EXHIBIT 4.1
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Shuffle Master, Inc.
and
Norwest Bank Minnesota, N.A.
Rights Agent
Rights Agreement
Dated as of June 26, 1998
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TABLE OF CONTENTS
Page
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Section 1. Certain Definitions....................................................................1
Section 2. Appointment of Rights Agent............................................................4
Section 3. Issuance of Rights Certificates........................................................4
Section 4. Form of Rights Certificates............................................................6
Section 5. Countersignature and Registration......................................................7
Section 6. Transfer, Split-Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates...............................8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights..........................9
Section 8. Cancellation and Destruction of Rights Certificates...................................10
Section 9. Availability of Capital Stock.........................................................11
Section 10. Preferred Shares Record Date..........................................................12
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights...........13
Section 12. Certificate of Adjusted Purchase Price or Number of Shares............................20
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power..................21
Section 14. Fractional Rights and Fractional Shares...............................................23
Section 15. Rights of Action......................................................................25
Section 16. Agreement of Rights Holders...........................................................25
Section 17. Rights Certificate Holder Not Deemed a Shareholder....................................26
Section 18. Concerning the Rights Agent...........................................................26
Section 19. Merger or Consolidation or Change of Name of Rights Agent.............................27
Section 20. Duties of Rights Agent................................................................27
Section 21. Change of Rights Agent................................................................29
Section 22. Issuance of New Rights Certificates...................................................30
Section 23. Redemption............................................................................30
Section 24. Exchange..............................................................................31
Section 25. Notice of Certain Events..............................................................33
Section 26. Notices...............................................................................34
Section 27. Supplements and Amendments............................................................34
Section 28. Determination and Actions by the Board of Directors, etc..............................35
Section 29. Successors............................................................................35
Section 30. Benefits of this Agreement............................................................35
Section 31. Severability..........................................................................35
Section 32. Governing Law.........................................................................36
Section 33. Counterparts..........................................................................36
Section 34. Descriptive Headings..................................................................36
Exhibit A - Form of Certificate of Designation, Preferences and Rights of Class A Preferred
Stock................................................................................A-1
Exhibit B - Form of Rights Certificate...........................................................B-1
Exhibit C - Summary of Rights to Purchase Preferred Shares.......................................C-1
RIGHTS AGREEMENT
Agreement, dated as of June 26, 1998, between Shuffle Master, Inc., a Minnesota
corporation (the "Company"), and Norwest Bank Minnesota, N.A. (the "Rights
Agent").
The Board of Directors of the Company has authorized and declared a dividend of
one preferred share purchase right (a "Right") for each Common Share (as
hereinafter defined) of the Company outstanding on July 10, 1998 (the "Record
Date"), each Right representing the right to purchase one one-hundredth of a
Preferred Share (as hereinafter defined), upon the terms and subject to the
conditions herein set forth, and has further authorized and directed the
issuance of one Right with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date (as such terms are hereinafter
defined).
Accordingly, in consideration of the premises and the mutual agreements herein
set forth, the parties hereby agree as follows:
1. SECTION 1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings indicated:
a. "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter
defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 20% or more of the Common
Shares of the Company then outstanding, but shall not include
(1) the Company,
(2) any Subsidiary (as such term is hereinafter defined)
of the Company,
(3) any employee benefit plan of the Company or any
Subsidiary of the Company, or
(4) any entity organized, appointed or established by the
Company for or pursuant to the terms of any such
plan.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person" as
the result of (a) an acquisition of Common Shares by the Company which, by
reducing the number of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person to 20% or more of the Common Shares of
the Company then outstanding or (b) the acquisition by such Person of newly
issued Common Shares directly from the Company (it being understood that a
purchase from an underwriter or other intermediary is not directly from the
Company); provided, however, that if a Person shall become the Beneficial Owner
of 20% or more of the Common Shares of the Company then outstanding by reason of
share purchases by the Company or the receipt of newly-issued Common Shares
directly from the Company and shall, after such
share purchases or direct issuance by the Company, become the Beneficial Owner
of any additional Common Shares of the Company, then such Person shall be deemed
to be an "Acquiring Person". 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 Section 1(a), has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of Common Shares so that
such Person would no longer be an Acquiring Person, as defined pursuant to the
foregoing provisions of this Section 1(a), then such Person shall not be deemed
to be an "Acquiring Person" for any purposes of this Agreement.
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 Exchange Act as in effect on the date of
this Agreement.
c. A Person shall be deemed the "Beneficial Owner" of and shall
be deemed to "beneficially own" any securities:
(1) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or
indirectly;
(2) 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), or upon the exercise of conversion
rights, exchange rights, rights, warrants or options,
or otherwise; PROVIDED, HOWEVER, that a Person shall
not be deemed the Beneficial Owner of, or to
beneficially own, (x) securities tendered pursuant to
a tender or exchange offer made by or on behalf of
such Person or any of such Person's Affiliates or
Associates until such tendered securities are
accepted for purchase or exchange, (y) securities
issuable upon exercise of Rights at any time prior to
the occurrence of a Triggering Event or (z)
securities issuable upon exercise of Rights from and
after the occurrence of a Triggering Event which
Rights were acquired by such Person or any of such
Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) or
Section 22 hereof (the "Original Rights") or pursuant
to Section 11(i) hereof in connection with an
adjustment made with respect to any Original Rights;
or (B) the sole or shared right to vote or dispose
pursuant to any agreement, arrangement or
understanding; PROVIDED, HOWEVER, that a Person shall
not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement,
arrangement or understanding to vote such security
(1) arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations
promulgated under the Exchange Act and (2) is not
also then reportable on Schedule 13D or Schedule 13G
under the Exchange Act (or any comparable or
successor report); or (C) has "beneficial ownership"
of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange
Act); or
(3) which are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate
thereof) with which such Person or any of such
Person's Affiliates or Associates has any agreement,
arrangement or understanding, whether written or oral
(other than customary agreements with and between
underwriters and selling group members with respect
to a bona fide public offering of securities), for
the purpose of acquiring, holding, voting (except to
the extent contemplated by the proviso to Section
1(c)(ii)(B)) or disposing of any securities of the
Company.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to own beneficially hereunder.
d. "Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in the State of
Minnesota 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.,
Eden Prairie, Minnesota time, on such date; PROVIDED, HOWEVER,
that if such date is not a Business Day it shall mean 5:00
P.M., Eden Prairie, Minnesota time, on the next succeeding
Business Day.
f. "Common Shares" when used with reference to the Company shall
mean the shares of Common Stock, $.01 par value, of the
Company. "Common Shares" when used with reference to any
Person other than the Company shall mean the capital stock (or
equity interest) of such other Person with the greatest voting
power, or the equity securities or other equity interest
having power to control or direct the management of such
Person.
g. "Continuing Director" shall mean (i) any member of the Board
of Directors of the Company, while such Person is a member of
the Board, who is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, or a representative of an
Acquiring Person or of any such Affiliate or Associate, and
was a member of the Board prior to the date of this Agreement,
or (ii) any Person who subsequently becomes a member of the
Board, while such Person is a member of the Board, who is not
an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative of an Acquiring Person
or of any such Affiliate or
Associate, if such Person's nomination for election or
election to the Board is recommended or approved by a majority
of the Continuing Directors.
h. "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
i. "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
j. "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.
k. "Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or
otherwise) of such entity.
l. "Preferred Shares" shall mean shares of Class A Preferred
Stock, $.01 par value, of the Company having the rights and
preferences set forth in the Form of Certificate of
Designation, Preferences and Rights attached to this Agreement
as Exhibit A.
m. "Redemption Date" shall have the meaning set forth in Section
7 hereof.
n. "Section 11(a)(ii) Event" shall mean an event described in
Section 11(a)(ii) hereof.
o. "Shares Acquisition Date" shall mean the first date of public
announcement (which for purposes of this definition, shall
include, without limitation, a report filed pursuant to
Section 13(d) under the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such.
p. "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting
equity securities or equity interest is owned, directly or
indirectly, by such Person.
q. "Triggering Event" shall mean a Section 11(a)(ii) Event or an
event described in Section 13(a) hereof.
