RIGHTS AGREEMENT
dated as of
June 3, 2005
between
SENTO CORPORATION
and
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Rights Agent
TABLE OF CONTENTS
ARTICLE I CERTAIN DEFINITIONS.................................................1
1.1 Certain Definitions...............................................1
1.2 Determinations....................................................6
ARTICLE II THE RIGHTS.........................................................7
2.1 Legend on Common Share Certificates...............................7
2.2 Initial Exercise Price; Exercise of Rights; Detachment
of Rights.........................................................7
2.3 Adjustments to Exercise Price; Number of Rights...................9
2.4 Date on Which Exercise is Effective..............................11
2.5 Execution, Authentication, Delivery, and Dating of Rights
Certificates.....................................................11
2.6 Registration, Registration of Transfer and Exchange..............12
2.7 Mutilated, Destroyed, Lost, and Stolen Rights Certificates.......12
2.8 Persons Deemed Owners............................................13
2.9 Delivery and Cancellation of Certificates........................13
2.10 Agreement of Rights Holders.....................................13
ARTICLE III ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS...14
3.1 Flip-over Transaction or Event...................................14
3.2 Flip-in Event....................................................15
3.3 Obligations of the Company.......................................15
ARTICLE IV THE RIGHTS AGENT..................................................16
4.1 General..........................................................16
4.2 Merger or Consolidation or Change of Name of Rights Agent........16
4.3 Duties of Rights Agent...........................................17
4.4 Change of Rights Agent...........................................18
ARTICLE V REDEMPTION.........................................................18
5.1 Redemption.......................................................18
5.2 By the Board of Directors........................................19
5.3 Rights Termination...............................................19
ARTICLE VI MISCELLANEOUS.....................................................19
6.1 Expiration.......................................................19
6.2 Issuance of New Rights Certificate...............................19
6.3 Supplements and Amendments.......................................19
6.4 Fractional Rights................................................20
6.5 Fractional Shares................................................20
6.6 Rights of Action.................................................20
6.7 Holder of Rights Not Deemed a Stockholder........................21
6.8 Notice of Proposed Actions.......................................21
6.9 Notices..........................................................21
6.10 Costs of Enforcement............................................22
6.11 Successors......................................................22
6.12 Benefits of this Agreement......................................22
6.13 Descriptive Headings............................................22
6.14 Governing Law...................................................22
6.15 Counterparts....................................................22
6.16 Severability....................................................22
6.17 Effective Date..................................................22
6.18 Determinations and Actions by the Board of Directors............22
i
RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT (this "Agreement"), dated as of the 3rd day of
June, 2005, is entered into by and between SENTO CORPORATION, a Utah corporation
(the "Company"), and AMERICAN STOCK TRANSFER & TRUST COMPANY (the "Rights
Agent").
WHEREAS, in order to preserve stockholder value, the Company's Board of
Directors has determined that it is advisable for the Company to adopt a
stockholder rights plan (the "Rights Plan") to protect the Company and its
stockholders from abusive acquisition tactics;
WHEREAS, in order to implement the Rights Plan, the Company's Board of
Directors has authorized and declared a dividend distribution of one right
("Right") effective 5:00 p.m. (Mountain time) on June 3, 2005 (the "Record
Date") for each Common Share (as hereinafter defined) outstanding at the Close
of Business (as hereinafter defined) on the Record Date; and has authorized the
issuance of one Right in respect of each Common Share issued after the Record
Date and until the earliest to occur of the Separation Date, the Expiration
Date, or the Redemption Date (as such terms are hereinafter defined);
WHEREAS, each Right entitles the holder thereof, after the Separation
Date, to purchase securities of the Company (or in certain cases, of certain
other entities) pursuant to the terms and subject to the conditions set forth
herein; and
WHEREAS, the Company desires to appoint the Rights Agent to act on the
Company's behalf, and the Rights Agent is willing to so act, in connection with
the issuance, transfer, exchange, and replacement of Rights Certificates (as
hereinafter defined), the exercise of Rights, and other matters referred to
herein.
NOW, THEREFORE, in consideration of the premises and respective
agreements set forth herein, the parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Definitions.
For purposes of this Agreement, the following terms have the following
meanings:
(a) "Acquiring Person" shall mean any Person that, together
with all Affiliates and Associates of such Person, will be the
Beneficial Owner of twenty percent (20%) or more of the Voting Shares
of the Company then outstanding, but shall not include the Company, any
Company Subsidiary, any employee benefit plan of the Company or any
Company Subsidiary, or any Person or entity organized, appointed, or
established by the Company or such Company Subsidiary for or pursuant
to the terms of any such employee benefit plan. Notwithstanding the
foregoing, no Person shall become an Acquiring Person solely as the
result of a reduction in the number of Voting Shares outstanding due to
an acquisition of Voting Shares by the Company that increases the
proportionate number of such Voting Shares Beneficially Owned by such
Person to twenty percent (20%) or more unless and until that Person
shall purchase or otherwise become (as a result of actions by such
Person or its Affiliates or Associates) the Beneficial Owner of any
additional Voting Shares of the Company.
(b) "Affiliate" of, or a Person "affiliated" with, a specified
Person shall mean a Person that directly, or indirectly through one or
more intermediaries, controls, is controlled by, or is under common
control with such specified Person.
(c) "Associate" used to indicate a relationship with a
specified Person, shall mean:
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(i) any corporation, partnership, or other
organization of which such specified Person is an officer,
member, or partner;
(ii) any trust or other estate in which such
specified Person has a substantial beneficial interest or as
to which such specified Person serves as trustee or in a
similar fiduciary capacity;
(iii) any relative or spouse of such specified Person
or any Person with whom such specified Person is living in a
conjugal relationship outside marriage, or any relative of
such spouse or other Person who has the same home as such
specified Person or a director or officer of the Company or an
Affiliate of the Company;
(iv) any Person who is a director, officer, member,
partner, or trustee of such specified Person or of any
corporation, partnership, or other organization (other than
the Company or any wholly-owned Company Subsidiary) that is an
Affiliate or Associate of such specified Person; and
(v) any corporation of which such specified Person
beneficially owns, directly or indirectly, voting securities
carrying more than ten percent (10%) of the rights attaching
to all voting securities of such corporation for the time
being outstanding.
(d) A Person shall be deemed the "Beneficial Owner," to have
"Beneficial Ownership" of, and to "Beneficially Own" any securities:
(i) as to which such Person or any of such Person's
Affiliates or Associates is or may be deemed to be the
beneficial owner pursuant to Rule 13d-3 or 13d-5 under the
Exchange Act (or pursuant to any comparable or successor laws
or regulations or, if such rules shall be rescinded and there
shall be no comparable or successor laws or regulations,
pursuant to Rule 13d-3 or 13d-5 as in effect on the date of
this Agreement); and
(ii) as to which such Person or any of such Person's
Affiliates or Associates has the right to become Beneficial
Owner (whether such right is exercisable immediately or only
after the passage of time or the occurrence of changes in
Market Prices) pursuant to any contract, agreement,
arrangement, or understanding, or upon the exercise of any
rights (other than the Rights), whether conversion rights,
exchange rights, warrants, options, or otherwise;
provided, however, that a Person shall not be deemed the "Beneficial
Owner," to have "Beneficial Ownership" of, or to "Beneficially Own" any
security:
(x) tendered pursuant to a tender or exchange offer
or Take-over Bid made by such Person or any of such Person's
Affiliates or Associates until the earliest of such tendered
security being accepted for payment or exchange or being taken
up and paid for; or
(xi) as to which such Person's Affiliates or
Associates have or share the voting power or have the power to
direct the voting pursuant to a revocable proxy given in
response to a public proxy solicitation made pursuant to, and
in accordance with, the applicable rules and regulations under
the Exchange Act, except if such power (or the arrangement
relating thereto) is then reportable under Item 6 of Schedule
13D under the Exchange Act (or any similar provision of a
comparable or successor report).
For purposes of this Agreement, in determining the percentage of the
outstanding Voting Shares with respect to which a Person is the
Beneficial Owner, all Voting Shares as to which such Person is deemed
the Beneficial Owner shall be deemed outstanding.
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(e) "Board of Directors" shall mean, as applicable, the Board
of Directors of the Company and/or any of its Subsidiaries.
(f) "Business Day" shall mean any day other than Saturday,
Sunday, or a day on which banking institutions in the state of Utah are
authorized or obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean the time
on such date (or, if such date is not a Business Day, the time on the
next succeeding Business Day) at which the office of the transfer agent
for the Common Shares of the Company in Salt Lake City, Utah (or, after
the Separation Date, the offices of the Rights Agent, if different from
such transfer agent) is closed to the public.
(h) "Common Shares," when used with reference to the Company,
shall mean the shares of common stock, par value $0.25 per share (as
such par value may be changed from time to time), of the Company.
"Common Shares," when used with reference to any Person other than the
Company, shall mean the shares of capital stock (or equity interest)
with the most significant voting or decision-making power with respect
to management or control of such other Person or, if such other Person
is a Subsidiary of another Person, the Person or Persons that
ultimately control such first-mentioned Person.
(i) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(j) "Exercise Price" shall mean, as of any date, the price at
which a holder may purchase the securities issuable upon exercise of
one whole Right. Until adjustment thereof in accordance with the terms
hereof, the Exercise Price shall equal One Hundred Dollars ($100.00),
payable in lawful money of the United States of America.
(k) "Expiration Date" shall mean the Close of Business on June
3, 2008.
(l) "Flip-in Event" shall mean a transaction in which any
Person shall become an Acquiring Person; provided, however, that the
term "Flip-in Event" shall not include any transaction or event that
constitutes a "Flip-over Transaction or Event."
