EXHIBIT 1
RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT, dated as of June 6, 2001, is made between Allied
Research Corporation, a Delaware corporation (the "Company"), and Mellon
Investor Services LLC, a New Jersey limited liability company (the "Rights
Agent").
RECITALS
The Board of Directors of the Company has authorized and declared the
payment of a dividend of one preferred share purchase right (a "Right") for each
share of Common Stock (as defined in Section 1) outstanding on the Record Date
(as defined in Section 1) and has authorized the issuance of one Right for each
share of Common Stock issued after the Record Date and before the earliest of
the Distribution Date, the Redemption Date, the Exchange Date and the Expiration
Date (as such terms are defined in Section 1) and in certain cases following the
Distribution Date. Each Right will represent, as of the Record Date, the right
to purchase one one-hundredth of one share of Preferred Stock (as defined in
Section 1) upon the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth in this Agreement, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
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following terms have the meanings indicated:
(a) "Acquiring Person" means any Person who or which, together with
all Affiliates and Associates of such Person, is (or has previously been, at any
time after the date of this Agreement, whether or not such Person(s) continues
to be) the Beneficial Owner of fifteen percent (15%) or more of the Common Stock
then outstanding (determined without taking into account any securities
exercisable or exchangeable for, or convertible into, Common Stock, other than
any such securities beneficially owned by the Acquiring Person and Affiliates
and Associates of such Person). However, "Acquiring Person" shall not include an
Exempt Person.
Notwithstanding the foregoing, a Person shall not become an "Acquiring
Person" solely as the result of an acquisition of Common Stock by the Company or
any Subsidiary which, by reducing the number of shares outstanding, increases
the proportionate number of shares beneficially owned by such Person to fifteen
percent (15%) or more of the Common Stock then outstanding as determined above;
provided, however, that if a Person becomes the Beneficial Owner of fifteen
percent (15%) or more of the Common Stock then outstanding as determined above
solely by reason of such a share acquisition by the Company and such Person
shall, after becoming the Beneficial Owner of such Common Stock, become the
Beneficial Owner of any additional shares of Common Stock by any means
whatsoever (other than as a result of the subsequent occurrence of a stock
dividend or a subdivision of the Common Stock into a larger number of shares or
a similar transaction), then such Person shall be deemed to be an "Acquiring
Person."
Notwithstanding the foregoing, if a majority of the Board of Directors
of the Company determines in good faith that a Person who would otherwise be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
Section 1(a), has become such inadvertently (including, without limitation,
because (X) such Person was unaware that it was the Beneficial Owner of the
requisite percentage of Common Stock or (Y) such Person was aware of the extent
of its ownership but had no actual knowledge of the consequences thereof under
this Agreement), and in any such case without any intention of changing or
influencing control of the Company, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that such Person would no
longer be an "Acquiring Person," as defined pursuant to the foregoing provisions
of this Section 1(a), then such Person shall not be deemed to be an "Acquiring
Person" for any purposes of this Agreement. The determination of whether such
Person becoming an Acquiring Person shall have been inadvertent and the
determination of whether the divestment of sufficient shares shall have been
made as promptly as practicable shall be made by a majority of the Board of
Directors of the Company.
(b) "Adjustment Number" has the meaning set forth in, and shall be
calculated in accordance with, the Certificate of Designation, Preferences and
Rights of Series B Participating Preferred Stock attached as Exhibit A hereto.
(c) "Affiliate" has the meaning given to such term in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as in effect on the
date of this Agreement; provided that, for purposes of this Agreement, the term
"Affiliate" shall not include any Person that is an Exempt Person.
(d) "Associate" has the meaning given to such term in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as in effect on the
date of this Agreement; provided that, for purposes of this Agreement, the term
"Associate" shall not include any Person that is an Exempt Person.
(e) Except as provided below, a Person shall be deemed to be the
"Beneficial Owner" of, and shall be deemed to "beneficially own," any
securities:
(1) which such Person or any Affiliate or Associate of such Person
beneficially owns, directly or indirectly;
(2) which such Person or any Affiliate or Associate of such Person
has, directly or indirectly, the right or obligation (whether or not then
exercisable or effective) to acquire pursuant to any agreement, arrangement or
understanding (whether or not in writing), or upon the exercise of conversion
rights, exchange rights, rights (other than these Rights), warrants or options,
or otherwise; provided, however, that a Person will 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 Affiliate or Associate
of such Person until such tendered securities are accepted for purchase or
exchange;
(3) which such Person or any Affiliate or Associate of such Person
has, directly or indirectly, the right (whether or not then exercisable) to
vote, or to direct the voting of, pursuant
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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 pursuant to this clause (3) if the agreement,
arrangement or understanding to vote, or to direct the voting of, such security
(A) arises solely from a revocable proxy or consent given in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the Exchange Act and applicable rules and regulations thereunder and (B) is not
also then reportable under Item 6 (or any comparable or successor item) of
Schedule 13D under the Exchange Act (or any comparable or successor schedule or
report);
(4) which such Person or any Affiliate or Associate of such Person
has "beneficial ownership" of as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act or any successor provision;
or
(5) which are beneficially owned, directly or indirectly, by any
other Person or any Affiliate or Associate of such other Person with whom such
Person or any Affiliate or Associate of such Person has any agreement,
arrangement or understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described in
clause (3) of this Section 1(e) or disposing of any securities of the Company.
Nothing in the preceding sentence 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 40 days
after the date of such acquisition.
Notwithstanding anything in this Agreement to the contrary, for
purposes of this Agreement, no Person shall be treated as the "Beneficial Owner"
of, or be deemed to "beneficially own," any securities solely by reason of the
ownership of those securities by any other Person that is an Exempt Person.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially under the preceding provisions in this
definition.
(f) "Business Combination" has the meaning set forth in Section 13 of
this Agreement.
(g) "Business Day" means any day other than a Saturday, Sunday or a
day on which banking institutions in the States of Delaware or New Jersey are
authorized or obligated by law or executive order to close.
(h) "Close of Business" on any given date means 5:00 p.m., Vienna,
Virginia time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 p.m. Vienna, Virginia time, on the next
succeeding Business Day.
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(i) "Common Equivalent Share" has the meaning set forth in Section
11(c)(1)(B) of this Agreement.
(j) "Common Share" has the meaning set forth in Section 11(c)(1)(B)
of this Agreement.
(k) "Common Stock" when used with reference to the Company means the
Common Stock, par value $0.10 per share, of the Company (as the same may be
changed by reason of any combination, subdivision or reclassification of the
Common Stock). "Common Stock" when used with reference to any Person (other than
the Company prior to a Business Combination) means 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 shares or units do not limit (as a fixed
amount and not merely in proportional terms) the amount of dividends or income
payable or distributable on such shares or units or the amount of assets
distributable on such shares or units upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person and do not provide that
such shares or units are subject to redemption at the option of such Person, or
any shares of capital stock or units of equity interests into which the
foregoing shall be reclassified or changed; provided, however, that if at any
time there are more than one such class or series of capital stock of or equity
interests in such Person, "Common Stock" of such Person will 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.
(l) "Current Market Price" per share or unit of Common Stock, Common
Equivalent Share or any other security on any date is the average of the daily
closing prices per share or unit of such Common Stock, Common Equivalent Share
or any other security for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date for the purpose of any
computation under this Agreement; provided, however, that in the event that the
Current Market Price per share of Common Stock, Common Equivalent Share or any
other security is determined during a period following the announcement by the
issuer of such Common Stock, Common Equivalent Share or any other security of
(i) a dividend or distribution on such Common Stock, Common Equivalent Share or
any other security other than a regular quarterly cash dividend, or (ii) any
subdivision, combination or reclassification of such Common Stock, Common
Equivalent Share or any other security, and prior to the expiration of 30
Trading Days after the "ex-dividend" date for such dividend or distribution or
the record date for such subdivision, combination or reclassification, then, and
in each such case, the "Current Market Price" must be appropriately adjusted to
take into account such dividend, distribution, subdivision, combination or
reclassification. The closing price for each Trading Day shall be the last sale
price, regular way, on such day, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, on such day,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the American
Stock Exchange ("AMEX") or, if the Common Stock, Common Equivalent Share or any
other security is not listed or admitted to trading on the AMEX, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal United States national securities exchange on
which the Common Stock, Common Equivalent Share or any other security is listed
or admitted to trading
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or, if the Common Stock, Common Equivalent Share or any other security is not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotations System or such other system
then in use, or, if on any such date the Common Stock, Common Equivalent Share
or any other security is not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the security selected by a majority of the Board of Directors of the
Company. If no such market maker is making a market, the fair market value of
such shares or units on such day shall be determined in good faith by a majority
of the Board of Directors of the Company, which determination shall be described
in a statement filed with the Rights Agent and shall be binding and conclusive
for all purposes. The term "Trading Day" means a day on which the principal
United States national securities exchange on which the Common Stock, Common
Equivalent Share or any other security is listed or admitted to trading is open
for the transaction of business or, if the Common Stock, Common Equivalent Share
or any other security is not listed or admitted to trading on any United States
national securities exchange, but is traded in the over-the-counter market, then
any day for which the high bid and low asked prices in the over-the-counter
market are reported, or if the Common Stock, Common Equivalent Share or any
other security is not traded in the over-the-counter market, then a Business
Day. If the Preferred Stock is not publicly traded, the "Current Market Price"
of the Preferred Stock shall be conclusively deemed to be the Current Market
Price of the Common Stock as determined pursuant to this paragraph of Section 1
(appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by the Adjustment
Number. Each Common Equivalent Share consisting of preferred stock other than
Preferred Stock shall be conclusively deemed to have the same "Current Market
Price" as a Common Equivalent Share consisting of Preferred Stock.
(m) "Distribution Date" means the earlier of (i) the tenth (10/th/)
day after the Stock Acquisition Date and (ii) the tenth (10/th/) Business Day
after commencement of or public disclosure of an intention to commence
(including, without limitation, any such commencement or public disclosure which
occurs before or after the date of this Agreement and prior to the issuance of
the Rights) a tender offer or exchange offer by a Person if, after acquiring the
maximum number of securities sought pursuant to such offer, such Person, or any
Affiliate or Associate of such Person, would be an Acquiring Person. A majority
of the Board of Directors of the Company may defer the date set forth in clause
(ii) of the preceding sentence to a specified later date or to an unspecified
later date to be determined by a subsequent action or event.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor statute.
(o) "Exchange Date" means the time at which Rights are exchanged
pursuant to Section 11(c)(2).
(p) "Exempt Event" means with respect to any Person, the acquisition
by such Person of Beneficial Ownership of Common Stock solely as a result of the
occurrence of a Triggering Event and the effect of such Triggering Event on the
last proviso of clause (2) of the definition of
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Beneficial Owner, other than a Triggering Event in which such Person becomes an
Acquiring Person.
(q) "Exempt Person" means (i) the Company, (ii) any Subsidiary of the
Company, (iii) any employee benefit plan of the Company or of any Subsidiary of
the Company and (iv) any Person holding Common Stock for any such employee
benefit plan or for employees of the Company or of any Subsidiary of the Company
pursuant to the terms of any such employee benefit plan.
(r) "Exercise Amount" means the amount payable by the holder as a
condition to the exercise of one Right. Until and unless it shall be adjusted in
accordance with this Agreement, the Exercise Amount shall be $50.00.
(s) "Expiration Date" means the Close of Business on May 31, 2011.
(t) "Person" means any individual, firm, corporation, limited
liability company, partnership, joint venture, association, trust,
unincorporated organization or other entity, and shall include any "group" as
that term is used in Rule 13d-5(b) under the Exchange Act (or any successor
provision).