2. SECTION 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.
3. SECTION 3. ISSUANCE OF RIGHTS CERTIFICATES.
a. Until the earlier of (i) the Close of Business on the tenth
day after the Shares Acquisition Date or (ii) the Close of
Business on 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 the Company, any
Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company or any person or
entity organized, appointed or established by the Company for
or pursuant to the terms of any such plan) of, or of the first
public announcement of the intention of any Person (other than
the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the
Company or any person or entity organized, appointed or
established by the Company for or pursuant to the terms of any
such plan) to commence, a tender or exchange offer the
consummation of which would result in any Person becoming the
Beneficial Owner of Common Shares aggregating 20% or more of
the then outstanding Common Shares (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(b)
hereof) by the certificates for Common Shares registered in
the names of the holders thereof (which certificates shall
also be deemed to be certificates for Rights) and not by
separate certificates, (y) the Rights will be transferable
only in connection with the transfer of Common Shares and (z)
each transfer of Common Shares (including a transfer to the
Company) shall constitute a transfer of the Rights associated
with such Common Shares. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the
Rights Agent will countersign, and the Company will send or
cause to be sent (and the Rights Agent will, if requested,
send) by first-class, insured, postage-prepaid mail, to each
record holder of Common Shares as of the Close of Business on
the Distribution Date, at the address of such holder shown on
the records of the Company, a Rights Certificate, in
substantially the form of Exhibit B hereto (a "Rights
Certificate"), evidencing one Right for each Common Share so
held. As of the Distribution Date, the Rights will be
evidenced solely by such Rights 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 Shares, in substantially the form of Exhibit C
hereto (the "Summary of Rights"), by first-class,
postage-prepaid mail, to each record holder of Common Shares
as of the close of business on the Record Date, at the address
of such holder shown on the records of the Company. With
respect to certificates for Common Shares outstanding as of
the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates registered in the names of
the holders thereof together with a copy of the Summary of
Rights attached thereto. Until the Distribution Date (or the
earlier of the Redemption Date or the Final Expiration Date),
the surrender for transfer of any certificate for Common
Shares outstanding on the Record Date, with or without a copy
of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with the
Common Shares represented thereby.
c. Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares
referred to in the last sentence of this
Section 3(c)) after the Record Date but prior to the earliest
of the Distribution Date, the Redemption Date or the Final
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 a Rights Agreement between
Shuffle Master, Inc. and Norwest Bank Minnesota, N.A. dated as
of June 26, 1998 (the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of Shuffle
Master. 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. Shuffle Master will mail to the holder of this
certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor. As described in
the Rights Agreement, Rights issued to any Person who becomes
an Acquiring Person or any Associate or Affiliate thereof (all
as defined in the Rights Agreement) shall become null and
void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that the Company shall not
be entitled to exercise any Rights associated with the Common Shares which are
no longer outstanding.
4. SECTION 4. FORM OF RIGHTS CERTIFICATES.
a. The Rights Certificates and the forms of election to purchase
and of assignment to be printed on the reverse thereof, shall
be substantially the same as 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 Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed,
or to conform to usage. Subject to the terms, provisions and
restrictions elsewhere herein, the Rights Certificates shall
entitle the holders thereof to purchase such number of one
one-hundredths of a Preferred Share as shall be set forth
therein at the price per one one-hundredth of a Preferred
Share set forth therein (the "Purchase Price"), but the amount
and type of securities purchasable upon the exercise of each
Right and the Purchase Price shall be subject to adjustment as
provided herein.
b. Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned
by: (i) an Acquiring Person or any Associate or Affiliate of
an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom
such Acquiring Person has any continuing agreement,
arrangement or understanding, whether written or oral,
regarding the transferred Rights or (B) a transfer which the
Board of Directors of the Company has determined in good faith
is part of a plan, arrangement or understanding, whether
written or oral, which has as a primary purpose or effect
avoidance of the second paragraph of Section 11(a)(ii) hereof,
and any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this
sentence, shall contain (to the extent feasible) the following
legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Rights Certificate and the Rights represented hereby may
become null and void in the circumstances specified in Section
11(a)(ii) of such Agreement.
The provisions of the second paragraph of Section 11(a)(ii) shall apply whether
or not any Rights Certificate actually contains the foregoing legend.
5. SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
The Rights Certificates shall be executed on behalf of the Company by its
Chairman of the Board, its Chief Executive Officer, its President, any of its
Vice Presidents, or its Treasurer, either manually or by facsimile signature,
and shall be attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Rights Certificates shall be
manually countersigned by the Rights Agent and shall not be valid for any
purpose unless countersigned. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the Person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificate may be signed on
behalf of the Company by any Person who, at the actual date of the execution of
such Rights Certificate, shall
be a proper officer of the Company to sign such Rights Certificate, although at
the date of the execution of this Rights Agreement any such Person was not such
an officer.
Following the Distribution Date, the Rights Agent will keep or cause to be kept,
at its principal office, books for registration and transfer of the Rights
Certificates of each series issued hereunder. Such books shall show the names
and addresses of the respective holders of the Rights Certificates, the number
of Rights evidenced on its face by each of the Rights Certificates and the date
of each of the Rights Certificates.
6. SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
a. Subject to the provisions of Sections 4(b), 14 and 24 hereof,
at any time after the Close of Business on the Distribution
Date, and at or prior to the Close of Business on the earlier
of the Redemption Date or the Final Expiration Date, any
Rights Certificate or Rights Certificates (other than Rights
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 transferred,
split-up, combined or exchanged for another Rights Certificate
or Rights Certificates, entitling the registered holder to
purchase a like number of one one-hundredths of a Preferred
Share (or Common Shares, other securities or property, as the
case may be) as the Rights Certificate or Rights Certificates
surrendered then entitle such holder to purchase. Any
registered holder desiring to transfer, split-up, combine or
exchange any Rights Certificate or Rights Certificates shall
make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Rights
Certificates to be transferred, split-up, combined or
exchanged at the principal office of the Rights Agent. Neither
the Rights Agent nor the Company shall be obligated to take
any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder
shall have completed and signed the certificate contained in
the form of assignment on the reverse side of such Rights
Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner (or former Beneficial
Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall,
subject to Sections 4 and 11(a)(ii) hereof, countersign and
deliver to the Person entitled thereto a Rights Certificate or
Rights 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 Rights
Certificates.
b. Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Rights Certificate, and, in
case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of
all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the
Rights Certificate, if mutilated, the Company will make and
deliver a new Rights Certificate of like tenor to the Rights
Agent for delivery to the registered holder in lieu of the
Rights Certificate so lost, stolen, destroyed or mutilated.
7. SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
a. Subject to Section 11(a)(ii) hereof, the registered holder of
any valid Rights Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein including,
without limitation, the restrictions on exercisability set
forth in Section 9(c) hereof) in whole or in part at any time
after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase on the
reverse side thereof duly executed, to the Rights Agent at the
principal office of the Rights Agent, together with payment of
the Purchase Price (as defined below) for each one
one-hundredth of a Preferred Share (or Common Shares, other
securities, cash or other assets, as the case may be) as to
which the Rights are exercised, at or prior to the earliest of
(i) the close of business on June 26, 2008 (the "Final
Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption
Date"), or (iii) the time at which such Rights are exchanged
as provided in Section 24 hereof.
b. The Purchase Price for each one one-hundredth of a Preferred
Share to be issued upon exercise of a Right shall initially be
$18.00, shall be subject to adjustment from time to time as
provided in Sections 11 and 13 hereof and shall be payable in
lawful money of the United States of America in accordance
with paragraph (c) below.
c. Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the
certificate on the reverse side of the Rights Certificate duly
executed, accompanied by payment of the Purchase Price for the
shares (or other securities or property, as the case may be)
to be purchased and an amount equal to any applicable transfer
tax required to be paid by the holder of such Rights
Certificate in accordance with Section 9 hereof by wire
transfer, certified check, cashier's check or money order
payable to the order of the Company, or such other payment
method reasonably required by the Company, the Rights Agent
shall thereupon promptly (i) (A) requisition from any transfer
agent of the Preferred Shares (or make available if the Rights
Agent is the transfer agent of the Preferred Shares)
certificates for the number of Preferred Shares to be
purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests or (B)
requisition from the depository agent depository receipts as
provided in Section 14(b) hereof, representing such number of
one one-hundredths of a Preferred Share as are to be purchased
(in which case certificates for the Preferred Shares
represented by such receipts shall be deposited by the
transfer agent with the depository agent and the Company
hereby directs the depository agent to comply with such
request, (ii) when appropriate,
requisition from the Company or such other entity the amount
of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such
certificates or depository receipts, cause the same to be
delivered to or upon the order of the registered holder of
such Rights Certificate, registered in such name or names as
may be designated by such holder, and (iv) when appropriate,
after receipt, deliver such cash to or upon the order of the
registered holder of such Rights Certificate. In the event
that the Company elects or is obligated to issue other
securities (including Common Shares) of the Company, pay cash
and/or distribute other property pursuant to Section
11(a)(iii) hereof, the Company will make all arrangements
necessary so that such other securities, cash and/or property
are available for distribution by the Rights Agent, if and
when appropriate.
d. In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new
Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent to
the registered holder of such Rights Certificate or to his
duly authorized assigns, subject to the provisions of Section
14 hereof.