(m) "Flip-over Entity" shall mean:
(i) in the case of any transaction described in
clause (i) of the first sentence of Section 1.1(n) hereof: (1)
the Person that is the issuer of the securities into which
Common Shares of the Company are converted in such merger or
consolidation, or, if there is more than one such issuer, that
issuer the Common Shares of which have the greatest Market
Price, or (2) if no securities are so issued, (A) the Person
that is the other party to the merger or consolidation and
that survives such merger or consolidation, or, if there is
more than one such Person, that Person the Common Shares of
which have the greatest Market Price, or (B) if the Person
that is the other party to the merger or consolidation does
not survive the merger or consolidation, the Person that does
survive the merger or consolidation (including the Company if
it survives); and
(ii) in the case of any transaction described in
clause (ii) of the first sentence of Section 1.1(n) hereof,
the Person that is the party receiving the greatest portion of
the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a
party to such transaction or transactions receives the same
portion of the assets or earning power so transferred or if
the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such Persons
as is the issuer of Common Shares having the greatest Market
Price of shares outstanding; provided, however, that, in any
such case, if the Common Shares of such Person are not at such
time and have not been continuously over the preceding
12-month period registered under Section 12 of the Exchange
Act and such Person is a direct or indirect Subsidiary of
another Person the Common Shares of which are and have been so
registered, the term "Flip-over Entity" shall refer to such
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other Person, or if such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Shares of all
of which are and have been so registered, the term "Flip-over
Entity" shall refer to whichever of such Persons is the issuer
of the Common Shares having the greatest Market Price of the
shares outstanding.
(n) "Flip-over Transaction or Event" shall mean (i) a
transaction in which, directly or indirectly, the Company shall
consolidate with, merge with or into, or enter into an arrangement
with, any other Person (other than a wholly-owned Subsidiary of the
Company), or any other Person (other than a wholly-owned Subsidiary of
the Company) shall consolidate with, merge with or into, or enter into
an arrangement with the Company, and in connection therewith, all or
part of the outstanding Common Shares of the Company shall be changed
in any way, reclassified or converted into or exchanged for shares or
other securities or cash or any other property, or (ii) a transaction
or series of transactions in which, directly or indirectly, the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer) assets:
(1) aggregating more than fifty percent
(50%) of the assets (measured by either book value or
Market Price, whichever results in the greater
percentage); or
(2) that generated during the Company's last
completed fiscal year or are expected to generate in
the Company's then-current fiscal year more than
fifty percent (50%) of the operating income or cash
flow of the Company and its Subsidiaries (taken as a
whole) to any other Person (other than the Company or
one or more of its wholly-owned Subsidiaries) or to
two or more such Persons that are affiliated or
otherwise acting jointly or in concert.
(o) "Market Price" of any securities (including the Rights) on
any date of determination shall mean the average of the daily closing
prices per share (or Right) of such securities (determined as described
below) on each of the 20 consecutive Trading Days through and including
the Trading Day immediately preceding such date; provided, however,
that if an event of a type analogous to any of the events described in
Section 2.3 hereof shall have caused the closing prices used to
determine the Market Price on any Trading Day not to be fully
comparable with the closing price on such date of determination, each
such closing price so used shall be appropriately adjusted in a manner
analogous to the applicable adjustment provided for in Section 2.3
hereof in order to make it fully comparable with the closing price on
such date of determination. The closing price per share of any
securities on any date shall be (i) the last sale price, regular way,
or, in case no such sale takes place on such date, the average of the
closing bid and asked prices, regular way, for each share of such
securities as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on any national securities exchange, (ii) if the securities are
not listed or admitted to trading on any national securities exchange,
the closing board lot sale price, (iii) if for any reason none of such
prices is available on such day or the securities are not listed or
admitted to trading on any national securities exchange, the average of
the high bid and low asked prices for each share of such securities in
the over-the-counter market, as reported by the Nasdaq Stock Market of
the National Association of Securities Dealers, Inc. ("Nasdaq"), or
such other system then in use, or (iv) if on any such date the
securities are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market
maker making a market in the securities selected in good faith by the
Board of Directors of the Company; provided, however, that if on any
such date the securities are not traded in the over-the-counter market,
the closing price per share of such securities on such date shall mean
the fair value per share of securities on such date as determined in
good faith by the Board of Directors of the Company after consultation
with a nationally recognized investment banking firm with respect to
the fair value per share of such securities.
(p) "Offer" shall mean a written proposal delivered to the
Company by any Person or Persons that (i) Beneficially Own in the
aggregate one percent (1%) or less of the outstanding Common Shares of
the Company and have not within the 12-month period preceding the
delivery of such written proposal Beneficially Owned in the aggregate
4
in excess of one percent (1%) of the outstanding Common Shares of the
Company, and (ii) within said 12-month period have not disclosed, or
caused the disclosure of, any intention that would result in the
acquisition or influence of control of the Company (any such Persons
meeting the conditions specified in clauses (i) and (ii), an
"Offeror"), and which proposal:
(1) provides for acquisition of all of the
outstanding Voting Shares held by any Person other
than the Offeror and its Affiliates for cash at the
same specified price;
(2) is, in the opinion of a nationally
recognized investment banking firm retained by the
Offeror, fair to the holders of Voting Shares other
than the Offeror and its Affiliates and is at a price
that is not less than the book value;
(3) states that such offer shall remain open
for at least 90 days and shall include all Voting
Shares outstanding as of the date of the proposal or
issued thereafter pursuant to contracts in effect at
the date of the proposal and that the Offeror has
obtained written financing commitments from
recognized financing sources and/or has on hand, cash
or cash equivalents, for the full amount of all
financing necessary to consummate the offer; and
(4) requests the Company to call a special
meeting of the holders of Voting Shares for the
purpose of voting on a resolution requesting the
Board of Directors to accept such offer and contains
a written agreement of the Offeror to pay (or share
with any other Offeror) at least one-half of the
Company's costs of preparing and mailing proxy
material for its own solicitation.
(q) "Offer To Acquire" shall include:
(i) an offer to purchase or a solicitation of an
offer to sell Voting Shares; and
(ii) an acceptance of an offer to sell Voting Shares,
whether or not such offer to sell has been solicited; or
(iii) any combination thereof, and
the Person accepting an offer to sell shall be deemed to be making an
offer to acquire to the Person that made the offer to sell.
(r) "Offeror's Securities" means Voting Shares Beneficially
Owned on the date of an Offer To Acquire by any Person that makes a
Take-over Bid or by any Person acting jointly or in concert with such
Person.
(s) "Person" shall mean any individual, firm, partnership,
association, group (as such term is used in Rule 13d-3 under the
Exchange Act as in effect on the date of this Agreement), corporation,
trust, business trust, or other entity and shall include any successor
(by merger or otherwise) of such entity.
(t) "Preferred Shares" shall mean the currently authorized but
unissued shares of Series A Preferred Stock, no par value per share, of
the Company, having the rights and preferences set forth in the form of
Designation of Rights, Privileges, and Preferences attached hereto as
Exhibit A.
(u) "Redemption Date" means the date of the action of the
Company's Board of Directors ordering the redemption of the Rights
pursuant to Section 5.2 hereof.
(v) "Redemption Price" means a price of $0.001 per Right,
subject to adjustment as set forth in Article V hereof.
5
(w) "Right" means the right to purchase 1/100 of a Preferred
Share at the Exercise Price, subject to adjustment, or the right to
purchase, exchange, or receive other securities or assets of the
Company or another issuer as set forth herein.
(x) "Right Certificate" means a certificate evidencing a Right
or Rights, substantially in the form of Exhibit B hereto.
(y) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(z) "Separation Date" shall mean the Close of Business on the
earliest of (i) the tenth day (or such later day as is determined by
unanimous vote of the Board of Directors and publicly announced) after
the Stock Acquisition Date (provided, however, that if prior to the
date that would otherwise be the Separation Date, the Acquiring Person,
whose becoming such shall have caused the Stock Acquisition Date to
occur, shall cease to be an Acquiring Person and shall be the
Beneficial Owner of not more than five percent (5%) of the Common
Shares of the Company, as indicated in a public announcement or public
filing by such Person, then for purposes of this Section 1.1(z), the
Stock Acquisition Date shall be deemed not to have occurred), or (ii)
the tenth day after the date of the commencement of, or first public
announcement of, the intent of any Person (other than the Company, any
Company Subsidiary, or any Person or entity organized, appointed, or
established by the Company or such Company Subsidiary for or pursuant
to any tender or exchange offer plan) to commence a tender or exchange
offer or Take-over Bid to acquire (when added to any Voting Shares as
to which such Person is the Beneficial Owner immediately prior to such
tender or exchange offer or Take-over Bid) Beneficial Ownership of
twenty percent (20%) or more of the outstanding Voting Shares (provided
that, if the foregoing results in the Separation Date being prior to
the Record Date, the Separation Date shall be the Record Date, and
provided further that, if any tender or exchange offer or Take-over Bid
referred to in clause (ii) of this Section 1.1(z) expires or is
canceled, terminated, or otherwise withdrawn prior to the date that
would otherwise be the Separation Date, such offer shall be deemed, for
purposes of this Section 1.1(z), never to have been made), or (iii)
such later date as may be fixed by the Board of Directors from time to
time by notice to the Rights Agent and publicly announced by the
Company.
(aa) "Stock Acquisition Date" shall mean the first date of
public announcement or filing by the Company or an Acquiring Person
that an Acquiring Person has become such, whether or not the term
"Acquiring Person" is used in fact in such announcement.
(bb) "Subsidiary" of any specified Person shall mean any
corporation or other entity of which a majority of the voting power of
the voting equity securities or a majority of the equity interest is
Beneficially Owned, directly or indirectly, by such Person.