(u) "Preferred Stock" means the Company's Series B Participating
Preferred Stock, par value $1.00 per share, having the rights and preferences
set forth in the Certificate of Designation, Preferences and Rights of Series B
Participating Preferred Stock, attached hereto as Exhibit A.
(v) "Principal Party" means (i) in the case of any Business
Combination described in clause (i), (ii) or (iii) of the first sentence of
Section 13(a), (A) the Person that is the issuer of any securities into which
shares of Common Stock of the Company are converted or for which they are
exchanged in such Business Combination or, if there is more than one such
issuer, the issuer of the Common Stock which has the greatest aggregate market
value or (B) if no securities are so issued, the Person that survives or results
from the Business Combination or, if there is more than one such Person, the
Person the Common Stock of which has the greatest aggregate market value, and
(ii) in the case of any Business Combination described in clause (iv) of the
first sentence in Section 13(a), the Person that receives the greatest portion
of the assets or earning power transferred pursuant to such Business Combination
or, if each Person that is a party to such Business Combination receives the
same portion of the assets or earning power so transferred or if the Person
receiving the greatest portion of the assets or earning power cannot reasonably
be determined, whichever of such Persons is the issuer of the Common Stock which
has the greatest aggregate market value; provided, however, that in any such
case, if the Common Stock of such Person is not at such time and has not been
continuously over the preceding 12-month period registered under Section 12 of
the Exchange Act and such Person is a direct or indirect Subsidiary of one or
more other Persons, then (x) "Principal Party" refers to whichever of such other
Persons has Common Stock that is and has been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act; (y) if the
Common Stocks of two or more of such other Persons are and have been so
registered, "Principal Party" refers to whichever of such other Persons is the
issuer of the Common Stock which has the
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greatest aggregate market value; or (z) if the Common Stock of none of such
other Persons has been so registered, "Principal Party" refers to whichever of
such other Persons (other than an individual) is the Person which has the equity
securities with the greatest aggregate market value. In case such Person is
owned, directly or indirectly, by a joint venture formed by two or more Persons
that are not owned, directly or indirectly, by the same Person, the rules set
forth above apply to each of the chains of ownership having an interest in such
joint venture as if such Person were a Subsidiary of both or all of such joint
ventures and the Principal Parties in each such chain shall bear the obligations
set forth in Section 13 in the same ratio as their direct or indirect interests
in such Person bear to the total of such interests.
(w) "Purchase Price" means: (i) until the Trigger Date, the price at
which one one-hundredth of a share of Preferred Stock shall be purchasable with
the Rights (the Purchase Price shall be $50.00 per one one-hundredth of a share
of Preferred Stock until and unless it shall be adjusted pursuant to this
Agreement) and (ii) immediately after the Trigger Date, the price per Common
Share for which Common Shares shall be purchasable with the Rights. Thereafter
the term "Purchase Price" as applied with respect to each kind of stock or other
property purchasable with the Rights as a result of adjustments prescribed by
this Agreement shall mean the price at which each share of such stock or the
smallest available unit of such other property is purchasable with the Rights.
(x) "Record Date" means the Close of Business on June 20, 2001.
(y) "Redemption Date" means the time at which the Rights are
scheduled to be redeemed as provided in Section 23.
(z) "Redemption Price" has the meaning given to such term in Section
23.
(aa) "Securities Act" means the Securities Act of 1933, as amended,
and any successor statute.
(bb) "Stock Acquisition Date" means the first date of public
disclosure by the Company, an Acquiring Person or otherwise that an Acquiring
Person has become such.
(cc) "Subsidiary" has the meaning given to such term in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as in effect on the
date of this Agreement.
(dd) "Trigger Date" means the first date upon which a Person becomes
an Acquiring Person.
(ee) "Triggering Event" shall mean a Person becoming an Acquiring
Person.
Section 2. Appointment of Rights Agent. The Company hereby appoints
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the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable. In the event the Company appoints one or more co-Rights
Agents, the respective duties of the Rights Agent and
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any co-Rights Agent shall be as the Company shall determine. Contemporaneously
with such appointment, if any, the Company shall notify the Rights Agent
thereof. Notwithstanding the foregoing, the Rights Agent shall have no duty to
supervise, and in no event shall be liable for, the acts or omissions of any
such co-Rights Agent.
Section 3. Issuance of Rights Certificates.
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(a) Until the Distribution Date: (i) the Rights shall be issued in
respect of and shall be evidenced by the certificates representing the shares of
Common Stock issued and outstanding on the Record Date and shares of Common
Stock issued or which become outstanding after the Record Date and prior to the
earliest of the close of business on the Distribution Date, the Redemption Date,
the Exchange Date and the Expiration Date (which certificates for Common Stock
shall be deemed to also be certificates evidencing the Rights), and not by
separate certificates; (ii) the registered holders of such shares of Common
Stock shall also be the registered holders of the Rights associated with such
shares; and (iii) the Rights shall be transferable only in connection with the
transfer of shares of Common Stock, and the surrender for transfer of any
certificate for such shares of Common Stock shall also constitute the surrender
for transfer of the Rights associated with such shares. As soon as practicable
after the Company has notified the Rights Agent of the occurrence of the
Distribution Date and has provided the Rights Agent with all necessary
information, the Rights Agent shall, at the expense of the Company (except as
otherwise provided in Section 7(e)), mail, by first-class, insured, postage
prepaid mail, to each record holder of the Common Stock as of the Close of
Business on the Distribution Date, as shown by the records of the Company, at
the address of such holder shown on such records, one or more certificates
evidencing the Rights ("Rights Certificates"), in substantially the form of
Exhibit B hereto, evidencing one Right (as adjusted from time to time pursuant
to this Agreement) for each share of Common Stock so held. From and after the
Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) Rights shall be issued in respect of all shares of Common Stock
which are issued or sold by the Company after the Record Date but prior to the
earliest of the Distribution Date, the Redemption Date, the Exchange Date and
the Expiration Date. In addition, in connection with the issuance or sale of
Common Stock by the Company following the Distribution Date and prior to the
earliest of the Redemption Date, the Exchange Date and the Expiration Date, the
Company shall, with respect to Common Stock so issued or sold (i) pursuant to
the exercise of stock options issued prior to the Distribution Date or under any
employee plan or arrangement created prior to the Distribution Date, or (ii)
upon the exercise, conversion or exchange of securities issued by the Company
prior to the Distribution Date, issue Rights and Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (x) no such Rights and 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 (y) no such Rights and Rights Certificates shall be issued if, and
to the extent that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof. Certificates issued after the Record Date
representing shares of Common Stock outstanding on the Record Date and shares of
Common Stock issued after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date, the Exchange Date and
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the Expiration Date shall have impressed, printed, or written on, or otherwise
affixed to them a legend substantially in the following form:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights Agreement
between Allied Research Corporation (the "Company") and
Mellon Investor Services LLC, as Rights Agent, dated as of
June 6, 2001 (the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of the
Company. Under certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor. Under certain
circumstances, Rights that were, are or become beneficially
owned by Acquiring Persons or their Associates or
Affiliates (as such terms are defined in the Rights
Agreement) may become null and void and the holder of any
of such Rights (including any subsequent holder) shall not
have any right to exercise such Rights.
(c) Notwithstanding any other provision of this Agreement, neither the
Company, the Rights Agent nor anyone else shall have any obligation to issue any
Rights Certificate to an Acquiring Person or to anyone else in whose hands the
Rights nominally represented by such Certificate shall be null and void either
initially or in connection with a request to register a transfer of Rights
represented by a certificate previously issued. Furthermore, neither the
Company, the Rights Agent nor anyone else shall be obligated to issue Rights
Certificates to any person making a tender offer which if consummated could
render such person an Acquiring Person or to any Affiliate or Associate of such
person until and unless the tender offer is withdrawn and the person shall have
established to the Company's reasonable satisfaction that such person does not
intend to become an Acquiring Person. The Company shall be entitled to require
any person claiming the right to receive a Rights Certificate to present such
evidence as the Company shall require in good faith to establish to the
Company's satisfaction that the Rights represented by that Certificate have not
become null and void under the provisions in Section 7(e) or that the Company is
not entitled to withhold such Certificate under the provisions of the preceding
sentence.
Section 4. Form of Rights Certificates. The Rights Certificates (and
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the form of election to purchase shares and form of assignment to be printed on
the reverse thereof) shall be in substantially the form of Exhibit B hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate (but which
do not affect the rights, duties or responsibilities of the Rights Agent) and as
are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any law or with any rule or
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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 this Agreement, the Rights 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 shares of Preferred
Stock as shall be set forth therein at the Purchase Price set forth therein, but
the number and kind of such securities and the Purchase Price shall be subject
to adjustment as provided in this Agreement.
Section 5. Execution, Countersignature and Registration.
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(a) Each Rights Certificate shall be executed on behalf of the
Company by the Company's Chief Executive Officer, President, or any Vice
President, either manually or by facsimile signature, and shall have affixed
thereto the Company's seal or a facsimile thereof which shall be attested by the
Company's Secretary or an Assistant Secretary, either manually or by facsimile
signature. Each Rights Certificate shall be countersigned by the Rights Agent
either manually or, if permitted by the Company, by facsimile signature and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Company who shall have signed a Rights Certificate shall cease to be such
officer of the Company before countersignature by the Rights Agent and issuance
and delivery by the Company, such Rights Certificate nevertheless may be
countersigned by the Rights Agent and issued and delivered with the same force
and effect as though the Person who signed such Rights Certificate had not
ceased to be such officer of the Company; and any Rights Certificate may be
signed on behalf of the Company by any Person who, at the actual date of the
execution of such Rights Certificate, shall be a proper officer of the Company
to sign such Rights Certificate, although at the date of the execution of this
Agreement any such Person was not such an officer.
(b) Following the Distribution Date and receipt by the Rights Agent
of all necessary information, the Rights Agent shall keep or cause to be kept,
at its office designated for such purpose, books for registration and transfer
of the Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced by each Rights Certificate, and the certificate number and the
date of issuance of each Rights Certificate.
Section 6. Transfer, Division, Combination and Exchange of Rights
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Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
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(a) Subject to the provisions of Section 3(c) and Section 14, at any
time after the Close of Business on the Distribution Date and at or prior to the
Close of Business on the earliest of the Redemption Date, the Exchange Date and
the Expiration Date, any Rights Certificate or Rights Certificates may be
transferred, divided, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like number
of shares of Preferred Stock (or following a Triggering Event or a Business
Combination, other securities, cash or other property, as the case may be) as
the Rights Certificate or Rights Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, divide, combine
or exchange any Rights Certificate shall make such request in writing delivered
to the Rights Agent, and shall surrender the Rights Certificate or Rights
Certificates to be transferred, divided, combined or exchanged at the office of
the Rights Agent designated for
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such purpose. Thereupon the Rights Agent shall countersign and deliver to the
Person entitled thereto a Rights Certificate or Rights Certificates, as the case
may be, as so requested. As a condition to such transfer, division, combination
or exchange, the Company may require payment by the surrendering holder of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection therewith. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have duly and
properly completed and executed the form of assignment on the reverse side of
such Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or such former or proposed Beneficial Owner)
thereof or such Beneficial Owner's Affiliates or Associates as the Company or
the Rights Agent shall reasonably request. The Rights Agent shall have no duty
or obligation to take any action under any Section of this Agreement which
requires the payment of a Rights holder of applicable taxes and governmental
charges unless and until the Rights Agent is satisfied that all such taxes
and/or charges have been paid.
(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 Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security satisfactory to them, and, at the Company's or the Rights Agent'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 Rights Certificate if mutilated, the Company will make and
deliver a new Rights Certificate of like tenor to the Rights Agent for delivery
to the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
------------------------------------------------------
Rights.
