EXHIBIT 1
---------
TAB PRODUCTS CO.
AND
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
Rights Agent
RIGHTS AGREEMENT
Dated as of October 24, 1996
TABLE OF CONTENTS
-----------------
Page
-----
1. Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Appointment of Rights Agent. . . . . . . . . . . . . . . . . . . . . . . 5
3. Issuance of Right Certificates . . . . . . . . . . . . . . . . . . . . . 5
4. Form of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . 7
5. Countersignature and Registration. . . . . . . . . . . . . . . . . . . . 7
6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates. . . . . . . . . 8
7. Exercise of Rights; Purchase Price; Expiration Date of Rights. . . . . . 9
8. Cancellation and Destruction of Right Certificates . . . . . . . . . . . 10
9. Reservation and Availability of Shares of Preferred Stock. . . . . . . . 10
10. Preferred Stock Record Date. . . . . . . . . . . . . . . . . . . . . . . 11
11. Adjustments to Number and Kind of Shares, Number of Rights or Purchase
Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12. Certification of Adjustments . . . . . . . . . . . . . . . . . . . . . . 19
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power . . 20
14. Fractional Rights and Fractional Shares. . . . . . . . . . . . . . . . . 23
15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
16. Agreement of Right Holders . . . . . . . . . . . . . . . . . . . . . . . 24
17. Right Certificate Holder Not Deemed a Stockholder. . . . . . . . . . . . 25
18. Concerning the Rights Agent. . . . . . . . . . . . . . . . . . . . . . . 25
19. Merger or Consolidation or Changed Name of Rights Agent. . . . . . . . . 25
20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . 26
21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . 28
22. Issuance of New Right Certificates . . . . . . . . . . . . . . . . . . . 29
23. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
i
24. Exchange of Rights for Common Stock. . . . . . . . . . . . . . . . . . . 30
25. Notice of Proposed Actions . . . . . . . . . . . . . . . . . . . . . . . 31
26. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
27. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . 32
28. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
29. Benefits of this Rights Agreement. . . . . . . . . . . . . . . . . . . . 33
30. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
31. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
32. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 33
33. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ii
RIGHTS AGREEMENT
This Rights Agreement ("Rights Agreement"), is dated as of October 24,
1996, between TAB Products Co., a Delaware corporation (the "Company"), and
ChaseMellon Shareholder Services, L.L.C. (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company on October 24, 1996 (i)
authorized the issuance and declared a dividend of one right ("Right") for
each share of the common stock of the Company ("Common Stock") outstanding as
of the Close of Business (as such term is hereinafter defined) on November 6,
1996 (the "Record Date"), each Right representing the right to purchase one
one-hundredth of a share of Series A Preferred Stock of the Company having
the rights, powers and preferences set forth in the form of Certificate of
Designation attached hereto as Exhibit A upon the terms and subject to the
conditions hereinafter set forth, and (ii) further authorized the issuance of
one Right with respect to each share of Common Stock of the Company that
shall become outstanding between November 6, 1996, and the Distribution Date
(as such term is hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties agree as follows:
1. CERTAIN DEFINITIONS. For purposes of this Agreement the following
terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term
is hereinafter defined) and Associates (as such term is hereinafter defined)
of such Person, without the prior approval of the Board of Directors, shall
be the Beneficial Owner (as such term is hereinafter defined) of fifteen
percent (15%) or more of the outstanding Common Stock; provided, however,
that in no event shall a Person who or which, together with all Affiliates
and Associates of such Person, is the Beneficial Owner of less than 15% of
the Company's outstanding shares of Common Stock, become an Acquiring Person
solely as a result of a reduction of the number of shares of outstanding
Common Stock, including repurchases of outstanding shares of Common Stock by
the Company, which reduction increases the percentage of outstanding shares
of Common Stock beneficially owned by such Person, PROVIDED, HOWEVER, that if
a Person shall become the Beneficial Owner of 15% or more of the Company's
outstanding shares of Common Stock then outstanding solely by reason of a
reduction of the number of shares of outstanding Common Stock, and shall
thereafter become the Beneficial Owner of any additional shares of Common
Stock of the Company, then such Person shall be deemed to be an "Acquiring
Person" unless upon the consummation of the acquisition of such additional
shares of Common Stock such person does not own fifteen percent (15%) or more
of the shares of Common Stock then outstanding, and PROVIDED FURTHER, that an
Acquiring Person shall not include an Exempt Person (as such term is
hereinafter defined). Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that a Person who would
otherwise be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently (including,
without limitation, because (i) such Person was unaware that it beneficially
owned a percentage of Common Stock that would otherwise cause such Person to
be an "Acquiring Person" or (ii) such Person was aware of the extent of its
Beneficial Ownership but
1
had no actual knowledge of the consequences of such Beneficial Ownership
under this Agreement) and without any intention of changing or influencing
control of the Company, and such Person divests as promptly as practicable a
sufficient number of shares of Common Stock so that such Person would no
longer be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall not be deemed to be
or to have become an "Acquiring Person" for any purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), as in
effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of any
securities
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to acquire (whether
such right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities), whether or not in
writing, or upon the exercise of conversion rights, exchange rights, rights
(other than the Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," securities tendered pursuant to a tender or exchange
offer made by such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or exchange; or (B)
the right to vote or dispose of or has "beneficial ownership" of (as
determined pursuant to Rule 13d-3 of the General Rules and Regulations under
the Exchange Act, or any comparable or successor rule), including pursuant to
any agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the "Beneficial Owner"
of, or to "beneficially own", any securities if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable proxy
or consent given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations of
the Exchange Act and (2) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor report);
or
(iii) which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such Person's Affiliates
or Associates has any agreement, arrangement or understanding (whether or not
in writing) for the purpose of acquiring, holding, voting
[except as described in clause (B) of subparagraph (ii) of this Section 1(c)]
or disposing of any securities of the Company;
PROVIDED, HOWEVER, that no Person who is an officer, director or employee of
an Exempt Person shall be deemed, solely by reason of such Person's status or
authority as such, to be the "Beneficial Owner" of, to have "Beneficial
Ownership" of or to "beneficially own" any securities that are "beneficially
owned" (as defined in this Section 1(c)), including, without limitation, in a
fiduciary capacity, by an Exempt Person or by any other such officer,
director or employee of an Exempt Person.
2
For all purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares
of Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act as in effect on the date hereof.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York or
the State of California are authorized or obligated by law or executive order
to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M., New
York time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York time, on the next succeeding
Business Day.
(f) "Common Stock" when used with reference to the Company shall
mean the common stock of the Company. "Common Stock" when used with
reference to any Person other than the Company which shall be organized in
corporate form shall mean the capital stock or other equity security with the
greatest per share voting power of such Person or, if such Person is a
Subsidiary of or is controlled by another Person, the Person which ultimately
controls such first-mentioned Person. "Common Stock" when used with
reference to any Person other than the Company which shall not be organized
in corporate form shall mean units of beneficial interest which shall
represent the right to participate in profits, losses, deductions and credits
of such Person and which shall be entitled to exercise the greatest voting
power per unit of such Person.
(g) "Common Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(h) "Current Market Price" shall have the meaning set forth in
Section 11(d) hereof.
(i) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
(j) "Distribution Date" shall have the meaning set forth in Section
3(a) hereof.
(k) "Equivalent Common Stock" shall have the meaning set forth in
Section 11(b) hereof.
(l) "Exchange Act" shall have the meaning set forth in Section 1
hereof.
(m) "Exempt Person" shall mean the Company or any Subsidiary of the
Company, including, without limitation, in its fiduciary capacity, any
employee benefit plan or employee stock plan of the Company or of any
Subsidiary of the Company, or any Person, organized, appointed, established
or holding Common Stock for or pursuant to the terms of any such plan or any
Person funding other employee benefits for employees of the Company or any
Subsidiary of the Company.
(n) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
3
(o) "Flip-In Event" shall mean any event described in Section
11(a)(ii)(A), 11(a)(ii)(B) or 11(a)(ii)(C) hereof.
(p) "Flip-In Exercise Payment" shall have the meaning set forth in
Section 11(a)(ii) hereof.
(q) "Flip-In Trigger Date" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(r) "Flip-Over Event" shall mean any event described in clause (x),
(y) or (z) of Section 13(a) hereof.
(s) "Flip-Over Exercise Payment" shall have the meaning set forth
in Section 13(a) hereof.
(t) "NASDAQ" shall have the meaning set forth in Section 9(b)
hereof.
(u) "Person" shall mean any individual, firm, corporation,
partnership, trust or other entity.
(v) "Preferred Stock" shall mean the Series A Preferred Stock, $.01
par value of the Company having the rights, powers and preferences set forth
in EXHIBIT A hereto, and, to the extent that there is not a sufficient number
of shares of Series A Preferred Stock authorized to permit the full exercise
of the Rights, any other series of Preferred Stock, $.01 par value, of the
Company designated for such purpose containing terms substantially similar to
the terms of the Series A Preferred Stock.
(w) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(x) "Purchase Price" shall have the meaning set forth in Section
4(a) hereof.
(y) "Record Date" shall have the meaning set forth in the WHEREAS
clause at the beginning of the Agreement.
(z) "Redemption Date" shall have the meaning set forth in Section
7(a) hereof.
(aa) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(bb) "Right Certificate" shall have the meaning set forth in Section
3(a) hereof.
(cc) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(dd) "Stock Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person
has become such or such earlier date as a majority of the directors shall
become aware of the existence of an Acquiring Person.
(ee) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
4
(ff) "Subsidiary" of a Person shall mean any corporation or other
entity of which securities or other ownership interests having ordinary
voting power sufficient to elect a majority of the board of directors or
other persons performing similar functions are beneficially owned, directly
or indirectly, by such Person and any corporation or other entity that is
otherwise controlled by such Person.
(gg) "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.
(hh) "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.
(ii) "Triggering Event" shall mean any event described in Section
11(a)(ii)(A), 11(a)(ii)(B) or 11(a)(ii)(C) or Section 13 hereof.
(jj) "Voting Power" shall mean the voting power of all securities of
the Company then outstanding and generally entitled to vote for the election
of directors of the Company.
Any determination required by the definitions contained in this Section 1
shall be made by the Board of Directors of the Company in its good faith
judgment, which determination shall be binding on the Rights Agent and the
holders of the Rights.
2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the Rights
Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable. In the event the Company appoints one or more
Co-Rights Agents, the respective duties of the Rights Agents and any
Co-Rights Agents shall be as the Company shall determine.
3. ISSUANCE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the tenth day after the Stock
Acquisition Date (or, if the tenth day after the Stock Acquisition Date
occurs before the Record Date, the Close of Business on the Record Date) or
(ii) the tenth business day (or such later date as may be determined by
action of the Board of Directors prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any Person (other
than an Exempt Person) of, or of the first public announcement of the intent
of any Person (other than an Exempt Person) to commence (which intention to
commence remains in effect for five business days after such announcement), a
tender or exchange offer upon the successful consummation of which such
Person, together with its Affiliates and Associates, would be the Beneficial
Owner of 15% or more of the outstanding Common Stock (irrespective of whether
any shares are actually purchased pursuant to any such offer) (including any
such date which is after the date of this Agreement and prior to the issuance
of the Rights; the earlier of such dates being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of Section 3(c) hereof) by the certificates for the Common Stock
registered in the names of the holders of the Common Stock and not by
separate Right Certificates, and (y) each Right will be transferable only in
connection with the transfer of a share (subject to adjustment as hereinafter
provided) of Common Stock. As soon as practicable after the Distribution
Date, the Rights Agent will mail, by first-class, postage prepaid mail, to
each record holder of the Common Stock as of the Close of Business on the
Distribution Date, as shown by the records of the Company, to
5
the address of such holder shown on such records, a Right certificate in
substantially the form of EXHIBIT B hereto ("Right Certificate") evidencing
one Right for each share of Common Stock so held. As of and after the
Distribution Date the Rights will be evidenced solely by such Right
Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Stock,
substantially in the form attached hereto as EXHIBIT C ("Summary of Rights"),
by first-class, postage prepaid mail, to each record holder of Common Stock
as of the Close of Business on the Record Date, at the address of such holder
shown on the records of the Company.