(cc) "Take-over Bid" means an Offer To Acquire Voting Shares
when the Voting Shares subject to the Offer To Acquire, together with
the Offeror's Securities, constitute in the aggregate twenty percent
(20%) or more of the outstanding Voting Shares at the date of the Offer
To Acquire.
(dd) "Trading Day," when used with respect to any securities,
shall mean a day on which the principal securities exchange on which
such securities are listed or admitted to trading is open for the
transaction of business or, if the securities are not listed or
admitted to trading on any securities exchange, a Business Day.
(ee) "Voting Shares" shall mean only the Common Shares of the
Company and any other shares of capital stock of the Company entitled
to vote generally in the election of directors.
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1.2 Determinations.
Any determination required to be made by the Company's Board of
Directors for purposes of applying the definitions contained in this Article 1
shall be made by the Board of Directors in its good faith judgment, which
determination shall be conclusive and binding on the Rights Agent and the
holders of the Rights.
ARTICLE II
THE RIGHTS
2.1 Legend on Common Share Certificates.
Certificates for the Common Shares issued after the Record Date, but
prior to the Close of Business on the Separation Date, shall evidence one Right
for each Common Share represented thereby and shall have impressed on, printed
on, written on, or otherwise affixed to them, the following legend:
Until the Separation Date (as defined in the Rights Agreement referred
to below), this certificate also evidences and entitles the holder
thereof to certain Rights as set forth in a Rights Agreement, dated
June 3, 2005 (the "Rights Agreement"), between Sento Corporation (the
"Company") and American Stock Transfer & Trust Company, as Rights
Agent, the terms of which are hereby incorporated by reference and a
copy of which is on file at the principal executive office of the
Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights may be redeemed by the Company, may expire, may
become void (if, in certain cases, they are "Beneficially Owned" by an
"Acquiring Person," as such terms are defined in the Rights Agreement,
or a transferee thereof), or may be evidenced by separate certificates
and may no longer be evidenced by this certificate. The Company will
mail or arrange for the mailing of a copy of the Rights Agreement to
the holder of this certificate without charge within five days after
the receipt of a written request therefor.
Certificates representing Common Shares of the Company that are issued and
outstanding at the Record Date shall evidence one Right for each Common Share
evidenced thereby notwithstanding the absence of the foregoing legend.
2.2 Initial Exercise Price; Exercise of Rights; Detachment of Rights.
(a) Subject to adjustment as herein set forth, each Right will
entitle the holder thereof, after the Separation Date, to purchase,
subject to adjustment from time to time as provided herein, 1/100 of a
Preferred Share at the Exercise Price.
(b) Until the Separation Date:
(i) no Right may be exercised; and
(ii) each Right will be evidenced by the certificate
for the associated Common Share and will be transferable only
together with, and will be transferred by a transfer of, such
associated Common Share. Notwithstanding any other provision
of this Agreement, any Rights held by the Company or any of
its Subsidiaries shall be void.
(c) After the Separation Date and prior to the Expiration
Date, the Rights, unless earlier redeemed in accordance with the
provisions of Article V hereof, may be exercised and will be
transferable independent of Common Shares. Promptly following the
Separation Date, the Rights Agent will mail to each holder of record of
Common Shares as of the Separation Date, at such holder's address as
shown by the records of the transfer agent and registrar of the
Company's Common Shares (the Company hereby agreeing to cause such
transfer agent and registrar, if different from the Rights Agent, to
7
furnish copies of such records to the Rights Agent for this purpose):
(i) a Rights Certificate appropriately completed, representing the
number of Rights held by such holder at the Separation Date and having
such marks of identification or designation and such legends,
summaries, or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with any
rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange or quotation system on which the Rights may from
time to time be listed or traded. or to conform to usage, and (ii) a
disclosure statement describing the Rights.
(d) Rights may be exercised on any Business Day after the
Separation Date and prior to the Expiration Date by submitting to the
Rights Agent the Rights Certificate evidencing such Rights with an
Election to Exercise (an "Election to Exercise"), substantially in the
form attached to the Rights Certificate duly completed, accompanied by
payment in cash or by certified check or money order payable to the
order of the Company, of a sum equal to the Exercise Price multiplied
by the number of Rights being exercised and a sum sufficient to cover
any transfer tax or charge that may be payable in respect of any
transfer involved in the transfer or delivery of Rights Certificates or
the issuance or delivery of certificates for whole or fractional
Preferred Shares in a name other than that of the holder of the Rights
being exercised.
(e) Upon receipt of a Rights Certificate, with an Election to
Exercise accompanied by payment as set forth in Section 2.2(d) above,
the Rights Agent will thereupon promptly:
(i) requisition from any transfer agent of the
capital stock of the Company certificates for the number of
whole or fractional Preferred Shares to be purchased (the
Company hereby irrevocably authorizing and directing such
transfer agent to comply with all such requisitions);
(ii) as provided in Section 6.5(b) hereof, at the
election of the Company, cause depository receipts to be
issued in lieu of fractional shares;
(iii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of
fractional shares in accordance with Section 6.5(b) hereof;
(iv) when appropriate, requisition from the Company
the amount of cash or other consideration to be paid in lieu
of capital stock as determined pursuant to the terms hereof;
and
(v) after receipt of such certificates, depository
receipts, and/or cash or other consideration, deliver the same
to or upon the order of the registered holder of such Rights
Certificate, registered (in the case of certificates or
depository receipts) in such name or names as may be
designated by such holder.
(f) In case the holder of any Rights shall exercise less than
all the Rights evidenced by such holder's Rights Certificate, a new
Rights Certificate evidencing the Rights remaining unexercised will be
issued by the Rights Agent to such holder or to such holder's duly
authorized assigns.
(g) The Company covenants and agrees that it will:
(i) cause to be reserved and kept available out of
its authorized and unissued shares of preferred stock and
common stock, respectively, or out of authorized and issued
shares of preferred stock and common stock, respectively, held
in its treasury, such number of Preferred Shares and Common
Shares, respectively, as will from time to time be sufficient
to permit the exercise in full of all outstanding Rights;
(ii) not effect any amendment to the designation of
rights, privileges, and preferences for the Preferred Shares
or any amendment to the articles of incorporation of the
Company that would materially and adversely affect the rights,
privileges, or powers of the Preferred Shares (regardless of
whether there are then any holders of Preferred Shares),
without the prior approval of the holders of two-thirds or
8
more of the then-outstanding Preferred Shares and the prior
written consent of the holders of two-thirds or more of the
then-outstanding Rights that are not Beneficially Owned by any
Acquiring Person. (For purposes of the taking of any action by
the holders of Rights, the Company's Board of Directors may
establish a record date and may call and hold a meeting of
such holders or seek their consent to action by the requisite
number thereof in writing substantially in accordance with the
procedure applicable to action to be taken by the holders of
Preferred Shares and in accordance with applicable law);
(iii) take all such action as may be necessary and
within its power to ensure that all Preferred Shares delivered
upon exercise of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (subject to payment of
the Exercise Price), be duly and validly authorized, executed,
issued, delivered, fully paid, and nonassessable;
(iv) take all such action as may be necessary and
within its power to comply with any applicable requirements of
the Securities Act or the Exchange Act, or the rules and
regulations thereunder and any other applicable law, rule, or
regulation, in connection with the issuance and delivery of
the Rights Certificates and the issuance of any Preferred
Shares upon exercise of Rights;
(v) use its best efforts to cause all Preferred
Shares issued upon exercise of Rights to be listed on a
national securities exchange (or on the same trading market as
are the shares of Company Common Stock) upon issuance; and
(vi) pay when due and payable any and all federal and
state transfer taxes (but not any income taxes of the holder
or exercising holder or any liability of the Company to
withhold tax) and charges that may be payable in respect of
the original issuance or delivery of the Rights Certificates;
provided that, the Company shall not be required to pay any
transfer tax or charge which may be payable in respect of any
transfer involved in the transfer or delivery of Rights
Certificates or the issuance or delivery of certificates for
shares in a name other than that of the holder of the Rights
being transferred or exercised.
2.3 Adjustments to Exercise Price; Number of Rights.
(a) In the event the Company shall at any time after the
Record Date and prior to the Expiration Date:
(i) declare or pay a dividend on the Common Shares
payable in Common Shares (or other capital stock or securities
exchangeable for or convertible into or giving a right to
acquire Common Shares or other capital stock) other than
pursuant to any optional stock dividend program;
(ii) subdivide or split the then-outstanding Common
Shares into a greater number of Common Shares;
(iii) combine or consolidate the then-outstanding
Common Shares into a smaller number of Common Shares or effect
a reverse split of the outstanding Common Shares; or
(iv) issue any Common Shares (or other capital stock
or securities exchangeable for or convertible into or giving a
right to acquire Common Shares or other capital stock) in
respect of, in lieu of, or in exchange for existing Common
Shares in a reclassification or recapitalization;
then, and in each such event, the Exercise Price and the number of
Rights outstanding, or, if the payment or effective date therefor shall
occur after the Separation Date, the Preferred Shares purchasable upon
exercise of Rights, shall be adjusted in the manner set forth below. If
9
the Exercise Price and number of Rights outstanding are to be adjusted,
(x) the Exercise Price in effect after such adjustment will be equal to
the Exercise Price in effect immediately prior to such adjustment
divided by the number of Common Shares (or other capital stock) (the
"Expansion Factor") that a holder of one Common Share immediately prior
to such dividend, subdivision, combination, or issuance would hold
thereafter as a result thereof, and (xi) each Right held prior to such
adjustment will become that number of Rights equal to the Expansion
Factor, and the adjusted number of Rights will be deemed to be
distributed among the Common Shares with respect to which the original
Rights were associated (if they remain outstanding) and the shares
issued in respect of such dividend, subdivision, combination, or
issuance, so that each such Common Share (or other capital stock) will
have exactly one Right associated with it. If the Preferred Shares
purchasable upon exercise of Rights are split, subdivided, or combined,
or if any dividend (whether of cash or securities) is declared with
respect thereto, the Preferred Shares purchasable upon exercise of each
Right after such event will be automatically adjusted to be that number
of the Preferred Shares that a holder of the Preferred Shares
purchasable upon exercise of one Right (regardless of whether a Right
shall then be exercisable) immediately prior to such split,
subdivision, combination, or dividend would hold thereafter as a result
thereof. If after the Record Date and prior to the Expiration Date, the
Company shall issue any shares of capital stock other than Common
Shares in a transaction of a type described in the first sentence of
this Section 2.3(a), shares of such capital stock shall be treated
herein as nearly equivalent to Common Shares as may be practicable and
appropriate under the circumstances, and the Company and the Rights
Agent agree to amend this Agreement in order to effect such treatment,
and the Company will not consolidate with, merge with or into, or enter
into an arrangement with any other Person unless such Person agrees to
be bound by the terms of an amendment effecting such treatment.