------
(a) Each Right shall entitle (except as otherwise provided in this
Agreement) the registered holder thereof, upon the exercise thereof as provided
in this Agreement, to purchase, for the Purchase Price, at any time after the
Distribution Date and prior to the earliest of the Expiration Date, the Exchange
Date and the Redemption Date, one one-hundredth (1/100) of a share of Preferred
Stock, subject to adjustment from time to time as provided in Sections 11 and
13.
(b) The registered holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided in this Agreement) in
whole or in part (except that no fraction of a Right may be exercised) at any
time after the Distribution Date and prior to the earliest of the Expiration
Date, the Exchange Date and the Redemption Date, by surrendering the Rights
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal stock transfer office of the
Rights Agent, together with payment of the Exercise Amount for each Right
exercised.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Exercise Amount for each Right exercised and an amount equal to
any applicable tax or charge required to be paid by the surrendering holder
pursuant to Section 9(d), the Rights Agent shall, subject to the provisions of
this Agreement, thereupon promptly (i)(A) requisition from any transfer agent
for
11
the Preferred Stock (or make available, if the Rights Agent is the transfer
agent for such shares) certificates for the Preferred Stock (or other
securities, as the case may be) to be purchased (and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests), or
(B) if the Company shall have elected to deposit the total number of shares of
Preferred Stock (or other securities, as the case may be) issuable upon exercise
of the Rights with a depositary agent, requisition from the depositary agent
depositary receipts representing such Preferred Stock (or other securities, as
the case may be) as are to be purchased (in which case certificates for the
Preferred Stock (or other securities, as the case may be) represented by such
receipts shall be deposited by the transfer agent with the depositary agent) and
the Company shall direct the depositary agent to comply with such request; (ii)
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 Rights
Certificate, registered in such name or names as may be designated by such
holder; and (iii) if appropriate, requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional shares in accordance with
Section 14 of this Agreement and, promptly after receipt thereof, cause the same
to be delivered to or upon the order of the registered holder of such Rights
Certificate. In the event that the Company is obligated to issue other
securities (including shares of Common Stock) of the Company, pay cash and/or
distribute other property pursuant to this Agreement, the Company will make all
arrangements necessary so that such other securities, cash and/or other property
are available for distribution by the Rights Agent, if and when necessary to
comply with this Agreement.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Rights
Certificate or to his duly authorized assigns, subject to the provisions of
Section 3(c) and Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, any
Rights that are or were formerly beneficially owned on or after the earlier of
the Distribution Date and the Trigger Date by (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (ii) a direct or indirect
transferee of an Acquiring Person (or of an Associate or Affiliate of such
Acquiring Person) who becomes a transferee after the Acquiring Person becomes
such, or (iii) a direct or indirect transferee of an Acquiring Person (or of an
Associate or Affiliate of such Acquiring Person) who becomes a transferee prior
to or concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a direct or indirect transfer (whether or not for
consideration) from the Acquiring Person (or from an Associate or Affiliate of
such Acquiring Person) to holders of equity interests in such Acquiring Person
(or to holders of equity interests in any Associate or Affiliate of such
Acquiring Person) or to any Person with whom the Acquiring Person (or an
Associate or Affiliate of such Acquiring Person) has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a direct or
indirect transfer which a majority of the Board of Directors of the Company
determines is part of an agreement, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall, immediately
upon the occurrence of a Triggering Event and without any further action, be
null and void and no holder of such Rights shall have any rights whatsoever with
respect to such Rights whether under this Agreement or otherwise; provided,
however, that, in the case of transferees under clause (ii) or clause (iii)
above, any Rights
12
beneficially owned by such transferee shall be null and void only if and to the
extent such Rights were formerly beneficially owned by a Person who was, at the
time such Person beneficially owned such Rights, or who later became, an
Acquiring Person or an Affiliate or Associate of such Acquiring Person. The
Company shall notify the Rights Agent when this Section 7(e) applies and use all
reasonable efforts to ensure that the provisions of this Section 7(e) are
complied with, but neither the Company nor the Rights Agent shall have any
liability to any holder of a Rights Certificate or to any other Person as a
result of the Company's failure to make, or any delay in making (including any
such failure or delay by the Board of Directors of the Company) any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to the registered holder of a Rights Certificate upon the
occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) duly and properly completed and signed the
certificate contained in the form of election to purchase set forth on the
reverse side of the Rights Certificate surrendered for such exercise and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or
former or proposed Beneficial Owner) thereof or the Affiliates or Associates of
such Beneficial Owner (or former or proposed Beneficial Owner) as the Company or
the Rights Agent shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
---------------------------------------------------
Rights Certificates surrendered for the purpose of exercise, transfer, division,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
the provisions of this Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Stock.
-----------------------------------------------
(a) The Company covenants and agrees that it will cause to be
reserved and kept available at all times out of its authorized and unissued
shares of Preferred Stock or its authorized and issued shares of Preferred Stock
held in its treasury (and, following the occurrence of a Triggering Event or a
Business Combination, out of its authorized and unissued shares of Common Stock
and/or other securities or out of its authorized and issued shares of Common
Stock and/or other securities held in its treasury) free from preemptive rights
or any right of first refusal, a sufficient number of shares of Preferred Stock
(and, following the occurrence of a Triggering Event, shares of Common Stock
and/or other securities) to permit the exercise in full of all Rights from time
to time outstanding.
13
(b) The Company further covenants and agrees, so long as the
Preferred Stock (and, following the occurrence of a Triggering Event or a
Business Combination, shares of Common Stock and/or other securities) issuable
upon the exercise of Rights may be listed on any United States national
securities exchange or quoted on any automated quotation system, to use its best
efforts to cause, from and after the time that the Rights become exercisable,
all such shares and/or other securities reserved for such issuance to be listed
on such exchange or quoted on such automated quotation system upon official
notice of issuance upon such exercise.
(c) The Company further covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
(and, following the occurrence of a Triggering Event or a Business Combination,
shares of Common Stock and/or other securities) delivered upon the exercise of
Rights shall, at the time of delivery of the certificates for such shares and/or
such other securities (subject to payment of the Purchase Price), be duly and
validly authorized and issued, fully paid, nonassessable, freely tradable, not
subject to liens or encumbrances, and free of preemptive rights, rights of first
refusal or any other restrictions or limitations on the transfer or ownership
thereof, of any kind or nature whatsoever.
(d) The Company further covenants and agrees that it will pay when
due and payable any and all taxes and governmental charges which may be payable
in respect of the original issuance or delivery of the Rights Certificates or of
any certificates for shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) upon the exercise of Rights. The Company shall
not, however, be required to (i) pay any tax or charge which may be payable in
respect of any transfer involved in the issuance or delivery of any Rights
Certificates or the issuance or delivery of any certificates for shares of
Preferred Stock (or Common Stock and/or other securities as the case may be) to
a Person other than, or in a name other than that of, the registered holder of
the Rights Certificate evidencing Rights surrendered for exercise or (ii)
transfer or deliver any Rights Certificate or issue or deliver any certificates
for shares of Preferred Stock (or Common Stock and/or other securities as the
case may be) upon the exercise of any Rights until any such tax or charge shall
have been paid (any such tax or charge being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax or charge is due.
(e) The Company shall (i) as soon as practicable following a
Triggering Event (or such earlier time following the Distribution Date as may be
required by law), prepare and file a registration statement on an appropriate
form under the Securities Act with respect to the securities purchasable upon
exercise of the Rights, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the earlier of (A) the
date as of which Rights are no longer exercisable for such securities and (B)
the Expiration Date. The Company shall also take such action as may be necessary
or appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercise of the Rights. The
Company may temporarily suspend, for a period of time not to exceed 120 days
after the date of a Triggering Event, the exercisability of the Rights in order
to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall make a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as
14
well as a public announcement at such time as the suspension is no longer in
effect. The Company shall promptly provide the Rights Agent with copies of such
announcements.
Section 10. Preferred Stock Record Date. Each Person in whose name any
---------------------------
certificate for shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Stock (or Common Stock and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable taxes and charges) was made; provided,
however, that if the date of such surrender and payment is a date upon which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares (and/or such other securities, as the
case may be) on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are open.
Section 11. Adjustments to Purchase Price, Number of Shares or Number
---------------------------------------------------------
of Rights. The Purchase Price, the number and kind of securities, cash and other
---------
property obtainable upon exercise of each Right and the number of Rights
outstanding shall be subject to adjustment from time to time as provided in this
Section 11.
(a) Adjustments Prior to Trigger Date:
(1) In the event the Company shall at any time after the
date of this Agreement and prior to the Trigger Date (i) pay a dividend or make
a distribution on the Common Stock payable in shares of Common Stock, (ii)
subdivide (by a stock split or otherwise) the outstanding Common Stock into a
larger number of shares, (iii) combine (by a reverse stock split or otherwise)
the outstanding Common Stock into a smaller number of shares (any of the actions
described in clauses (i), (ii) or (iii) are herein called a "stock split") then:
(A) The number of Rights outstanding shall be adjusted
so that after giving effect to such stock split the number of Rights outstanding
shall be exactly equal to the number of shares of Common Stock outstanding (and
so that prior to the Distribution Date one Right shall be associated with every
share of Common Stock outstanding after such stock split);
(B) The Exercise Amount shall be adjusted by
multiplying the Exercise Amount in effect immediately prior to such stock split
by a fraction, the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such stock split and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
after such stock split;
(C) The Purchase Price for each one one-hundredth of a
share of Preferred Stock shall not change; and
15
(D) The fraction of a share of Preferred Stock
purchasable with each Right immediately after such stock split shall be equal to
the product derived by multiplying the fraction of a share of Preferred Stock
purchasable with each Right immediately prior to such stock split times the
fraction cited in clause (B) above.
The following example illustrates the intended operation of the
preceding provisions. Assume that initially each Right would (when and if it
became exercisable) entitle its holder to purchase one one-hundredth of a share
of Preferred Stock for $200 (and accordingly the initial Exercise Amount and the
initial Purchase Price per one one-hundredth of a share of Preferred Stock are
each $200). Assume further that prior to the Distribution Date, the Company
splits its Common Stock two for one (thereby doubling the number of shares of
Common Stock outstanding). The intended operation of the preceding adjustment
provisions is that: (i) the number of Rights outstanding would also double; (ii)
one Right would be associated with each share of Common Stock outstanding after
the stock split; (iii) each Right would have an Exercise Amount equal to $100;
(iv) each Right will entitle its holder (when and if the Right becomes
exercisable) to purchase one two-hundredth of one share of Preferred Stock; and
(v) the Purchase Price for each one one-hundredth of a share of Preferred Stock
would remain $200 so that the price for each one two-hundredth of a share of
Preferred Stock purchasable with each Right would be $100.
(2) Adjustment in Rights Certificates: In the event the
Distribution Date shall occur and the Company shall issue separate certificates
to represent the Rights, the following provisions shall thereafter apply:
(A) In the event the number of Rights outstanding are
increased pursuant to Section 11(a)(1), the Company shall as promptly as
reasonably possible distribute to the record holders of the Rights on the record
date for the stock split giving rise to the increase in the number of Rights
certificates representing the additional Rights issuable by reason of such stock
split.
(B) In the event the number of Rights outstanding are
reduced pursuant to Section 11(a) by reason of the occurrence of a reverse stock
split or its functional equivalent, then each Rights Certificate outstanding
prior to such reverse stock split shall thereafter represent the reduced number
of Rights into which the Rights represented by such certificate immediately
prior to such reverse stock split shall have been converted by reason of the
occurrence of that reverse stock split.
