EXHIBIT 1
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ETEC SYSTEMS, INC.
and
BANK OF BOSTON
Rights Agent
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Rights Agreement
Dated as of January 15, 1997
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TABLE OF CONTENTS
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Page
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1. Certain Definitions.................................................... 1
2. Appointment of Rights Agent............................................ 4
3. Issue of Rights Certificates........................................... 4
4. Form of Rights Certificates............................................ 6
5. Countersignature and Registration...................................... 7
6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates............... 8
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.......... 8
8. Cancellation and Destruction of Rights Certificates.................... 10
9. Reservation and Availability of Preferred Stock........................ 11
10. Preferred Stock Record Date............................................ 12
11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights....................................................... 12
12. Certificate of Adjusted Purchase Price or Number of Shares............. 22
13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.......................................................... 22
14. Additional Covenants................................................... 25
15. Fractional Rights and Fractional Shares................................ 25
16. Rights of Action....................................................... 27
17. Agreement of Rights Holders............................................ 27
18. Rights Certificate Holder Not Deemed a Stockholder..................... 28
19. Concerning the Rights Agent............................................ 28
20. Merger or Consolidation or Change of Name of Rights
Agent.................................................................. 29
21. Duties of Rights Agent................................................. 29
22. Change of Rights Agent................................................. 32
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23. Issuance of New Rights Certificates.................................... 33
24. Redemption, Termination and Exchange................................... 34
25. Notice of Certain Events............................................... 37
26. Notices................................................................ 38
27. Supplements and Amendments............................................. 38
28. Determination and Actions by the Board of Directors,
etc.................................................................... 39
29. Successors............................................................. 39
30. Benefits of This Agreement............................................. 39
31. Severability........................................................... 40
32. Governing Law.......................................................... 40
33. Counterparts........................................................... 40
34. Descriptive Headings................................................... 40
Exhibit A -- Certificate of Designation,
Preferences and Rights of Series A
Participating Preferred Stock....................... A-1
Exhibit B -- Form of Rights Certificate.......................... B-1
Exhibit C -- Form of Summary of Rights........................... C-1
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RIGHTS AGREEMENT
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THIS AGREEMENT is dated as of January 15, 1997 between ETEC SYSTEMS, INC.,
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a Nevada corporation (the "Company"), and BANK OF BOSTON (the "Rights Agent").
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W I T N E S S E T H:
WHEREAS, on January 15, 1997, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right (as hereinafter
defined) for each share of Common Stock, $.01 par value per share, of the
Company (the "Common Stock") outstanding as of the close of business on January
31, 1997 (the "Record Date"), and contemplates the issuance of one Right
(subject to adjustment as provided herein) for each share of Common Stock of the
Company issued between the Record Date and the earlier of the Distribution Date
and the Expiration Date, as such terms are hereinafter defined (with Rights also
to be issued in connection with certain issuances of Common Stock after the
Distribution Date, as provided more fully herein), each Right representing the
right to purchase one one-hundredth of a share of Series A Participating
Preferred Stock of the Company having the rights, powers and preferences set
forth in the form of Certificate of Designation, Preferences and Rights attached
hereto as Exhibit A, upon the terms and subject to the conditions hereinafter
set forth (the "Rights"):
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto hereby agree as follows:
1. Certain Definitions. For purposes of this Agreement, the following
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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 (as such
term is hereinafter defined) and Associates (as such term is hereinafter
defined) of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of securities representing 15% or more of the shares
of Common Stock then outstanding or who was such a Beneficial Owner at any
time after the date hereof, whether or not such Person continues to be the
Beneficial Owner of securities representing 15% or more of the outstanding
shares of Common Stock. Notwithstanding the foregoing, (i) in no event
shall a Person who or which, together with all Affiliates and Associates of
such Person, is the Beneficial Owner of less than 15% of the Company's
outstanding shares of Common Stock become an Acquiring Person solely as a
result of a reduction of the number of shares of outstanding Common Stock,
including repurchases of outstanding
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shares of Common Stock by the Company, which reduction increases the
percentage of outstanding shares of Common Stock beneficially owned by such
Person (provided that any subsequent increase in the amount of Common Stock
beneficially owned by such Person, together with all Affiliates and
Associates of such Person, without the prior approval of the Company shall