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
Rights 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.
f. Notwithstanding any statement to the contrary contained in
this Agreement or in any Rights Certificate, if the
Distribution Date or the Shares Acquisition Date shall occur
prior to the Record Date, the provisions of this Agreement,
including (without limitation) Sections 3 and 11(a)(ii), shall
be applicable to the Rights upon their issuance to the same
extent such provisions would have been applicable if the
Record Date were the date of this Agreement.
8. SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES.
All Rights 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
Rights 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 other Rights Certificate purchased or
acquired by the Company otherwise than upon the exercise
thereof. The Rights Agent shall deliver all canceled Rights Certificates to the
Company, or shall, at the written request of the Company, destroy such canceled
Rights Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
9. SECTION 9. AVAILABILITY OF CAPITAL STOCK.
a. The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued
Preferred Shares (and, following the occurrence of a
Distribution Date, out of its authorized and unissued Common
Shares and/or other securities or out of its authorized and
issued shares held in its treasury), the number of Preferred
Shares (or Common Shares and/or other securities, as the case
may be) that will be sufficient to permit the exercise in full
of all outstanding Rights as provided in this Agreement.
b. The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares
(or Common Shares and/or other securities, as the case may be)
delivered upon exercise of Rights shall be, at the time of
delivery of the certificates for such Preferred Shares (or
Common Shares and/or other securities, as the case may be)
(subject to any necessary payment of the Purchase Price), duly
and validly authorized and issued and fully paid and
nonassessable shares.
c. The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes
and charges which may be payable in respect of the issuance or
delivery of the Rights Certificates or of any Preferred Shares
(or Common Shares and/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 Rights Certificates to
a Person other than, or the issuance or delivery of
certificates or depository receipts for the Preferred Shares
(or Common Shares and/or other securities, as the case may be)
in a name other than that of, the registered holder of the
Rights Certificate evidencing Rights surrendered for exercise
or to issue or to deliver any certificates or depository
receipts for Preferred Shares (or Common Shares and/or other
securities, as the case may be) upon the exercise of any
Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Rights Certificate at the
time of surrender) or until it has been established to the
Company's reasonable satisfaction that no such tax is due.
d. So long as the Preferred Shares (and, following the occurrence
of a Distribution Date, Common Shares and/or other securities,
as the case may be) issuable and deliverable upon the exercise
of the Rights may be listed on any inter-dealer quotation
system or national securities exchange, the Company shall use
its best efforts to cause, from and after such time as the
Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
e. The Company shall use its best efforts to (i) file on the
appropriate form, as soon as practicable following the
earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered by
the Company upon exercise of the Rights has been determined
hereunder, a registration statement under the Securities Act
of 1933, as amended (the "Act"), with respect to the
securities purchasable upon exercise of the Rights, (ii) cause
such registration statement to become effective as soon as
practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Act) until the
earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the Final Expiration
Date. The Company may temporarily suspend, for a period of
time not to exceed ninety (90) days after the date set forth
in clause (i) of the first sentence of this Section 9(e), the
exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon
any such suspension, the Company shall 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. In
addition, if the Company shall determine that a registration
statement is required following the Distribution Date, the
Company may temporarily suspend the exercisability of the
Rights until such time as a registration statement has been
declared effective. The Company will also take such action as
may be appropriate under, or to ensure compliance with, the
securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights.
Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any
jurisdiction if the requisite qualification in such
jurisdiction shall not have been obtained, the exercise
thereof shall not be permitted under applicable law or a
registration statement shall not have been declared effective.
10. SECTION 10. PREFERRED SHARES RECORD DATE.
Each Person in whose name any certificate for Preferred Shares (or Common Shares
and/or other securities, as the case may be) is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
the Preferred Shares (or Common Shares and/or other securities, as the case may
be) represented thereby on, and such certificate shall be dated, the date upon
which the Rights certificate evidencing such Rights was duly surrendered and
payment of the applicable Purchase Price (and any applicable transfer taxes) was
made (or Rights were duly surrendered in exchange for Common Shares pursuant to
Section 24 hereof); PROVIDED, HOWEVER, that if the date of such surrender and
payment is a date upon which the Preferred Shares (or Common Shares and/or other
securities, as the case may be) transfer books of the Company are closed, such
Person shall be deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next succeeding Business Day on which the
Preferred Shares (or Common Shares and/or other securities, as the case may be)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate shall not be entitled to
any rights of a holder of Preferred Shares (or Common Shares and/or other
securities, as the case may be) 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. SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS.
The Purchase Price, the number and kind of shares covered by and obtainable upon
exercise of each Right, and the number of Rights outstanding, are subject to
adjustment from time to time as provided in Sections 11 and 13 of this
Agreement.
a.
(1) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the
Preferred Shares payable in Preferred Shares, (B)
subdivide the outstanding Preferred Shares, (C)
combine the outstanding Preferred Shares into a
smaller number of Preferred Shares or (D) issue any
shares of its capital stock in a reclassification of
the Preferred Shares (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 capital stock issuable on such
date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall
be entitled to receive the aggregate number and kind
of shares of capital stock which, if such Right had
been exercised immediately prior to such date and at
a time when the Preferred Shares transfer books of
the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or
reclassification; PROVIDED, HOWEVER, that in no event
shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable
upon exercise of one Right. If an event occurs which
would require adjustment under both Section 11(a)(i)
and Section 11(a)(ii), 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).
(2) Subject to Section 24 of this Agreement, in the event
any Person shall become an Acquiring Person, each
holder of a valid Right shall thereafter have a right
to receive, upon exercise thereof at a price equal to
the then current Purchase Price multiplied by the
number of one one-hundredths of a Preferred Share for
which a Right is then exercisable, in accordance with
the terms of this Agreement, and in lieu of Preferred
Shares, such number
of Common Shares of the Company as shall equal the
result obtained by (x) multiplying the then current
Purchase Price by the number of one one-hundredths of
a Preferred Share for which, a Right is then
exercisable and dividing that product by (y) 50% of
the then current per share market price of the
Company's Common Shares (determined pursuant to
Section 11(d) hereof) on the date of the occurrence
of the event described above. In the event that any
Person shall become an Acquiring Person and the
Rights shall then be outstanding, the Company shall
not take any action which would eliminate or diminish
the benefits intended to be afforded by the Rights.
From and after the time when a Person becomes an Acquiring Person (a
"Section 11(a)(ii) Event") any Rights that are or were acquired or
beneficially owned by (i) any Acquiring Person (or any Associate or
Affiliate of such Acquiring Person), (ii) a transferee of such
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person became an Acquiring Person or
(iii) a transferee of such Acquiring Person (or of any such Associate
or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person's becoming an Acquiring Person and receives such
Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests
in such Acquiring Person or to any Person with whom the Acquiring
Person has any continuing agreement, arrangement or understanding,
whether written or oral, regarding the transferred Rights or (B) a
transfer which the Board of Directors has determined in good faith is
part of a plan, arrangement or understanding, whether written or oral,
which has as a primary purpose or effect the avoidance of this Section
11(a)(ii), shall each be void and any holder of such Rights shall
thereafter have no exercise or any other rights whatsoever with respect
to such Rights under any provision of this Agreement or otherwise. No
Rights Certificate shall be issued pursuant to Section 3, this Section
11(a)(ii) or Section 24 that represents Rights beneficially owned by an
Acquiring Person or any Associate or Affiliate thereof whose Rights
would be void pursuant to the preceding sentence; no Rights Certificate
shall be issued at any time upon the transfer of any Rights to an
Acquiring Person or any Associate or Affiliate thereof whose Rights
would be void pursuant to the preceding sentence or to any nominee of
such Acquiring Person, Associate or Affiliate; and any Rights
Certificate delivered to the Rights Agent for transfer to an Acquiring
Person, Associate or Affiliate thereof whose Rights would be void
pursuant to the preceding sentence shall be canceled.