(b) Basic Triggering Event Adjustments: Upon the first occurrence of
a Triggering Event (except as otherwise provided in this Agreement), each Right
shall be changed so that immediately after the Triggering Event:
(1) it shall no longer be exercisable for Preferred Stock
but rather shall be exercisable for Common Stock (subject to adjustment as
provided in Section 11(c));
(2) the number of shares of Common Stock which may be
acquired (upon exercise of each Right and payment of the Exercise Amount) shall
be equal to the result
16
obtained by dividing (x) 50 percent of the Current Market Price per share of
Common Stock on the date of the occurrence of the Triggering Event into (y) the
Exercise Amount in effect immediately prior to the Triggering Event; and
(3) the Purchase Price per Common Share purchasable with
each Right shall be equal to 50 percent of the Current Market Price per share of
Common Stock on the date of the occurrence of the Triggering Event.
(c) Other Post Triggering Event Adjustments.
(1) Use of Common Equivalent Shares or Cash: In the event
that the number of shares of Common Stock which are authorized by the Company's
certificate of incorporation, but which are not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights ("Available Common
Stock"), is not sufficient to permit the exercise in full of the Rights after
the adjustment made in accordance with Section 11(b), then:
(A) First, the Available Common Stock shall be
allocated among all of the then-outstanding and exercisable Rights so that each
Right shall entitle its holder to receive (upon exercise of the Right and
payment of the Exercise Amount) the same amount of Available Common Stock and
(ii) second, the Board of Directors of the Company shall promptly take
appropriate action to declare that each Right shall additionally entitle its
holder to receive (x) a number of Common Equivalent Shares equal to the
remainder derived by subtracting the number of shares of Available Common Stock
allocated to each Right in the preceding clause (i) from the total number of
shares of Common Stock which would have been purchasable with such Right if the
Corporation had a sufficient number of shares of Common Stock to permit the
Right to be exercisable entirely for Common Stock (such remainder being referred
to herein as the "Unallocated Shares"), (y) cash in an amount equal to the
Current Value of the Unallocated Shares, or (z) any combination of the foregoing
determined by the Board of Directors of the Company so long as each Right
entitles its holder to receive the same kind and amount of Common Equivalent
Shares and the same amount of cash as the holder of each other Right. For
purposes of the preceding sentence, the "Current Value" of a particular number
of Unallocated Shares shall be equal to the product derived by multiplying that
particular number times the greater of (i) the Current Market Price (calculated
as prescribed in Section 1) for the Common Stock on the day on which the Board
of Directors determines to make a substitution of cash for such Unallocated
Shares (the "Substitution Date") or (ii) the closing price per share (calculated
as prescribed in Section 1) for the Common Stock on the Trading Day immediately
prior to the Substitution Date.
(B) For purposes of this Agreement, a "Common
Equivalent Share" shall be a share or fraction of a share of preferred stock
(including, but not limited to, Preferred Stock), as follows: (i) with respect
to Preferred Stock, a Common Equivalent Share shall be the fraction of a share
of Preferred Stock equal to the reciprocal of the Adjustment Number in effect at
the time the term shall be applied and/or the unit of Preferred Stock issued and
(ii) with respect to preferred stock other than Preferred Stock, a Common
Equivalent Share shall be a share or fraction of a share of such preferred stock
that the Board of Directors of the Company deems to represent substantially the
same proportionate interest in the Company as a
17
Common Equivalent Share represented by such fraction of a share of Preferred
Stock and to have a dividend rate and other characteristics as similar as
possible to such fraction of a share of Preferred Stock. The term "Common Share"
whenever it is used in this Agreement means both a share of Common Stock and a
Common Equivalent Share.
(C) If circumstances after the initial Trigger Date
require the use of Common Equivalent Shares, the Company shall use its best
efforts to obtain authorization to issue (i) a sufficient quantity of Common
Stock to permit Common Stock to be issued upon exercise of the Rights and/or any
exercise of the exchange right under the following Section and (ii) a sufficient
quantity of Common Equivalent Shares as may be necessary or appropriate to
permit Common Equivalent Shares to be issued upon exercise of the Rights and/or
any exercise of the exchange right under the following Section. Each time the
Company's authorized Common Stock shall be increased, the adjustment required
under the preceding paragraphs shall be redone to maximize the amount of Common
Stock issuable upon exercise of the Rights. To the extent excess authorized
Common Stock remains after the readjustment required by the preceding sentence,
the holder of any outstanding Common Equivalent Share shall have the right at
any time to require the Company to exchange that share for a share of Common
Stock.
(D) In no event, however, shall the Company be
obligated to reserve any Common Stock for issuance under the Rights until and
unless a Triggering Event actually occurs.
(E) In no event shall the Company issue any Preferred
Stock except for issuances caused by exercise of the Rights and except for
issuances required by this Section 11(c)(1), Section 11(c)(2) or Section
11(d)(6).
(2) Exchange Option:
(A) At any time after the occurrence of a Triggering
Event and prior to (i) the time any Person (other than an Exempt Person),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of fifty percent (50%) or more of the Common Stock then
outstanding and (ii) the occurrence of a Business Combination, the Board of
Directors of the Company may, at its option, cause the Company to exchange for
all or part of the then-outstanding and exercisable Rights, Common Shares at an
exchange ratio of one Common Share per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
of this Agreement (such exchange ratio being referred to herein as the "Exchange
Ratio"). Any partial exchange shall be effected on a pro rata basis based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 7(e) hereof) held by each holder of Rights.
(B) Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any particular Rights pursuant
to this Section 11(c)(2) and without any further action and without any notice,
the right to exercise those particular Rights shall terminate and the only right
a holder shall have thereafter with respect to any of those particular Rights
shall be to receive the number of Common Shares equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The Company shall
promptly
18
give public notice of any such exchange (as well as prompt written notice
thereof to the Rights Agent) and in addition, the Company shall promptly mail a
notice of any such exchange to all of the holders of such Rights in accordance
with Section 25 of this Agreement; provided, however, that the failure to give,
any delay in giving or any defect in, such notice shall not affect the validity
of such exchange. Each such notice of exchange will state the method by which
the exchange of the Common Shares for Rights will be effected and, in the event
of any partial exchange, the number of Rights which will be exchanged. The
Company shall not be required to issue fractions of Common Shares or to
distribute certificates which evidence fractional Common Shares. In lieu of such
fractional Common Shares, the Company shall pay to the registered holders of the
Rights Certificates with regard to which such fractional Common Shares would
otherwise be issuable an amount in cash equal to the product derived by
multiplying (x) the subject fraction, by (y) the last sale price of the Common
Shares on the fifth Trading Day following the public announcement of the
exchange by the Company, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices on such day, in either case on a
when issued basis (taking into account the exchange), as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the AMEX (or, if the Common Shares are not so
listed or traded, then as determined in the manner provided under the definition
of "Current Market Price," adjusted to take into account the exchange). In
determining whether any particular holder shall be obligated to receive cash in
lieu of a fractional share, the holder shall be entitled to have all Rights
beneficially owned by such holder aggregated so that only one fractional share
shall be attributable to all the Rights so beneficially owned.
(d) Antidilution Adjustments After the Trigger Date:
(1) In the event the Company shall at any time after the
Trigger Date effect any stock split with respect to its Common Stock, then the
Purchase Price to be in effect after such stock split shall be determined by
multiplying the Purchase Price in effect immediately prior to such action by a
fraction, the numerator of which shall be the number of Common Shares
outstanding immediately prior to such stock split and the denominator of which
shall be the number of Common Shares outstanding immediately after such stock
split.
(2) In case the Company shall at any time after the Trigger
Date fix a record date for the making of a distribution to holders of Common
Stock (including any such distribution made in connection with a
reclassification of the Common Stock or a consolidation or merger in which the
Company is the surviving corporation) of securities (other than Common Stock and
rights, options or warrants referred to in Section 11(d)(3), cash (other than a
regular periodic cash dividend at an annual rate not in excess of (x) one
hundred and twenty-five percent (125%) of the annual rate of the regular cash
dividend paid on the Common Stock during the immediately preceding fiscal year
or (y) in the event that a regular cash dividend was not paid on the Common
Stock during such preceding fiscal year, five percent (5%) of the Current Market
Price of the Common Stock on the date such regular cash dividend was first
declared), property, evidences of indebtedness or assets, the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the Current Market Price per share of
19
Common Stock on such record date, less the fair market value (as determined in
good faith by a majority of the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent) of
such securities, cash, property, evidences of indebtedness or assets to be so
distributed in respect of one share of Common Stock, and the denominator of
which shall be such Current Market Price per share of Common Stock on such
record date. Such adjustments shall be made successively whenever such a record
date is fixed; and in the event that such distribution is not made following
such adjustment, the Purchase Price shall be readjusted to be the Purchase Price
which would have been in effect if such record date had not been fixed.
(3) If the Company shall at any time after the Trigger
Date fix a record date for the issuance of rights, options or warrants to
holders of Common Shares entitling them to subscribe for or purchase Common
Shares (or securities convertible into Common Shares) at a price per Common
Share (or, in the case of a convertible security, having a conversion price per
Common Share) less than the Current Market Price per share of Common Stock on
such record date and requiring that the conversion or purchase right be
exercised within 45 calendar days after such record date, the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of shares of Common Shares
outstanding on such record date, plus the number of Common Shares which the
aggregate exercise and/or conversion price for the total number of Common Shares
which are obtainable upon exercise and/or conversion of such rights, options,
warrants or convertible securities would purchase at such Current Market Price,
and the denominator of which shall be the number of shares of Common Shares
outstanding on such record date, plus the number of additional Common Shares
which may be obtained upon exercise and/or conversion of such rights, options,
warrants or convertible securities. In case such subscription price may be paid
in a consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by a majority
of the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the Rights
Agent. Common Shares owned by or held for the account of the Company or any
Subsidiary of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants are
not issued following such adjustment, the Purchase Price shall be readjusted to
be the Purchase Price which would have been in effect if such record date had
not been fixed.
(4) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall determine
to be advisable in order that any combination or subdivision of the Common
Stock, issuance wholly for cash of any Common Stock at less than the Current
Market Price, issuance wholly for cash of Common Stock or securities which by
their terms are convertible into or exchangeable or exercisable for Common
Shares, stock dividends or issuance of rights, options or warrants referred to
in this Section 11, hereafter made by the Company to holders of its Common
Shares, shall not be taxable to such stockholders.
20
(5) After each adjustment of the Purchase Price pursuant to any of
subsections (1) - (4) immediately above, the number of Common Shares purchasable
with each Right shall be adjusted to the quotient derived by dividing the
Purchase Price as constituted after giving effect to such adjustment into the
Exercise Amount.
(6) The Company shall not take any of the actions described in any
of subsections (1) - (3) above at a time when any Common Equivalent Shares are
outstanding unless the Company shall take substantively identical actions with
respect to the outstanding Common Stock and outstanding Common Equivalent
Shares. Conversely, the Company shall not take any actions with respect to
outstanding Common Equivalent Shares analogous to those described in any of
subsections (1) - (3) above unless the Company shall take substantively
identical actions with respect to the outstanding Common Stock and outstanding
Common Equivalent Shares.
(e) Recapitalizations.
(1) In the event that after the Trigger Date, the Company shall
issue any securities in a reclassification of the Common Stock or in any other
recapitalization (including any such reclassification in connection with a
consolidation or merger in which the Company is the surviving corporation), then
in each such event:
(A) the property purchasable with each Right shall be adjusted
to be whatever the owner of that Right would have owned by reason of both (i)
the exercise of that Right immediately prior to such recapitalization or
reclassification and (ii) the effect of that recapitalization or
reclassification on the property assumed to have been received in such exercise.
(B) The Exercise Amount shall be allocated among the shares of
stock and/or other units of property for which the Right shall be exercisable
after giving effect to the adjustment cited in clause (A) based on the fair
market value of such property to determine the Purchase Price for each such
share and/or unit.