In the event the Company shall at any time after the Record
Date and prior to the Separation Date issue any Common Shares otherwise
than in a transaction referred to in the preceding paragraph, each such
Common Share so issued shall automatically have one new Right
associated with it, which Right shall be evidenced by the certificate
representing such Share.
(b) In the event the Company shall at any time after the
Record Date and prior to the Separation Date fix a record date for the
making of a distribution to all holders of Common Shares of rights or
warrants entitling them to subscribe for or purchase Common Shares (or
securities convertible into or exchangeable for or carrying a right to
purchase or subscribe for Common Shares) at a price per Common Share
(or, if a security convertible into or exchangeable for or carrying a
right to purchase or subscribe for Common Shares), having a conversion,
exchange, or exercise price (including the price required to be paid to
purchase such convertible or exchangeable security or right per share)
less than the Market Price per Common Share on such record date, the
Exercise Price shall be adjusted. The Exercise Price in effect after
such record date will equal the Exercise Price in effect immediately
prior to such record date multiplied by a fraction, of which the
numerator shall be the number of Common Shares outstanding on such
record date plus the number of Common Shares that the aggregate
offering price of the total number of Common Shares so to be offered
(and/or the aggregate initial conversion, exchange, or exercise price
of the convertible or exchangeable securities or rights so to be
offered (including the price required to be paid to purchase such
convertible or exchangeable securities or rights)) would purchase at
such Market Price, and of which the denominator shall be the number of
Common Shares outstanding on such record date plus the number of
additional Common Shares to be offered for subscription or purchase (or
into which the convertible or exchangeable securities or rights so to
be offered are initially convertible, exchangeable, or exercisable). 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 the Company's
Board of Directors. For purposes of this Agreement, the granting of the
right to purchase Common Shares (whether from treasury shares or
otherwise) pursuant to any dividend or interest reinvestment plan
and/or any Common Share purchase plan providing for the reinvestment of
dividends or interest payable on securities of the Company and/or the
investment of periodic optional payments and/or employee benefit or
similar plans (so long as such right to purchase is in no case
evidenced by the delivery of rights or warrants) shall not be deemed to
constitute an issue of rights or warrants by the Company; provided,
however, that, in the case of any dividend or interest reinvestment
plan, the right to purchase Common Shares is at a price per share of
not less than ninety percent (90%) of the current market price per
share (determined as provided in such plans) of the Common Shares.
10
(c) In the event the Company shall at any time after the
Record Date and prior to the Separation Date fix a record date for the
making of a distribution to all holders of Common Shares of evidences
of indebtedness or assets (other than a regular periodic cash dividend
or a dividend paid in Common Shares) or rights or warrants (excluding
those referred to in Section 2.3(b)), the Exercise Price shall be
adjusted. The Exercise Price in effect after such record date will
equal the Exercise Price in effect immediately prior to such record
date less the fair market value (as determined in good faith by the
Company's Board of Directors) of the portion of the assets, evidences
of indebtedness, rights, or warrants so to be distributed applicable to
the securities purchasable upon exercise of one Right.
(d) Each adjustment made pursuant to this Section 2.3 shall be
made as of:
(i) the record date for the applicable dividend or
distribution, in the case of an adjustment made pursuant to
subsection (b) or (c) above; and
(ii) the payment or effective date for the applicable
dividend, subdivision, change, combination, or issuance, in
the case of an adjustment made pursuant to subsection (a)
above.
(e) In the event the Company shall at any time after the
Record Date and prior to the Separation Date issue any shares of
capital stock (other than Common Shares), or rights or warrants to
subscribe for or purchase any such capital stock or securities
convertible into or exchangeable for any such capital stock, in a
transaction referred to in clause (a)(i) or (a)(iv) above, if the Board
of Directors acting in good faith determines that the adjustments
contemplated by clauses (a), (b), and (c) above in connection with such
transaction will not appropriately protect the interests of the holders
of Rights, the Company may determine what other adjustments to the
Exercise Price, number of Rights, and/or Preferred Shares purchasable
upon exercise of Rights would be appropriate and, notwithstanding
clauses (a), (b), and (c) above, such adjustments, rather than the
adjustments contemplated by clauses (a), (b), and (c) above, shall be
made. The Company and the Rights Agent shall amend this Agreement as
appropriate to provide for such adjustments.
(f) Each adjustment to the Exercise Price made pursuant to
this Section 2.3 shall be calculated to the nearest cent. Whenever an
adjustment to the Exercise Price is made pursuant to this Section 2.3,
the Company shall:
(i) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for
such adjustment;
(ii) promptly file with the Rights Agent and with
each transfer agent for the Common Shares a copy of such
certificate; and
(iii) mail a brief summary thereof to each holder of
Rights.
(g) Irrespective of any adjustment or change in the securities
purchasable upon exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the
securities so purchasable that were expressed in the initial Rights
Certificates issued hereunder.
2.4 Date on Which Exercise is Effective.
Each Person in whose name any certificate for Preferred Shares is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of such Preferred Shares represented thereby on, and
such certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered for exercise and payment of the
11
Exercise Price for such Rights (and any applicable transfer taxes and other
governmental charges payable by the exercising holder hereunder) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Share transfer books of the Company are closed, such Person
shall be deemed to have become the record holder of such Preferred Shares on,
and such certificate shall be dated, the next succeeding Business Day on which
the Preferred Share transfer books of the Company are open.
2.5 Execution, Authentication, Delivery, and Dating of Rights
Certificates.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, President or one of its Executive
Vice Presidents, attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Rights
Certificate may be manual or facsimile. Rights Certificates bearing the
manual or facsimile signatures of individuals that were at any time the
proper officers of the Company shall bind the Company, notwithstanding
that such individuals or any of them have ceased to hold such offices
prior to the countersignature and delivery of such Rights Certificates.
(b) Promptly after the Company learns of the Separation Date,
the Company will notify the Rights Agent of such Separation Date and
will deliver Rights Certificates executed by the Company to the Rights
Agent for countersignature, and the Rights Agent shall countersign
(manually or by facsimile signature in a manner satisfactory to the
Company) and deliver such Rights Certificates to the holders of the
Rights pursuant to Section 2.2(c) hereof. No Rights Certificate shall
be valid for any purpose until countersigned by the Rights Agent as
aforesaid.
(c) Each Rights Certificate shall be dated the date of
countersignature thereof.
2.6 Registration, Registration of Transfer and Exchange.
(a) The Company will cause to be kept a register (the "Rights
Register") in which, subject to such reasonable regulations as it may
prescribe, the Company will provide for the registration and transfer
of Rights. The Rights Agent is hereby appointed "Rights Registrar" for
the purpose of maintaining the Rights Register for the Company and
registering Rights and transfers of Rights as herein provided. In the
event that the Rights Agent shall cease to be the Rights Registrar, the
Rights Agent will have the right to examine the Rights Register at all
reasonable times.
(b) After the Separation Date and prior to the Expiration
Date, upon surrender for registration of transfer or exchange of any
Rights Certificate, and subject to the provisions of Section 2.6(d)
below, the Company will execute, and the Rights Agent will countersign
and deliver, in the name of the holder or the designated transferee or
transferees, as required pursuant to the holder's instructions, one or
more new Rights Certificates evidencing the same aggregate number of
Rights as did the Rights Certificates so surrendered.
(c) All Rights issued upon any registration of transfer or
exchange of Rights Certificates shall be the valid obligations of the
Company, and such Rights shall be entitled to the same benefits under
this Agreement as the Rights surrendered upon such registration of
transfer or exchange.
(d) Every Rights Certificate surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Company or
the Rights Agent, as the case may be, duly executed by the holder
thereof or such holder's attorney duly authorized in writing. As a
condition to the issuance of any new Rights Certificate under this
Section 2.6, the Company may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in
relation thereto.
2.7 Mutilated, Destroyed, Lost, and Stolen Rights Certificates.
(a) If any mutilated Rights Certificates is surrendered to the
Rights Agent prior to the Expiration Date, the Company shall execute
and the Rights Agent shall countersign and deliver in exchange therefor
12
a new Rights Certificate evidencing the same number of Rights as did
the Rights Certificate so surrendered.