(3) In lieu of issuing Common Shares of the Company in
accordance with Section 11(a)(ii) hereof, the Company
may, in the sole discretion of the Board of
Directors, elect to (and, in the event that the Board
of Directors has not exercised the exchange right
contained in Section 24 hereof and there are not
sufficient issued but not outstanding and authorized
but unissued Common Shares to permit the exercise in
full of the Rights in accordance with the foregoing
subparagraph (ii), the Company shall) take all such
action as may be necessary to authorize, issue or
pay, upon the
exercise of the Rights, cash (including by way of a
reduction of the Purchase Price), property, other
securities or any combination thereof having an
aggregate value equal to the value of the Common
Shares of the Company which otherwise would have been
issuable pursuant to Section 11(a)(ii), which
aggregate value shall be determined by the Board of
Directors. For purposes of the preceding sentence,
the value of the Common Shares shall be determined
pursuant to Section 11(d) hereof and the value of any
equity securities which the Board of Directors
determines to be a "common stock equivalent"
(including the Preferred Shares, in such ratio as the
Board of Directors shall determine) shall be deemed
to have the same value as the Common Shares. Any such
election by the Board of Directors must be made and
publicly announced within 60 days following the date
on which the event described in Section 11(a)(ii)
shall have occurred. Following the occurrence of the
event described in Section 11(a)(ii), the Board of
Directors may suspend the exercisability of the
Rights for a period of up to 60 days following the
date on which the event described in Section
11(a)(ii) shall have occurred to the extent that the
directors have not determined whether to exercise the
Company's right of election under this Section
11(a)(iii). 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.
b. In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or
purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares
("equivalent preferred shares")) or securities convertible
into Preferred Shares or equivalent preferred shares at a
price per Preferred Share or equivalent preferred share (or
having a conversion price per share, if a security convertible
into Preferred Shares or equivalent preferred shares) less
than the then current per share market price of the Preferred
Shares (as defined in Section 11(d)) 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 Preferred Shares
outstanding on such record date plus the number of Preferred
Shares which could be purchased at the current per share
market price for the aggregate offering price of the total
number of Preferred Shares and/or equivalent preferred shares
so to be offered (and/or the aggregate initial conversion
price of the convertible securities so to be offered) and the
denominator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of additional
Preferred Shares and/or equivalent preferred shares to be
offered for subscription or purchase (or into which the
convertible securities so to be offered are initially
convertible); PROVIDED, HOWEVER, that in no event shall the
consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital
stock of
the Company issuable upon exercise of one Right. In case such
subscription price may be paid in a consideration part or all
of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the
Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent.
Preferred Shares 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, options 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 the making of
a distribution to all holders of the Preferred Shares
(including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing
or surviving corporation) of evidences of indebtedness or
assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Shares) 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 then current per share
market price of the Preferred Shares 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 assets or evidences of indebtedness so to
be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which
shall be such current per share market price of the Preferred
Shares; PROVIDED, HOWEVER, that in no event shall the
consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital
stock of the Company to be issued upon exercise of one Right.
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 again be adjusted to
be the Purchase Price which would then be in effect if such
record date had not been fixed.
d.
(1) For the purpose of any computation hereunder, the
"current per share market price" of any security (a
"Security" for the purpose of this Section 11(d)(i))
on any date shall be deemed to be the average of the
daily closing prices (determined as provided in the
next sentence) per share of such Security for the 30
consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date, and for the
purpose of any computation under Section 11(a)(iii)
hereof, the "current per share market price" of a
Security on any date shall be deemed to be the
average of the daily closing prices per share of such
Security for the 30 consecutive
Trading Days immediately following such date;
provided, however, that in the event that the current
per share market price of the Security is determined
during a period following the announcement by the
issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of
such Security or securities convertible into such
shares (other than the Rights), or (B) any
subdivision, combination or reclassification of such
Security and prior to the expiration of 30 Trading
Days after the ex-dividend date for such dividend or
distribution, or the record date for such
subdivision, combination or reclassification, then,
and in each such case, the current per share market
price shall be appropriately adjusted to reflect the
current market price per share equivalent of such
Security as if such dividend, distribution,
combination or reclassification has not been
declared. 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 on the Nasdaq National Market or,
if the Security is listed or admitted for trading on
a national exchange, as reported in the principal
consolidated transaction reporting system with
respect to securities listed on the principal
national securities exchange on which the Security is
listed or admitted to trading, or, if the Security is
not listed on the Nasdaq National Market or listed or
admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in
the over-the-counter market, as reported by any other
system then in use, or, if on any such date the
Security is not quoted by any such organization, the
average of the closing bid and asked prices as
furnished by a professional market maker making a
market in the Security selected by the Board of
Directors of the Company. The term "Trading Day"
shall mean a day on which the principal national
securities exchange on which the Security is listed
or admitted to trading is open for the transaction of
business or, if the Security is not listed or
admitted to trading on any national securities
exchange, a Business Day.
(2) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred
Shares shall be determined in accordance with the
method set forth in Section 11(d)(i). If the
Preferred Shares are not publicly traded, the
"current per share market price" of the Preferred
Shares shall be conclusively deemed to be the current
per share market price of the Common Shares as
determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after
the date hereof), multiplied by one hundred. If
neither the Common Shares nor the Preferred Shares
are publicly held or so listed or traded, "current
per share market price" 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.
e. No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at
least 1% 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 one one-millionth of a Preferred Share or one
ten-thousandth of any other share or security, 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 requires such adjustment or (ii) the date of
the expiration of the right to exercise any Rights.
f. If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the
Company other than Preferred Shares, thereafter the number of
such other shares so receivable upon exercise of any Right
shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Shares contained in
Sections 11(a), 11(b) and 11(c), and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Preferred
Shares 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 one one-hundredths of a Preferred Share 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 11(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 Preferred Share
(calculated to the nearest one one-millionth of a Preferred
Share) obtained by (i) multiplying (x) the number of one
one-hundredths of a share 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 to adjust the number of Rights, in
substitution for any adjustment in the
number of one one-hundredths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be
exercisable for the number of one one-hundredths of a
Preferred Share for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to
such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one
ten-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. The 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 Rights
Certificates have been issued, shall be at least 10 days later
than the date of the public announcement. If Rights
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 Rights Certificates on such record date
Rights 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 Rights
Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment.
Rights Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein
and shall be registered in the names of the holders of record
of Rights 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 one one-hundredths of a Preferred Share
issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number of one
one-hundredths of a Preferred Share which were expressed in
the initial Rights Certificates issued hereunder, without
prejudice to the validity of such Rights Certificate(s) or the
application of the provisions hereof.
k. Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the
then par value, if any, of the Preferred Shares issuable upon
exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully
paid and nonassessable Preferred Shares at such adjusted
Purchase Price.
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 issuing to the holder of any Right exercised after such
record date of the Preferred Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise
over and above the Preferred Shares 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 upon the occurrence of the event requiring such
adjustment.
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 it in
its sole discretion shall determine to be advisable in order
that any consolidation or subdivision of the Preferred Shares,
issuance wholly for cash of any Preferred Shares at less than
the current market price, issuance wholly for cash of
Preferred Shares or securities which by their terms are
convertible into or exchangeable for Preferred Shares,
dividends on Preferred Shares payable in Preferred Shares or
issuance of rights, options or warrants referred to in Section
11(b), hereafter made by the Company to holders of its
Preferred Shares shall not be taxable to such stockholders.
n. In the event that at any time after the date of this Agreement
and prior to the Shares Acquisition Date, the Company shall
(i) declare or pay any dividend on the Common Shares payable
in Common Shares or (ii) effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares) into
a greater or lesser number of Common Shares, then in any such
case (i) the number of one one-hundredths of a Preferred Share
purchasable after such event upon proper exercise of each
Right shall be determined by multiplying the number of one
one-hundredths of a Preferred Share so purchasable immediately
prior to such event by a fraction, the numerator of which is
the number of Common Shares outstanding immediately before
such event and the denominator of which is the number of
Common Shares outstanding immediately after such event, and
(ii) each Common Share outstanding immediately after such
event shall have issued with respect to it that number of
Rights which each Common Share outstanding immediately prior
to such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made successively
whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.
12. SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 and 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts
accounting for such adjustment, (b) file with the Rights Agent and with each
transfer agent for the Common Shares or the Preferred Shares a copy of such
certificate and (c) mail a brief summary thereof to each holder of a Rights
Certificate in accordance with Section 25 hereof.
13. SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
a. If, after the Shares Acquisition Date, directly or indirectly,
(w) the Company shall consolidate with, or merge with and
into, any other Person, (x) any Person shall consolidate with
the Company, or merge with and into the Company and the
Company shall be the continuing or surviving corporation of
such merger and, in connection with such merger or
consolidation all or part of the outstanding Common Shares are
changed into or exchanged for stock or other securities of any
other Person (or the Company) or cash or any other property,
(y) the Company shall sell, mortgage or otherwise transfer (or
one or more of its Subsidiaries shall sell, mortgage or
otherwise transfer), in one or more transactions, assets or
earning power aggregating 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole)
to any Person other than the Company or one or more of its
wholly-owned Subsidiaries, or (z) any Acquiring Person or any
Associate or Affiliate of any such Acquiring Person, at any
time after the date of this Agreement, directly or indirectly,
(A) shall, in one transaction or a series of transactions,
transfer any assets to the Company or to any of its
Subsidiaries in exchange (in whole or in part) for Common
Shares, for shares of other equity securities of the Company
or for securities exercisable for or convertible into shares
of equity securities of the Company (Common Shares or
otherwise) or otherwise obtain from the Company, with or
without consideration, any additional shares of such equity
securities or securities exercisable for or convertible into
shares of such equity securities (other than pursuant to a pro
rata distribution to all holders of Common Shares), (B) shall
sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise acquire or dispose of assets, in one transaction or
a series of transactions, to, from or with the Company or any
of its Subsidiaries without obtaining a written opinion from a
nationally recognized investment banking firm that the terms
of such transaction or arrangement are no less favorable to
the Company than the Company would be able to obtain in
arm's-length negotiation with an unaffiliated third party, (C)
shall sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise acquire or dispose of in one transaction
or a series of transactions, to, from or with the Company or
any of the Company's Subsidiaries (other than incidental to
the lines of business, if any, engaged in as of the date
hereof between the Company and such Acquiring Person or
Associate or Affiliate) assets having an aggregate fair market
value of more than $5,000,000, (D) shall receive any
compensation from the Company or any of the Company's
Subsidiaries other than compensation for full-time employment
as a regular employee at rates in accordance with the
Company's (or its Subsidiaries') past practices, or (E) shall
receive the benefit, directly or indirectly (except
proportionately as a stockholder and except if resulting from
a requirement of law or governmental regulation), of
any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantage provided
by the Company or any of its Subsidiaries, then, and in each
such case, (i) each holder of a Right (except as otherwise
provided herein) shall thereafter have the right to receive,
upon the exercise thereof at a price equal to the then current
Purchase Price multiplied by the number of one one-hundredths
of a Preferred Share for which a Right is then exercisable in
accordance with the terms of this Agreement, and in lieu of
Preferred Shares, such number of validly authorized and
issued, fully paid, non-assessable and freely tradeable Common
Shares of the Principal Party (as hereinafter defined) not
subject to any liens, encumbrances, rights of first refusal or
other adverse claims, as shall equal the result obtained by
(A) multiplying the then current Purchase Price by the number
of one one-hundredths of a Preferred Share for which a Right
is then exercisable and dividing that product by (B) 50% of
the then current per share market price of the Common Shares
of the Principal Party (determined pursuant to Section 11(d)
hereof) on the date of consummation of such consolidation,
merger, sale or transfer; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations
and duties of the Company pursuant to this Agreement; (iii)
the term "Company" shall thereafter be deemed to refer to such
Principal Party; and (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a
sufficient number of its Common Shares in accordance with
Section 9 hereof) in connection with such consummation as may
be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in
relation to the Common Shares thereafter deliverable upon the
exercise of the Rights.
b. "Principal Party" shall mean:
(1) In the case of any transaction described in (w) or
(x) of the first sentence of Section 13(a), the
Person that is the issuer of any securities into
which Common Shares of the Company are converted in
such merger or consolidation, and if no securities
are so issued, the Person that is the surviving
entity of such merger or consolidation (including the
Company if applicable); and
(2) In the case of any transaction described in (y) or
(z) of the first sentence in Section 13(a), the
Person that is the party receiving the greatest
portion of the assets, securities, earning power or
other benefit transferred pursuant to such
transaction or transactions; provided, however, that
in any such case described in clauses (b)(i) and
(b)(ii): (1) if the Common Shares of such Person are
not at such time and have not been continuously over
the preceding 12-month period registered under
Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person the
Common Shares of which are and have been so
registered, "Principal Party" shall refer to such
other Person; (2) in case such Person is a
Subsidiary, directly or indirectly, of more than one
person, the Common Shares of two or more of which are
and have been so registered, "Principal Party" shall
refer to whichever of such Persons is the issuer of
the Common Shares having the greatest aggregate
market value; and (3) in case such Person is owned,
directly or indirectly, by a joint venture formed by
two or more Persons that are not owned, directly or
indirectly, by the same person, the rules set forth
in (1) and (2) above shall apply to each of the
chains of ownership having an interest in such joint
venture as if such party were a "Subsidiary" of both
or all of such joint venturers and the Principal
Parties in each such chain shall bear the obligations
set forth in this Section 13 in the same ratio as
their direct or indirect interests in such Person
bear to the total of such interests.
c. The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have
sufficient Common Shares authorized to permit the full
exercise of the Rights and prior thereto the Company and such
Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms
set forth in paragraphs (a) and (b) of this Section 13 and
further providing that, as soon as practicable after the date
of any consolidation, merger, sale or transfer mentioned in
paragraph (a) of this Section 13, the Principal Party will:
(1) prepare and file a registration statement under the
Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an
appropriate form, and will use its best efforts to
cause such registration statement to (A) become
effective as soon as practicable after such filing
and (B) remain effective (with a prospectus at all
times meeting the requirements of the Act) until the
Final Expiration Date;
(2) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its
Affiliates which comply in all respects with the
requirements for registration on Form 10 under the
Exchange Act; and
(3) take such actions as may be necessary or appropriate
under the blue sky laws of the various states.
The Company shall not enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or arrangements which,
as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights. The
provisions of this Section 13 shall similarly apply to successive mergers,
consolidations, sales or transfers.
14. SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
a. The Company shall not be required to issue fractions of Rights
or to distribute Rights Certificates which evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid
to the registered holders of the Rights Certificates with
regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of
this Section 14(a), the current market value of a whole Right
shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights
would have been otherwise issuable. The closing price for any
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 principal national securities exchange on which the Rights
are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other
system then in use, or, if on any such date the Rights 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 Rights selected by the Board of
Directors of the Company. If on any such date no such market
maker is making a market in the Rights, the fair value of the
Rights on such date as determined in good faith by the Board
of Directors of the Company shall be used.
b. The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share) upon
exercise of the Rights or to distribute certificates which
evidence fractional Preferred Shares (other than fractions
which are integral multiples of one one-hundredth of a
Preferred Share). Fractions of Preferred Shares in integral
multiples of one one-hundredth of a Preferred Share may, at
the election of the Company, be evidenced by depository
receipts, pursuant to an appropriate agreement between the
Company and a depository selected by it; provided, that such
agreement shall provide that the holders of such depository
receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of the
Preferred Shares represented by such depository receipts. In
lieu of fractional Preferred Shares that are not integral
multiples of one one-hundredth of a Preferred Share, the
Company shall pay to the registered holders of Rights
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 Preferred Share. For the purposes
of this Section 14(b), the current market value of a Preferred
Share shall be the closing price of a Preferred Share (as
determined pursuant to the second sentence of Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of
such exercise.
c. Following the occurrence of a Distribution Date, the Company
shall not be required to issue fractions of shares of Common
Stock upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Common Stock.
In lieu of fractional shares of Common Stock, the Company may
pay to the registered holders of Rights 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 share of Common Stock. For purposes of this Section 14(c),
the current market value of one share of Common Stock shall be
the closing price of one share of Common Stock (as determined
pursuant to the second sentence of Section 11(d)(i) hereof)
for the Trading Day immediately prior to the date of such
exercise.
d. The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right (except as provided
above).
15. SECTION 15. RIGHTS OF ACTION.
All rights of action in respect of this Agreement, excepting the rights of
action given to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares); and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
of the Common Shares), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution Date, of the
Common Shares), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Agreement.
16. SECTION 16. AGREEMENT OF RIGHTS HOLDERS.
Every holder of a Right, by accepting the same, consents and agrees with the
Company and the Rights Agent and with every other holder of a Right that:
a. prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the
Common Shares;
b. after the Distribution Date, the Rights Certificates will be
transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent, duly
endorsed or accompanied by a proper instrument of transfer and
with appropriate forms and certificates fully executed;
c. the Company and the Rights Agent may deem and treat the Person
in whose name the Rights Certificate (or, prior to the
Distribution Date, the associated certificate for Common
Shares) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificates or the
associated certificate for Common Shares made by anyone other
than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall
be affected by any notice to the contrary; 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 any other Person as 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.
17. SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.
No holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a shareholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
18. SECTION 18. CONCERNING THE RIGHTS AGENT.
The Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement and the exercise
and performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability arising,
directly or indirectly, therefrom. In no case shall the Rights Agent be liable
for special, indirect, incidental 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 possibility of such loss or damage.
The Rights Agent shall be protected and shall incur no liability for, or in
respect of any action taken, suffered or omitted by it in connection with, its
administration of this Agreement in reliance upon any Rights Certificate or
certificate for the Preferred Shares or Common Shares or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons, or otherwise upon the advice of counsel as set forth in
Section 20 hereof.
19. SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this 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 Rights Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall be changed and at such
time any of the Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
20. SECTION 20. DUTIES OF RIGHTS AGENT.
The Rights Agent undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the Company and the
holders of Rights Certificates, by their acceptance thereof, shall be bound:
a. The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such
opinion.
b. Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Company prior
to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of
the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer or the Secretary
of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent
for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such
certificate.
c. The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own negligence, bad faith or
willful misconduct.
d. The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this
Agreement or in the Rights Certificates (except its
countersignature thereof) or be required to verify the same,
but all such statements and recitals are and shall be deemed
to have been made by the Company only.
e. The Rights Agent shall not be under any responsibility in
respect of the validity of this 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
Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any change
in the exercisability of the Rights (including the Rights
becoming void pursuant to Section 11(a)(ii) hereof) or any
adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for in Section 3, 11, 13,
23 or 24, or the ascertaining of the existence of facts that
would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Rights
Certificates after actual notice that such change or
adjustment is required); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares (or
Common Shares and/or other securities, as the case may be) to
be issued pursuant to this agreement or any Rights Certificate
or as to whether any Preferred Shares (or Common Shares and/or
other securities, as the case may be) 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 Agreement.
g. The Rights Agent is hereby authorized and directed to accept,
prior to the Shares Acquisition Date, instructions with
respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer,
the President, any Vice President, the Secretary or the
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 by it in
good faith in accordance with instructions of any such officer
or for any delay in acting while waiting for those
instructions.
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 Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity
for the Company or for any other legal entity.
i. The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and
the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct, provided reasonable
care was exercised in the selection and continued employment
thereof.
21. SECTION 21. CHANGE OF RIGHTS AGENT.
The Rights Agent or any successor Rights Agent may resign and thereafter be
discharged from its duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common Shares or
Preferred Shares by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon 30 days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Shares or Preferred Shares by registered or certified mail,
and to the holders of the Rights 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. If the Company shall
fail to make such appointment within a period of 30 days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be either (A) a corporation organized and
doing business under the laws of the United States or of any state of the United
States, in good standing, authorized under such laws to exercise corporate trust
or stock transfer powers, and 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 million or (B) an
affiliate of such a corporation. 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 Shares or Preferred Shares, and mail a notice thereof in writing to
the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
22. SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement.
23. SECTION 23. REDEMPTION.
a. The Rights may be redeemed by action of the Board of Directors
pursuant to paragraph (b) of this Section 23 and shall not be
redeemed in any other manner.
b. The Board of Directors of the Company may, at its option, at
any time prior to such time as any Person becomes an Acquiring
Person, redeem all, but not less than all, of the then
outstanding Rights at a redemption price of $.01 per Right,
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"); PROVIDED, HOWEVER, if the Board of
Directors of the Company authorizes redemption of the Rights
on or after the date of a change (resulting from a proxy or
consent solicitation) in a majority of the directors in office
at the commencement of such solicitation if any Person who is
a participant in such solicitation has stated (or, if upon the
commencement of such solicitation, a majority of the Board of
Directors of the Company has determined in good faith) that
such Person (or any of its Affiliates or Associates) intends
to take, or may consider taking, any action which would result
in such Person becoming an Acquiring Person or which would
cause the occurrence of a Triggering Event, then the
redemption is not effective for a period of 180 days following
such date, unless there are Continuing Directors then in
office and such authorization receives the concurrence of a
majority of such Continuing Directors.
The redemption of the Rights by the Board of Directors may be made effective at
such time on such basis and with such conditions as the Board of Directors in
its sole discretion may establish. If redemption of the Rights is to be
effective as of a future date, the Rights shall continue to be exercisable,
subject to Section 11(a)(ii) hereof, until the effective date of the redemption,
provided that nothing contained herein shall preclude the Board of Directors
from subsequently causing the Rights to be redeemed at a date earlier than the
previously scheduled effective date of the redemption. The Company may, at its
option, pay the Redemption Price in cash, Common Shares (based on the current
per share market price of the Common Shares at the time of redemption) or any
other form of consideration deemed appropriate by the Board of Directors.
c. Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to
paragraph (b) of this Section 23 (or at the effective time of
such redemption established by the Board of Directors of the
Company pursuant to paragraph (b) of this Section 23), and
without any further action and without any notice, the right
to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the
Redemption Price. The Company shall promptly give public
notice of any such redemption; PROVIDED, HOWEVER, that the
failure to give, or any defect in, any such notice shall not
affect the validity of such redemption. Within 10 days after
such action of the Board of Directors ordering the redemption
of the Rights pursuant to paragraph (b) of this Section 23 or
if later, the effectiveness of the redemption of the rights
pursuant to the last sentence of paragraph (b), 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 Shares. 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
will state the method by which the payment of the Redemption
Price will be made. 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, (ii) depositing with a bank or trust company
having a capital and surplus of at least $100 million, funds
necessary for such redemption, in trust, to be applied to the
redemption of the Rights so called for redemption and (iii)
arranging for the mailing of the Redemption Price to the
registered holders of the Rights; then, and upon such action,
all outstanding Rights Certificates shall be null and void
without further action by the Company. Neither the Company nor
any of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23 or in
Section 24 hereof, and other than in connection with the
purchase of Common Shares prior to the Shares Acquisition
Date.
24. SECTION 24. EXCHANGE.
a. The Board of Directors of the Company may, at its option, at
any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11(a)(ii) hereof) for
Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date
hereof. Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time
after any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or any
such Subsidiary, or any entity holding Common Shares for or
pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Shares then
outstanding.
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
Common Shares equal to the number of valid Rights held by such
holder. 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 Common Shares 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 Preferred Shares (or equivalent
preferred shares, as such term is defined in Section 11(b)
hereof) for Common Shares exchangeable for Rights, at the
initial rate of one one-hundredth of a Preferred Share (or
equivalent preferred share) for each Common Share, as
appropriately adjusted to reflect adjustments in the voting
rights of the Preferred Shares pursuant to the terms thereof,
so that the fraction of a Preferred Share delivered in lieu of
each Common Share shall have the same voting rights as one
Common Share.
d. In the event that there shall not be sufficient Common Shares
or Preferred Shares 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 Common Shares or Preferred Shares for issuance upon
exchange of the Rights.
e. The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional
Common Shares. In lieu of such fractional Common Shares, the
Company shall pay to the registered holders of the Rights
Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to
the same fraction of the current market value of a whole
Common Share. For the purposes of this paragraph (e), the
current market value of a whole Common Share shall be the
closing price of a Common Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date of exchange pursuant to this
Section 24.
25. SECTION 25. NOTICE OF CERTAIN EVENTS.
a. In case the Company shall propose (i) to pay any dividend
payable in stock of any class to the holders of its Preferred
Shares or to make any other distribution to the holders of its
Preferred Shares (other than a regular quarterly cash
dividend), (ii) to offer to the holders of its Preferred
Shares rights or warrants to subscribe for or to purchase any
additional Preferred Shares or shares of stock of any class or
any other securities, rights or options, (iii) to effect any
reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding
Preferred Shares), (iv) to effect any consolidation or merger
into or with, 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 50% or more
of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person, (v) to
effect the liquidation, dissolution or winding up of the
Company, or (vi) to declare or pay any dividend on the Common
Shares payable in Common Shares or to effect a subdivision,
combination or consolidation of the Common Shares (by
reclassification or otherwise), then, in each such case, the
Company shall give to each holder of a Rights Certificate, in
accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for such event,
and the date of participation therein by the holders of the
Common Shares and/or Preferred Shares, if any such date is to
be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least 10 days
prior to the record date for determining holders of the
Preferred Shares 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 the Common Shares
and/or Preferred Shares, whichever shall be the earlier.
b. In case any of the events set forth in Section 11(a)(ii)
hereof shall occur, then the Company shall as soon as
practicable thereafter give to each holder of a Rights
Certificate, in accordance with Section 26 hereof, a notice of
the occurrence of
such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section
11(a)(ii) hereof.