cause such Person to be an Acquiring Person); (ii) the term Acquiring
Person shall not mean (A) the Company, (B) any subsidiary of the Company
(as such term is hereinafter defined), (C) any employee benefit plan of the
Company or any of its subsidiaries, or (D) any entity holding securities of
the Company organized, appointed or established by the Company or any of
its subsidiaries for or pursuant to the terms of any such plan; and (iii)
no Person shall be deemed to be an Acquiring Person if (A) within five
business days after such Person would otherwise have become an Acquiring
Person (but for the operation of this clause (iii)), such Person notifies
the Board of Directors that such Person did so inadvertently and within two
business days after such notification, such Person is the Beneficial Owner
of less than 15% of the outstanding shares of Common Stock or (B) by reason
of such Person's Beneficial Ownership of 15% or more of the outstanding
shares of Common Stock on the date hereof if prior to the Record Date, such
Person notifies the Board of Directors that such Person is no longer the
Beneficial Owner of 15% or more of the then outstanding shares of Common
Stock.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (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:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right or obligation to acquire (whether such
right or obligation is exercisable or effective immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights,
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rights (other than the Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," securities tendered pursuant to a
tender or exchange offer made by such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted
for payment or exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," any security under this clause
(B) if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy given in response to
a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of the Exchange
Act and (2) is not also then reportable by such Person on Schedule 13D
under the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (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 or not in writing)
(other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), or with which such Person or any of such Person's
Affiliates have otherwise formed a group, for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as
described in clause (B) of subparagraph (ii) of this paragraph (c)) or
disposing of any securities of the Company.
(d) "Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of California are
authorized or obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5 P.M., San
Francisco time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5 P.M., San Francisco time, on the next
succeeding Business Day.
(f) "Common Stock" shall mean the Common Stock, $.01 par value, of the
Company, except that "Common Stock" when used with reference to stock
issued by any
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Person other than the Company shall mean the capital stock with the
greatest voting power, or the equity securities or other equity interest
having power to control or direct the management, of such Person or, if
such Person is a subsidiary of another Person, of the Person which
ultimately controls such first-mentioned Person and which has issued and
outstanding such capital stock, equity securities or equity interests.
(g) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company, joint venture, association, trust
or other entity.
(h) "Preferred Stock" shall mean the Series A Participating Preferred
Stock, $.01 par value, of the Company.
(i) "Stock Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person
has become such.
(j) A "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 voting interests is owned, directly or indirectly, by such
Person, or which is otherwise controlled by such Person.
(k) "Voting power" shall mean the voting power of all securities of
the Company then outstanding and generally entitled to vote for the
election of directors of the Company.
2. Appointment of Rights Agent. The Company hereby appoints the Rights
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Agent to act as agent for the Company and the holders of the Rights (who, in
accordance with Section 3 hereof, shall prior to the Distribution Date also be
the holders of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such Co-Rights Agents as it may deem necessary or
desirable. In the event the Company appoints one or more Co-Rights Agents, the
respective duties of the Rights Agents and any Co-Rights Agents shall be as the
Company shall determine.
3. Issue of Rights Certificates.
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(a) Until the earlier of (i) the Stock Acquisition Date or (ii) the tenth
day (or such later date as may be determined by action of the Board of
Directors) after the date of the commencement of, or first public announcement
of the intent of any Person (other than the Company, any subsidiary of the
Company,
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or any employee benefit plan of the Company or any of its subsidiaries) to
commence (which intention to commence remains in effect for five Business Days
after such announcement), a tender or exchange offer which would result in such
Person becoming an Acquiring Person (including any such date which is on or
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 shall be evidenced (subject to the provisions of paragraph (b) of
this Section 3) by the certificates for Common Stock registered in the names of
the holders of the Common Stock (which certificates for Common Stock shall be
deemed also to be certificates for Rights) and not by separate certificates, and
(y) the Rights (and the right to receive certificates therefor) shall be
transferable only in connection with the transfer of the underlying shares of
Common Stock. As soon as practicable after the Distribution Date, the Rights
Agent shall send by first-class, insured, postage prepaid mail, to each record
holder of the Common Stock as of the close of business on the Distribution Date,
at the address of such holder shown on the records of the Company, a certificate
for Rights, in substantially the form of Exhibit B hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so held. As
of and after the Distribution Date, the Rights shall be evidenced solely by such
Rights Certificates.