(c) Rights shall be issued in respect of all shares of Common Stock
that are issued (either as an original issuance or from the Company's
treasury) after the Record Date prior to the earlier of the Distribution Date
or the Expiration Date. With respect to certificates representing such
shares of Common Stock, the Rights will be evidenced by such certificates for
Common Stock registered in the names of the holders thereof together with the
Summary of Rights. Until the Distribution Date (or, if earlier, the
Expiration Date), the surrender for transfer of any certificate for Common
Stock outstanding on the Record Date (with or without a copy of the Summary
of Rights attached thereto), shall also constitute the surrender for transfer
of the Rights associated with the Common Stock represented thereby.
(d) Certificates issued for Common Stock (including, without
limitation, certificates issued upon transfer or exchange of Common Stock)
after the Record Date but prior to the earlier of the Distribution Date or
the Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between TAB Products Co. and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent, dated as of
October 24, 1996, as the same may be amended from time to time (the "Rights
Agreement"), the terms of which are incorporated herein by reference and a
copy of which is on file at the principal executive office of TAB
Products Co. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and will
no longer be evidenced by this certificate. TAB Products Co. will mail to
the holder of this certificate a copy of the Rights Agreement without
charge after receipt by it of a written request therefor. UNDER CERTAIN
CIRCUMSTANCES AS PROVIDED IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO,
BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN
ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) OR AN ASSOCIATE OR
AFFILIATE (AS DEFINED IN THE RIGHTS AGREEMENT) THEREOF AND CERTAIN
TRANSFEREES THEREOF WILL BE NULL AND VOID AND WILL NO LONGER BE
TRANSFERABLE.
With respect to such certificates containing the foregoing legend, the Rights
associated with the Common Stock represented by such certificates shall, until
the Distribution Date, be evidenced by such certificates alone, and registered
holders of Common Stock shall also be the registered holders of the associated
Rights, and the surrender for transfer of any such certificate shall also
constitute the surrender for transfer of the Rights associated with the Common
Stock represented thereby. In the event that the Company purchases or acquires
any shares of Common Stock after the Record Date but prior to the earlier of the
Distribution Date, the Redemption Date or the Expiration Date, any Rights
associated with such shares of Common Stock shall be deemed
6
canceled and retired so that the Company shall not be entitled to exercise
any Rights associated with the shares of Common Stock no longer outstanding.
Notwithstanding this paragraph (d), the omission of a legend shall not
affect the enforceability of any part of this Agreement or the rights of any
holder of the Rights.
4. FORM OF RIGHT CERTIFICATES.
(a) The Right Certificates (and the forms of election to purchase
shares and of assignment to be printed on the reverse thereof), when, as and
if issued, shall be substantially in the form set forth in EXHIBIT B hereto
and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Rights 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 on
which the Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Sections 11, 13 and 22 hereof, the Right
Certificates evidencing the Rights issued on the Record Date whenever such
certificates are issued, shall be dated as of the Record Date and the Right
Certificates evidencing Rights to holders of record of Common Stock issued
after the Record Date shall be dated as of the Record Date but shall also be
dated to reflect the date of issuance of such Right Certificate. On their
face, Right Certificates shall entitle the holders thereof to purchase, for
each Right, one one-hundredth of a share of Preferred Stock, or other
securities or property as provided herein, as the same may from time to time
be adjusted as provided herein, at the price per share of $35.00, as the same
may from time to time be adjusted as provided herein (the "Purchase Price").
(b) Notwithstanding any other provision of this Rights Agreement,
any Right Certificate that represents Rights that are or were at any time on
or after the earlier of the Stock Acquisition Date or the Distribution Date
beneficially owned by an Acquiring Person or any Affiliate or Associate
thereof (or any transferee of such Rights) shall have impressed on, printed
on, written on or otherwise affixed to it (if the Company or the Rights Agent
has knowledge that such Person is an Acquiring Person or an Associate or
Affiliate thereof or transferee of such Persons or a nominee of any of the
foregoing) the following legend:
The beneficial owner of the Rights represented by this Right Certificate is
an Acquiring Person or an Affiliate or Associate (as defined in the Rights
Agreement) of an Acquiring Person or a subsequent holder of such Right
Certificates beneficially owned by such Persons. Accordingly, this Right
Certificate and the Rights represented hereby are null and void and will no
longer be transferable as provided in the Rights Agreement.
The provisions of Section 11(a)(ii) and Section 24 of this Rights Agreement
shall be operative whether or not the foregoing legend is contained on any
such Right Certificates.
5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chief Executive Officer, its President or any Vice President,
either manually or by facsimile signature, and have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be countersigned, either
manually or by facsimile, by the Rights Agent and shall not be valid for any
purpose unless so countersigned. In case any
7
officer of the Company who shall have signed any of the Right Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Right
Certificates, nevertheless, may be countersigned by the Rights Agent, issued
and delivered with the same force and effect as though the person who signed
such Right Certificates had not ceased to be such officer of the Company; and
any Right Certificate may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Right Certificate, shall be
a proper officer of the Company to sign such Right Certificate, although at
the date of the execution of this Rights Agreement any such person was not
such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at one of its offices designated for such purposes, records
for registration and transfer of the Right Certificates issued hereunder.
Such records shall show the names and addresses of the respective holders of
the Right Certificates, the number of Rights evidenced on its face by each of
the Right Certificates, the date of each of the Right Certificates and the
certificate numbers for each of the Right Certificates.
6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Sections 7(e), 11(a)(ii) and 14
hereof, at any time after the Close of Business on the Distribution Date and
at or prior to the Close of Business on the Expiration Date, any Right
Certificate or Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or that
have been exchanged pursuant to Section 24 hereof) may be (i) transferred or
(ii) split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of
shares of Preferred Stock or other securities as the Right Certificate or
Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer any Right Certificate shall surrender
the Right Certificate at the office of the Rights Agent designated for such
purposes with the form of assignment on the reverse side thereof duly
endorsed (or enclose with such Right Certificate a written instrument of
transfer in form satisfactory to the Company and the Rights Agent), duly
executed by the registered holder thereof or his attorney duly authorized in
writing, and with such signature guaranteed by a member of a securities
approved medallion program. Any registered holder desiring to split up,
combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate or
Right Certificates to be split up, combined or exchanged at the principal
office of the Rights Agent. Thereupon the Rights Agent shall, subject to
Sections 4(b), 7(e), 11 and 14 hereof, countersign (by manual or facsimile
signature) and deliver to the person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer, split up, combination or
exchange of Right Certificates.
(b) Subject to the provisions of Section 11(a)(ii) hereof, upon
receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, if requested by the Company,
reimbursement to the Company of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Company will
8
execute and deliver a new Right Certificate of like tenor to the Rights Agent
for delivery to the registered owner in lieu of the Right Certificate so
lost, stolen, destroyed or mutilated.
7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Subject to Section 11(a)(ii) hereof, the Rights shall become
exercisable, and may be exercised to purchase Preferred Stock, except as
otherwise provided herein, in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed (with such
signature duly guaranteed), to the Rights Agent at 00 Xxxxxxxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, together with payment of the Purchase
Price with respect to each Right exercised, subject to adjustment as
hereinafter provided, at or prior to the Close of Business on the earlier of
(i) October 23, 2006 (the "Final Expiration Date"), (ii) the time at which
the Rights are redeemed as provided in Section 23 hereof (such date being
herein referred to as the "Redemption Date") or (iii) the time at which all
such Rights are exchanged as provided in Section 24 hereof (the earliest of
(i), (ii) and (iii) being herein referred to as the "Expiration Date").
(b) The Purchase Price and the number of shares of Preferred Stock
or other securities or consideration to be acquired upon exercise of a Right
shall be subject to adjustment from time to time as provided in Sections 11
and 13 hereof. The Purchase Price shall be payable in lawful money of the
United States of America, in accordance with Section 7(c) hereof.
(c) Except as provided in Section 11(a)(ii) hereof, upon receipt of
a Right Certificate with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price (as such amount may be reduced
pursuant to Section 11(a)(iii) hereof) or so much thereof as is necessary for
the shares to be purchased and an amount equal to any applicable transfer
tax, by cash, certified check or official bank check payable to the order of
the Company or the Rights Agent, the Rights Agent shall, subject to Section
20(k), thereupon promptly (i) requisition from any transfer agent of the
Preferred Stock (or make available if the Rights Agent is the transfer agent)
certificates for the number of shares of Preferred Stock so elected to be
purchased and the Company will comply and hereby authorizes and directs such
transfer agent to comply with all such requests, (ii) requisition from the
Company the amount of cash to be paid in lieu of issuance of fractional
shares in accordance with Section 14(b) hereof, and (iii) promptly after
receipt of such Preferred Stock certificates cause the same to be delivered
to or upon the order of the registered holder of such Right Certificate,
registered in such name or names as may be designated by such holder, and,
when appropriate, after receipt promptly deliver such cash to or upon the
order of the registered holder of such Right Certificate. In the event of a
purchase of securities, other than Preferred Stock, pursuant to Section 11(a)
or Section 13 hereof, the Rights Agent shall promptly take the appropriate
actions corresponding to the foregoing clauses (i) through (iii). In the
event that the Company is obligated to issue other securities of the Company,
pay cash and/or distribute other property pursuant to Section 11(a) hereof,
the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate.
(d) Except as otherwise provided herein, in case the registered
holder of any Right Certificate shall exercise less than all the Rights
evidenced thereby, a new Right Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be issued by the Rights Agent to the
registered holder of such Right Certificate or to his duly authorized
assigns, subject to the provisions of Section 14 hereof.
9
(e) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the
form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall reasonably request.
8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All Right
Certificates surrendered for the purpose of exercise. transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Rights Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any Right Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all canceled Right Certificates to the Company, or shall,
at the written request of the Company, destroy such canceled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
9. RESERVATION AND AVAILABILITY OF SHARES OF PREFERRED STOCK.
(a) The Company covenants and agrees that at all times it will
cause to be reserved and kept available, out of and to the extent of its
authorized and unissued shares of Preferred Stock not reserved for another
purpose (and, following the occurrence of a Triggering Event, other
securities) or held in its treasury, the number of shares of Preferred Stock
(and, following the occurrence of a Triggering Event, other securities) that,
as provided in this Agreement, including Section 11(a)(iii) hereof, will be
sufficient to permit the exercise in full of all outstanding Rights,
provided, however, that the Company shall not be required to reserve and keep
available shares of Preferred Stock or other securities sufficient to permit
the exercise in full of all outstanding Rights pursuant to the adjustments
set forth in Section 11(a)(ii), Section 11(a)(iii) or Section 13 hereof
unless, and only to the extent that, the Rights become exercisable pursuant
to such adjustments.