(b) If there shall be delivered to the Company and the Rights
Agent prior to the Expiration Date (i) evidence to their satisfaction
of the destruction, loss, or theft of any Rights Certificate, and (ii)
such security or indemnity as may be required by them to save each of
them and any of their agents harmless, then, in the absence of notice
to the Company or the Rights Agent that such Rights Certificate has
been acquired by a bona fide purchaser, the Company shall execute and
upon its request the Rights Agent shall countersign and deliver, in
lieu of any such destroyed, lost, or stolen Rights Certificate, a new
Rights Certificate evidencing the same number of Rights as did the
Rights Certificate so destroyed, lost, or stolen .
(c) As a condition to the issuance of any new Rights
Certificate under this Section 2.7, the Company may require the payment
of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Rights Agent) connected therewith.
(d) Every new Rights Certificate issued pursuant to this
Section 2.7 in lieu of any destroyed, lost, or stolen Rights
Certificate shall evidence an original additional contractual
obligation of the Company, whether or not the destroyed, lost, or
stolen Rights Certificate shall be at any time enforceable by anyone,
and shall be entitled to all the benefits of this Agreement equally and
proportionately with any and all other Rights duly issued hereunder.
2.8 Persons Deemed Owners.
Prior to due presentment of a Rights Certificate (or, prior to the
Separation Date, the associated Common Share certificate) for registration of
transfer, the Company, the Rights Agent, and any agent of the Company or the
Rights Agent may deem and treat the Person in whose name such Rights Certificate
(or, prior to the Separation Date, the associated Common Share certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby for
all purposes whatsoever. As used in this Agreement, unless the context otherwise
requires, the term "holder" of any Rights shall mean the registered holder of
such Rights (or, prior to the Separation Date, the associated Common Shares).
2.9 Delivery and Cancellation of Certificates.
All Rights Certificates surrendered upon exercise or for redemption,
registration of transfer, or exchange shall, if surrendered to any Person other
than the Rights Agent, be delivered to the Rights Agent and, in any case, shall
be promptly canceled by the Rights Agent. The Company may at any time deliver to
the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder that the Company may have acquired in any
manner whatsoever, and all Rights Certificates so delivered shall be promptly
canceled by the Rights Agent. No Rights Certificate shall be countersigned in
lieu of or in exchange for any Rights Certificates canceled as provided in this
Section 2.9, except as expressly permitted by this Agreement. The Rights Agent
shall destroy all canceled Rights Certificates and deliver a certificate of
destruction to the Company.
2.10 Agreement of Rights Holders.
Every holder of Rights by accepting the same consents and agrees with
the Company and the Rights Agent and with every other holder of Rights that:
(a) prior to the Separation Date, each Right will be
transferable only together with, and will be transferred by a transfer
of, the associated Common Share;
(b) after the Separation Date, the Rights Certificates will be
transferable only on the Rights Register as provided herein;
13
(c) prior to due presentment of a Rights Certificate (or,
prior to the Separation Date, the associated Common Share certificate)
for registration of transfer, the Company, the Rights Agent, and any
agent of the Company or the Rights Agent may deem and treat the Person
in whose name the Rights Certificate (or, prior to the Separation Date,
the associated Common Share certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on such Rights Certificate or the
associated Common Share certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary; and
(d) without the approval of any holder of Rights and upon the
sole authority of the Company's Board of Directors acting in good
faith, this Agreement may be supplemented or amended from time to time
pursuant to Section 6.3, Section 2.3(e), or the last sentence of the
first paragraph of Section 2.3(a) hereof.
ARTICLE III
ADJUSTMENTS TO THE RIGHTS IN THE EVENT
OF CERTAIN TRANSACTIONS
3.1 Flip-over Transaction or Event.
(a) Subject to Section 3.3 hereof, in the event that prior to
the Expiration Date the Company enters into, consummates, or permits to
occur any Flip-over Transaction or Event, the Company shall take such
action as shall be necessary to ensure, and shall not enter into,
consummate, or permit to occur such Flip-over Transaction or Event
until it shall have entered into a supplemental agreement with the
principal Person engaging in such Flip-over Transaction or Event (the
"Flip-over Entity," as such term is more specifically defined in
Section 1.1(m) hereof) for the benefit of the holders of the Rights,
providing that upon consummation of the Flip-over Transaction or Event:
(i) each Right shall thereafter constitute the right
to purchase from the Flip-over Entity, upon exercise thereof
in accordance with the terms hereof, that number of Common
Shares of such Flip-over Entity having an aggregate Market
Price on the date of consummation or occurrence of such
Flip-over Transaction or Event equal to twice the Exercise
Price for an amount in cash equal to the Exercise Price (such
right to be appropriately adjusted in a manner analogous to
the applicable adjustment to the Rights provided for in
Section 2.3 in the event that after such date of consummation
or occurrence an event of a type analogous to any of the
events described in Section 2.3 shall have occurred with
respect to such Common Shares);
(ii) the Flip-over Entity shall thereafter be liable
for, and shall assume, by virtue of such Flip-over Transaction
or Event and such supplemental agreement, all the obligations
and duties of the Company pursuant to this Agreement;
(iii) the term "Company" for all purposes of this
Rights Agreement shall thereafter be deemed to refer to such
Flip-over Entity;
(iv) such Flip-over Entity shall take such steps
(including the reservation of a sufficient number of its
Common Shares, in the same manner applicable to the
reservation of Preferred Shares provided by Section 2.2(g)(i)
hereof) in connection with the consummation of such Flip-over
Transaction or Event as may be necessary to assure that the
provisions hereof shall thereafter be applicable;
(v) confirming that all rights of first refusal or
preemptive rights in respect of the issuance of Common Shares
of the Flip-over Entity upon exercise of outstanding Rights
14
have been waived and that such transaction shall not result in
a default by the Flip-over Entity under this Rights Agreement;
and
(vi) providing that, as soon as practicable after the
date of such Flip-over Transaction or Event, the Flip-over
Entity will:
(1) prepare and file, as required by law, a
registration statement under the Securities Act with
respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form,
use its best efforts to cause such registration
statement to become effective as soon as practicable
after such filing, and use its best efforts to cause
such registration statement to remain effective (with
a prospectus at all times meeting the requirements of
the Securities Act), until the date of expiration of
the Rights, and similarly comply with applicable
state securities laws;
(2) use its best efforts to list (or
continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on
a national securities exchange or to meet the
eligibility requirements for quotation on the Nasdaq
Stock Market; and
(3) deliver to holders of the Rights
historical financial statements for the Flip-over
Entity that comply in all respects with the
requirements for registration on Form 10 (or any
successor form) under the Exchange Act.
3.2 Flip-in Event.
(a) Subject to Section 3.3, in the event that prior to the
Expiration Date a Flip-in Event shall occur, the Company shall take
such action as shall be necessary to ensure and provide, within five
Business Days or such longer period as may be required to satisfy the
requirements of the Securities Act and the Exchange Act that, except as
provided below, such Right shall thereafter constitute the right to
purchase from the Company, upon exercise thereof in accordance with the
terms hereof, that number of Common Shares of the Company having an
aggregate Market Price on the date of consummation or occurrence of
such Flip-in Event equal to the Exercise Price for an amount in cash
equal to one-half the Exercise Price (such right to be appropriately
adjusted in a manner analogous to the applicable adjustment provided
for in Section 2.3 in the event that after such date of consummation or
occurrence an event of a type analogous to any of the events described
in Section 2.3 shall have occurred with respect to such Common Shares).
(b) Notwithstanding the foregoing, upon the occurrence of any
Flip-in Event, any Rights that are or were Beneficially Owned on or
after the earlier of the Separation Date or the Stock Acquisition Date
by (i) an Acquiring Person or (ii) a transferee, direct or indirect, of
an Acquiring Person (or any Affiliate or Associate of an Acquiring
Person) in a transfer, whether or not for consideration, that the
Company's Board of Directors acting in good faith has determined is
part of a plan, arrangement, or scheme of an Acquiring Person (or any
Affiliate or Associate of an Acquiring Person) that has the purpose or
effect of avoiding clause (i) of this Section 3.2(b), shall become void
and any holder of such Rights (including transferees) shall thereafter
have no right to exercise such Rights under any provision of this
Agreement.
(c) Any Rights Certificate issued pursuant to Section 2.2 that
represents Rights Beneficially Owned by an Acquiring Person and any
Rights Certificate issued at any time upon the transfer of any Rights
to an Acquiring Person or any Affiliate or Associate thereof or to any
nominee of any such Acquiring Person, Affiliate, or Associate, and any
Rights Certificate issued upon transfer, exchange, replacement, or
adjustment of any other Rights Certificate referred to in this
sentence, shall contain the following legend:
The Rights represented by this Rights Certificate were issued
to a Person that was an Acquiring Person or an Affiliate or an
Associate of an Acquiring Person (as such terms are defined in
15
the Rights Agreement). This Rights Certificate and the Rights
represented hereby may become void in the circumstances
specified in Section 3.2(b) of the Rights Agreement.
Provided that, the Rights Agent shall not be under any responsibility
to ascertain the existence of facts that would require the imposition
of such legend but shall be required to impose such legend only if
instructed to do so by the Company, or if a holder fails to certify
upon transfer or exchange in the space provided on the Rights
Certificate that such holder is not an Acquiring Person or an Affiliate
or Associate thereof; provided further, however, that the absence of
such legend on any Rights Certificate shall not be deemed dispositive
of whether the holder thereof is an Acquiring Person.
3.3 Obligations of the Company.
(a) The Company shall not enter into or engage in any
transaction of the kind referred to in this Article III if at the time
of such transaction there are any rights, warrants, or securities
outstanding or any other arrangements, agreements, or instruments that
would eliminate or otherwise diminish in any respect the benefits
intended to be afforded by this Rights Agreement to the holders of
Rights upon consummation of such transaction. The provisions of this
Article III shall apply to successive mergers or consolidations, sales,
or other transfers.
