time a Person becomes an Acquiring Person, (x) this
Agreement may be supplemented or amended only if the Board of Directors, with
the concurrence of a majority of the Continuing Directors then in office,
determines that such supplement or amendment is, in their judgment, in the best
interests of the Company and its shareholders, and (y) no supplement or
amendment shall be made that decreases the Redemption Price, shortens the
Expiration Date, increases the initial Purchase Price or decreases the number of
shares of Common Stock for which a Right is initially exercisable. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock. In addition,
notwithstanding anything to the contrary contained in this Rights Agreement, no
supplement or amendment to this Rights Agreement shall be made that (x) reduces
the Redemption Price (except as required by Section 12(a)), (y) provides for an
earlier Expiration Date, or (z) changes the last two sentences in the definition
of Acquiring Person contained in Section 1.
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
Shares) 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 holder
of the Right Certificates (and, prior to the Distribution Date, of the Common
Shares).
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(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).
SECTION 29. SEVERABILITY; CONFLICT WITH OTHER AGREEMENTS
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 Washington and for all purposes shall be governed by and construed in
accordance with the law of Washington applicable to contract to be made and
performed entirely within Washington.
SECTION 31. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed as of the day and year first above written.
FIRST INTERSTATE BANK OF EDMARK CORPORATION
WASHINGTON, N.A.
By /s/ Xxxxx Xxx Xxxxxxxxx By /s/ Xxxxx X. Xxxxxxxx
------------------------------- -------------------------------
Its Vice President Xxxxx X. Xxxxxxxx, Chairman
and Chief Executive Officer
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EXHIBIT A
TO RIGHTS
AGREEMENT
[Form of Right Certificate]
Certificate No. ___
__________ Rights
NOT EXERCISABLE AFTER NOVEMBER 29, 2005, OR
EARLIER IF REDEEMED BY THE COMPANY. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $.001 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
EDMARK 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 29, 1995 (the "Rights Agreement"),
between Edmark Corporation, a Washington corporation (the "Company"), and First
Interstate Bank of Washington, N.A., 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 29, 2005 (the "Expiration Date"), at the principal office of the Rights
Agent, or its successors as Rights Agent (in Seattle, Washington), one fully
paid, nonassessable share
1-A
34
of Common Stock, no par value, of the Company (the "Common Shares"), at a
purchase price share equal to $100 (the "Purchase Price") payable in cash, 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, are the Purchase Price and the number and kind of shares that may be
so purchased as of December 15, 1995. 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
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 reference to the Rights Agreement 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 1principal 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 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 $.001 per Right (which amount shall
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be subject to adjustment as provided in the Rights Agreement) at any time prior
to the earlier of (i) such time as a Person (as defined in the Rights Agreement)
becomes an Acquiring Person and (ii) the Expiration Date; provided, however,
that for the 120-day period after any date of change (resulting from a proxy or
consent solicitation) in a majority of the Company's Board of Directors in
office at the commencement of such solicitation, the Rights may only be redeemed
if (A) there are directors then in office who were in office at the commencement
of such solicitation and (B) the Company's Board of Directors, with the
concurrence of a majority of such directors then in office, determines that such
redemption is, in its judgment, in the best interests of the Company and its
shareholders.
The Company may, but shall not be required to, issue fractions of
Common Shares or distribute certificates that evidence fractions of Common
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 or to issue
certificates or utilize a depository arrangement as provided in the terms of the
Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Common Shares
or of any other securities of the Company that may at any time be issuable on
the exercise 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, may of the rights of a
shareholder of the Company, including, without limitation, any right to vote for
the give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholder 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:
------------------------------------------------------
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EDMARK CORPORATION
By
-------------------------------------
Its
-------------------------------------
Attest:
-------------------------------------
[NAME]
Countersigned:
FIRST INTERSTATE BANK OF
WASHINGTON, N.A., as Rights Agent
By
-------------------------------------
Its
-------------------------------------
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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: _________________, 19__
-------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended.
--------------------------------------------------------------------------------
The undersigned hereby certifies that 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).
----------------------------------------
Signature
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Form of Reverse Side of Right Certificate, Cont.
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such
holder desires to exercise the Rights
represented by the Right Certificate)
To: EDMARK CORPORATION
The undersigned hereby irrevocably elects to exercise
____________________ Rights represented by this Right Certificate to purchase
the Common Shares issuable upon the exercise of such Rights and requests that
certificates for such Common Shares be issued in the name of:
--------------------------------
--------------------------------
--------------------------------
(Please print name and address and insert social security or other
identifying number)
If such number or 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 print name and address and insert social security or other
identifying number)
Dated: ____________________, 19___
-----------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an
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approved signature guarantee medallion program), pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934, as amended.
--------------------------------------------------------------------------------
The undersigned hereby certifies that 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).
----------------------------------------
Signature
--------------------------------------------------------------------------------
NOTICE
The signatures in the Form Assignment or Form of Election to Purchase,
as the case may be, must conform to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or any
change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement) and such Assignment or Election to Purchase will not be honored.
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