(2) To illustrate the intended operation of this provision, assume
that: (i) immediately prior to a reclassification, each Right were exercisable
for 10 Common Shares and the Exercise Amount were $200 (resulting in a purchase
price of $20 per Common Share); (ii) as a result of the Reclassification, each
outstanding Common Share is reclassified into two New Common Shares and one
Series C Share; and (iii) immediately after the reclassification, the market
value of each New Common Share was $15 and the market value of each Series C
share was $10. Immediately after the assumed reclassification, each Right would
be exercisable for 20 New Common Shares at a purchase price of $7.50 per share
and ten Series C Shares at a purchase price of $5 per share.
(f) In the event a Triggering Event shall occur, or in the event there
shall be a recapitalization or reclassification pursuant to Section 11(e), or in
the event there shall be any merger or other action which shall cause a change
in the property purchasable with the Rights under Section 13, or in the event
there shall be any other occurrence or development which shall
21
cause the property purchasable with the Rights to consist in whole or in part of
anything other than Preferred Stock, then and in any such event:
(1) The certificates representing the Rights shall automatically be
deemed to represent the adjusted terms of the Rights without the need to replace
such certificates. The Company shall thereafter make arrangements for the
production of certificates representing the revised terms of the Rights
resulting from such adjustment and shall use such certificates to represent
Rights for which new certificates shall be issuable by reason of a transfer of
record ownership or by reason of a request by the existing record owner for a
replacement certificate representing the revised terms of the Rights.
(2) The principles underlying the adjustment provisions in this
Section 11 and elsewhere in this Agreement shall be applied to fairly and
proportionately adjust the shares or other property purchasable with the Rights
and the purchase price for each share or other property unit purchasable with
the Rights after giving effect to the adjustments required by reason of such
event to reflect any subsequent capital changes or other events. Without
limiting by implication the generality of the preceding sentence, the provisions
of Sections 7, 9, 10, 12, 13, 14 and 24 of this Agreement which related to the
Preferred Stock shall after the occurrence of any such event apply in a
substantively identical manner to the shares or other property purchasable with
the Rights after giving effect to such event.
(g) Before taking any action that would cause an adjustment reducing the
Purchase Price per share at which shares are purchasable with the Rights below
the par value of those shares, the Company shall take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares at such adjusted
Purchase Price.
(h) In any case in which this Section 11 shall require that an adjustment
be made effective as of a record date for a specified event, the Company may
elect to defer (and shall give prompt written notice of such election to the
Rights Agent) until the occurrence of such event the issuance to the holder of
any Right exercised after such record date the shares of Common Stock and other
securities, cash or property of the Company, if any, issuable upon such exercise
over and above the shares of Common Stock and other securities, cash or property
of the Company, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however, that the Company
shall deliver to such holder a due xxxx or other appropriate instrument
evidencing such holder's right to receive such additional shares (fractional or
otherwise) or other securities, cash or property upon the occurrence of the
event requiring such adjustment.
(i) The Company covenants and agrees that on and after the Trigger Date
neither it nor any combination of it and its subsidiaries shall (i) consolidate
with any other Person, or (ii) merge with or into any other Person or (iii)
directly or indirectly sell, lease, or otherwise transfer or dispose of (in one
transaction or a series of related transactions) assets or earning power
aggregating more than fifty percent (50%) of the assets or earning power of the
Company and its Subsidiaries taken as a whole to any other Person if (A) at the
time of or immediately after such consolidation, merger, sale, lease, transfer,
or disposition there are any rights, warrants, securities
22
or other instruments outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights, (B) prior to, simultaneously with or immediately after
such consolidation, merger, sale, lease, transfer, or disposition the
stockholders (or equity holders) of the Person who constitutes, or would
constitute, the Principal Party in such transaction shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
or Associates or (C) the form or nature of organization of the Principal Party
would preclude or limit the exercisability of the Rights. The Company shall not
consummate any such consolidation, merger, sale, lease, transfer, or disposition
unless prior thereto the Company and such other Person shall have executed and
delivered to the Rights Agent a supplemental agreement evidencing compliance
with this Section 11(i).
(j) The Company covenants and agrees that, after the Trigger Date it
will not, except as permitted by Section 11(c)(3) of this Agreement, take (or
permit any Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will, directly or indirectly,
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights.
Section 12. Certification of Adjustments. Whenever an adjustment is
----------------------------
made as provided in Sections 11 and 13, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of the
computations and facts accounting for such adjustment, (b) promptly file with
the Rights Agent and with each transfer agent for the stock then purchasable
with the Rights a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Rights Certificate (or, if no Rights Certificates have been
issued, to each holder of a certificate representing shares of Common Stock) in
accordance with Section 25. Notwithstanding the foregoing sentence, the failure
of the Company to give such notice shall not affect the validity of or the force
or effect of or the requirement for such adjustment. Any adjustment to be made
pursuant to Sections 11 and 13 of this Agreement shall be effective as of the
date of the event giving rise to such adjustment. The Rights Agent shall have no
duty with respect to and shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall not be obligated
or responsible for calculating any adjustment nor shall it be deemed to have
knowledge of such adjustment unless and until it shall have received such
certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
------------------------------------------------------
Earning Power.
-------------
(a) A "Business Combination" shall be deemed to occur in the event
that, in or following a Triggering Event, (i) the Company shall, directly or
indirectly, consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a transaction that complies with Section
11(i) and Section 11(j) of this Agreement) in a transaction in which the Company
is not the continuing, resulting or surviving corporation of such merger or
consolidation, (ii) any Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(i) and Section 11(j) of this
Agreement) shall, directly or indirectly, consolidate with the Company, or shall
merge with and into the Company, in a transaction in which the Company is the
continuing, resulting or surviving corporation of such merger or consolidation
and, in connection with such merger or consolidation, all or part of the Common
Stock shall be changed (including, without limitation, any conversion into or
exchange for
23
securities of the Company or of any other Person, cash or any other property),
(iii) the Company shall, directly or indirectly, effect a share exchange in
which all or part of the Common Stock shall be changed (including, without
limitation, any conversion into or exchange for securities of any other Person,
cash or any other property) or (iv) the Company shall, directly or indirectly,
sell, lease, exchange, mortgage, pledge or otherwise transfer or dispose of (or
one or more of its Subsidiaries shall directly or indirectly sell, lease,
exchange, mortgage, pledge or otherwise transfer or dispose of), in one
transaction or a series of related transactions, assets or earning power
aggregating more than fifty percent (50%) of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person (other than
the Company or any of its Subsidiaries in one or more transactions each and all
of which comply with Section 11(i) and Section 11(j) of this Agreement).
In the event of a Business Combination, proper provision shall be made
so that each holder of a Right (except as otherwise provided in this Agreement)
shall thereafter have the right to receive, upon the exercise of each Right,
such number of shares of Common Stock of the Principal Party as shall be equal
to the result obtained by dividing the Exercise Amount in effect prior to the
Business Combination by fifty percent (50%) of the Current Market Price per
share of the Common Stock of such Principal Party immediately prior to the
consummation of such Business Combination. All shares of Common Stock of any
Person for which any Right may be exercised after consummation of a Business
Combination as provided in this Section 13(a) shall, when issued upon exercise
thereof in accordance with this Agreement, be duly and validly authorized and
issued, fully paid, nonassessable, freely tradable, not subject to liens or
encumbrances, and free of preemptive rights, rights of first refusal or any
other restrictions or limitations on the transfer or ownership thereof of any
kind or nature whatsoever. The Purchase Price per share for such Common Stock
immediately after such Business Combination shall be equal to 50 percent of the
Current Market Price per share of the Common Stock of such Principal Party
immediately prior to the consummation of such Business Combination.
(b) After consummation of any Business Combination, (i) the Principal
Party shall be liable for, and shall assume, by virtue of such Business
Combination and without the necessity of any further act, all the obligations
and duties of the Company pursuant to this Agreement, (ii) the term "Company" as
used in this Agreement shall thereafter be deemed to refer to such Principal
Party and (iii) such Principal Party shall take all steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common Stock
in accordance with Section 9) in connection with such Business Combination as
necessary to ensure that the provisions of this Agreement shall thereafter be
applicable, as nearly as reasonably may be, in relation to the shares of its
Common Stock thereafter deliverable upon the exercise of the Rights.
(c) The Company shall not consummate any Business Combination unless
prior thereto (i) the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance (other than shares reserved for issuance pursuant to this Agreement to
the holders of Rights) to permit the exercise in full of the Rights in
accordance with this Section 13, (ii) the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the fulfillment of the Principal Party's obligations and the terms
as set forth in paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable on or after the date of such
24
Business Combination, the Principal Party, at its own expense, shall (A) prepare
and file, if necessary, a registration statement on an appropriate form under
the Securities Act with respect to the Rights and the securities purchasable
upon exercise of the Rights, (B) use its best efforts to cause such registration
statement to become effective as soon as practicable after such filing and
remain effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date, (C) deliver to holders of the Rights
historical financial statements for the Principal Party and each of its
Affiliates which comply in all respects with the requirements for registration
on Form 10 (or any successor form) under the Exchange Act, (D) use its best
efforts to qualify or register the Rights and the securities purchasable upon
exercise of the Rights under the state securities or "blue sky" laws of such
jurisdictions as may be necessary or appropriate, (E) use its best efforts to
list the Rights and the securities purchasable upon exercise of the Rights on a
United States national securities exchange and (F) obtain waivers of any rights
of first refusal or preemptive rights in respect of the Common Stock of the
Principal Party subject to purchase upon exercise of outstanding Rights, (iii)
the Company and the Principal Party shall have furnished to the Rights Agent an
opinion of independent counsel stating that such supplemental agreement is a
legal, valid and binding agreement of the Principal Party enforceable against
the Principal Party in accordance with its terms, and (iv) the Company and the
Principal Party shall have filed with the Rights Agent a certificate of a
nationally recognized firm of independent accountants setting forth the number
of shares of Common Stock of such issuer which may be purchased upon the
exercise of each Right after the consummation of such Business Combination.
(d) The provisions of this Section 13 shall similarly apply to
successive Business Combinations. In the event a Business Combination shall be
consummated at any time after the occurrence of a Triggering Event, the Rights
which have not theretofore been exercised shall thereafter be exercisable for
the consideration and in the manner described in Section 13(a). The provisions
of Section 11(b) of this Agreement shall be applicable to events which occur
after a Business Combination.
(e) Notwithstanding any other provision of this Agreement, no
adjustment to the number or kind of shares (or fractions of a share), cash or
other property for which a Right is exercisable or the number of Rights
outstanding or associated with each share of Common Stock 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 13, unless the terms of this Agreement are amended so as to
preserve such benefits, provided that this paragraph shall not prevent any
change prior to the Trigger Date permitted by Section 26(a) and provided that
this Section 13(e) shall not be deemed to limit or impair the right to engage in
an exchange pursuant to Section 11(c)(2).
(f) The Company covenants and agrees that it shall not effect any
Business Combination if at the time of, or immediately after such Business
Combination, there are any rights, options, warrants or other instruments
outstanding which would diminish or otherwise eliminate the benefits intended to
be afforded by the Rights.
25
(g) Without limiting the generality of this Section 13, in the event
the nature of the organization of any Principal Party shall preclude or limit
the acquisition of Common Stock of such Principal Party upon exercise of the
Rights as required by Section 13(a) as a result of a Business Combination, it
shall be a condition to such Business Combination that such Principal Party
shall take such steps (including, but not limited to, a reorganization) as may
be necessary to ensure that the benefits intended to be derived under this
Section 13 upon the exercise of the Rights are assured to the holders thereof.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractional Rights or to
distribute Rights Certificates which evidence fractional Rights.