(b) In the event that there shall not be sufficient Common
Shares authorized to permit the exercise in full of the Rights in
accordance with Section 3.2(a), holders of Rights will receive upon
exercise Common Shares of the Company to the extent available and then
cash, property, or other securities of the Company (which may be
accompanied by a reduction in the Exercise Price), in proportions
determined by the Company, so that the aggregate value received is
equal to the Exercise Price.
ARTICLE IV
THE RIGHTS AGENT
4.1 General.
(a) The Company hereby appoints the Rights Agent to act as
agent for the Company and the holders of Rights 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 such Co-Rights Agents, the respective duties of the Rights
Agents and Co-Rights Agents shall be as the Company may determine. 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 other
disbursements incurred in the administration and execution 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, or expense, incurred without
negligence, bad faith, or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement, including the
costs and expenses of defending against any claim of liability, which
right to indemnification will survive the termination of this
Agreement.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered, or omitted
by it in connection with its administration of this Agreement in
reliance upon any certificate for Common Shares, Rights Certificate,
certificate for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed,
executed and, when necessary, verified or acknowledged, by the proper
Person or Persons.
16
4.2 Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or amalgamated or with which it
may be consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent
is a party, or any corporation succeeding to the stockholder services
business of the Rights Agent or any successor Rights Agent, will be the
successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any
of the parties hereto; provided that, such corporation would be
eligible for appointment as a successor Rights Agent under the
provisions of Section 4.4 hereof. In case at the time such successor
Rights Agent succeeds to the agency created by this Agreement, any of
the Rights Certificates have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates
have not 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 Certificate will have full force provided in the
Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is
changed and at such time any of the Rights Certificate shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificate 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.
4.3 Duties of Rights Agent.
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Rights Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel will
be full and complete authorization and protection to the Rights Agent
as to any action taken or omitted by it in good faith and in accordance
with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent deems it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking
or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate
signed by a Person believed by the Rights Agent to be the Chairman of
the Board, the President or any Executive Vice President or Vice
President, and by the Treasurer or any Assistant Treasurer or the
Secretary or any Assistant Secretary of the Company and delivered to
the Rights Agent; and such certificate will be full authorization to
the Rights Agent for any action taken or suffered in good faith by it
under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent will be liable hereunder only for its own
negligence, bad faith, or willful misconduct.
(d) The Rights Agent will not be liable for, or by reason of,
any of the statements of fact or recitals contained in this Agreement
or in the certificates for Common Shares or the Rights Certificates
(except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and will be deemed to
have been made by the Company only.
(e) The Rights Agent will not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
17
hereof (except the due authorization, execution, and delivery hereof by
the Rights Agent) or in respect of the validity or execution of any
Common Share certificate, Preferred Share certificate, or Rights
Certificate (except its countersignature thereof); nor will it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Rights Certificate; nor will it
be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 3.2(b) hereof
or any adjustment required under the provisions of Section 2.3 hereof)
or responsible for the manner, method, or amount of any such adjustment
or the ascertaining of the existence of facts that would require any
such adjustments (except with respect to the exercise of Rights after
receipt of the certificate contemplated by Section 2.3 describing any
such adjustment); nor will it by any act hereunder be deemed to make
any representation or warranty as to the authorization of any Preferred
Shares or Common Shares to be issued pursuant to this Agreement or any
Rights or as to whether any Preferred Shares or Common Shares will,
when issued, be duly and validly authorized, executed, issued,
delivered, 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 performing 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 any Person believed by the Rights Agent to be the
Chairman of the Board, the President, any Executive Vice President or
Vice President or the Secretary or any Assistant Secretary, or the
Treasurer or any Assistant Treasurer of the Company, and to apply to
such Persons for advice or instructions in connection with its duties
and it shall not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any such Person.
(h) The Rights Agent and any stockholder, director, officer,
or employee of the Rights Agent may buy, sell, or deal in Preferred
Shares, Common Shares, Rights, or other securities of the Company or
become pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement, subject to the terms, covenants,
conditions, and restrictions of this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the
Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights
Agent will not be answerable or accountable for any act, default,
neglect, or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, default, neglect, or
misconduct provided reasonable care was exercised in the selection and
continued employment thereof.
4.4 Change of Rights Agent.
The Rights Agent may resign and be discharged from its duties under
this Agreement upon 90 days' notice (or such lesser notice as is acceptable to
the Company) in writing mailed to the Company and to each transfer agent of
Common Shares, by registered or certified mail, and to the holders of the Rights
in accordance with Section 6.9. The Company may remove the Rights Agent upon 30
days' notice in writing, mailed to the Rights Agent and to each transfer agent
of the Common Shares, by registered or certified mail, and to the holders of the
Rights in accordance with Section 6.9. If the Rights Agent should resign or be
removed or otherwise become incapable of acting, the Company will appoint a
successor to the Rights Agent. If the Company fails to make such appointment
within a period of 30 days after such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of any Rights (which holder shall, with such
notice, submit such holder's Rights Certificate for inspection by the Company),
then the holder of any Rights may apply to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court shall be a corporation incorporated
under the laws of the state of Utah or a province thereof authorized to carry on
the business of a trust company in the state of Utah. After appointment, the
successor Rights Agent will be vested with the same powers, rights, duties, and
18
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 the purpose. Not later than the effective date of any such appointment, the
Company will file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares and mail a notice thereof in
writing to the holders of the Rights. Failure to give any notice provided for in
this Section 4.4 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.
ARTICLE V
REDEMPTION
5.1 Redemption.
The Rights may be redeemed solely by action of the Board of Directors
pursuant to Section 5.2 hereof and in no other manner.
5.2 By the Board of Directors.
The Company's Board of Directors may, at its option, at any time prior
to the earlier of (a) the Expiration Date or (b) the Close of Business on the
tenth day after the Stock Acquisition Date (or such later date as may be
determined by the majority vote of the Board of Directors from time to time), by
notice to the Rights Agent and public announcement by the Company, redeem all,
but not less than all, of the then-outstanding Rights at the Redemption Price,
appropriately adjusted to reflect any stock split, stock dividend, or similar
transaction occurring after the date hereof, and the Company may, at its option,
pay the Redemption Price in Common Shares (based on the current Market Price of
the Common Shares at the time of redemption), cash, or any other form of
consideration deemed appropriate by the Board of Directors.
5.3 Rights Termination.
Immediately upon the action of the Company's Board of Directors
ordering the redemption of the Rights pursuant to Section 5.2 hereof, and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. The Company shall promptly give public
notice 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.
Within 10 days after such action of the Board of Directors ordering the
redemption of the Rights pursuant to Section 5.2 hereof, the Company shall mail
a notice of redemption to all the holders of the then-outstanding Rights at
their last addresses as they appear upon the registry books of the Rights Agent
or, prior to the Separation Date, on the registry books of the transfer agent
for the Common Shares of the Company, if different. Any notice that is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made. Neither the Company nor
any of its Affiliates or Associates may redeem any Rights at any time in any
manner other than that specifically set forth in this Article V, and other than
in connection with the purchase of Common Shares of the Company prior to the
Separation Date.
ARTICLE VI
MISCELLANEOUS
6.1 Expiration.
No Person shall have any right pursuant to this Agreement or in respect
of any Right after the Expiration Date, except the Rights Agent as specified in
Section 4.1(a) of this Agreement.
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6.2 Issuance of New Rights Certificate.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the number or kind or class of
shares purchasable upon exercise of Rights made in accordance with the
provisions of this Agreement.
6.3 Supplements and Amendments.
The Company may from time to time supplement or amend this Agreement
without the approval of any holders of Rights:
(a) to make any changes, except for a supplement or amendment
that would establish an earlier Expiration Date or change the Exercise
Price that the Board of Directors acting in good faith may deem
necessary or desirable; provided that, no such supplement or amendment
made on or after the Stock Acquisition Date shall materially adversely
affect the interests of the holders of Rights generally; and provided
further that, no such supplement or amendment shall be made to the
provisions of Article IV except with the written concurrence of the
Rights Agent to such supplement or amendment; or
(b) in order to cure any ambiguity or to correct or supplement
any provision contained herein that may be inconsistent with any other
provisions herein or otherwise defective.
6.4 Fractional Rights.
(a) The Company shall not be required to issue fractions of
Rights or Right Certificates evidencing fractional Rights.
(b) In lieu of fractional Rights, the registered holders of
the Rights Certificates with regard to which such fractional Rights
would otherwise be issuable shall be paid in cash an amount equal to
the same fraction of the current Market Price of a whole Right. For the
purposes of this Section 6.4, the current Market Price of a whole Right
shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price of the Rights for any
day shall be determined in the same manner set forth in Section 1.1(o).
6.5 Fractional Shares.
(a) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions that are integral multiples of
1/100 of a share) or fractions of a share of Common Shares upon
exercise of the Rights or to distribute certificates that evidence
fractional shares of Preferred Shares (other than fractions that are
integral multiples of 1/100 of a share) or fractional shares of Common
Shares. Nothing contained herein, however, shall be deemed to prevent
any holder of Rights from aggregating the number of Rights exercised in
any single transaction in such a manner that the aggregate number of
Rights exercised in a single transaction may be convertible into an
integral number of shares (or, in the case of Preferred Shares, an
integral multiple of 1/100 of a share). A holder of fractional share
certificates of Preferred Shares shall have all such rights,
privileges, and preferences as it may be entitled to pursuant to the
Utah Revised Business Corporation Act.