(b) The Company shall (i) use its best efforts to cause, from and
after such time as the Rights become exercisable, the Rights and all shares
of Preferred Stock (and following the occurrence of a Triggering Event, other
securities) issued or reserved for issuance upon exercise thereof to be
listed on the American Stock Exchange, and if the Preferred Stock shall
become listed on the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ") or any other national securities
exchange, to cause, from and after such time as the Rights become
exercisable, the Rights and all shares of Preferred Stock (and, following the
occurrence of a Triggering Event, other securities) issued or reserved for
issuance upon exercise thereof to be listed on such exchange upon official
notice of issuance upon such exercise and (ii) if then necessary, to permit
the offer and issuance of such shares of Preferred Stock (and, following the
occurrence of a Triggering Event, other securities), register and qualify
such share of Preferred Stock (and, following the occurrence of a Triggering
Event, other securities) under the Securities Act and any applicable state
securities or "blue sky" laws (to the extent exemptions therefrom are not
available), cause such registration statement and qualifications to become
effective as soon as possible after such filing and keep such registration
and qualifications effective until the Expiration Date of the Rights. The
Company may temporarily suspend, for a
10
period of time not to exceed ninety (90) days, the exercisability of the
Rights in order to prepare and file a registration statement under the
Securities Act and permit it to become effective. Upon any such suspension,
the Company shall issue a public announcement stating that the exercisability
of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained and until a
registration statement under the Securities Act (if required) shall have been
declared effective.
(c) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock (and
following the occurrence of a Triggering Event, other securities) delivered
upon exercise of Rights shall, at the time of delivery of the certificates
for such shares (subject to payment of the Purchase Price in respect
thereof), be duly and validly authorized and issued and fully paid and
nonassessable shares in accordance with applicable law.
(d) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes which may be
payable in respect of the issuance or delivery of the Right Certificates or
of any shares of Preferred Stock (or other securities, as the case may be)
upon the exercise of Rights. The Company shall not, however, be required to
pay any transfer tax which may be payable in respect of any transfer or
delivery of Right Certificates to a Person other than, or the issuance or
delivery of certificates for Preferred Stock (or other securities, as the
case may be) upon exercise of Rights in a name other than that of, the
registered holder of the Right Certificate, and the Company shall not be
required to issue or deliver a Right Certificate or certificate for Preferred
Stock (or other securities, as the case may be) to a person other than such
registered holder until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such tax
is due.
10. PREFERRED STOCK RECORD DATE. Each Person in whose name any
certificate for shares of Preferred Stock (or other securities, as the case
may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the shares of Preferred Stock
(or other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made. Prior to the exercise of the
Rights evidenced thereby, the holder of a Right Certificate, as such, shall
not be entitled to any rights of a stockholder of the Company with respect to
the shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or
to exercise any preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.
11. ADJUSTMENTS TO NUMBER AND KIND OF SHARES, NUMBER OF RIGHTS OR
PURCHASE PRICE. The number and kind of shares subject to purchase upon the
exercise of each Right, the number of Rights outstanding and the Purchase
Price are subject to adjustment from time to time as provided in this Section
11.
(a) (i) In the event the Company shall at any time after the date
of this Rights Agreement (A) declare or pay any dividend on Preferred Stock
payable in shares of Preferred Stock, (B) subdivide or split the outstanding
shares of Preferred Stock into a greater number of shares, (C) combine or
consolidate the outstanding shares of Preferred Stock into a
11
smaller number of shares or effect a reverse split of the outstanding shares
of Preferred Stock, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in this
Section 11(a), the Purchase Price in effect at the time of the record date
for such dividend or of the effective date of such subdivision, combination
or reclassification, and the number and kind of shares of Preferred Stock or
capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive, upon payment of the Purchase Price then in
effect, the aggregate number and kind of shares of capital stock or other
securities, which, if such Right had been exercised immediately prior to such
date, the holder thereof would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and shall be
made prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 24, in the event
(A) any Acquiring Person or any Associate or Affiliate of
any Acquiring Person, at any time after the date of this Agreement, directly
or indirectly, (1) shall consolidate with or merge with and into the Company
or any of its Subsidiaries or otherwise combine with the Company or any of
its Subsidiaries and the Company or such Subsidiary shall be the continuing
or surviving corporation of such consolidation, merger or combination and the
Common Stock of the Company shall remain outstanding and no shares thereof
shall be changed into or exchanged for stock or other securities of the
Company or of any other Person or cash or any other property, or (2) shall,
in one or more transactions, other than in connection with the exercise of a
Right or Rights and other than in connection with the exercise or conversion
of securities exercisable for or convertible into securities of the Company
or of any Subsidiary of the Company, transfer any assets or property to the
Company or any of its Subsidiaries in exchange (in whole or in part) for any
shares of any class of capital stock of the Company or any of its
Subsidiaries or any securities exercisable for or convertible into shares of
any class of capital stock of the Company or any of its Subsidiaries, or
otherwise obtain from the Company or any of its Subsidiaries, with or without
consideration, any additional shares of any class of capital stock of the
Company or any of its Subsidiaries or any securities exercisable for or
convertible into shares of any class of capital stock of the Company or any
of its Subsidiaries (other than as part of a pro rata offer or distribution
by the Company or such Subsidiary to all holders of such shares), or (3)
shall sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise acquire (other than as a pro rata dividend) or dispose, to, from or
with, as the case may be, in one transaction or a series of transactions, the
Company or any of its Subsidiaries, assets (including securities) on terms
and conditions less favorable to the Company or such Subsidiary than the
Company or such Subsidiary would be able to obtain in arm's-length
negotiation with an unaffiliated third party, or (4) shall receive any
compensation from the Company or any of its Subsidiaries for services other
than compensation for employment as a regular or part-time employee, or fees
for serving as a director, at rates in accordance with the Company's (or its
Subsidiary's) past practices, or (5) shall receive the benefit, directly or
indirectly (except proportionately as a stockholder), of any loans, advances,
guarantees, pledges or other financial assistance or any tax credits or tax
advantage provided by the Company or any of its Subsidiaries, or (6) shall
engage in any transaction with the Company (or any of its Subsidiaries)
involving the sale, license, transfer or grant of any right in, or disclosure
of, any patents, copyrights, trade secrets, trademarks, know-how or any other
intellectual or industrial property rights recognized under any country's
intellectual property laws
12
which the Company (including its Subsidiaries) owns or has the right to use
on terms and conditions not approved by the Board; or
(B) any Person, alone or together with its Affiliates and
Associates, shall become an Acquiring Person; or
(C) during such time as there is an Acquiring Person,
there shall be any reclassification of securities (including any reverse
stock split), or any recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or any other
transaction or series of transactions involving the Company or any of its
Subsidiaries (whether or not with or into or otherwise involving an Acquiring
Person or any Affiliate or Associate of such Acquiring Person) which has the
effect, directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity
securities of the Company or any of its Subsidiaries, or securities
exercisable for or convertible into equity securities of the Company or any
of its Subsidiaries, which is directly or indirectly beneficially owned by
any Acquiring Person or any Affiliate or Associate of any Acquiring Person,
then upon the first occurrence of such Flip-In Event (A) the Purchase Price
shall be adjusted to be the Purchase Price in effect immediately prior to the
Flip-In Event multiplied by the number of one one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately prior to such
Flip-In Event, whether or not such Right was then exercisable, and (B) each
holder of a Right, except as otherwise provided in this Section 11(a)(ii) and
Section 11(a)(iii) hereof, shall thereafter have the right to receive, upon
exercise thereof at a price equal to the Purchase Price (as so adjusted), in
accordance with the terms of this Agreement and in lieu of shares of
Preferred Stock, such number of shares of Common Stock as shall equal the
result obtained by dividing the Purchase Price (as so adjusted) by 50% of the
Current Market Price per share of the Common Stock (determined pursuant to
Section 11(d) hereof) on the date of such Flip-In Event; PROVIDED, HOWEVER,
that the Purchase Price (as so adjusted) and the number of shares of Common
Stock so receivable upon the exercise of a Right shall, following the Flip-In
Event, be subject to further adjustment as appropriate in accordance with
Sections 11(f) hereof. Notwithstanding anything in this Agreement to the
contrary, however, from and after the Flip-In Event, any Rights that are
beneficially owned by (x) any Acquiring Person (or any Affiliate or Associate
of any Acquiring Person), (y) a transferee of any Acquiring Person (or any
such Affiliate or Associate) who becomes a transferee after the Flip-In Event
or (z) a transferee of any Acquiring Person (or any such Affiliate or
Associate) who became a transferee prior to or concurrently with the Flip-In
Event pursuant to either (I) a transfer from the Acquiring Person to holders
of its equity securities or to any Person with whom it has any continuing
agreement, arrangement or understanding regarding the transferred Rights or
(II) a transfer which the Board of Directors has determined is part of a
plan, arrangement or understanding which has the purpose or effect of
avoiding the provisions of this paragraph, and subsequent transferees of such
Persons, shall be void without any further action and any holder of such
Rights shall thereafter have no rights whatsoever with respect to such Rights
under any provision of this Agreement. The Company shall use all reasonable
efforts to ensure that the provisions of this Section 11(a)(ii) are complied
with, but shall have no liability to any holder of Right Certificates or
other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder. From and after the Flip-In Event, no Right Certificate shall be
issued pursuant to Section 3 or Section 6 hereof that represents Rights that
are or have become void pursuant to the provisions of this paragraph, and any
Right Certificate delivered to the Rights Agent that represents Rights that
are or have become void pursuant to the provisions of this paragraph shall be
canceled.
13
(iii) The Company may at its option substitute for a share
of Common Stock issuable upon the exercise of Rights in accordance with the
foregoing subparagraph (ii) such number or fractions of shares of Preferred
Stock having an aggregate current market value equal to the Current Market
Price of a share of Common Stock. In the event that there shall not be
sufficient shares of Common Stock issued but not outstanding or authorized
but unissued to permit the exercise in full of the Rights in accordance with
the foregoing subparagraph (ii), the Board of Directors shall, to the extent
permitted by applicable law and any material agreements then in effect to
which the Company is a party (A) determine the excess (such excess, the
"Spread") of (1) the value of the shares of Common Stock issuable upon the
exercise of a Right in accordance with the foregoing subparagraph (ii) (the
"Current Value") over (2) the Purchase Price (as adjusted in accordance with
the foregoing subparagraph (ii)), and (B) with respect to each Right (other
than Rights which have become void pursuant to the foregoing subparagraph
(ii)), make adequate provision to substitute for the shares of Common Stock
issuable in accordance with the foregoing paragraph (ii) upon exercise of the
Right and payment of the Purchase Price (as adjusted in accordance
therewith), (1) cash, (2) a reduction in such Purchase Price, (3) shares of
Preferred Stock or other equity securities of the Company (including, without
limitation, shares or fractions of shares of preferred stock which, by virtue
of having dividend, voting and liquidation rights substantially comparable to
those of the shares of Common Stock, are deemed in good faith by the Board of
Directors to have substantially the same value as the shares of Common Stock
(such shares of Preferred Stock and shares or fractions of shares of
preferred stock are hereinafter referred to as "Common Stock Equivalents",
(4) debt securities of the Company, (5) other assets, or (6) any combination
of the foregoing, having a value which, when added to the value of the shares
of Common Stock actually issued upon exercise of such Right, shall have an
aggregate value equal to the Current Value (less the amount of any reduction
in such Purchase Price), where such aggregate value has been determined by
the Board of Directors upon the advice of a nationally recognized investment
banking firm selected in good faith by the Board of Directors; PROVIDED,
HOWEVER, that if the Company shall not make adequate provision to deliver
value pursuant to clause (B) above within thirty (30) days following the
Flip-In Event (the "Flip-in Trigger Date"), then the Company shall be
obligated to deliver, to the extent permitted by applicable law and any
material agreements then in effect to which the Company is a party, upon the
surrender for exercise of a Right and without requiring payment of such
Purchase Price, shares of Common Stock (to the extent available), and then,
if necessary, such number or fractions of shares of Preferred Stock (to the
extent available) and then, if necessary, cash, which shares and/or cash have
an aggregate value equal to the Spread. If the Board of Directors of the
Company shall determine in good faith that it is likely that sufficient
additional shares of Common Stock and/or Common Stock Equivalents could be
authorized for issuance upon exercise in full of the Rights, the thirty (30)
day period set forth above may be extended to the extent necessary, but not
more than ninety (90) days after the Flip-In Trigger Date, in order that the
Company may seek stockholder approval for the authorization of such
additional shares or Common Stock Equivalents (such thirty (30) day period,
as it may be extended, is herein called the "Substitution Period"). To the
extent that the Company determines that some action need be taken pursuant to
the second and/or third sentence of this Section 11(a)(iii), the Company (x)
shall provide, subject to the last sentence of Section 11(a)(ii) hereof, that
such action shall apply uniformly to all outstanding Rights, and (y) may
suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution to be made pursuant to
the first sentence of Section 11(a)(iii) and to determine the value thereof.