As soon as practicable following the Record Date, the Company shall send a
copy of a Summary of Rights, in substantially the form attached hereto as
Exhibit C (the "Summary of Rights"), by first-class, postage prepaid mail, to
each record holder of the Common Stock as of the close of business on the Record
Date, at the address of such holder shown on the records of the Company. With
respect to certificates for the Common Stock outstanding as of the Record Date,
until the Distribution Date (or earlier redemption, expiration or termination of
the Rights), the Rights shall be evidenced by such certificates for the Common
Stock together with the Summary of Rights and the registered holders of the
Common Stock shall also be the registered holders of the associated Rights.
Until the Distribution Date (or earlier redemption, expiration or termination
of the Rights), the surrender for transfer of any of the certificates for the
Common Stock outstanding on the Record Date, even without a copy of the Summary
of Rights attached thereto, shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
(b) Certificates issued for Common Stock (including, without limitation,
certificates issued upon transfer or exchange of Common Stock) after the Record
Date, but prior to the earlier of the Distribution Date or the Expiration Date
(as such term is hereinafter defined), shall be deemed also to be certificates
for Rights, and shall have impressed, printed, stamped, written or otherwise
affixed onto them the following legend:
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This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between ETEC SYSTEMS,
INC. (the "Company") and BANK OF BOSTON (the "Rights Agent") dated as of
January 15, 1997 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal offices of the Company. Under certain circumstances, as set forth
in the Rights Agreement, such Rights may be redeemed, may expire, or may be
evidenced by separate Certificates and will no longer be evidenced by this
Certificate. The Company will mail to the holder of this certificate a copy
of the Rights Agreement without charge within five days after receipt of a
written request therefor. Under certain circumstances, Rights issued to
Acquiring Persons (as defined in the Rights Agreement) or certain related
Persons and any subsequent holder of such Rights may become null and void .
With respect to such certificates containing the foregoing legend, until the
Distribution Date (or earlier redemption, expiration or termination of the
Rights), the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any of such certificates shall also constitute the transfer of
the Rights associated with the Common Stock represented by such certificate.
4. Form of Rights Certificates.
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(a) The Rights Certificates (and the forms of election to purchase shares
and of assignment and certificates to be printed on the reverse thereof) shall
each be substantially in the form set forth in Exhibit B hereto and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 11 and Section 23 hereof, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date, and on their face
shall entitle the holders thereof to purchase such number of one one-hundredths
of a share of Preferred Stock as shall be set forth therein at the price per one
one-hundredth of a share set forth therein (the "Purchase Price"), but the
number of such shares and the Purchase Price shall be subject to adjustment as
provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) hereof that
represents Rights beneficially owned by an Acquiring Person or any Associate or
Affiliate thereof and any Rights
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Certificate issued at any time upon the transfer of any Rights to such an
Acquiring Person or any Associate or Affiliate thereof or to any nominee of such
Acquiring Person, Associate or Affiliate, and any Rights Certificate issued
pursuant to Section 6 or Section 11 upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this sentence, shall
contain the following legend:
The Rights represented by this Rights Certificate were issued to a Person
who was an Acquiring Person or an Affiliate or an Associate of an Acquiring
Person, as such terms are defined in the Rights Agreement. This Rights
Certificate and the Rights represented hereby may become void under the
circumstances specified in Section 7(e) of the Rights Agreement.
The provisions of Section 7(e) of this Rights Agreement shall be operative
whether or not the foregoing legend is contained on any such Rights Certificate.
5. Countersignature and Registration. The Rights Certificates shall be
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executed on behalf of the Company by its Chairman of the Board, any Vice
Chairman of the Board, its President or any Vice President, either manually or
by facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Rights
Certificates shall be countersigned by the Rights Agent, either manually or by
facsimile signature, and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed 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 Certificates 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 office designated for such purpose, books for registration and
transfer of the Rights Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights Certificates and
the date of each of the Rights Certificates.