26. SECTION 26. NOTICES.
Notices or demands authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights Certificate to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
Shuffle Master, Inc.
00000 Xxxxxx Xxxx Xxxx
Xxxx Xxxxxxx, Xxxxxxxxx 00000
Attention: President
With a copy to:
Larkin, Hoffman, Xxxx & Xxxxxxxx, Ltd.
1500 Norwest Financial Center
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be deemed given or made upon
receipt and shall be addressed (until another address is filed in writing with
the Company) as follows:
Norwest Bank Minnesota, N.A.
000 Xxxxx Xxxxxxx Xxxxxxxx
Xxxxx Xxxxx Xxxx, Xxxxxxxxx 00000
Attention: Shareholder Relations
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
27. SECTION 27. SUPPLEMENTS AND AMENDMENTS.
The Company may from time to time supplement or amend this Agreement without the
approval of any holders of Rights Certificates in order to cure any ambiguity,
to correct or supplement any provision contained herein which may be defective
or inconsistent with any other provisions herein, or to make any other
provisions with respect to the Rights which the Company may deem necessary or
desirable, any such supplement or amendment to be evidenced by a writing signed
by the Company and the Rights Agent; PROVIDED, HOWEVER, that from and after such
time
as any Person becomes an Acquiring Person, this Agreement shall not be amended
in any manner which would adversely affect the interests of the holders of
Rights (except the interests of any Acquiring Person and its Affiliates and
Associates), which amendment shall be effective only if there are Continuing
Directors and shall require the occurrence of a majority of such Continuing
Directors.
28. SECTION 28. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors, or the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including, without limitation, a
determination to redeem or not redeem the Rights or to amend the Agreement and
whether any proposed amendment adversely affects the interests of the holders of
Rights Certificates). For all purposes of this Agreement, any calculation of the
number of Common Shares or other securities outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding Common Shares or any other securities 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 of this Agreement. All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
of Directors in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights Certificates and all other
parties unless the Board of Directors specifically states that such action,
calculations, interpretation or determination is not final, conclusive and
binding, and (y) not subject the Board of Directors to any liability to the
holders of the Rights Certificates.
29. SECTION 29. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
30. SECTION 30. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any Person or
corporation other than the Company, the Rights Agent and the registered holders
of valid Rights Certificates (and, prior to the Distribution Date, the Common
Shares) any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of valid Rights Certificates (and, prior
to the Distribution Date, the Common Shares).
31. SECTION 31. SEVERABILITY.
If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
32. SECTION 32. GOVERNING LAW.
This Agreement and each Rights Certificate issued hereunder shall be deemed to
be a contract made under the laws of the State of Minnesota and for all purposes
shall be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.
33. SECTION 33. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.
34. SECTION 34. DESCRIPTIVE HEADINGS.
Descriptive headings of the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
ATTEST: SHUFFLE MASTER, INC.
/s/ Xxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxx
----------------------------------- -----------------------------------
Secretary Its: President and Chief Executive
Officer
ATTEST: NORWEST BANK MINNESOTA, N.A.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxxxxxxx
----------------------------------- -----------------------------------
Xxxxx Xxxxxxxxxx
Its: Officer
EXHIBIT A
FORM
OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF
CLASS A PREFERRED STOCK
OF
SHUFFLE MASTER, INC.
We, Xxxxxx X. Xxxxx, President and Chief Executive Officer, and Xxxx X. Xxxxxxx,
Secretary, of Shuffle Master, Inc., a corporation organized and existing under
the Minnesota Business Corporation Act, in accordance with the provisions of
Section 302A.401 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Articles of Incorporation of the said Corporation, the said Board of Directors
on June 26, 1998 adopted the following resolution creating a series of
________________________ (_________) shares of preferred stock designated as
Class 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 Articles
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 voting
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:
Class A Preferred Stock:
Section 1. Designation and Amount.
The shares of such series shall be designated as "Class A Preferred
Stock" (the "Class A Preferred Stock") and the number of shares constituting the
Class A Preferred Stock shall initially be ______________. Such number of shares
may be increased or decreased by resolution of the Board of Directors; PROVIDED,
that no decrease shall reduce the number of shares of Class A Preferred Stock to
a number less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities or rights issued
by the Company convertible into Class A Preferred Stock AND FURTHER PROVIDED
that the Board of Directors shall increase the number of shares constituting the
Class A Preferred Stock to the extent necessary for the Company to have
available sufficient shares of such Series A Preferred Stock available to
fulfill all of the Company's obligations to holders of securities and Rights of
the Company.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior
and superior to the Class A Preferred Stock with respect to
dividends, the holders of shares of Class A Preferred Stock,
in preference to the holders of Common Stock, $.01 par value
(the "Common Stock"), of the Company, and of any other junior
stock, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for
the purpose, dividends payable when and as dividends are
declared on the Company's Common Stock in an amount, subject
to the provision for adjustment hereinafter set forth, equal
to 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other
distributions, declared on the Company's Common Stock (except
as provided in the next sentence). In the event the Company
shall at any time declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, 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 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) The Company shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this
Section immediately after it declares a dividend or
distribution on the Common Stock.
Section 3. Voting Rights.
The holders of shares of Class A Preferred Stock shall have the
following voting rights:
(A) Each share of Class A Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the
shareholders of the Company.
(B) Except as otherwise provided herein, in any other Certificate
of Designation, Preferences and Rights creating a series of
Preferred Stock or any similar stock, or by law, the holders
of shares of Class A Preferred Stock and the holders of shares
of Common Stock and any other capital stock of the Company
having general voting rights shall vote together as one class
on all matters submitted to a vote of shareholders of the
Company.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Class 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 Class A Preferred Stock purchased or otherwise acquired
by the Company 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 subject to the conditions and
restrictions on issuance set forth herein, in the Articles of Incorporation, or
in any other Certificate of Designation, Preferences and Rights creating a
series of Preferred Stock or any similar stock or as otherwise required by law.
Section 5. Liquidation, Dissolution or Winding Up.
Upon any liquidation, dissolution or winding up of the Company, no
distribution shall be made (1) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Class A Preferred Stock unless, prior thereto, the holders of shares of Class A
Preferred Stock shall have received an aggregate 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 shares of Common
Stock. In the event the Company shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Class A Preferred
Stock were entitled immediately prior to such event under the proviso in clause
(1) 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 Company shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case each share of Class A Preferred Stock shall at
the same time be similarly exchanged or changed into 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 Company shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the
exchange or change of shares of Class 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 Class A Preferred Stock shall not be redeemable.
Section 8. Rank.
The Class A Preferred Stock shall rank, with respect to the payment of
dividends and the distribution of assets, junior to all series of any other
class of the Company's Preferred Stock.
Section 9. Amendment.
The Articles of Incorporation of the Company shall not be amended in
any manner which would materially alter or change the powers, preferences or
special rights of the Class A Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Class 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 _______
day of June, 1998.
ATTEST: SHUFFLE MASTER, INC.
By:
----------------------------------- -----------------------------------
Secretary Its: President and Chief Executive
Officer
EXHIBIT B
FORM OF RIGHTS CERTIFICATE
CERTIFICATE NO. _____ ______ RIGHTS
NOT EXERCISABLE AFTER JUNE 26, 2008, OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT, AND ARE VOIDABLE
AND SUBJECT TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
ALTERNATIVE LEGEND
THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED
BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE
OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN THE SECOND PARAGRAPH OF
SECTION 11(A)(II) OF SUCH AGREEMENT.
Rights Certificate
Shuffle Master, Inc.