In the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of
14
this Section 11(a)(iii), the value of the Common Stock shall be the Current
Market Price per share of the Common Stock on the Flip-In Trigger Date and
the per share or per unit value of any Common Stock Equivalent shall be
deemed to equal the Current Market Price per share of the Common Stock on
such date. The Board of Directors may, but shall not be required to,
establish procedures to allocate the right to receive Common Stock upon the
exercise of the Rights among holders of Rights pursuant to this Section
11(a)(iii).
(b) In case the Company shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of
Preferred Stock entitling them to subscribe for or purchase (for a period
expiring within forty-five calendar days after such record date) Preferred
Stock, shares having the same rights, privileges and preferences as the
Preferred Stock ("equivalent preferred stock") or securities convertible into
Preferred Stock or equivalent preferred stock at a price per share of
Preferred Stock or equivalent preferred stock (or having a conversion price
per share, if a security convertible into Preferred Stock or equivalent
preferred stock) less than the Current Market Price per share of Preferred
Stock on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock outstanding on such record
date, plus the number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred Stock and/or
equivalent preferred stock (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such Current
Market Price, and the denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or equivalent preferred stock to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid by delivery of consideration part or all of
which may be in a form other than cash, the value of such non-cash
consideration shall be as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a statement filed
with the Rights Agent. Shares of Preferred Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are not
so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution
to all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash, assets (other
than a dividend payable in Preferred Stock, but including any dividend
payable in stock other than Preferred Stock) or subscription rights or
warrants (excluding those referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the Current Market Price
per share of Preferred Stock on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent)
of the portion of the cash, assets or evidences of indebtedness to be
distributed or of such subscription rights or warrants applicable to a share
of Preferred Stock and the denominator of which shall be such Current Market
Price per share of Preferred Stock. Such adjustments shall be made
successively whenever such a record date is fixed, and in the event that such
distribution is not so made, the Purchase Price shall be adjusted to be the
Purchase Price which would have been in effect if such record date had not
been fixed.
15
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "Current Market
Price" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of the Common Stock for the
thirty consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date, and for purpose of computations made pursuant
to Section 11(a)(iii) hereof, the "Current Market Price" per share of the
Common Stock on any date shall be deemed to be the average of the daily
closing prices per share of the Common Stock for the ten consecutive Trading
Days immediately following such date; PROVIDED, however, that in the event
that the Current Market Price per share of the Common Stock is determined
during a period following the announcement by the issuer of the Common Stock
of (i) any dividend or distribution on the Common Stock (other than a regular
quarterly cash dividend and other than the Rights), (ii) any subdivision,
combination or reclassification of the Common Stock, and prior to the
expiration of the requisite thirty Trading Day or ten Trading Day period, as
set forth above, after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification occurs, then, and in each such case, the Current Market
Price shall be properly adjusted to take into account ex-dividend trading.
The closing price for each day shall be the last sale price, regular way, or,
in case no such sale takes place on such day, the average of the closing bid
and asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the shares of
Common Stock are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the shares of Common Stock are listed or admitted to
trading or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, the last quoted sale price or,
if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in
use, or, if on any such date the shares of Common Stock 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 Common Stock
selected by the Board of Directors of the Company. If on any such date no
market maker is making a market in the Common Stock, the fair value of such
shares on such date as determined in good faith by the Board of Directors of
the Company shall be used and shall be binding on the Rights Agent. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the shares of Common Stock are listed or admitted to
trading is open for the transaction of business or, if the shares of Common
Stock are not listed or admitted to trading on any national securities
exchange, a Business Day. If the Common Stock is not publicly held or not so
listed or traded, "Current Market Price" per share shall mean the fair value
per share as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "Current
Market Price" per share (or one one-hundredth of a share) of Preferred Stock
shall be determined in the same manner as set forth above for the Common
Stock in clause (i) of this Section 11(d) (other than the last sentence
thereof). If the Current Market Price per share (or one one-hundredth. of a
share) of Preferred Stock cannot be determined in the manner provided above
or if the Preferred Stock is not publicly held or listed or traded in a
manner described in clause (i) of this Section 11(d), the "Current Market
Price" per share of Preferred Stock shall be conclusively deemed to be an
amount equal to 100 (as such number may be appropriately adjusted for such
events as stock splits, stock dividends and recapitalizations with respect to
the Common Stock occurring after the date of this Agreement) multiplied by
the Current Market
16
Price per share of the Common Stock and the "Current Market Price" per one
one-hundredth of a share of Preferred Stock shall, be equal to the Current
Market Price per share of the Common Stock (as appropriately adjusted). If
neither the Common Stock nor the Preferred Stock is publicly held or so
listed or traded, "Current Market Price" per shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment
in the Purchase Price shall be required unless such adjustment would require
an increase or decrease of at least one percent in the Purchase Price;
PROVIDED, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 11 shall
be made to the nearest cent or to the nearest ten-thousandth of a share of
Common Stock or other share or one-hundred-thousandth of a share of Preferred
Stock, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no
later than the earlier of (i) three years from the date of the transaction
which mandates such adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock other
than Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Right and the Purchase Price thereof shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the shares of
Preferred Stock contained in Section 11(a), (b), (c), (e), (g), (h), (i),
(j), (k) and (m) hereof, and the provisions of Sections 7, 9, 10, 13 and 14
hereof with respect to the Preferred Stock shall apply on like terms to any
such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Preferred
Stock purchasable from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of one one-hundredths of a share of Preferred Stock (calculated
to the nearest one-hundred-thousandth) obtained by (i) multiplying (x) the
number of one one-hundredths of a share of Preferred Stock covered by a Right
immediately prior to this adjustment, by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price, and (ii) dividing
the product so obtained by the Purchase Price in effect immediately after
such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price or any adjustment to the number of shares of Preferred
Stock for which a Right may be exercised made pursuant to Sections 11(a)(i),
11(b) or 11(c), to adjust the number of Rights in lieu of any adjustment in
the number of shares of Preferred Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after the adjustment in the number of
Rights shall be exercisable for the number of shares of Preferred Stock for
which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the
17
number of Rights shall become that number of Rights (calculated to the
nearest one hundred-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price. Company
shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the
date on which the Purchase Price is adjusted or any day thereafter, but, if
the Right Certificates have been issued, shall be at least ten days later
than the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be distributed
to holders of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14 hereof, the additional Rights
to which such holders shall be entitled as a result of such adjustment, or,
at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Right Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Right
Certificates so to be distributed shall be issued, executed and countersigned
in the manner provided for herein (and may bear, at the option of the
Company, the adjusted Purchase Price) and shall be registered in the names of
the holders of record of Right Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of shares of Preferred Stock issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue
to express the Purchase Price per share and the number of shares which were
expressed in the initial Right Certificate issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the shares
of Common Stock, Preferred Stock or other capital stock issuable upon
exercise of the Rights, the Company shall take any corporate action,
including using its best efforts to obtain any required stockholder
approvals, which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock, Preferred Stock or other capital stock at such
adjusted Purchase Price. If upon any exercise of the Rights, a holder is to
receive a combination of Common Stock and Common Stock Equivalents, a portion
of the consideration paid upon such exercise, equal to at least the then par
value of a share of Common Stock of the Company, shall be allocated as the
payment for each share of Common Stock of the Company so received.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record
date the shares of Preferred Stock and other capital stock or securities of
the Company, if any, issuable upon such exercise over and above the shares of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; PROVIDED, however, that the Company shall deliver
to such holder a due xxxx or other appropriate instrument evidencing such
holder's right to receive such additional shares of Preferred Stock and other
capital stock or securities upon the occurrence of the event requiring such
adjustment.
18
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price,
in addition to those adjustments expressly required by this Section 11, as
and to the extent that in their good faith judgment the Board of Directors of
the Company shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Stock, (ii) issuance for cash
of any shares of Preferred Stock at less than the Current Market Price, (iii)
issuance for cash of shares of Preferred Stock or securities which by their
terms are convertible into or exchangeable for shares of Preferred Stock,
(iv) stock dividends or (v) issuance of rights, options or warrants referred
to in this Section 11, hereafter made by the Company to holders of its
Preferred Stock shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person, (ii)
merge with or into any other Person, or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to,
any other Person or Persons, if (x) at the time of or immediately after such
consolidation, merger or sale there are any charter or by-law provisions or
any rights, warrants or other instruments or securities outstanding or
agreements in effect which substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale,
the stockholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of its
Affiliates and Associates. The Company shall not consummate any such
consolidation, merger or sale unless prior thereto the Company and such other
Person shall have executed and delivered to the Rights Agent a supplemental
agreement evidencing compliance with this subsection.
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23, Section 24 or Section
27 hereof, take (or permit any Subsidiary to take) any action if at the time
such action is taken it is reasonably foreseeable that such action will
diminish substantially or eliminate the benefits intended to be afforded by
the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time after the Record Date and prior
to the Distribution Date (i) declare or pay any dividend on the outstanding
shares of Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, or (iii) combine the outstanding shares
of Common Stock into a smaller number of shares, the number of Rights
associated with each share of Common Stock then outstanding, or issued or
delivered thereafter, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any
such event equals the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event by
a fraction, the numerator or which shall be the number of shares of Common
Stock outstanding immediately prior to the occurrence of such event and the
denominator of which shall be the number of shares of Common Stock
outstanding immediately following the occurrence of such event.
12. CERTIFICATION OF ADJUSTMENTS. Whenever an adjustment is made as
provided in Sections 11 and 13 hereof, the Company shall (a) promptly prepare
a certificate signed by its Chief Executive Officer, its President or any
Vice President and by the Treasurer or any Assistant
19
Treasurer or the Secretary or any Assistant Secretary of the Company setting
forth such adjustment and a brief statement of the facts giving rise to such
adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Preferred Stock and the Common Stock a copy of such certificate
and (c) mail a brief summary thereof to each holder of a Right Certificate
(or, if prior to the Distribution Date, to each holder of a certificate
representing shares of Common Stock) in accordance with Section 26 hereof.
Notwithstanding the foregoing sentence, the failure of the Company to give
such notice shall not affect the validity of or the force or effect of or the
requirement for such adjustment. The Rights Agent shall be fully protected
in relying on any certificate prepared by the Company pursuant to Sections 11
and 13 and on any adjustment therein contained and shall not be deemed to
have knowledge of any such adjustment unless and until it shall have received
such certificate. Any adjustment to be made pursuant to Sections 11 and 13
of this Rights Agreement shall be effective as of the date of the event
giving rise to such adjustment.