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6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
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Mutilated, Destroyed, Lost or Stolen Rights Certificates. Subject to the
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provisions of Section 15 hereof, at any time after the close of business on the
Distribution Date, and at or prior to the close of business on the Expiration
Date, any Rights Certificate or Certificates 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 shares of Preferred
Stock as the Rights Certificate or Rights Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Rights Certificate or
Rights Certificates to be transferred, split up, combined or exchanged at the
principal office of the Rights Agent. Thereupon the Rights Agent shall
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. 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.
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 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, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and 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 shall execute and deliver a new Rights Certificate of
like tenor to the Rights Agent for countersignature and delivery to the
registered owner in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
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(a) The registered holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or in part at
any time after the Distribution Date upon presentation of the Rights
Certificate, with the appropriate 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 for each one one-
hundredth of a share of Preferred Stock (or such other number of shares or other
securities) as to which the Rights are exercised, at or prior to the earliest
of (i) the close of business on ten years after Record Date (the "Final
Expiration Date"), (ii) the time at which the
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Rights are redeemed as provided in Section 24 hereof, (iii) the consummation of
a transaction contemplated by Section 13(d) hereof or (iv) the time at which the
Rights are exchanged as provided in Section 24(c) hereof (such earliest time
being herein referred to as the "Expiration Date"). Notwithstanding any other
provision of this Agreement, any Person who prior to the Distribution Date
becomes a record holder of shares of Common Stock may exercise all of the rights
of a registered holder of a Rights Certificate with respect to the Rights
associated with such shares of Common Stock in accordance with and subject to
the provisions of this Agreement, including the provisions of Section 7(e)
hereof, as of the date such Person becomes a record holder of shares of Common
Stock.
(b) The Purchase Price for each one one-hundredth share of Preferred Stock
pursuant to the exercise of a Right shall initially be $200, 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 appropriate form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares (or other securities or property)
to be purchased and an amount equal to any applicable transfer tax (as
determined by the Rights Agent) in cash, or by certified check or bank draft
payable to the order of the Company, the Rights Agent shall, subject to Section
21(k), thereupon promptly (i)(A) requisition from any transfer agent of the
shares of Preferred Stock (or make available, if the Rights Agent is the
transfer agent) certificates for the number of shares of Preferred Stock to be
purchased, and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company, in its sole discretion,
shall have elected to deposit the shares of Preferred Stock issuable upon
exercise of the Rights hereunder into a depositary, requisition from the
depositary agent depositary receipts representing such number of one one-
hundredths of a share of Preferred Stock as are to be purchased (in which case
certificates for the shares of Preferred Stock represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Company shall direct the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash, if any, to be paid
in lieu of issuance of fractional shares in accordance with Section 15, (iii)
promptly after receipt of such certificates or depositary receipts, cause the
same to be delivered to or upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be designated by
such holder and (iv) when appropriate, after receipt promptly deliver such cash
to or upon the order of the registered holder of such Rights Certificate. In
the event that the Company is obligated to issue other securities of the
Company, and/or distribute other
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property pursuant to Section 11(a), the Company shall make all arrangements
necessary so that such other securities and/or property are available for
distribution by the Rights Agent, if and when appropriate. In addition, in the
case of an exercise of the Rights by a holder pursuant to Section 11(a)(ii), the
Rights Agent shall return such Rights Certificate to the registered holder
thereof after imprinting, stamping or otherwise indicating thereon that the
rights represented by such Rights Certificate no longer include the rights
provided by Section 11(a)(ii) of the Rights Agreement and if less than all the
Rights represented by such Rights Certificate were so exercised, the Rights
Agent shall indicate on the Rights Certificate the number of Rights represented
thereby which continue to include the rights provided by Section 11(a)(ii).
(d) In case the registered holder of any Rights Certificate shall exercise
(except pursuant to Section 11(a)(ii)) less than all the Rights evidenced
thereby, a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and delivered to the
registered holder of such Rights Certificate or to his duly authorized
assigns, subject to the provisions of Section 15 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, if there
occurs any of the events set forth in Section 11(a)(ii) or Section 13(a) then
any Rights that are or were on or after the Distribution Date beneficially owned
by an Acquiring Person or any Associate or Affiliate of an Acquiring Person
shall become null and void, without any further action, and any holder of such
Rights shall thereafter have no rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise.