(b) In lieu of issuing fractions (other than fractions that
are integral multiples of 1/100 of a share) of Preferred Shares, the
Company may, at its election, issue depository receipts evidencing
fractions of Preferred Shares pursuant to an appropriate agreement
between the Company and a depository selected by it; provided that,
such agreement shall provide that the holders of such depository
receipts shall have all of the rights, privileges, and preferences to
20
which they would be entitled as owners of Preferred Shares pursuant to
the Utah Revised Business Corporation Act. With respect to fractional
Preferred Shares that are not integral multiples of 1/100 of a
Preferred Share, if the Company does not issue such fractional
Preferred Shares or depository receipts in lieu thereof, there shall be
paid to the holders of record of Right Certificates at the time such
Right Certificates are exercised as herein provided an amount in cash
equal to the same fraction of the Market Price of a Preferred Share.
(c) The holder of a Right by the acceptance of a Right
expressly waives its right to receive any fractional Preferred Shares
(other than fractions that are integral multiples of 1/100 of a
Preferred Share) upon exercise of a Right.
6.6 Rights of Action.
Subject to the terms of this Agreement, rights of action in respect of
this Agreement, other than rights of action vested solely in the Rights Agent,
are vested in the respective holders of the Rights, and any holder of any
Rights, without the consent of the Rights Agent or of the holder of any other
Rights, may, on such holder's own behalf and for such holder's own benefit and
the benefit of other holders of Rights, enforce, institute, and maintain any
suit, action, or proceeding against the Company to enforce, or otherwise act in
respect of, such holder's right to exercise such holder's Rights in the manner
provided in such holder's Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and 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.
6.7 Holder of Rights Not Deemed a Stockholder.
No holder, as such, of any Rights shall be entitled to vote, receive
dividends, or be deemed for any purpose the holder of Preferred Shares or any
other securities that may at any time be issuable on the exercise of such
Rights, nor shall anything contained herein or in any Rights Certificate be
construed to confer upon the holder of any Rights, as such, any of the rights of
a stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 6.8 hereof),
or to receive dividends or subscription rights or otherwise, until such Rights
shall have been exercised in accordance with the provisions hereof.
6.8 Notice of Proposed Actions.
In case the Company shall propose after the Separation Date and prior
to the Expiration Date:
(a) to effect or permit (in cases when the Company's
permission is required) any Flip-in Event or Flip-over Transaction or
Event; or
(b) to effect the liquidation, dissolution, or winding up of
the Company or the sale of all or substantially all of the Company's
assets;
then, in each such case, the Company shall give to each holder of a Right, in
accordance with Section 6.9 hereof, a notice of such proposed action, which
shall specify the date on which such Flip-in Event or Flip-over Transaction or
Event, liquidation, dissolution, or winding up is to take place, and such notice
shall be so given at least 20 Business Days prior to the date of the taking of
such proposed action.
6.9 Notices.
Notices or demands authorized or required by this Agreement to be given
or made by the Rights Agent or by the holder of any Rights to the Company shall
be sufficiently given or made if delivered or sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
21
Sento Corporation
000 Xxxx Xxxx Xxxxxx Xx.
Xxxxxxxx Xxxx, Xxxx 00000
Attention: Secretary
Any notice or demand authorized or required by this Agreement to be
given or made by the Company or by the holder of any Rights to the Rights Agent
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:
American Stock Transfer & Trust Company
0000 00xx Xxxxxx
Xxxxxxxx, XX 00000
Attention: President
Notices or demands authorized or required by this Agreement to be given
or made by the Company or the Rights Agent to the holder of any Rights shall be
sufficiently given or made if delivered or sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as it appears
upon the registry books of the Rights Agent or prior to the Separation Date, on
the registry books of the transfer agent and registrar of the Company's capital
stock, if different from the Rights Agent. Any notice that is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice.
6.10 Costs of Enforcement.
The Company agrees that if the Company or any other Person the
securities of which are purchasable upon exercise of Rights fails to fulfill any
of its obligations pursuant to this Agreement, then the Company or such Person
will reimburse the holder of any Rights for the costs and expenses (including
legal fees) incurred by such holder in actions to enforce its rights pursuant to
any Rights or this Agreement.
6.11 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.
6.12 Benefits of this Agreement.
Nothing in this Agreement shall be construed to give any Person other
than the Company, the Rights Agent, and the holders of the Rights any legal or
equitable right, remedy, or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent, and the
holders of the Rights.
6.13 Descriptive Headings.
Descriptive headings appear herein for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
6.14 Governing Law.
This Agreement and each Right issued hereunder shall be deemed to be a
contract made under the internal laws of the state of Utah and for all purposes
shall be governed by and construed in accordance with the internal laws,
including the corporate laws, of such state applicable to contracts to be made
and performed entirely within such state without giving effect to conflicts of
laws principles thereof.
22
6.15 Counterparts.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
6.16 Severability.
If any term or provision hereof or the application thereof to any
circumstance shall, in any jurisdiction and to any extent, be invalid or
enforceable, such term or provision shall be ineffective as to such jurisdiction
to the extent of such invalidity or unenforceability without invalidating or
rendering unenforceable the remaining terms and provisions hereof or the
application of such term or provision to circumstances other than those as to
which it is held invalid or unenforceable.
6.17 Effective Date.
This Agreement shall become effective at 5:00 p.m., Mountain Time, on
June 3, 2005.
6.18 Determinations and Actions by the Board of Directors.
The Board shall have the exclusive power and authority to administer
and amend this Agreement and to exercise all rights and powers specifically
granted to the Board or the Company, or as may be necessary or advisable in the
administration of this Agreement, including the right and power to interpret the
provisions of this Agreement and make all determinations deemed necessary or
advisable for the administration of this Agreement (including a determination to
redeem or not to redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations, and determinations (including for purposes of
clause (b) below, all omissions with respect to the foregoing) that are done or
made by the Board, in good faith, shall (a) be final, conclusive, and binding on
the Company, the Rights Agent, the holders of the Rights Certificates and all
other parties, and (b) not subject the Board to any liability to the holders of
the Rights Certificates.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
SENTO CORPORATION
By: /s/ Xxxxxxx X.'Xxxx
----------------------------------
Xxxxxxx X'Xxxx
Chief Executive Officer
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Xxxxxxx Xxxxxx
In House Legal Counsel
23
Exhibit A
SENTO CORPORATION
AMENDMENT TO ARTICLES OF INCORPORATION
DESIGNATING RIGHTS, PRIVILEGES, AND PREFERENCES OF
SERIES "A" PREFERRED STOCK
Pursuant to the provisions of the Utah Revised Business Corporation
Act, section 16-10a-602, of the corporation laws of the state of Utah, the
undersigned corporation hereby adopts the following Amendment to Articles of
Incorporation Designating Rights, Privileges, and Preferences of Series "A"
Preferred Stock (the "Designation"):
FIRST: The name of the Corporation is Sento Corporation
SECOND: The following resolution amending the articles of incorporation
establishing a series of preferred stock designated as the "Series A
Participating Preferred Stock" consisting of 200,000 shares, no par value, was
duly adopted by the board of directors of the Corporation on May 28, 2005, in
accordance with the articles of incorporation of the Corporation and the
corporation laws of the state of Utah:
RESOLVED, there is hereby created a series of preferred stock of the Corporation
to be designated as the "Series "A" Preferred Stock" consisting of 200,000
shares, no par value, with the following powers, preferences, rights,
qualifications, limitations, and restrictions:
1. Liquidation.
1.01 In the event of any voluntary or involuntary liquidation
(whether complete or partial), dissolution, or winding up of the
Corporation, the holders of the Series "A" Preferred Stock shall be
entitled to be paid out of the assets of the Corporation available for
distribution to its shareholders, whether from capital, surplus, or
earnings, an amount in cash equal to all unpaid dividends, whether or
not previously declared, accrued thereon to the date of final
distribution subject to the priority distribution required respecting
any issued and outstanding shares of any series of preferred stock
authorized prior to the date hereof plus an amount per share equal to
100 times the aggregate amount to be distributed per share to the
holders of shares of Common Stock of the Corporation. No distribution
shall be made on any common stock or other subsequent series of
preferred stock of the Corporation by reason of any voluntary or
involuntary liquidation (whether complete or partial), dissolution, or
winding up of the Corporation unless each holder of any Series "A"
Preferred Stock shall have received all amounts to which such holder
shall be entitled under this subsection 1.01.
1.02 If on any liquidation (whether complete or partial),
dissolution, or winding up of the Corporation, the assets of the
Corporation available for distribution to holders of Series "A"
Preferred Stock shall be insufficient to pay the holders of outstanding
Series "A" Preferred Stock the full amounts to which they otherwise
would be entitled under subsection 1.01, the assets of the Corporation
available for distribution to holders of Series "A" Preferred Stock
shall be distributed to them pro rata on the basis of the number of
shares of Series "A" Preferred Stock held by each such holder.
2. Voting Rights. The Series "A" Preferred Stock shall be voted with
the Common Stock as a single class and shall not be entitled to vote as a
separate class, except to the extent that the consent of the holders of the
Series "A" Preferred Stock, voting as a class, is specifically required by the
provisions of the corporation laws of the state of Utah, as now existing or as
hereafter amended. Each holder of Series "A" Preferred Stock shall be entitled
to 100 votes for each share of such stock held on all matters submitted to a
vote of the stockholders of the Corporation.
3. Dividends.
3.01 The Corporation shall pay to the holders of the Series
"A" Preferred Stock out of the assets of the Corporation at any time
available for the payment of dividends at the times and in the amounts
provided for in this section 3.