13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER.
(a) In the event that following the first occurrence of a Flip-In
Event, directly or indirectly, (x) the Company shall consolidate with, or
merge with and into, any other Person or Persons and the Company shall not be
the surviving or continuing corporation of such consolidation or merger, or
(y) any Person or Persons shall consolidate with, or merge with and into, the
Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding shares of Common Stock shall be
changed into or exchanged for stock or other securities of any other Person
or of the Company or cash or any other property other than, in the case of
the transactions described in subparagraphs (x) or (y), a merger or
consolidation which would result in all of the Voting Power represented by
the securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into securities of the surviving entity) all of the Voting Power
represented by the securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation and the holders of
such securities not having changed as a result of such transactions), or (z)
the Company or one or more of its Subsidiaries shall sell, mortgage or
otherwise transfer to any other Person or any Affiliate or Associate of such
Person, in one transaction, or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole), then, on the first
occurrence of any such event (a "Flip-Over Event"), proper provision shall be
made so that (i) each holder of a Right (other than Rights which have become
void pursuant to Section 11(a)(ii) hereof) shall thereafter have the right to
receive, upon the exercise thereof at the Purchase Price (as theretofore
adjusted in accordance with Section 11(a)(ii) hereof), in accordance with the
terms of this Agreement and in lieu of shares of Preferred Stock or Common
Stock of the Company, such number of validly authorized and issued, fully
paid, non-assessable and freely tradeable shares of Common Stock of the
Principal Party (as such term is hereinafter defined), not subject to any
liens, encumbrances, rights of first refusal or other adverse claims, as
shall equal the result obtained by dividing the Purchase Price (as
theretofore adjusted in accordance with Section 11(a)(ii) hereof) by 50% of
the Current Market Price per share of the Common Stock of such Principal
Party (determined pursuant to Section 11(d) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; PROVIDED,
HOWEVER, that the Purchase Price (as theretofore adjusted in accordance with
Section 11(a)(ii) hereof) and the number of shares of Common Stock of such
Principal Party so receivable upon exercise of a Right shall be subject to
further adjustment as appropriate in accordance with Section 11(f) hereof to
reflect any events occurring in respect of the Common Stock of such Principal
Party after the
20
occurrence of such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue
of such Flip-Over Event, all the obligations and duties of the Company
pursuant to this Rights Agreement; (iii) the term "Company" for all purposes
of this Rights Agreement shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall only apply to such Principal Party following the
first occurrence of a Flip-Over Event; and (iv) such Principal Party shall
take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock in accordance with Section 9
hereof) in connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its shares of
Common Stock thereafter deliverable upon the exercise of the Rights;
provided, however, that, upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all assets, recapitalization,
reclassification of shares, reorganization or other extraordinary transaction
in respect of such Principal Party, each holder of a Right shall thereupon be
entitled to receive, upon exercise of a Right, such cash, shares, rights,
warrants and other property which such holder would have been entitled to
receive had he, at the time of such transaction, owned the shares of Common
Stock of the Principal Party purchasable upon the exercise of a Right, and
such Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x) or (y) of
the first sentence of Section 13(a) hereof; (A) the Person that is the issuer
of the securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, or, if there is more than one such
issuer, the issuer the Common Stock of which has the greatest aggregate
market value or (B) if no securities are so issued, (x) the Person that is
the other party to the merger or consolidation and that survives said merger
or consolidation, or, if there is more than one such Person, the Person the
Common Stock of which has the greatest market value or (y) 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 (z) of the
first sentence in Section 13(a) 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 Stock having the
greatest aggregate market value of shares outstanding;
PROVIDED, HOWEVER, that in any such case described in the foregoing (b)(i) or
(b)(ii), (1) if the Common Stock of such Person is not at such time and has
not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, the term "Principal Party" shall refer to such other Person, or
(2) if such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stocks of all of which are and have been so registered,
the term "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest market value of shares
outstanding, or (3) if
21
such Person is owned, directly or indirectly, by a joint venture formed by
two or more Persons that are not owned, directly or indirectly, by the same
Person, the rules set forth in clauses (1) and (2) above shall apply to each
of the owners having an interest in the joint venture as if the Person owned
by the joint venture was a Subsidiary of both or all of such joint venturers,
and the Principal Party in each such case shall bear the obligations set
forth in this Section 13 in the same ratio as its interest in such Person
bears to the total of such interests.
(c) The Company shall not consummate any consolidation, merger,
sale or transfer referred to in Section 13(a) unless the Principal Party
shall have a sufficient number of authorized shares of its Common Stock that
have not been issued or reserved for issuance to permit the exercise in full
of the Rights in accordance with this Section 13 and unless prior thereto the
Company and the Principal Party involved therein shall have executed and
delivered to the Rights Agent an agreement confirming that the requirements
of Sections 13(a) and (b) hereof shall promptly be performed in accordance
with their terms and that such consolidation, merger, sale or transfer of
assets shall not result in a default by the Principal Party under this Rights
Agreement as the same shall have been assumed by the Principal Party pursuant
to Sections 13(a) and (b) hereof and further providing that, as soon as
practicable after executing such agreement pursuant to this Section 13, the
Principal Party at its own expense shall:
(i) prepare and file a registration statement under the
Securities Act, if necessary, 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 Act) until the date of expiration of the
Rights, and similarly comply with applicable state securities laws;
(ii) use its best efforts, if the Common Stock of the
Principal Party shall become listed on a national securities exchange, to
list (or continue the listing of) the Rights and the securities purchasable
upon exercise of the Rights on such securities exchange and, if the Common
Stock of the Principal Party shall not be listed on a national securities
exchange, to cause the Rights and the securities purchased upon exercise of
the Rights to be reported by NASDAQ or such other system then in use;
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party which comply in all respects
with the requirements for registration on Form 10 (or any successor form)
under the Exchange Act; and
(iv) obtain waivers of any rights of first refusal or
preemptive rights in respect of the shares of Common Stock of the Principal
Party subject to purchase upon exercise of outstanding Rights.
In the event that any of the transactions described in Section 13(a) hereof
shall occur at any time after the occurrence of a transaction described in
Section 11(a)(ii) hereof, the Rights which have not theretofore been
exercised shall thereafter be exercisable in the manner described in Section
13(a).
(d) Furthermore, in case the Principal Party which is to be a party
to a transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or Bylaws or
other instrument governing its corporate affairs,
22
which provision would have the effect of (i) causing such Principal Party to
issue, in connection with, or as a consequence of, the consummation of a
transaction referred to in this Section 13, shares of Common Stock of such
Principal Party at less than the then Current Market Price per share
(determined pursuant to Section 11(d) hereof) or securities exercisable for,
or convertible into, Common Stock of such Principal Party at less than such
then current market price (other than to holders of Rights pursuant to this
Section 13) or (ii) providing for any special payment, tax or similar
provisions in connection with the issuance of the Common Stock of such
Principal Party pursuant to the provisions of Section 13; then, in such
event, the Company hereby agrees with each holder of Rights that it shall not
consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision
will have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction.
14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the holders of record
of the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
then current market value of a whole Right. For the purposes of this Section
14(a), the then current market value of a Right shall be determined in the
same manner as the Current Market Price of a share of Common Stock shall be
determined pursuant to Section 11(d) hereof.
(b) The Company shall not be required to issue fractions of shares
of Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred
Stock (other fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in
integral multiples of one one-hundredth of a share of Preferred Stock may, at
the election of the Company, be evidenced by depositary receipts, pursuant to
an appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such
depositary receipts shall have all the rights, privileges and preferences to
which they are entitled as beneficial owners of the shares of Preferred Stock
represented by such depositary receipts. In lieu of fractional shares of
Preferred Stock that are not integral multiples of one one-hundredth of a
share of Preferred Stock, the Company may pay to the registered holders of
Right Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market value of
one one-hundredth of a share of Preferred Stock. For purposes of this
Section 14(b), the current market value of one one-hundredth of a share of
Preferred Stock shall be the Current Market Price of a share of Common Stock
(as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) Following the occurrence of a Flip-In Event, the Company shall
not be required to issue fractions of shares or units of Common Stock or
Common Stock Equivalents or other securities upon exercise of the Rights or
to distribute certificates which evidence fractional shares of such Common
Stock or Common Stock Equivalents or other securities. In lieu of fractional
shares or units of such Common Stock or Common Stock Equivalents or other
securities, the Company may pay to the registered holders of Right
Certificates at the time such
23
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the Current Market Value of a share or unit of such Common Stock
or Common Stock Equivalent or other securities. For purposes of this Section
14(c), the Current Market Value shall be determined in the manner set forth
in Section 11(d) hereof for the Trading Day immediately prior to the date of
such exercise and, if such Common Stock Equivalent is not traded, each such
Common Stock Equivalent shall have the value of one one-hundredth of a share
of Preferred Stock.
(d) The holder of a Right by the acceptance of a Right expressly
waives his right to receive any fractional Right or any fractional shares
upon exercise of a Right.
15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, other than any rights of action vested in the Rights Agent
pursuant to Sections 18 and 20 below, are vested in the respective holders of
record of the Right Certificates (and, prior to the Distribution Date, the
holders of record of the Common Stock); and any holder of record of any Right
Certificate (or, prior to the Distribution Date, of the Common Stock),
without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common Stock), may,
in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company or any other
Person to enforce, or otherwise act in respect of, his right to exercise the
Rights evidenced by such Right Certificate in the manner provided in such
Right 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, accordingly, that they 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. Holders of Rights shall be entitled to
recover the reasonable costs and expenses, including attorneys' fees,
incurred by them in any action to enforce the provisions of this Agreement.
16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right by accepting
the same consents and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will not be
evidenced by a Right Certificate and will be transferable only in connection
with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates will be
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the person
in whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent or the
transfer agent of the Common Stock) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or other Person as
24
a result of its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or other
order, decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of
such obligation; PROVIDED, however, that the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No holder of a
Right, as such, shall be entitled to vote, receive dividends in respect of or
be deemed for any purpose to be the holder of Common Stock or any other
securities of the Company which may at any time be issuable upon the exercise
of the Rights, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate,
as such, any of the rights of a stockholder of the Company or any right to
vote in 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 25 hereof), or to receive
dividends or subscription rights in respect of any such stock or securities,
or otherwise, until the Right or Rights evidenced by such Right Certificate
shall have been exercised in accordance with the provisions hereof.
18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all service 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
Rights 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 gross
negligence, bad faith or willful misconduct on the part of the Rights Agent
for any thing done or omitted to be done by the Rights Agent in connection
with the acceptance and administration of this Rights Agreement, including
the cost and expenses of defending against any claim of liability in the
premises. The indemnity provided herein shall survive the expiration of the
Rights and the termination of this Rights Agreement. Anything in this
agreement to the contrary notwithstanding, in no event shall the Rights Agent
be liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Rights
Agent has been advised of the likelihood of such loss damage and regardless
of the form of action.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Rights Agreement in reliance upon
any Right Certificate, certificate for Common Stock or other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, guaranteed, verified or acknowledged,
by the proper Person or Persons.
19. MERGER OR CONSOLIDATION OR CHANGED NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party,
25
or any corporation succeeding to the corporate trust or stock transfer
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any 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 21 hereof. In case at
the time such successor Rights Agent shall succeed to the agency created by
this Agreement, any of the Right Certificates shall have been countersigned
but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and, in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent
may countersign such Right Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such
cases such Right Certificate shall have the full force provided in the Right
Certificates and in this Rights Agreement.