(b) The Company shall permit the issuance and trading of Preferred
Stock in fractional shares such that the smallest fractional share tradable at
any particular time shall equal the reciprocal of the Adjustment Number in
effect at that particular time. The Company shall not be required to issue
fractions of shares of Preferred Stock (other than fractions which are integral
multiples of the reciprocal of the Adjustment Number) upon exercise of the
Rights or to distribute certificates which evidence fractional shares of
Preferred Stock (other than fractions which are integral multiples of the
reciprocal of the Adjustment Number). Fractions of shares of Preferred Stock
may, at the election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a depositary
selected by it, provided that such agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of the Preferred Stock. In lieu
of fractional shares of Preferred Stock that are not integral multiples of the
reciprocal of the Adjustment Number, the Company may at its option (i) issue
scrip or warrants in registered form (either represented by a certificate or
uncertificated) or in bearer form (represented by a certificate) which shall
entitle the holder to receive the reciprocal of the Adjustment Number of one
share of Preferred Stock upon the surrender of such scrip or warrants
aggregating the reciprocal of the Adjustment Number of one share of Preferred
Stock, or (ii) pay to the registered holders of Rights Certificates at the time
such Rights Certificates are exercised as provided in this Agreement an amount
in cash equal to the same fraction of the relevant closing price of a share of
Preferred Stock. For purposes of this Section 14(b), the relevant closing price
of a share of Preferred Stock shall be the closing price of a share of Preferred
Stock (as determined pursuant to the second sentence of the definition of
"Current Market Price" in Section 1) for the Trading Day immediately prior to
the date of such exercise.
(c) The Company shall not be required to issue fractions of shares of
Common Stock or Common Equivalent Shares or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of such fractional shares of
Common Stock, the Company shall pay to the registered holders of the Rights
Certificates with regard to which such fractional shares of Common Stock would
otherwise be issuable an amount in cash equal to the product derived by
multiplying (x) the subject fraction, by (y) the closing price of a share of
Common Stock (as determined pursuant to the second sentence of the definition of
"Current Market Price" in Section 1) for the Trading Day immediately prior to
the date of such exercise.
26
(d) The holder of a Right by his acceptance thereof expressly waives
any right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as otherwise provided in this Agreement).
(e) Whenever a payment for fractional Rights or fractional shares is to
be made by the Rights Agent, the Company shall (i) promptly prepare and deliver
to the Rights Agent a certificate setting forth in reasonable detail the facts
related to such payments and the prices and/or formulas utilized in calculating
such payments, and (ii) provide sufficient monies to the Rights Agent in the
form of fully collected funds to make such payments. The Rights Agent shall be
fully protected in relying upon such a certificate and shall have no duty with
respect to, and shall not be deemed to have knowledge of any payment for
fractional Rights or fractional shares under any Section of this Agreement
relating to the payment of fractional Rights or fractional shares unless and
until the Rights Agent shall have received such a certificate and sufficient
monies.
Section 15. Rights of Action. Except as otherwise provided, all rights
----------------
of action in respect of this Agreement are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, any
registered holders of associated Common Stock); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, any share of associated
Common Stock), without the consent of the Rights Agent or of the holder of any
other Right, may, on his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his rights pursuant to this Agreement.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and will be
entitled to specific performance of the obligations under, and injunctive relief
against actual or threatened violations of the obligations of any Person subject
to, this Agreement.
Section 16. Agreement of Rights Holders Concerning Transfer and
---------------------------------------------------
Ownership of Rights. Every holder of a Right by accepting the same consents and
-------------------
agrees with the Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates will be
transferable on the registry books of the Rights Agent only if surrendered at
the principal stock transfer office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person in
whose name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Rights Certificate or the associated Common Stock certificate
made by anyone other than the Company, the transfer agent for the stock
purchasable with such Right 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.
27
Section 17. Rights Holder Not Deemed a Stockholder. No holder, as such,
--------------------------------------
of any Rights Certificate shall be entitled to vote or to receive dividends or
distributions or shall be deemed for any purpose the holder of Preferred Stock
or any other securities, cash or other property which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained in this Agreement or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
stockholder of the Company, including, without limitation, any right (i) to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, (ii) to give or withhold consent to any corporate action,
(iii) to receive notice of meetings or other actions affecting stockholders
(except as provided in Section 24), (iv) to receive dividends, distributions or
subscription rights, (v) to institute, as a holder of Preferred Stock or other
securities issuable on exercise of the Rights represented by any Rights
Certificate, any derivative action on behalf of the Company, or otherwise, until
and only to the extent that the Right or Rights evidenced by such Rights
Certificate shall have been exercised in accordance with the provisions of this
Agreement.
Section 18. Concerning the Rights Agent. The Company agrees to pay to
---------------------------
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other disbursements incurred in
the preparation, execution, delivery, amendment and administration of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, damage judgment, fine, penalty, claim, demand, settlement,
cost or expense, incurred without gross negligence, bad faith, willful
misconduct or breach of this Agreement on the part of the Rights Agent, (each as
determined by a final, non-appealable order, judgment, decree or ruling of a
court of competent jurisdiction), for any action taken, suffered or omitted by
the Rights Agent in connection with the acceptance and administration of this
Agreement, including, without limitation, the costs and expenses of defending
against any claim of liability in the premises. The costs and expenses of
enforcing this right of indemnification shall also be paid by the Company. The
provisions of this Section 18 and 20 below shall survive the exercise or
expiration of the Rights, the termination of this Agreement and the resignation
or removal of the Rights Agent.
The Rights Agent may conclusively rely upon and shall be authorized and
protected and shall incur no liability for or in respect of any action taken,
suffered or omitted by it in connection with its acceptance and administration
of this Agreement in reliance upon any Rights Certificate or certificate for
Preferred Stock or Common Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement or other paper or
document reasonably believed by it to be genuine and to be signed, executed and,
when necessary, verified or acknowledged, by the proper Person or Persons. The
Rights Agent shall not be deemed to have knowledge of any event of which it was
supposed to receive notice thereof hereunder, and the Rights Agent shall be
fully protected and shall incur no liability for failing to take any action in
connection therewith unless and until it has received such notice in writing.
28
Notwithstanding anything in this Agreement to the contrary, in no event
shall the Rights Agent be liable for special, punitive, indirect, consequential
or incidental loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Rights Agent has been advised of the likelihood of
such loss or damage and regardless of the form of the action. Any liability of
the Rights Agent under this Agreement shall be limited to the amount of the fees
paid by the Company to the Rights Agent.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
Any Person into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any Person resulting from any
merger or consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any Person succeeding to the business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any document or any further
act on the part of any of the parties hereto, provided that such Person would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of 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 Certificate 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 Agreement.
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 Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes only
----------------------
the duties and obligations imposed by this Agreement (and no implied duties or
obligations shall be read into this Agreement against the Rights Agent) upon the
following terms and conditions, by all of which the Company and the holders of
Rights Certificates, by their acceptance thereof, shall be bound:
(a) Before the Rights Agent acts or refrains from acting, the Rights
Agent may consult with legal counsel (who may be legal counsel for the Company),
and the advice or opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent and the Rights Agent shall
incur no liability for or in respect of, any action taken, suffered or omitted
by it in accordance with such advice or opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the
29
identity of any Acquiring Person or any Affiliate or Associate of an Acquiring
Person or the determination of Current Market Price) be proved or established by
the Company prior to taking, suffering or omitting to take any action hereunder,
such fact or matter (unless other evidence in respect thereof be specifically
prescribed in this Agreement) may be deemed to be conclusively proved and
established by a certificate signed by the Chief Executive Officer, the
President, the Chief Financial Officer, the Treasurer, any Vice President or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization and protection to the Rights Agent and the Rights
Agent shall incur no liability for or in respect of, any action taken, suffered
or omitted to be taken by it under the provisions of this Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder only for the gross
negligence, bad faith, willful misconduct or breach of this Agreement by it or
its attorneys or agent (each as determined by a final, non-appealable order,
judgment, decree or ruling of a court of competent jurisdiction).
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility or have any
liability in respect of the validity of this Agreement or the execution and
delivery of this Agreement (except the due execution and delivery of this
Agreement by the Rights Agent) or in respect of the validity or execution of any
Rights Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Rights Certificate; nor shall it be responsible for
any change in the exercisability of the Rights (including the Rights becoming
null and void pursuant to Section 7(e)) or any adjustment in the terms of the
Rights (including the manner, method or amount thereof) provided for in Sections
3, 11, 13 or 23 or the ascertaining of the existence of facts that would require
any such change or adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after actual notice of any change or adjustment
is required); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Preferred Stock, Common Stock or other securities to be issued pursuant to
this Agreement or any Rights Certificate or as to whether any shares of
Preferred Stock, Common Stock or other securities will, when issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performance by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chief Executive Officer, the President, the Chief Financial Officer, the
Treasurer, any Vice President or the Secretary of the
30
Company, and to apply to such officers for advice or instructions in connection
with its duties, and such instructions shall be full authorization and
protection to the Rights Agent and the Rights Agent shall incur no liability for
or in respect of any action taken, suffered or omitted to be taken by it in
accordance with instructions of any such officer or for any delay in acting
while waiting for these instructions. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent under this Agreement and the date on or after which such action shall be
taken of such omission shall be effective. The Rights Agent shall not be liable
for any action taken by, or omission of, the Rights Agent in accordance with a
proposal included in any such application on or after the date specified in such
application (which date shall not be less than ten Business Days after the date
any officer of the Company actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application subject to the proposed action or omission and/or specifying the
action to be taken or omitted.
(h) The Rights Agent and any stockholder, affiliate, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though the Rights Agent were not
serving as such under this Agreement. Nothing in this Agreement shall preclude
the Rights Agent from acting in any other capacity for the Company or for any
other legal Person.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, omission, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting from any such act,
omission, default, neglect or misconduct, absent gross negligence, bad faith or
willful misconduct (each as determined by a final, non-appealable order,
judgment, decree or ruling of a court of competent jurisdiction) in the
selection and continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
(k) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
it believes that repayment of such funds or adequate indemnification against
such risk or liability is not reasonably assured to it.
(l) The Rights Agent shall not be required to take notice or be deemed to
have notice of any fact, event or determination (including, without limitation,
any dates or events defined in this Agreement or the designation of any Person
as an Acquiring Person, Affiliate or Associate)
31
under this Agreement unless and until the Rights Agent shall be specifically
notified in writing by the Company of such fact, event or determination.
(m) At any time and from time to time after the Distribution Date, upon
the request of the Company, the Rights Agent shall promptly deliver to the
Company a list, as of the most recent practicable date (or as of such earlier
date as may be specified by the Company), of the holders of the record Rights.