(f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless the certificate contained in the appropriate
form of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise shall have been properly completed and
duly executed by the registered holder thereof and the Company shall have been
provided with such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
8. Cancellation and Destruction of Rights Certificates. All Rights
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Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or 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
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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. Reservation and Availability of Preferred Stock. The Company
-----------------------------------------------
covenants and agrees that it shall cause to be reserved and kept available out
of its authorized and unissued shares of Preferred Stock, or any authorized and
issued shares of Preferred Stock held in its treasury, the number of shares of
Preferred Stock that will be sufficient to permit the exercise in full of all
outstanding Rights and, after the occurrence of an event specified in Sections
11 and 13, shall so reserve and keep available a sufficient number of shares of
Common Stock (and/or other securities) which may be required to permit the
exercise in full of the Rights pursuant to this Agreement.
So long as the shares of Preferred Stock (and, after the occurrence of an
event specified in Section 11 and 13, any other securities) issuable upon the
exercise of the Rights may be listed on any national securities exchange or
national quotation system, the Company shall use its best efforts to cause, from
and after such time as the Rights become exercisable, all shares (or other
securities) reserved for such issuance to be listed on such exchange or system
upon official notice of issuance upon such exercise.
The Company covenants and agrees that it shall take all such action as may
be necessary to ensure that all shares of Preferred Stock and/or other
securities delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares or other securities (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable shares or securities.
The Company further covenants and agrees that it shall 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 certificates for shares of Preferred Stock and/or other securities 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 in respect of the issuance or
delivery of the shares of Preferred Stock and/or other securities in a name
other than that of, the registered holder of the Rights Certificates evidencing
Rights surrendered for exercise or to issue or deliver any certificates for
shares of Preferred Stock, and/or other securities in a name other than
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that of the registered holder upon the exercise of any Rights until 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 satisfaction that no such tax is due.
The Company shall use its best efforts to (i) file, if required by law, as
soon as practicable following the Distribution Date, a registration statement
under the Securities Act of 1933, as amended (the "Act"), with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, (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
and the rules and regulations thereunder) until the Expiration Date (unless and
until the Company shall have received an opinion of counsel to the effect that
the maintenance of such registration statement in effect is no longer
necessary). The Company will also take such action as may be appropriate under
the blue sky laws of the various states.
10. Preferred Stock Record Date. Each Person in whose name any
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certificate for shares of Preferred Stock (or other securities) is issued upon
the exercise of Rights shall for all purposes be deemed to have become the
holder of record of the shares of Preferred Stock (or other securities)
represented thereby on, and such certificate shall be dated, the date upon which
the Rights Certificate evidencing such Rights was duly presented and payment of
the Purchase Price (and any applicable transfer taxes) was made; provided,
however, that if the date of such presentation and payment is a date upon which
the Preferred Stock (or other securities) 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 Stock (or other securities) transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the holder of
a Rights Certificate, as such, shall not be entitled to any rights of a
stockholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
--------------------------------------------------------------------
Rights. The Purchase Price, the number of shares covered by each Right and the
------
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a
-12-
dividend on the Preferred Stock payable in shares of Preferred Stock, (B)
subdivide the outstanding Preferred Stock, (C) combine the outstanding
Preferred Stock into a smaller number of shares or (D) issue any shares of
its capital stock in a reclassification of the Preferred Stock (including
any such reclassification in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and in Section 7(e), 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 and other securities which, if such Right had been
exercised immediately prior to such date and at a time when the Preferred
Stock 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. If an event occurs which
would require an 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).