20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the duties and
obligations imposed by this Rights Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any
action taken or omitted to be taken by it in good faith and in accordance
with such opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact
or matter (including, without limitation, the identity of any Acquiring
Person and the determination of "Current Market Price") 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 certificate signed by the President or any 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 shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Rights
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Rights Agreement or in
the Right Certificates (except its countersignature thereof) or be required
to verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.
26
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Rights Agreement or in
any Right Certificate; nor shall it be responsible for any adjustment
required under the provisions of Sections 11, 13, 23 or 24 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 adjustment
(except with respect to the exercise of Rights evidenced by Right
Certificates after receipt of a Certificate furnished pursuant to Section 12
describing any such adjustment); nor shall it by any act hereunder be deemed
to make any representation or warranty as to the authorization or reservation
of any shares of Common Stock to be issued pursuant to this Rights Agreement
or any Right Certificate or as to whether any shares of Common Stock will,
when issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the Chief Executive Officer, the President or any Vice
President or the Secretary or any Assistant Secretary or the Treasurer or any
Assistant Treasurer of the Company, and to apply to such officers for advice
or instructions in connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer. Any application by the Rights Agent
for written instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken or omitted by the
Rights Agent under this Rights Agreement and the date on and/or after which
such action shall be taken or such omission shall be effective. Subject to
Section 20(c) hereof, the Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after the
date any officer of the Company actually receives such application, unless
any such officer shall have consented in writing to an earlier date) unless,
prior to taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have received written instructions in
response to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were
not the Rights Agent under this Rights Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the Company
or for any other 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 shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any
27
such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form
of assignment or the form of election to purchase set forth on the reverse
thereof, as the case may be, has either not been completed or indicates an
affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not
take any further action with respect to such requested exercise of transfer
without first consulting with the Company.
21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Rights
Agreement upon 30 days' notice in writing, or such earlier period as shall be
agreed to in writing, mailed to the Company and to each transfer agent of the
Common Stock by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. The Company may remove the Rights Agent or
any successor Rights Agent (with or without cause) upon 30 days' notice in
writing, or such earlier period as shall be agreed to in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock by registered or certified mail, and to
the holders of the Right Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent.
Notwithstanding the foregoing provisions of this Section 21, in no event
shall the resignation or removal of a Rights Agent be effective until a
successor Rights Agent shall have been appointed and have accepted such
appointment. If the Company shall fail to make such appointment within a
period of 30 days after such removal or after it has been notified in writing
of such resignation or incapacity by the resigning or incapacitated Rights
Agent or by the holder of a Right Certificate (who shall, with such notice,
submit his Right Certificate for inspection by the Company), then the
incumbent Rights Agent or the holder of record of any Right Certificate may
apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company
or by such a court, shall be (a) a corporation organized and doing business
under the laws of the United States or any State thereof, in good standing,
which is authorized under such laws to exercise corporate trust or stock
transfer powers and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as Rights Agent
a combined capital and surplus of at least $50,000,000 or (b) an Affiliate
controlled by a corporation described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment the Company shall file notice thereof
in writing with the predecessor Rights Agent and each transfer agent of the
Common Stock, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
28
validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of the
provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price per share and the number or kind
or class of shares of stock or other securities or property purchasable under
the Right Certificates made in accordance with the provisions of this Rights
Agreement. In addition, in connection with the issuance or sale of shares of
Common Stock following the Distribution Date and prior to the redemption or
expiration of the Rights, the Company shall, with respect to shares of Common
Stock so issued or sold pursuant to the exercise of stock options or under
any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, in each case
existing prior to the Distribution Date, issue Right Certificates
representing the appropriate number of Rights in connection with such
issuance or sale; PROVIDED, HOWEVER, that (i) no such Right Certificate shall
be issued if, and to the extent that, the Company shall be advised by counsel
that such issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Right Certificate
would be issued, and (ii) no such Right Certificate shall be issued, if, and
to the extent that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof.
23. REDEMPTION.
(a) The Board of Directors of the Company may, at its option, at
any time prior to the earlier of (x) the first occurrence of a Flip-In Event
or (y) the Close of Business on the Expiration Date, redeem all but not less
than all the then outstanding Rights at a redemption price of $.001 per
Right, as such amount may be appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such redemption price being hereinafter referred to as the "Redemption
Price").
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights (or at such later time as the
Board of Directors may establish for the effectiveness of such redemption),
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 (or such later time as the
Board of Directors may establish for the effectiveness of such redemption),
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 Distribution Date, on the registry
books of the transfer agent for the Common Stock. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption shall state the
method by which the payment of the Redemption Price will be made. The
failure to give notice required by this Section 23(b) or any defect therein
shall not affect the legality or validity of the action taken by the Company.
(c) In the case of a redemption permitted under Section 23(a), the
Company may, at its option, discharge all of its obligations with respect to
the Rights by (i) issuing a press release announcing the manner of redemption
of the Rights and (ii) mailing payment of the
29
Redemption Price to the registered holders of the Rights at their last
addresses as they appear on the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent of the
Common Stock, and upon such action, all outstanding Right Certificates shall
be null and void without any further action by the Company.
24. EXCHANGE OF RIGHTS FOR COMMON STOCK.
(a) The Board of Directors of the Company may, at its option, at
any time after the occurrence of a Flip-In Event, exchange all or part of the
then outstanding and exercisable Rights (which (i) shall not include Rights
that have become void pursuant to the provisions of Section 11(a)(ii) and
(ii) shall include, without limitation, any Rights issued after the
Distribution Date in accordance with Section 22) for shares of Common Stock
at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter
referred to as the "Exchange Ratio"). Notwithstanding the foregoing the Board
of Directors shall not be empowered to effect such exchange at any time after
any Person (other than an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of shares of Common
Stock aggregating 50% or more of the shares of Common Stock then outstanding.
From and after the occurrence of an event specified in Section 13(a) hereof,
any Rights that theretofore have not been exchanged pursuant to this Section
24(a) shall thereafter be exercisable only in accordance with Section 13 and
may not be exchanged pursuant to this Section 24(a).
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of
this Section 24 and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter
of a holder of such Rights shall be to receive that number of shares of
Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange; PROVIDED, HOWEVER, that the failure to give, or
any defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the shares of Common Stock for Rights will be effected and, in
the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute, and, in the event that there shall not be
sufficient shares of Common Stock issued but not outstanding or authorized
but unissued to permit any exchange of Rights as contemplated in accordance
with this Section 24, the Company shall substitute to the extent of such
insufficiency, for each share of Common Stock that would otherwise be
issuable upon exchange of a Right, a number of shares of Preferred Stock or
fractions thereof (or equivalent preferred shares, as such term is defined in
Section 11(b)) having an aggregate current per share market price (determined
pursuant to Section 11(d) hereof) equal to the current per share market price
of one share of Common Stock (determined pursuant to Section 11(d) hereof) as
of the date of the Flip-In Event.
30
(d) In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit
any exchange of Rights as contemplated in accordance with this Section 24,
the Company shall take all such action as may be necessary to authorize
additional shares of Common Stock for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of shares
of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock,
the Company shall pay to the registered holders of the Right Certificates
with regard to which such fractional shares of Common Stock would otherwise
be issuable an amount in cash equal to the same fraction of the current
market value of a whole share of Common Stock. For the purposes of this
paragraph (d), the current market value of a whole share of Common Stock
shall be the Current Market Price of a share of Common Stock (as defined in
Section 11(d) hereof for the purposes of computations made other than
pursuant to Section 11(a)(iii)) for the Trading Day immediately prior to the
date of exchange pursuant to this Section 24.
25. NOTICE OF PROPOSED ACTIONS.
(a) In case the Company, after the Distribution Date, shall propose
(i) to effect any of the transactions referred to in Section 11(a)(i) or to
pay any dividend to the holders of record of its Preferred Stock payable in
stock of any class or to make any other distribution to the holders of record
of its Preferred Stock (other than a regular periodic cash dividend), or (ii)
to offer to the holders of record of its Preferred Stock or options,
warrants, or other rights to subscribe for or to purchase shares of Preferred
Stock (including any security convertible into or exchangeable for Preferred
Stock) or shares of stock of any other class or any other securities,
options, warrants, convertible or exchangeable securities or other rights, or
(iii) to effect any reclassification of its Preferred Stock or any
recapitalization or reorganization of the Company, or (iv) to effect any
consolidation or merger with or into, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons, or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of record of a Right Certificate, in accordance with Section 26
hereof, notice of such proposed action, which shall specify the record date
for the purposes of such transaction referred to in Section 11(a)(i), or such
dividend or distribution, or the date on which such reclassification,
recapitalization, reorganization, consolidation, merger, sale or transfer of
assets, liquidation, dissolution or winding up is to take place and the
record date for determining participation therein by the holders of record of
Preferred Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at least
10 days prior to the record date for determining holders of record of the
Preferred Stock for purposes of such action, and in the case of any such
other action, at least 10 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of record
of Preferred Stock, whichever shall be the earlier.
(b) In case any of the transactions referred to in Section
11(a)(ii) or Section 13 of this Rights Agreement are proposed, then, in any
such case, the Company shall give to each holder of Rights, in accordance
with Section 26 hereof, notice of the proposal of such transaction at least
10 days prior to consummating such transaction, which notice shall specify
the proposed event and the consequences of the event to holders of Rights
under Section 11(a)(ii) or
31
Section 13 hereof, as the case may be, and, upon consummating such
transaction, shall similarly give notice thereof to each holder of Rights.
(c) The failure to give notice required by this Section 25 or any
defect therein shall not affect the legality or validity of the action taken
by the Company or the vote upon any such action.
26. NOTICES. Notices or demands authorized by this Rights Agreement to
be given or made by the Rights Agent or by the holder of record of any Right
Certificate or Right to or on behalf of the Company shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Rights Agent) as follows:
TAB Products Co.
0000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Secretary
Subject to the provisions of Section 20 hereof, any notice or demand
authorized by this Rights Agreement to be given or made by the Company or by
the holder of record of any Right Certificate or Right to or on the Rights
Agent shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with
the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
00 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Relationship Management
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of record of any Right
Certificate or Right shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as it appears upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the Transfer Agent.
27. SUPPLEMENTS AND AMENDMENTS. Except as provided in the penultimate
sentence of this Section 27, for so long as the Rights are then redeemable,
the Company may in its sole and absolute discretion, and the Rights Agent
shall if the Company so directs, supplement or amend any provision of this
Agreement in any respect without the approval of any holders of the Rights.
At any time when the Rights are no longer redeemable, except as provided in
the penultimate sentence of this Section 27, the Company may, and the Rights
Agent shall, if the Company so directs, supplement or amend this Agreement
without the approval of any holders of Rights Certificates in order to (i)
cure any ambiguity, (ii) correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein,
(iii) shorten or lengthen any time period hereunder, or (iv) change or
supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable; PROVIDED that no such supplement or amendment shall
adversely affect the interests of the holders of Rights as such (other than
an Acquiring Person or an Affiliate or Associate of an Acquiring Person), and
no such amendment may cause the Rights again to become redeemable or cause
the Agreement again to become amendable other than in accordance with this
sentence. Notwithstanding anything contained in this Rights Agreement to the
contrary, no supplement or amendment shall
32
be made which changes the Redemption Price. Prior to the Distribution Date,
the interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock.
27. SUCCESSORS. All of the covenants and provisions of this Rights
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
28. BENEFITS OF THIS RIGHTS AGREEMENT. Nothing in this Rights Agreement
shall be construed to give to any person or corporation other than the
Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Stock) any
legal or equitable right, remedy or claim under this Rights Agreement; but
this Rights Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the holders of record of the Right Certificates
(and, prior to the Distribution Date, the Common Stock).