Section 21. Change of Rights Agent. The Rights Agent or any successor
----------------------
Rights Agent may resign and be discharged from its duties under this Agreement
upon notice of 30 days in writing mailed to the Company and to each transfer
agent of the Common Stock or Preferred Stock by registered or certified mail
and, at the expense of the Company, to the holders of the Rights Certificates by
either (i) first-class mail or (ii) by disclosure in a periodic report of the
Company required to be filed under the Exchange Act, any permitted report under
the Exchange Act, a press release of the Company or in any proxy or other
communication of the Company with its stockholders. The Company may remove the
Rights Agent or any successor Rights Agent upon notice of 30 days in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Stock or Preferred Stock by registered or
certified mail, and to the holders of the Rights Certificates by either (i)
first-class mail or (ii) by disclosure in a periodic report of the Company
required to be filed under the Exchange Act, any permitted report under the
Exchange Act, a press release of the Company or in any proxy or other
communication of the Company with its stockholders. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. Notwithstanding any other
provision of this Agreement, in no event shall the resignation or removal of a
Rights Agent be effective until a successor Rights Agent shall have been
appointed and have accepted such appointment. If the Company shall fail to make
such appointment within a period of 30 days after such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by any holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by the Company),
then the incumbent Rights Agent or the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (i) a Person organized and doing business
under the laws of the United States or of the State of Delaware (or of any other
state of the United States so long as such corporation is authorized to conduct
a banking, corporate trust or stock transfer business) in good standing, which
is authorized under such laws to exercise stock transfer powers and is subject
to supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $25,000,000 or (ii) an affiliate of a Person described in clause (i) of
this sentence. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for such purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock or Preferred Stock; the Company shall also either (i) mail a
notice thereof in
32
writing to the registered holders of the Rights Certificates or (ii) make a
disclosure with respect thereto in a periodic report of the Company required to
be filed under the Exchange Act, any permitted report under the Exchange Act, a
press release of the Company or in any proxy or other communication of the
Company with its stockholders. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
-----------------------------------
the provisions of this Agreement or of the Rights Certificates to the contrary,
the Company may, at its option, issue new Rights Certificates evidencing Rights
in such form as may be approved by a majority of the Board of Directors of the
Company to reflect any adjustment or change in the Purchase Price per share and
the number or kind or class of securities, cash or other property purchasable
under the Rights Certificates made in accordance with the provisions of this
Agreement.
Section 23. Redemption and Termination.
--------------------------
(a) The Board of Directors of the Company may, at its option, at any time
prior to the earlier of (i) the Close of Business or the tenth (10/th/) day
following the Company first knowledge of the Trigger Date and (ii) the
Expiration Date, redeem all but not less than all of the then-outstanding Rights
at a redemption price of $.01 per Right (the "Redemption Price") appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date of this Agreement. The Company may, at its option, pay
the Redemption Price in cash, shares (including fractional shares) of Common
Stock (based on the Current Market Price of the Common Stock at the time of
redemption) or any other form of consideration deemed appropriate by the Board
of Directors. The redemption of the Rights by the Board of Directors of the
Company may be made effective at such time, on such basis and with such
conditions as the Board of Directors of the Company in its sole discretion may
establish.
(b) At the time and date of effectiveness set forth in any resolution of
the Board of Directors of the Company ordering the redemption of the Rights,
without any further action and without any further 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; provided, however, that such
resolution of the Board of Directors of the Company may be revoked, rescinded or
otherwise modified at any time prior to the time and date of effectiveness set
forth in such resolution, in which event the right to exercise will not
terminate at the time and date originally set for such termination by the Board
of Directors of the Company. The Company shall promptly give public notice (as
well as prompt written notice thereof to the Rights Agent) of any such
redemption; provided, however, that the failure to give, or any defect in, any
such notice shall not affect the validity of such redemption. The Company shall
also give notice of such redemption to the Rights Agent. The Company may elect
to 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 issuance of
Rights Certificates, on the registry books of the transfer agent for the Common
Stock. Any notice which is mailed in the manner provided in this Agreement shall
be deemed given, whether
33
or not the holder receives the notice. In connection with any redemption
permitted under this Section 23, the Company may, at its option, discharge all
of its obligations with respect to the Rights by (i) issuing a press release
announcing the manner of redemption of the Rights and (ii) mailing payment of
the Redemption Price to the registered holders of the Rights at their last
addresses as they appear on the registry books of the Rights Agent or, prior to
the issuance of the Rights Certificates, on the registry books of the transfer
agent for the Common Stock, and upon such action, all outstanding Rights
Certificates shall be null and void without any further action by the Company.
Neither the Company nor any of its Affiliates or Associates may redeem, acquire
or purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23, and other than in connection with the
purchase of shares of Common Stock prior to the earlier of the Trigger Date and
the Expiration Date.
Section 24. Notice of Certain Events. In case the Company, on or after
------------------------
the Distribution Date, shall propose to (a) pay any dividend payable in stock of
any class to the holders of its Common Shares or to make any other distribution
to the holders of its Common Shares (other than a regular periodic cash dividend
at an annual rate not in excess of one hundred twenty-five percent (125%) of the
annualized rate of the cash dividend paid on the Common Shares during the
immediately preceding fiscal year), or (b) offer to the holders of its Common
Shares rights, options or warrants to subscribe for or to purchase any
additional shares of Common Shares or shares of stock of any class or any other
securities, rights or options, or (c) effect any reclassification of the Common
Shares (other than a reclassification involving only the subdivision of
outstanding shares of Common Shares, a change in the par value of such Common
Shares or a change from par value to no par value), or (d) directly or
indirectly effect any consolidation or merger into or with, or effect any sale,
lease, exchange, or other transfer or disposition (or to permit one or more of
its Subsidiaries to effect any sale, lease, exchange or other transfer or
disposition), in one transaction or a series of related transactions, of more
than 50 percent of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person, or (e) effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Right, in accordance with Section 25,
a notice of such proposed action, which shall specify any record date for the
purposes of such stock dividend or distribution of rights, or the date on which
such reclassification, consolidation, merger, sale, lease, exchange, transfer,
disposition, liquidation, dissolution or winding up is to take place and if such
holders will or may participate therein, the date of participation therein by
the holders of Common Shares, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (a) or (b) above
at least 20 days prior to the record date for determining holders of the Common
Shares for purposes of such action, and in the case of any such other action, at
least 20 days prior to the date of the taking of such proposed action or the
date of participation therein, if any, by the holders of Common Shares,
whichever shall be the earlier. The failure to give notice as required by this
Section 24 or any defect therein shall not affect the legality or validity of
the action taken by the Company or the vote upon any such action.
In case any Triggering Event or Business Combination shall occur, then, in
any such case, the Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, in accordance with Section 25, notice of the
occurrence of such Triggering Event or Business Combination, which shall specify
the Triggering Event or Business Combination and
34
include a description of the consequences of such event to holders of Rights
under Section 11 or 13.
Section 25. Notices. Notices or demands authorized by this Agreement to
-------
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company 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) or by facsimile transmission as follows:
Allied Research Corporation
0000 Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by registered or certified mail and shall be deemed given upon receipt and
addressed (until another address is filed in writing with the Company) or by
facsimile transmission as follows:
Mellon Investor Services LLC
00 Xxxx Xxxxxx, 0/xx/ Xxxxx
Xxx Xxxx, XX 00000
Attn: Relationship Manager
Facsimile No.: (000) 000-0000
With a copy to:
Mellon Investor Services LLC
00 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxx, Xxx Xxxxxx 00000
Attn: General Counsel
Facsimile No.: (000) 000-0000
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company (or, if no Rights Certificates have been issued, if sent by
first-class mail, postage prepaid, addressed to each holder of a certificate
representing shares of Common Stock at the address of such holder as shown on
the Company's Common Stock registry books).
35
Section 26. Supplements and Amendments.
--------------------------
For so long as the Rights are then redeemable, the Company may in its sole
and absolute discretion, and the Rights Agent shall, if the Company so directs
but subject to the other provisions of this Section, supplement or amend any
provision of this Agreement in any respect without the approval of any holders
of Rights or Common Stock. From and after the time that the Rights are no longer
redeemable, the Company may, and the Rights Agent shall, if the Company so
directs but subject to the other provisions of this Section, from time to time
supplement or amend this Agreement without the approval of any holders of Rights
(i) to cure any ambiguity or to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein
or (ii) to make any other changes or provisions in regard to matters or
questions arising hereunder which the Company may deem necessary or desirable,
including but not limited to extending the Expiration Date; that no such
supplement or amendment shall adversely affect the interests of the holders of
Rights as such (other than Acquiring Person), no such supplement or amendment
shall change or increase the Rights Agent's duties, liabilities, or obligations,
and no such supplement or amendment may cause the Rights again to become
redeemable or cause this Agreement again to become amendable other than in
accordance with this sentence; that the right of the Board of Directors to
extend the Distribution Date shall not require any amendment or supplement
hereunder. Upon the delivery of a certificate from an appropriate officer of the
Company which states that the proposed supplement or amendment is in compliance
with the terms of this Section 26, and provided, such amendment or supplement
does not change or increase the Rights Agent's rights, duties, liabilities or
obligations, the Rights Agent shall execute such supplement or amendment.
Section 27. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. Benefits of this Agreement. Nothing in this Agreement shall
--------------------------
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of Rights any legal or equitable right, remedy or claim
under this Agreement; and this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of the
Rights.
Section 29. Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be valid and enforceable
under applicable law, but if any provision of this Agreement shall be held to be
prohibited by or unenforceable under applicable law, (i) such provision shall be
applied to accomplish the objectives of the provision as originally written to
the fullest extent permitted by law and (ii) all other provisions of this
Agreement shall remain in full force and effect. No rule of strict construction,
rule resolving ambiguities against the person who drafted the provision giving
rise to such ambiguities, or other such rule of interpretation shall be applied
against any party with respect to this Agreement.
Section 30. Governing Law. This Agreement and each Rights Certificate
-------------
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the internal laws of
36
Delaware applicable to contracts to be made and performed entirely within
Delaware; provided, however, that all provisions regarding the rights, duties
and obligations of the Rights Agent shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such State.
Section 31. Counterparts. This Agreement may be executed in counterparts
------------
and each of such counterparts shall for all purposes be deemed to be an
original, and both such counterparts shall together constitute but one and the
same instrument.
Section 32. Descriptive Headings. Descriptive headings of the several
--------------------
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions of this
Agreement.
Section 33. Grammatical Construction. Throughout this Agreement, where
------------------------
such meanings would be appropriate, (a) any pronouns used herein shall include
the corresponding masculine, feminine or neuter forms (e.g., references to "he"
shall also include "she" and "it" and references to "who" and "whom" shall also
include "which") and (b) the plural form of nouns and pronouns shall include the
singular and vice-versa.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
ALLIED RESEARCH CORPORATION
By: /s/ X. X. Xxxxxxx Xxxx, III
---------------------------------
X. X. Xxxxxxx Xxxx, III,
Chairman of the Board, President
and Chief Executive Officer
MELLON INVESTOR SERVICES
LLC, as Rights Agent
By: _________________________________
Title: ______________________________
37
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES B PARTICIPATING PREFERRED STOCK
OF
ALLIED RESEARCH CORPORATION
Pursuant to Section 151 of the Corporation Law
of the State of Delaware
Allied Research Corporation, a corporation organized and existing under the
General Corporation Law of the State of Delaware, in accordance with the
provisions of Section 151 thereof, DOES HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Corporation, as amended, the Board of
Directors on June 6, 2001, adopted the following resolution creating a series of
five hundred thousand (500,000) shares of Preferred Stock designated as Series B
Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of Directors
by ARTICLE FOURTH of the Certificate of Incorporation and out of the Preferred
Stock authorized therein, the Board hereby authorizes that a series of Preferred
Stock of the Corporation be, and it hereby is, created and approved for issuance
in accordance with the Rights Agreement dated as of June 6, 2001, between the
Corporation and Mellon Investor Services LLC, and that the designation and
amount thereof and the voting powers, preferences and relative, participating,
optional and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof be, and hereby are, as
follows:
Section 1. Designation and Amount. The shares of such series shall be
----------------------
designated as Series B Participating Preferred Stock (the "Series B Preferred
Stock") and the number of shares constituting such series shall be five hundred
thousand (500,000). Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series B Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series B Preferred Stock.
Section 2. Dividends and Distributions.