(ii) Subject to Section 24(c) of this Agreement, in the event any
Person, alone or together with its Affiliates and Associates, shall become
an Acquiring Person (except pursuant to a tender or exchange offer for all
outstanding shares of Common Stock at a price and on terms determined by at
least a majority of the members of the Board of Directors who are not
officers of the Company and are not Acquiring Persons or Affiliates or
Associates thereof to be in the best interests of the Company and its
stockholders (other than the Person or an Affiliate or Associate thereof on
whose behalf the offer is being made) (a "Permitted Offer")), then,
promptly following the first occurrence of an event described in this
Section 11(a)(ii), proper provision shall be made so that each holder of a
Right, except as provided in Section 7(e) hereof, shall, for a period of 60
days after the later of the occurrence of any such event and the effective
date of an appropriate registration statement pursuant to Section 9, have a
right to receive, upon exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, in lieu of shares of
Preferred Stock, such number of shares of Common Stock of the Company as
shall equal the result
-13-
obtained by (x) multiplying the then current Purchase Price by the then
number of one one-hundredths of a share of Preferred Stock for which a
Right is then exercisable and (y) dividing that product by 50% of the
current market price per one share of Common Stock (determined pursuant to
Section 11(d)) on the date of the occurrence of the event set forth in this
subparagraph (ii) (such number of shares being referred to as the "number
of Adjustment Shares"); provided, however, that if the transaction that
would otherwise give rise to the foregoing adjustment is also subject to
the provisions of Section 13 hereof, then only the provisions of Section 13
hereof shall apply and no adjustment shall be made pursuant to this Section
11(a)(ii); and provided, further, that such 60-day period shall not be
deemed to run during any period in which the exercise of the Rights or the
fulfillment by the Company or the Rights Agent of its or their obligations
under their Agreement shall be enjoined or otherwise prohibited in full or
in part by any court or other governmental agency or body.
(iii) In lieu of issuing shares of Common Stock in accordance with
Section 11(a)(ii) hereof, the Company may, if a majority of the Board of
Directors then in office determines that such action is necessary or
appropriate and not contrary to the interests of holders of Rights, elect
to (and, in the event that the Board of Directors has not exercised the
exchange right contained in Section 24(c) hereof and there are not
sufficient treasury shares and authorized but unissued shares of Common
Stock 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,
shares of Common Stock, other securities or any combination thereof having
an aggregate value equal to the value of the shares of Common Stock which
otherwise would have been issuable pursuant to Section 11(a)(ii), which
aggregate value shall be determined by a nationally recognized investment
banking firm selected by a majority of the Board of Directors. For
purposes of the preceding sentence, the value of the Common Stock shall be
determined pursuant to Section 11(d) hereof and the value of any preferred
stock or preference stock which a majority of the Board of Directors
determines to be a "common stock equivalent" shall be deemed to have the
same value as the Common Stock. 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
-14-
occurrence of the event described in Section 11(a)(ii) hereof, a majority
of the Board of Directors then in office 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
such directors have not determined whether to exercise their rights 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) If the Company shall fix a record date for the issuance of rights,
options or warrants to all holders of Preferred Stock entitling them (for a
period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Stock (or shares having the same or
more favorable rights, privileges and preferences as the Preferred Stock
("equivalent preferred stock")) or securities convertible into Preferred
Stock or equivalent preferred stock at a price per share of Preferred Stock
or per share of equivalent preferred stock (or having a conversion price
per share, if a security convertible into Preferred Stock or equivalent
preferred stock) less than the current market price (as defined in Section
11(d)) per share of Preferred Stock on such record date, the Purchase Price
to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of shares of
Preferred Stock which the aggregate offering price of the total number of
shares of Preferred Stock and/or equivalent preferred stock to be offered
(and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price
and the denominator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of additional shares
of Preferred Stock and/or equivalent preferred stock to be offered for
subscription or purchase (or into which the convertible securities so to
be offered are initially convertible). In case such subscription price may
be paid in a consideration part or all of which shall be in a form other
than cash, the value of such consideration shall be determined reasonably
and with good faith to the holders of Rights by the Board of Directors of
the Company, whose determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Rights Agent and
conclusive for all purposes. Shares of Preferred Stock
-15-
owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall
be made successively whenever such a record date is fixed; and in the
event that such rights or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price which would then be in effect if
such record date had not been fixed.