29. GOVERNING LAW. This Rights Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts to be made
solely by residents of such state and performed entirely within such state.
30. COUNTERPARTS. This Rights 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.
31. DESCRIPTIVE HEADINGS. Descriptive headings of the several sections
of this Rights Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
32. SEVERABILITY. If any term, provision, covenant or restriction of
this Rights Agreement is held by a court of competent jurisdiction or other
authority to be invalid, illegal or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Rights Agreement shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated.
33
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement
to be duly executed, and their seals affixed and attested, all as of the date
and year first above written.
[SEAL]
ATTEST: TAB PRODUCTS CO.
By: /s/ XXXXXX X. XXXXXX By: /s/ XXXX XXXX
------------------------- -----------------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxx Xxxx
Title: Secretary Title: Acting President and
Chief Executive Officer
[SEAL]
ATTEST: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By: /s/ XXX XXXXXXX By: /s/ XXX XXXX
------------------------- -----------------------------
Name: Xxx Xxxxxxx Name: Xxx Xxxx
Title: Relationship Manager Title: Assistant Vice President
34
EXHIBIT A
---------
TAB PRODUCTS CO.
CERTIFICATE
OF DESIGNATION, PREFERENCES AND RIGHTS
OF THE TERMS OF THE
Series A Preferred Stock
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware
We, the Acting President and Chief Executive Officer and Secretary,
respectively, of TAB Products Co., organized and existing under the General
Corporation Law of the State of Delaware, in accordance with the provisions
of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Certificate of Incorporation of the said Corporation, the said Board of
Directors on October 24, 1996, adopted the following resolution creating a
series of 200,000 shares of Preferred Stock designated as Series A Preferred
Stock:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of this Corporation in accordance with the provisions of its Certificate of
Incorporation, a series of Preferred Stock of the Corporation be and it
hereby is created, and that the designation and amount thereof and the
powers, preferences and relative, participating, optional and other special
rights of the shares of such series, and the qualifications, limitations or
restrictions thereof are as follows:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Preferred Stock" (the "Series A Preferred Stock"),
$.01 par value per share, and the number of shares constituting such series
shall be 200,000.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) The dividend rate on the shares of Series A Preferred Stock shall
be for each quarterly dividend (hereinafter referred to as a "quarterly dividend
period"), which quarterly dividend periods shall commence on January 1, April 1,
July 1 and October 1 each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date") (or in the case of original issuance, from
the date of original issuance) and shall end on and include the day next
preceding the first date of the next quarterly dividend period, at a rate per
quarterly dividend period (rounded to the nearest cent) equal to the greater of
(a) $88.50 or (b) subject to the provisions for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash dividends, and
1
100 times the aggregate per share amount (payable in cash, based upon the
fair market value at the time the non-cash dividend or other distribution is
declared as determined in good faith by the Board of Directors) 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 (but not withdrawn) on the
Common Stock, par value $.01 per share, of the Corporation (the "Common
Stock") during the immediately preceding quarterly dividend period, or, with
respect to the first quarterly dividend period, since the first issuance of
any share or fraction of a share of Series A Preferred Stock. In the event
this Company shall at any time after November 6, 1996 (the "Rights
Declaration Date") (i) declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or
is a date after the record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly
Dividend Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of Series A Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 45 days prior to the date fixed for
the payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to
100 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number
2
of shares, then in each such case the number of votes per share to which
holders of shares of Series A Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation or by law, the holders of shares of Series A Preferred Stock
and the holders of shares of Common Stock shall vote together as one class on
all matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, in the Certificate of Incorporation
and in the Bylaws, holders of Series A Preferred Stock shall have no special
voting rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set forth herein)
for taking any corporate action.
Section 4. REACQUIRED SHARES. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
Section 5. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of the Series A
Preferred Stock shall be entitled to receive the greater of (a) $3,500 per
share, plus accrued dividends to the date of distribution, whether or not
earned or declared, or (b) an amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to
be distributed per share to holders of Common Stock. In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare
any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such case the
amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event pursuant to clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 6. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or
3
any other property, then in any such case the shares of Series A Preferred
Stock shall at the same time be similarly exchanged or changed in an amount
per share (subject to the provision for adjustment hereinafter set forth)
equal to 100 times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare
any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
Section 7. NO REDEMPTION. The shares of Series A Preferred Stock
shall not be redeemable.
Section 8. FRACTIONAL SHARES. Series A Preferred Stock may be issued
in fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and have the benefit of all other rights of
holders of Series A Preferred Stock. All payments made with respect to
fractional shares hereunder shall be rounded to the nearest whole cent.
Section 9. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section
2 are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any shares
of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series 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;
4
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such parity stock in exchange
for shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares
of Series A Preferred Stock, or any shares of stock ranking on a parity
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 such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes
shall determine in good faith will result in fair and equitable treatment
among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 9, purchase or otherwise acquire such shares at such time and in
such manner.
Section 10. RANKING. The Series A Preferred Stock shall be junior to
all other Series of the Corporation's preferred stock as to the payment of
dividends and the distribution of assets, unless the terms of any series
shall provide otherwise.
Section 11. AMENDMENT. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter
or change the powers, preferences or special rights of the Series A Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of two-thirds or more of the outstanding shares of Series A
Preferred Stock voting together as a single class.
IN WITNESS WHEREOF, we have executed and subscribed this certificate and
do affirm the foregoing as true under the penalties of perjury this 24th day
of October, 1996.
-----------------------------------------
Xxxx Xxxx, Acting President and
Chief Executive Officer
Attest:
-----------------------------
Xxxxxx X. Xxxxxx, Secretary
5
EXHIBIT B
---------
[Form of Right Certificate]
Certificate No. W- ___________Rights
NOT EXERCISABLE AFTER OCTOBER 23, 2006, OR EARLIER IF REDEEMED OR
EXCHANGED. AT THE OPTION OF THE COMPANY, THE RIGHTS MAY BE REDEEMED
AT $.001 PER RIGHT OR EXCHANGED FOR PREFERRED STOCK ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. IN THE EVENT THAT THE RIGHTS
REPRESENTED BY THIS CERTIFICATE ARE ISSUED TO A PERSON WHO IS AN
ACQUIRING PERSON OR CERTAIN TRANSFEREE OF THE RIGHTS PREVIOUSLY OWNED
BY SUCH PERSONS, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY SHALL BE NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
RIGHT CERTIFICATE
TAB PRODUCTS CO.
This certifies that _________________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the Rights Agreement dated as of October 24, 1996 ("Rights Agreement")
between TAB Products Co., a Delaware corporation ("Company"), and ChaseMellon
Shareholder Services, L.L.C. ("Rights Agent"), to purchase from the Company
at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 p.m. (New York time) on October 23, 2006,
at the principal office of the Rights Agent, or its successors as Rights
Agent, designated for such purposes, one one-hundredth of a fully paid and
nonassessable share of Series A Preferred Stock of the Company ("Preferred
Stock") at a purchase price of $35.00 per one one-hundredth of a share, as
the same may from time
1
to time be adjusted in accordance with the Rights Agreement ("Purchase
Price"), upon presentation and surrender of this Right Certificate with the
Form of Election to Purchase duly executed. Capitalized terms used herein
and not otherwise defined herein shall have the meanings ascribed to such
terms in the Rights Agreement.
As provided in the Rights Agreement, the Purchase Price and the number of
shares of Preferred Stock or other securities which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events and, upon
the happening of certain events, securities other than shares of Preferred
Stock, or other property, may be acquired upon exercise of the Rights
evidenced by this Right Certificate, as provided by the Rights Agreement.
Upon the occurrence of a Flip-In Event, if the Rights evidenced by this
Rights Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person, (ii) a transferee of any
such Acquiring Person, Associate or Affiliate, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of a person
who, after such transfer, became an Acquiring Person, or any Affiliate or
Associate of an Acquiring Person, such Rights shall be null and void and will
no longer be transferable and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such Flip-In Events.
This Right Certificate is subject to all the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions
are 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
2
immunities of the Rights Agent, the Company and the holders of record of the
Right Certificates, which limitation of rights include the temporary
suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement. Copies of the Rights
Agreement are on file at the principal executive office of the Company and
are available upon written request to the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder of record to purchase a like aggregate
number of shares of Preferred Stock as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder
to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof, another Right
Certificate or Right Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, at any time prior to
the earlier of (i) the occurrence of a Flip-In Event (as such term is defined
in the Rights Agreement) or (ii) the Expiration Date (as such term is defined
in the Rights Agreement), the Rights evidenced by this Certificate may be
redeemed by the Company at its option at a redemption price of $.001 per
Right. Subject to the provisions of the Rights Agreement, the Company may,
at its option, at any time after a Flip-In Event, exchange all or part of the
Rights evidenced by this Certificate for shares of the Company's Common Stock
or for Preferred Stock (or shares of a class or series of the Company's
preferred stock having the same rights, privileges and preferences as the
Preferred Stock).
3
In the event (i) any person or group becomes an Acquiring Person or (ii)
any of the types of transactions, acquisitions or other events described
above as self-dealing transactions occur, and prior to the acquisition by
such person or group of 50% or more of the outstanding shares of Common
Stock, the Board may require all or any portion of the outstanding Rights
(other than Rights owned by such Acquiring Person which have become void) to
be exchanged for Common Stock on a pro rata basis, at an exchange ratio of
one share of Common Stock or one one-hundredth of a share of Preferred Stock
(or of a share of a class or series of the Company's Preferred Stock having
equivalent rights, preferences and privileges), per Right (subject to
adjustment).
No fractional shares of Preferred Stock shall be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a share of Preferred Stock, which
may, at the option of the Company, be evidenced by depositary receipts), and
no fractional shares of Common Stock will be issued upon the exchange of any
Right or Rights evidenced hereby, and in lieu thereof, as provided in the
Rights Agreement, fractions of shares of Preferred Stock or Common Stock
shall receive an amount in cash equal to the same fraction of the then
Current Market Price (as such term is defined in the Rights Agreement) of a
share of Preferred Stock or Common Stock, as the case may be.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of Common Stock
or of any other securities of the Company which may at any time be issuable
on the exercise hereof, nor shall anything contained in the Rights Agreement
or herein be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right
4
to vote in 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 (other than certain actions specified in the Rights Agreement)
or to receive dividends or subscription rights, or otherwise, until the Right
or Rights evidenced by this Right Certificate shall have been exercised or
exchanged as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
5
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of October 24, 1996.
---------- --
ATTEST: TAB PRODUCTS CO.
/s/ By: /s/
--------------------- ----------------------------
Secretary Xxxx Xxxx
Title: Acting President and CEO
-------------------------
COUNTERSIGNED: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
As Rights Agent
By: /s/
---------------------------
Authorized Officer
Assistant Vice President
6
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such holder
desires to transfer any or all of the Rights
represented by this Right Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
______________________________________________________________________________
______________________________________________________________________________
(Name, address and social security or other
identifying number of transferee)
___________________________________ (_______________) of the Rights represented
by this Right Certificate, together with all right, title and interest in and to
said Rights, and hereby irrevocably constitutes and appoints __________________
_________________________ attorney to transfer said Rights on the books of the
within-named Company with full power of substitution.
Dated:___________________, 19__. _____________________________
(Signature)
Signature Guaranteed:
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the rights evidenced by this Right Certificate [ ] are [ ] are not
being sold, assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person (as such capitalized terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person or any transferee of such Persons.