---------------------------
(a) Subject to the prior and superior rights of the holders of any
outstanding shares of any series of Preferred Stock ranking prior and superior
to the shares of Series B Preferred Stock
38
with respect to dividends, the holders of shares of Series B Preferred Stock, in
preference to the holders of Common Stock and of any other junior stock, shall
be entitled to receive, when, as and if declared by the Board of Directors out
of funds legally available for the purpose, quarterly dividends payable in cash
on the fifteenth day of March, June, September and December in each year (each
such date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series B Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1.00 or (b) the
Adjustment Number (as defined below) times the aggregate per share amount of all
cash dividends, and the Adjustment Number times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions other than a
dividend payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Quarterly Dividend Payment Date or,
with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series B Preferred Stock. The
"Adjustment Number" shall initially be 100. In the event the Corporation shall
at any time after June 20, 2001 (i) declare or pay any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock
into a greater number of shares or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the Adjustment Number in
effect immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction, the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(b) The Corporation shall declare a dividend or distribution on the Series
B Preferred Stock as provided in paragraph (a) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series B
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series B Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series B Preferred Stock, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series B Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series B Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series B Preferred
Stock entitled to receive payment of a dividend or distribution
39
declared thereon, which record date shall be no more than 30 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series B Preferred
-------------
Stock shall have the following voting rights:
(a) Each share of Series B Preferred Stock shall entitle the holder
thereof to a number of votes equal to the Adjustment Number (as adjusted from
time to time pursuant to Section 2(a) hereof) on all matters submitted to a vote
of the stockholders of the Corporation.
(b) Except as otherwise provided herein, by law or in the Certificate of
Incorporation or By-Laws, the holders of shares of Series B Preferred Stock and
the holders of shares of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(c) Except as set forth herein, holders of Series B Preferred Stock shall
have no special voting rights and their consent shall not be required (except to
the extent they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section 4. Certain Restrictions.
--------------------
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Series B Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series B Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series B Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series B Preferred Stock,
except dividends paid ratably on the Series B Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series B Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or winding up)
to the Series B Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series B Preferred Stock, or any shares of stock ranking on a parity with the
Series B Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by
40
the Board of Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual dividend rates
and other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(b) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series B Preferred Stock
-----------------
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
preferred stock and may be reissued as part of a new series of preferred stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein, in the Certificate
of Incorporation or By-laws or otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
--------------------------------------
dissolution or winding up of the Corporation, no distribution shall be made (A)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series B Preferred Stock unless,
prior thereto, the holders of shares of Series B Preferred Stock shall have
received the greater of (i) $10 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment, and (ii) an aggregate amount per share, equal to the Adjustment
Number (as adjusted from time to time pursuant to Section 2(a) hereof) times the
aggregate amount to be distributed per share to holders of Common Stock, or (B)
to the holders of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series B Preferred Stock,
except distributions made ratably on the Series B Preferred Stock and all other
such parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter
--------------------------
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series B Preferred Stock then outstanding shall at the same time be similarly
exchanged or changed in an amount per share equal to the Adjustment Number (as
adjusted from time to time pursuant to Section 2(a) hereof) times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
changed or exchanged.
Section 8. No Redemption. The shares of Series B Preferred Stock shall
-------------
not be redeemable.
Section 9. Amendment. The Certificate of Incorporation of the Corporation
---------
shall not be amended in any manner which would materially alter or change the
powers, preferences
41
or special rights of the Series B Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of two-thirds of the outstanding
shares of Series B Preferred Stock, if any, voting together as a single class.
At any time when there are no shares of Series B Preferred Stock outstanding,
the number, designation, preferences and rights of the Series B Preferred Stock
as set forth in this Certificate of Designation may be amended by the Board of
Directors in the manner provided in Section 151(g) of the Delaware General
Corporation Law.
IN WITNESS WHEREOF, I have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury as of the 6/th/ day
of June, 2001.
ALLIED RESEARCH CORPORATION
By: ______________________________
Xxxx X. Xxxxx, Xx.,
Executive Vice President and
Chief Operating Officer
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Exhibit B
[Form of Rights Certificate]
Certificate No. R- __________Rights
NOT EXERCISABLE AFTER MAY 31, 2011 OR EARLIER IF
NOTICE OF REDEMPTION OR EXCHANGE IS GIVEN. THE RIGHTS ARE
SUBJECT TO REDEMPTION OR EXCHANGE, AT THE OPTION OF THE
COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Rights Certificate
ALLIED RESEARCH 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 June 6, 2001 (the "Rights Agreement") between Allied
Research Corporation, a Delaware corporation (the "Company"), and Mellon
Investor Services LLC, a New Jersey limited liability company (the "Rights
Agent"), unless notice of redemption or exchange shall have been previously
given by the Company, to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 P.M. Vienna, Virginia time) on May 31, 2011, at the principal corporate
trust office of the Rights Agent, or at the office of its successor as Rights
Agent, one one-hundredth of a fully paid nonassessable share of the Series B
Participating Preferred Stock, no par value, of the Company (the "Preferred
Stock"), at a purchase price (the "Purchase Price") of $50.00 per one one-
hundredth share, upon presentation and surrender of this Rights Certificate with
the Form of Election to Purchase duly executed. The Purchase Price may be paid
in cash or by certified bank check or bank draft payable to the order of the
Company.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates.
Capitalized terms used but not defined in this Rights Certificate that are
defined in the Rights Agreement shall have the same meanings ascribed to them in
the Rights Agreement. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the above-mentioned office of the
Rights Agent.
As provided in the Rights Agreement, the Purchase Price and the number of
shares of Preferred Stock or other securities, cash or other property which may
be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events.
If the Rights evidenced by this Rights Certificate are or were formerly
beneficially owned, on or after the earlier of the Distribution Date and the
Trigger Date, by (i) an Acquiring
43
Person or any Associate or Affiliate of an Acquiring Person, (ii) a direct or
indirect transferee of an Acquiring Person (or of any Associate or Affiliate of
an Acquiring Person) who becomes or becomes entitled to be a transferee after
the Acquiring Person becomes such, or (iii) a direct or indirect transferee of
an Acquiring Person (or of an Associate or Affiliate of such Acquiring Person)
who becomes or becomes entitled to be a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a direct or indirect transfer (whether or not for consideration) from the
Acquiring Person (or from an Associate or Affiliate of such Acquiring Person) to
holders of equity interests in such Acquiring Person (or to holders of equity
interests in any Associate or Affiliate of such Acquiring Person) or to any
Person with whom the Acquiring Person (or an Associate or Affiliate of such
Acquiring Person) has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a direct or indirect transfer which a
majority of the Board of Directors of the Company determines is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of Section 7(e) of the Rights Agreement, such Rights shall,
immediately upon the occurrence of a Triggering Event and without any further
action, be null and void and no holder of such Rights (including any subsequent
holder) shall have any rights whatsoever with respect to such Rights whether
under the Rights Agreement or otherwise, provided, however, that, in the case of
transferees under clause (ii) or clause (iii) above, any Rights beneficially
owned by such transferee shall be null and void only if and to the extent such
Rights were formerly beneficially owned by a Person who was, at the time such
Person beneficially owned such Rights, or who later became, an Acquiring Person
or an Affiliate or Associate of such Acquiring Person.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal corporate trust office of the Rights Agent, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of shares of Preferred Stock or other property as the Rights evidenced by
the Rights Certificate or Rights Certificates surrendered entitled such holder
to purchase. If this Rights Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate (a) may be redeemed by the Board of Directors of the Company at
its option at a redemption price of $.01 per Right, subject to adjustment,
payable, at the election of the Company, in cash or shares (including fractional
shares) of Common Stock or such other consideration as the Board of Directors of
the Company may determine, at any time prior to the earlier of (i) the Trigger
Date and (ii) the Expiration Date, or (b) may be exchanged by the Board of
Directors of the Company, at its option, in whole or in part, for shares of the
Company's Common Stock or other equivalent securities on a one-for-one basis, at
any time after the Trigger Date and prior to (i) any Person (other than an
Exempt Person), together with all Affiliates and Associates of such Person,
becoming the Beneficial Owner of fifty percent (50%) or more of the Common Stock
then outstanding and (ii) the occurrence of a Business Combination.
No fractional shares of Preferred Stock (other than fractions that are
integral multiples of one one-hundredth of a share of Preferred Stock, which
may, at the election of the Company, be
44
evidenced by depository receipts) are required to be issued upon the exercise of
any Right or Rights evidenced hereby, but in lieu thereof the Company may elect
to (i) evidence fractional shares by depositary receipts, (ii) issue scrip or
warrants in registered form (either represented by a certificate or
uncertificated) or in bearer form (represented by a certificate) which shall
entitle the holder to receive a full share upon the surrender of such scrip or
warrants aggregating a full share, or (iii) make a cash payment, as provided in
the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
to receive dividends on, or shall be deemed for any purpose the holder of,
Preferred Stock or any other securities, cash or property which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or this Certificate be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company, including, without
limitation, any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or to institute, as a holder of
Preferred Stock or other securities issuable on the exercise of the Rights
represented by this Certificate, any derivative action, or otherwise, until and
only to the extent the Right or Rights evidenced by this Rights Certificate
shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of ________________.
ALLIED RESEARCH CORPORATION
By: ___________________________
Title: ________________________
Countersigned:
Mellon Investor Services LLC
By: ____________________________
Authorized Officer
45
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED the undersigned _____________________ hereby sells,
assigns and transfers unto ___________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
Rights evidenced by this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
____________________ with a power of Attorney to transfer the said Rights and a
Rights Certificate evidencing such Rights on the books of the within named
Company, with full power of substitution.
A new Rights Certificate evidencing the remaining balance, if any, of such
Rights not hereby sold, assigned and transferred shall be mailed to and
registered in the name of the undersigned unless such person requests that such
Rights Certificate be registered in the name of and mailed to (complete only if
a Rights Certificate evidencing any remaining balance of Rights is to be
registered in a name other than the undersigned):
Please insert Social Security or other identifying number of transferee: _______
__________________________________________________________________
(Please print name and address)
__________________________________________________________________
46
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) his Rights Certificate or any Rights evidenced hereby __ are __ are not
being old, assigned and transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such
terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned __ did __ did not acquire any of the Rights evidenced by this Rights
Certificate from any Person who is or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated:____________________ ________________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution with
membership in a recognized signature guarantee medallion program as approved by
the Stock Transfer Association.
NOTICE
The signature on the foregoing Form of Assignment must correspond to the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Assignment is
not completed, the Company will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and, in the case of an
assignment or other transfer of this Rights Certificate or any Rights evidenced
hereby, will affix a legend to that effect on any Rights Certificate issued in
whole or partial exchange for this Rights Certificate.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
the Rights represented by this Rights Certificate)
To: ALLIED RESEARCH CORPORATION
The undersigned hereby irrevocably elects to exercise ________________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock or other securities, cash or other property issuable upon the
exercise of such Rights and requests that
47
certificates for such shares or other securities be issued in the name of, and
such cash or other property be paid to:
Please insert social security or other identifying number: _____________
________________________________________________________________________
(Please print name and address)
________________________________________________________________________
A new Rights Certificate evidencing the remaining balance, if any, of such
Rights not hereby exercised shall be mailed to and registered in the name of the
undersigned unless such person requests that such Rights Certificate be
registered in the name of and mailed to (complete only if Rights Certificate
evidencing any remaining balance of Rights is to be registered in a name other
than the undersigned):
Please insert social security or other identifying number: _____________
________________________________________________________________________
(Please print name and address)
________________________________________________________________________
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate __ are __ are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned __ did __ did not acquire the Rights evidenced by this Rights
Certificate from any Person who is or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ______________________ _____________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution with
membership in a recognized signature guarantee medallion program as approved by
the Stock Transfer Association.
48
NOTICE
The signature on the foregoing Form of Election to Purchase must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Election to
Purchase is not completed, the Company will deem the beneficial owner of the
Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and, in the
case of an assignment or other transfer of this Rights Certificate or any Rights
evidenced hereby, will affix a legend to that effect on any Rights Certificate
issued in whole or partial exchange for this Rights Certificate.
49