(c) If the Company shall fix a record date for the making of a
distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness, cash
(other than a regular quarterly cash dividend out of the earnings or
retained earnings of the Company), assets (other than a dividend payable in
Preferred Stock, but including any dividend payable in stock other than
Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b)), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator
of which shall be the current market price (as defined in Section 11(d))
per share of Preferred Stock on such record date, less the fair market
value (as determined reasonably and with good faith to the holders of
Rights by the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and conclusive for all purposes) of the portion
of the cash, assets or evidences of indebtedness so to be distributed or of
such subscription rights or warrants distributable in respect of one share
of Preferred Stock and the denominator of which shall be the current market
price (as defined in Section 11(d)) per share of the Preferred Stock. Such
adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would be in
effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than in
Section 11(a)(iii), the "current market price" per share of Common Stock on
any date shall be deemed to be the average of the daily closing prices per
share of such Common Stock for the 30 consecutive Trading Days (as such
term is hereinafter defined) immediately prior to such date; provided,
however, that in the event that the current per share market price of the
Common Stock is deter-
-16-
mined during a period following the announcement by the issuer of such
Common Stock of (A) a dividend or distribution on such Common Stock payable
in shares of such Common Stock or securities convertible into shares of
such Common Stock or (B) any subdivision, combination or reclassification
of such Common Stock, and prior to the expiration of 30 Trading Days after
the ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification, then, and in each
such case, the "current market price" shall be properly adjusted to take
into account ex-dividend trading. The closing price for each day shall be
the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the shares of Common Stock are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which
the shares of Common Stock are listed or admitted to trading or, if the
shares of Common Stock are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by the Nasdaq National Market or such other system then
in use, or, if on any such date the shares of Common Stock are not quoted
by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Common
Stock selected by the Board of Directors of the Company. If on any such
date no market maker is making a market in the Common Stock, the fair value
of such shares on such date as determined reasonably and with good faith
by the Board of Directors of the Company shall be used and shall be binding
on the Rights Agent. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the shares of Common Stock
are listed or admitted to trading is open for the transaction of business
or, if the shares of Common Stock are not listed or admitted to trading on
any national securities exchange, a Business Day. If the Common Stock is
not publicly held or not so listed or traded, "current market price" per
share shall mean the fair value per share determined reasonably and with
good faith to the holders of Rights by the Board of Directors of the
Company, whose determination shall
-17-
be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent.
(ii) For the purpose of any computation hereunder, the "current
market price" per share (or one one-hundredth of a share) of Preferred
Stock shall be determined in the same manner as set forth above for the
Common Stock in Section 11(d) (other than the last sentence thereof). If
the current market price per share (or one one-hundredth of a share) of
Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner
described in Section 11(d)(i), the "current market price" per share of
Preferred Stock shall be conclusively deemed to be an amount equal to 100
(as such number may be appropriately adjusted for such events as stock
splits, stock dividends and recapitalization with respect to the Common
Stock occurring after the date of this Agreement) multiplied by the
current market price per share of the Common Stock and the "current market
price" per one one-hundredth of a share of Preferred Stock shall be equal
to the current market price per share of the Common Stock (as appropriately
adjusted). If neither the Common Stock nor the Preferred Stock is publicly
held or so listed or traded, "current market price" per share shall mean
the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all
purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require
an increase or decrease of at least 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 thousandth of a share of Common
Stock or other share or one-hundred thousandth of a share of Preferred
Stock, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no
later than the earlier of (i) three years from the date of the transaction
which mandates such adjustment or (ii) the Expiration Date.
(f) If as a result of any provision of Section 11(a), the holder of
any Right thereafter exercised shall become entitled to receive any shares
of capital stock of the Company other than Preferred Stock,
-18-
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 shares contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10, 13 and 15 hereof with respect to the
Preferred Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Preferred
Stock purchasable from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of
the calculations made in Section 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number
of one one-hundredths of a share of Preferred Stock (calculated to the
nearest one-hundred thousandth) obtained by (i) multiplying (x) the number
of one one-hundredths of a share of Preferred Stock covered by a Right
immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii)
dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of shares of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment
in the number of Rights shall be exercisable for the number of one one-
hundredths of a share of Preferred Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to
such adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one hundred-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating
-19-
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 ten 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 15 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 may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the names of the
holders of record of 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 shares of Preferred Stock issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per share and the number of shares
which were expressed in the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the shares of
Preferred Stock, Common Stock or other securities 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 shares of Preferred
Stock, Common Stock or other securities at such adjusted Purchase Price.