This certifies that ____________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of June 26, 1998 (the "Rights Agreement") between Shuffle
Master, Inc., a Minnesota corporation (the "Company"), and Norwest Bank
Minnesota, N.A. (the "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., Eden Prairie, Minnesota time on June 26, 2008, at the
principal office of the Rights Agent, or at the office of its successor as
Rights Agent, one one-hundredth of a fully paid nonassessable share of Class A
Preferred Stock, $.01 par value (the "Preferred Shares"), of the Company, at a
purchase price of $18.00 per one one-hundredth of a Preferred Share (the
"Purchase Price"), upon presentation and surrender of this Rights Certificate
with the Form of Election to Purchase duly executed. The number of Rights
evidenced by this Rights Certificate (and the number of one one-hundredths of a
Preferred Share which may be purchased upon exercise hereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of
June 26, 1998, based on the Preferred. Shares as constituted at such date. As
provided in the Rights Agreement, the Purchase Price and the number of one
one-hundredths of a Preferred Share which may be purchased upon the exercise of
the Rights evidenced by this Rights Certificate are subject to modification and
adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Rights Certificate or Rights Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Rights Certificate or Rights
Certificates surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Rights Certificate or Rights Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate (i) may be redeemed by the Company at a redemption price of $.01 per
Right or (ii) may be exchanged in whole or in part for Preferred Shares or
shares of the Company's Common Stock, $.01 par value, on the terms set forth in
the Rights Agreement.
No fractional Preferred Shares will 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 Preferred Share, which may, at the election of the
Company, be evidenced by depository receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Company 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
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose until
it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _________________, ______.
ATTEST: SHUFFLE MASTER, INC.
By:
----------------------------------- -----------------------------------
Its:
------------------------------
Countersigned:
NORWEST BANK MINNESOTA, N.A.
By:
-------------------------------
Its:
--------------------------
[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED, __________________________________ hereby sells, assigns and
transfers unto _________________________________________________________________
(Please print name and address of transferee)
____________________________________________________________________________
(Please print social security or other identifying number of transferee)
this Rights Certificate, together with all interest therein, and does hereby
irrevocably constitute and appoint ___________________ Attorney, to transfer the
within Rights Certificate on the books of the within-named Company, with full
power of substitution.
Dated: ___________________________, ______
__________________________________________
Signature
Signature Guaranteed: __________________________________________________________
Signature must be guaranteed by an Eligible Guarantor Institution as defined by
SEC Rule 17Ad-15 (17 C.F.R. 240.17-Ad-15).
CERTIFICATE
[TO BE FURNISHED IN CONNECTION WITH ASSIGNMENT]
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Person (as such 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 Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of any such Person.
Dated: ___________________________, ______
__________________________________________
Signature
Signature Guaranteed: __________________________________________________________
NOTICE
The signatures to the foregoing Assignment and Certificate must correspond to
the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
The signature must be guaranteed by an Eligible Guarantor Institution as defined
by SEC Rule 17Ad-15 (17 C.F.R. 240.17-Ad-15).
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights Certificate.)
To: Shuffle Master, Inc.
The undersigned hereby irrevocably elects to exercise ________________
Rights represented by this Rights Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such Preferred Shares be issued in
the name of:
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address)
_______________________________________________________________
(Please insert social security or other identifying number)
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address)
_______________________________________________________________
(Please insert social security or other identifying number)
Dated: ___________________________, ______
__________________________________________
Signature
Signature Guaranteed: __________________________________________________________
Signatures must be guaranteed by an Eligible Guarantor Institution as defined by
SEC Rule 17Ad-15 (17 C.F.R. 240.17-Ad-15).
CERTIFICATE
[TO BE EXECUTED IN CONNECTION WITH ELECTION TO PURCHASE]
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Person (as such 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 Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of any such Person.
Dated: ___________________________, ______
__________________________________________
Signature
Signature Guaranteed: __________________________________________________________
NOTICE
The signatures to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
The signfcature must be guaranteed by an Eligible Guarantor Institution as
defined by SEC Rule 17Ad-15 (17 C.F.R. 240.17-Ad-15).
NOTICE
In the event the certification set forth above in the Form of Assignment or the
Form of Election to Purchase, as the case may be, is not completed, the Company
and the Rights Agent will deem the beneficial owner of the Rights evidenced by
this Rights Certificate to be an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement) and such Assignment or Election to
Purchase will not be honored.
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES UNDER PLAN
ADOPTED BY SHUFFLE MASTER, INC.
On June 26, 1998, the Board of Directors of Shuffle Master, Inc. (the "Company")
declared a dividend of one Right (a "Right") for each outstanding common share,
$.01 par value (the "Common Shares"), of the Company. The dividend is payable on
July 10, 1998 (the "Record Date") to the shareholders of record on that date.
Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Class A Preferred Stock, $.01 par value (the
"Preferred Shares"), of the Company at a price of $__________ per one
one-hundredth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and Norwest Bank
Minnesota, N.A., as Rights Agent (the "Rights Agent").
Until the earlier of (i) the close of business on the tenth day after the first
public announcement that a person or group of affiliated or associated persons
have acquired beneficial ownership of 20% or more of the outstanding Common
Shares (an "Acquiring Person"), or (ii) the close of business on the tenth 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) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership of such person or group of 20% or more of such outstanding Common
Shares (the earlier of such dates being called the "Distribution Date"), the
Rights will be evidenced by the Common Share certificates, will be transferable
only by the transfer of the Common Shares associated with such Rights and any
transfer of the Common Shares (including a transfer to the Company) will
constitute a transfer of the Rights. As described below, after a person or group
becomes an Acquiring Person, the Rights may not be redeemed and may only be
amended in limited circumstances.
Until the Distribution Date (or earlier redemption or expiration of the Rights),
new Common Share certificates issued after the Record Date, upon transfer or new
issuance of Common Shares, will contain a legend incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached, will also constitute the transfer
of the Rights associated with the Common Shares represented by such certificate.
As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Rights Certificates") will be mailed to holders of
record of the Common Shares as of the close of business on the Distribution Date
and such separate Rights Certificates alone will evidence the Rights.
The Rights are not exercisable until a person, entity or group becomes an
Acquiring Person. The Rights will expire on June 26, 2008 (the "Final Expiration
Date"), unless the Final Expiration Date is extended or unless the Rights are
redeemed earlier by the Company, in each case, as described below.
If a person or group of affiliated or associated persons becomes an "Acquiring
Person" by obtaining beneficial ownership of more than 20% of the then
outstanding Common Shares, each holder of a Right (other than those described in
the next sentence) will thereafter have the right to receive, upon exercise,
Common Shares (or, in certain circumstances, cash, property or other securities
of the Company) having a value equal to two times the Purchase Price of the
Right. All Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person will be void.
At any time after the first date of public announcement by the Company or an
Acquiring Person that an Acquiring Person has become such (a "Shares Acquisition
Date"), if (i) the Company is the surviving corporation in a merger with any
other company or entity, (ii) the Company is acquired in a merger or other
business combination transaction, (iii) 50% or more of the Company's
consolidated assets or earning power are sold, or (iv) an Acquiring Person
engages in certain "self-dealing" transactions with the Company, each holder of
a Right an outstanding (other than those whose rights have become void) will
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price of the Right, that number of shares of common stock of
the surviving or acquiring company which at the time of such transaction will
have a market value of two times the exercise price of such Right.
At any time after a person or group becomes an Acquiring Person and prior to the
acquisition by such person or group of 50% or more of the outstanding Common
Shares, the Board of Directors of the Company may exchange the Rights (other
than Rights owned by such person or group which have become void), in whole or
in part, without any additional payment, for Common Shares at an exchange ratio
of one Common Share (or of a share of a class or series of the Company's
preferred shares having equivalent rights, preferences and privileges), per
Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be required
until cumulative adjustments require an adjustment of at least 1% in such
Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depository
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to the Shares Acquisition Date, the Board of Directors of the
Company may redeem all, but not less than all, of the Rights at a price of $.01
per Right (the "Redemption Price"). Under certain circumstances set forth in the
Rights Agreement, the decision to redeem shall require the concurrence of a
majority of the Continuing Directors. The redemption of the Rights may be made
effective at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
The term "Continuing Director" means any member of the Board of Directors of the
Company who was a member of the Board prior to the date of the Rights Agreement,
and any person who
is subsequently elected to the Board if such person is recommended or approved
by a majority of the Continuing Directors, but shall not include an Acquiring
Person, or an affiliate or associate of an Acquiring Person, or any
representative of the foregoing entities.
Any of the provisions of the Rights may be amended by the Board of Directors of
the Company prior to the Shares Acquisition Date. After the Shares Acquisition
Date, the provisions of the Rights Agreement may be amended by the Board to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person) which amendment shall require
the concurrence of a majority of the Continuing Directors.
A copy of the Rights Agreement has been filed with the Securities and Exchange
Commission as an Exhibit to a Registration Statement on Form 8-A dated
_________________, 1998. A copy of the Rights Agreement is available free of
charge from the Company. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to the Rights
Agreement, which is hereby incorporated herein by reference.