Dated:__________________, 19__ _____________________________
(Signature)
Signature Guaranteed:
Form of Reverse Side of Right Certificate
(continued)
NOTICE
------
The signatures to the foregoing Assignment and the foregoing Certificate,
if applicable, must correspond to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or
any change whatsoever, and must be guaranteed by a participant in a
Securities Transfer Association ("STA") recognized signature program.
In the event that the foregoing Certificate is not duly executed, with
signature guaranteed, the Company may deem the Rights represented by this
Right Certificate to be Beneficially Owned by an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such capitalized terms are
defined in the Rights Agreement), and not issue any Right Certificate or
Right Certificates in exchange for this Right Certificate.
Form of Reverse Side of Right Certificate
(continued)
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed by the registered holder if such holder
desires to exercise any or all of the Rights
represented by this Right Certificate)
To TAB Products Co.:
The undersigned hereby irrevocably elects to exercise _______________
(__________) of the Rights represented by this Right Certificate to purchase the
shares of the Common Stock of the Company, or other securities or property
issuable upon the exercise of said number of Rights pursuant to the Rights
Agreement.
The undersigned hereby requests that a certificate for any such
securities and any such property be issued in the name of and delivered to:
______________________________________________________________________________
______________________________________________________________________________
(Name, address and social security or other
identifying number of issuee)
The undersigned hereby further requests that if said number of Rights
shall not be all the Rights represented by this Right Certificate, a new
Right Certificate for the remaining balance of such Rights be issued in the
name of and delivered to:
______________________________________________________________________________
______________________________________________________________________________
(Name, address and social security or other
identifying number of issuee)
Dated:__________________, 19__ _____________________________
(Signature)
Signature Guaranteed:
Form of Reverse Side of Right Certificate
(continued)
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person
or an Affiliate or Associate of any such Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined pursuant to
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person or any transferee of such Persons.
Dated:__________________, 19__ _____________________________
(Signature)
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Election to Purchase and the foregoing
Certificate, if applicable, must correspond to the name as written upon the
face of the this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever, and must be guaranteed by a member firm
of a registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or trust
company having an office or correspondent in the United States.
In the event that the foregoing Certificate is not executed, with
signature guaranteed, the Company may deem the Rights represented by this
Right Certificate to be Beneficially Owned by an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such capitalized terms are
defined in the Rights Agreement), and not issue any Right Certificate or
Right Certificates in exchange for this Right Certificate.
EXHIBIT C
---------
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED
TO, BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN
ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) OR AN ASSOCIATE OR
AFFILIATE (AS DEFINED IN THE RIGHTS AGREEMENT) THEREOF AND CERTAIN TRANSFEREES
THEREOF WILL BE NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
TAB PRODUCTS CO.
SUMMARY OF TERMS OF
RIGHTS AGREEMENT
NATURE OF RIGHT: When exercisable, each Right (a "Right") will initially
entitle the holder to purchase one one-hundredth of a
share of Series A Preferred Stock ("Preferred Stock") of
TAB Products Co. (the "Company").
MEANS OF DISTRIBUTION: The Rights will be distributed to holders of the
Company's outstanding Common Stock as a dividend of one
Right for each share of Common Stock. The Rights will
also be attached to all future issuances of Common
Stock prior to the Distribution Date (as defined
below).
EXERCISABILITY: Rights become exercisable on the earlier of: (i) the
tenth day following the date of public announcement by
the Company or by any person or group (an "Acquiring
Person") that such person or group has acquired
beneficial ownership of 15% or more of the Company's
outstanding Common Stock, or (ii) the tenth business day
(unless extended by the Board prior to the time a person
becomes an Acquiring Person) following the commencement,
or announcement of an intention to commence, by any
person or group of a tender or exchange offer which
would result in such person owning 15% or more of the
outstanding Common Stock of the Company (the earlier of
such dates is referred to as the "Distribution Date"),
PROVIDED that an Acquiring Person does not include an
Exempt Person (as such term is defined in the Rights
Agreement). Rights will trade separately from the
Common Stock once the Rights become exercisable.
EXERCISE PRICE: $35.00 per share, which is the amount that in the
judgment of the Board of Directors represents the
long-term value of the Common Stock over the term of the
Rights Agreement (the "Exercise Price").
TERM: The Rights will expire upon the earlier of (i) ten years
after the date of issuance, or October 23, 2006 or (ii)
redemption or exchange by the Company as described
below.
1
REDEMPTION OF RIGHTS: Rights are redeemable at a price of $0.001 per Right,
by the vote of the Company's Board of Directors, at any
time until the occurrence of a Flip-In Event (defined
below).
PREFERRED STOCK: The Preferred Stock purchasable upon exercise of the
Rights will be nonredeemable and junior to any other
series of preferred stock the Company may issue (unless
otherwise provided in the terms of such other series).
Each share of Preferred Stock will have a preferential
cumulative quarterly dividend in an amount equal to the
greater of (a) $88.50 or b) 100 times the dividend
declared on each share of Common Stock. In the event of
liquidation, the holders of Preferred Stock will receive
a preferred liquidation payment equal to the greater of
(a) $3,500 per share, plus accrued dividends to the date
of distribution whether or not earned or declared, or
(b) an amount per share equal to 100 times the aggregate
payment to be distributed per share of Common Stock.
Each share of Preferred Stock will have 100 votes,
voting together with the shares of Common Stock. In the
event of any merger, consolidation or other transaction
in which shares of Common Stock are exchanged for or
changed into other securities, cash and/or other
property, each share of Preferred Stock will be entitled
to receive 100 times the amount and type of
consideration received per share of Common Stock. The
rights of the Preferred Stock as to dividends,
liquidation and voting, and in the event of mergers and
consolidations, are protected by customary anti-dilution
provisions. Fractional shares (in integral multiples of
one one-hundredth) of Preferred Stock will be issuable;
however, the Company may elect to distribute depositary
receipts in lieu of such fractional shares. In lieu of
fractional shares other than fractions that are
multiples of one one-hundredth of a share, an adjustment
in cash will be made based on the market price of the
Preferred Stock on the last trading date prior to the
date of exercise. Because of the nature of the
Preferred Stock's dividend, liquidation and voting
rights, the value of one one-hundredth of a share of
Preferred Stock purchasable upon exercise of each Right
should approximate the value of one share of Common
Stock.
RIGHTS IN EVENT OF In the event that an Acquiring Person engages in
SELF-DEALING TRANSAC- certain self-dealing transactions with the Company, or
TION OR ACQUISITION OF a Person becomes the beneficial owner of 15% or more of
SUBSTANTIAL AMOUNT OF the outstanding Common Stock ("Flip-In Events"), a
COMMON STOCK: holder of a Right thereafter has the right to purchase,
upon payment of the then current Exercise Price, in lieu
of one one-hundredth of a share of Preferred Stock per
outstanding Right, such number of shares of Common Stock
having a market value at the time of the transaction
equal to the Exercise Price divided by one-half the
Current Market Price (as defined in the Rights
Agreement) of the Common Stock. Notwithstanding the
foregoing, Rights held by the Acquiring Person or any
Associate or Affiliate thereof or certain transferees
will be null and void and no longer be transferable.
Self-dealing transactions are defined to include a
consolidation, merger or other combination of an
Acquiring Person with the Company in which the Company
is the surviving corporation, the
2
transfer of assets to the Company in exchange for
securities of the Company, or otherwise obtain
securities of the Company (other than in a pro rata
distribution to all stockholders), the sale, purchase,
transfer, distribution, lease, mortgage, pledge or
acquisition of assets by the Acquiring Person to, from
or with the Company on other than an arm's length basis,
compensation to an Acquiring Person for services (other
than for employment as a regular or part-time employee
or director on a basis consistent with the Company's
past practice), a loan or provision of other financial
assistance (except proportionately as a stockholder) to
an Acquiring Person or the licensing, sale or other
transfer of proprietary technology or know-how from the
Company to the Acquiring Person on terms not approved
by the Board of Directors or a reclassification,
recapitalization or other transaction with the effect of
increasing by more than 1% the Acquiring Person's
proportionate share of any class of securities of the
Company.
RIGHTS IN EVENT OF If, following the occurrence of a Flip-In Event, the
BUSINESS COMBINATION: Company is acquired by any person in a merger or other
business combina-tion transaction in which the Common
Stock is exchanged or converted or in which the
corporation is not the surviving corporation, or 50% or
more of its assets or earnings power are sold to any
person, each holder of a Right (other than an Acquiring
Person, or Affiliates or Associates thereof) shall
thereafter have the right to purchase, upon payment of
the then current Exercise Price, such number of shares
of common stock of the acquiring company having a
current market value equal to the Exercise Price
divided by one-half the Current Market Price of such
common stock.
EXCHANGE OPTION: In the event (i) any person or group becomes an
Acquiring Person or (ii) any of the types of
transactions, acquisitions or other events described
above as self-dealing transactions occur, and prior to
the acquisition by such person or group of 50% or more
of the outstanding shares of Common Stock, the Board may
require all or any portion of the outstanding Rights
(other than Rights owned by such Acquiring Person which
have become void) to be exchanged for Common Stock on a
pro rata basis, at an exchange ratio of one share of
Common Stock or one one-hundredth of a share of
Preferred Stock (or of a share of a class or series of
the Company's Preferred Stock having equivalent rights,
preferences and privileges), per Right (subject to
adjustment).
FRACTIONAL SHARES: No fractional shares of Common Stock will be issued upon
exercise of the Rights and, in lieu thereof, a payment
in cash will be made to the holder of such Rights equal
to the same fraction of the current market value of a
share of Common Stock.
ADJUSTMENT: The Exercise Price payable, and the number of shares of
Preferred Stock or other securities or property
issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision,
combination or reclassification of the Preferred Stock,
(ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for Preferred
Stock or convertible securities at less than
3
the current market price of the Preferred Stock or (iii)
upon the distribution to holders of the Preferred Stock
of evidences of indebtedness or assets (excluding
dividends payable in Preferred Stock) or of subscription
rights or warrants (other than those referred to above).
The number of Rights associated with each share of
Common Stock is also subject to adjustment in the event
of a stock split of the Common Stock or a stock dividend
on the Common Stock payable in Common Stock or
subdivisions, consolidations or combinations of the
Common Stock occurring, in any such case, prior to the
Distribution Date.
RIGHTS AS STOCKHOLDER: The Rights themselves do not entitle the holder thereof
to any rights as a stockholder, including, without
limitation, voting rights or to receive dividends.
AMENDMENT OF RIGHTS: Until the Rights become nonredeemable, the Company may,
except with respect to the redemption price, amend the
Agreement in any manner. After the Rights become
nonredeemable, the Company may amend the Agreement to
cure any ambiguity, to correct or supplement any
provision which may be defective or inconsistent with
any other provisions, to shorten or lengthen any time
period under the Rights Agreement, or to change or
supplement any provision in any manner the Company may
deem necessary or desirable, provided that no such
amendment may adversely affect the interests of the
holders of the Rights (other than the Acquiring Person
or its Affiliates or Associates) or cause the Rights to
again be redeemable or the Agreement to again be freely
amendable.
A COPY OF THE RIGHTS AGREEMENT IS AVAILABLE, FREE OF CHARGE, FROM THE COMPANY,
0000 XXXX XXXX XXXX, XXXX XXXX, XXXXXXXXXX 00000, ATTENTION: SECRETARY. THIS
SUMMARY DESCRIPTION OF THE RIGHTS AGREEMENT DOES NOT PURPORT TO BE COMPLETE AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE RIGHTS AGREEMENT, AS AMENDED
FROM TIME TO TIME, WHICH IS INCORPORATED IN THIS SUMMARY DESCRIPTION BY
REFERENCE.
4