3.02 Subject to the rights of the holders of any shares of any
series of preferred stock (or any similar stock) ranking prior and
superior to the Series "A" Preferred Stock with respect to dividends,
the holders of the shares of Series "A" Preferred Stock shall be
entitled to receive, in preference to the holders of Common Stock and
any other junior stock, dividends payable on the dates on which a
dividend or distribution on the Common Stock is payable (other than a
dividend payable in Common Stock), commencing on the first date on
which such a dividend is payable after the first issuance of a share or
fraction of a share of Series "A" Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to 100 times the aggregate
per share amount of all cash dividends and 100 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 dividend payment date on the Common Stock, or, if
later, the first issuance of any share or fraction of a share of Series
"A" Preferred Stock.
3.03 Any payment of dividends declared and due under this
section 3 with respect to any shares of Series "A" Preferred Stock
shall be made by means of a check drawn on funds immediately available
for the payment thereof to the order of the record holder of such share
at the address for such record holder shown on the stock records
maintained by or for the Corporation, which check shall be mailed by
United States first class mail, postage prepaid. Any such payment shall
be deemed to have been paid by the Corporation on the date that such
payment is deposited in the United States mail as provided above;
provided, that in the event the check or other medium by which any
payment shall be made shall prove not to be immediately collectible on
the date of payment, such payment shall not be deemed to have been made
until cash in the amount of such payment shall actually be received by
the person entitled to receive such payment.
3.04 Registration of transfer of any share of Series "A"
Preferred Stock on the stock records maintained by or for the
Corporation to a person other than the transferor shall constitute a
transfer of any right which the transferor may have had to receive any
accrued but unpaid dividends as of the date of transfer, whether
declared or undeclared, and the Corporation shall have no further
obligation to the transferor with respect to such accrued and unpaid
dividends. Any shares of Series "A" Preferred Stock represented by a
new certificate issued to a new holder shall continue to accrue
dividends as provided in this section 3.
4. Certain Restrictions.
4.01 Whenever any dividends or other distributions payable on
the Series "A" Preferred Stock as provided herein are in arrears, until
all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series "A" Preferred Stock outstanding shall
have been paid in full, the Corporation shall not:
(a) 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 "A" Preferred Stock;
(b) 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 "A" Preferred Stock except
dividends paid ratably on the Series "A" 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;
(c) redeem, 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 "A" Preferred Stock, provided that the Corporation
-2-
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 (both as to dividends and
upon liquidation, dissolution or winding up) to the Series "A"
Preferred Stock; or
(d) redeem, purchase or otherwise acquire for
consideration shares of Series "A" Preferred Stock, or any
shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series
"A" Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the
Board of Directors) to all holders of Series "A" Preferred
Stock and other such shares (if any) upon such terms as the
Board of Directors, after consideration of the respective
annual 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.
5. Redemption. The Corporation shall not have the right to redeem
shares of Series "A" Preferred Stock.
6. Additional Provisions.
6.01 No change in the provisions of the Series "A" Preferred
Stock set forth in this Designation affecting any interests of the
holders of any shares of Series "A" Preferred Stock shall be binding or
effective unless such change shall have been approved or consented to
by the holders of a majority of the Series "A" Preferred Stock in the
manner provided in the corporation laws of the state of Utah, as the
same may be amended from time to time.
6.02 A share of Series "A" Preferred Stock shall be
transferable only on the books of the Corporation maintained at its
principal office, on delivery thereof duly endorsed by the holder or by
his duly authorized attorney or representative or accompanied by proper
evidence of succession, assignment, or authority to transfer. In all
cases of transfer by an attorney, the original letter of attorney, duly
approved, or an official copy thereof, duly certified, shall be
deposited and remain with the Corporation. In case of transfer by
executors, administrators, guardians, or other legal representatives,
duly authenticated evidence of their authority shall be produced and
may be required to be deposited and remain with the Corporation in its
discretion. On any registration or transfer, the Corporation shall
deliver a new certificate representing the share of Series "A"
Preferred Stock so transferred to the person entitled thereto.
6.03 Any notice required or permitted to be given to the
holders of the Series "A" Preferred Stock under this Designation shall
be deemed to have been duly given if mailed by first class mail,
postage prepared to such holders at their respective addresses
appearing on the stock records maintained by or for the Corporation and
shall be deemed to have been given as of the date deposited in the
United States mail.
THIRD: This amendment was duly adopted by the board of directors
without shareholder action, and shareholder action was not required.
FOURTH: This amendment does not alter the preferences, limitations, or
relative rights granted to or imposed upon any wholly unissued class of shares
or any wholly unissued series of any class of shares.
-3-
IN WITNESS WHEREOF, the foregoing Amendment to Articles of
Incorporation Designating Rights, Privileges, and Preferences of Series "A"
Preferred Stock of the Corporation has been executed this ___ day of June, 2005,
by the undersigned, who affirms and acknowledges, under penalties of perjury,
that the foregoing is the undersigned's act and deed and that the facts stated
herein are true.
SENTO CORPORATION
By:
----------------------------------------
Xxxxxxx X'Xxxx, Chief Executive Officer
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Exhibit B
[Form of Rights Certificate]
Certificate No. _________ ________ Rights
THE RIGHTS ARE SUBJECT TO TERMINATION AT THE OPTION OF THE COMPANY ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT UNDER CERTAIN CIRCUMSTANCES
(SPECIFIED IN SECTION 5.3 OF THE RIGHTS AGREEMENT). RIGHTS BENEFICIALLY
OWNED BY AN ACQUIRING PERSON OR TRANSFEREES OF AN ACQUIRING PERSON OR
ITS AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) MAY BECOME VOID.
Rights Certificate
This certifies that _________________________________ or registered
assigns is the registered holder of the number of Rights set forth above, each
of which entitles the registered holder thereof, subject to the terms,
provisions, and conditions of the Rights Agreement dated as of the 3rd day of
June, 2005 (the "Rights Agreement"), between Sento Corporation, a Utah
corporation (the "Company"), and American Stock Transfer & Trust Company (the
"Rights Agent") (which term shall include any successor Rights Agent under the
Rights Agreement), to purchase from the Company at any time after the Separation
Date (as such term is defined in the Rights Agreement) and prior to the close of
business on the Expiration Date, one one-hundredth (1/100) of a share of Series
A Preferred Stock (a "Preferred Share") at the Exercise Price referred to below,
upon presentation and surrender of this Rights Certificate with the Form of
Election to Exercise duly executed and submitted to the Rights Agent at its
principal office at 0000 00xx Xxxxxx, Xxxxxxxx, XX 00000. The Exercise Price
shall initially be One Hundred Dollars ($100.00) per Right and shall be subject
to adjustment in certain events as provided in the Rights Agreement.
In certain circumstances described in the Rights Agreement, each Right
evidenced hereby may entitle the registered holder thereof to purchase or
receive securities of an entity other than the Company; assets, debt securities,
or shares in the capital stock of the Company other than Preferred Shares; or
more or less than one one-hundredth (1/100) of a Preferred Share (or a
combination thereof), all as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement which terms, provisions, and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties, and immunities thereunder of the
Rights Agent, the Company, and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal executive office of the
Company and are available upon written request.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at any of the offices of the Rights Agent designated for such
purpose, 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 amount of securities as the Rights evidenced by the Rights Certificate
or Rights Certificates surrendered shall have entitled such holder to purchase.
If this Right Certificate shall be exercised in part, the registered holder
shall be entitled to receive, upon surrender hereof, another Rights Certificate
or Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be terminated by the Company under certain circumstances
at its option.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Preferred
Shares or Fractional Preferred Shares or of any other securities which may at
any time be issuable upon the exercise hereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the Rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights or otherwise until the Rights evidenced by this Rights Certificate shall
have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
IN WITNESS WHEREOF, the facsimile signature of the proper officers of
the Company and its corporate seal.
DATE: _____________________
SENTO CORPORATION
ATTEST:
By
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Xxxxxxx Xxxxxxx, Secretary Xxxxxxx X'Xxxx
Chief Executive Officer
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By
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Authorized Signature
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Rights Certificates.)
FOR VALUE RECEIVED
____________________________________________________________________ hereby
(Please print name and address of transferee)
sells, assigns, and transfers unto
this Rights Certificate, together with all right, title, and interest therein,
and does hereby irrevocably constitute and appoint _______________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
DATED:
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Signature
Signature Guaranteed: (Signature must correspond to name as
written upon the face of this Rights
Certificate in every particular, without
alteration or enlargement or any change
whatsoever)
Signature must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office in the United
States.
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(To be completed if true)
The undersigned hereby represents, or the benefit of all holders of
Rights and Common Shares, that the Rights evidenced by this Rights Certificate
are not and, to the knowledge of the undersigned, have never been Beneficially
Owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement).
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Signature
Signature Guaranteed:
FORM OF ELECTION TO EXERCISE
To: SENTO CORPORATION
The undersigned hereby irrevocable elects to exercise
_______________________ whole Rights represented by the attached Rights
Certificate to purchase the Preferred Shares or Fractional Preferred Shares or
other Company or non-Company securities as are issuable upon the exercise of
such Rights and requests that certificates for such Shares or Fractional Shares
be issued in the name of and delivered to:
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Address
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Social Security or Other Taxpayer Identification Number
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
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Address
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Social Security or Other Taxpayer Identification Number
DATED:
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Signature
Signature Guaranteed: (Signature must correspond to name as
written upon the face of this Rights
Certificate in every particular, without
alteration or enlargement or any change
whatsoever)
Signature must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office in the United
States.
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(To be completed if true)
The undersigned hereby represents, or the benefit of all holders of
Rights and Common Shares, that the Rights evidenced by this Rights Certificate
are not and, to the knowledge of the undersigned, have never been Beneficially
Owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement).
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Signature
NOTICE
In the event the certification set forth above in the Forms of
Assignment and Election 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, will affix a legend to that effect on any
Right Certificates issued in exchange for this Rights Certificate.
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