If upon any exercise of the Rights, a holder is to receive a combination of
Common Stock and common stock equivalents, a portion of the consideration
paid upon such exercise, equal to at least the then par value of a share of
Common Stock of the Company, shall be
-20-
allocated as the payment for each share of Common Stock of the Company so
received.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for
a specified event, the Company may elect to defer until the occurrence of
such event the issuing to the holder of any Right exercised after such
record date the shares of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and
above the shares of Preferred Stock and other capital stock or securities
of the Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due xxxx or other appropriate
instrument evidencing such holder's right to receive such additional shares
upon the occurrence of the event requiring such adjustment.
(m) Anything to the contrary in this Section 11 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
Stock, issuance wholly for cash of any shares of Preferred Stock at less
than the current market price, issuance wholly for cash of shares of
Preferred Stock or securities which by their terms are convertible into or
exchangeable for shares of Preferred Stock, stock dividends or issuance of
rights, options or warrants referred to hereinabove in this Section 11,
hereafter made by the Company to holders of its Preferred Stock shall not
be taxable to such stockholders.
(n) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the date of this Agreement
and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, (iii) combine the outstanding
Common Stock into a smaller number of shares, or (iv) issue any shares of
its capital stock in a reclassification of the outstanding Common Stock,
the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but prior to the
Distribution Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any
such event shall equal the result obtained by multiplying
-21-
the number of Rights associated with each share of Common Stock immediately
prior to such event by a fraction the numerator of which shall be the total
number of shares of Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the total
number of shares of Common Stock outstanding immediately following the
occurrence of such event.
(o) The exercise of Rights under Section 11(a)(ii) shall only result
in the loss of rights under Section 11(a)(ii) to the extent so exercised
and shall not otherwise affect the rights represented by the Rights under
this Rights Agreement, including the rights represented by Section 13.
12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever
----------------------------------------------------------
an adjustment is made as provided in Sections 11 and 13 hereof, the Company
shall (a) promptly prepare a certificate setting forth such adjustment and a
brief statement of the facts accounting for such adjustment, (b) promptly file
with the Rights Agent and with each transfer agent for the Preferred Stock and
the Common Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Rights Certificate in accordance with Section 26 hereof.
The Rights Agent shall be fully protected in relying on any such certificate and
on any adjustment therein contained and shall not be deemed to have knowledge of
any adjustment unless and until it shall have received such certificate.
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.
--------------------------------------------------------------------
(a) In the event that, following the Stock Acquisition Date, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into, any
other Person, (y) 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 (other than, in the case of either transaction
described in (x) or (y), a merger or consolidation which would result in all of
the voting power represented by the securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into securities of the surviving entity) all
of the voting power represented by the securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation and
the holders of such securities not having changed as a result of such merger or
consolidation), or (z) 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 more than 50%
of the assets or earning power of the Company and its subsidiaries (taken as a
whole) to any other Person, then, and in each such case, proper provision shall
be
-22-
made so that (i) following the Distribution Date, each holder of a Right (other
than as provided in Section 7(e) hereof) shall have the right to receive, upon
the exercise thereof at the then current Purchase Price in accordance with the
terms of this Agreement, such number of shares of freely tradable Common Stock
of the Principal Party (as hereinafter defined), free and clear of liens, rights
of call or first refusal, encumbrances or other adverse claims, as shall be
equal to the result obtained by (x) multiplying the then current Purchase Price
by the number of one one-hundredths of a share of Preferred Stock for which a
Right is then exercisable (without taking into account any adjustment previously
made pursuant to Section 11(a)(ii) hereof) and (y) dividing that product by 50%
of the current market price per share of the Common Stock of such Principal
Party (determined pursuant to Section 11(d) hereof) on the date of consummation
of such consolidation, merger, sale or transfer; (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, it being specifically intended that the
provisions of Section 11 hereof shall apply 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 shares of its Common Stock 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 its shares of Common Stock thereafter
deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in (x) or (y) of the
first sentence of this Section 13, the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted
in such merger or consolidation, and if no securities are so issued, the
Person that is the other party to the merger or consolidation (including,
if applicable, the Company, if it is the surviving corporation); and
(ii) in the case of any transaction described in (z) of the first
sentence in this Section 13, the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect
-23-
subsidiary or Affiliate of another Person, "Principal Party" shall refer to
such other Person; (2) in case such Person is a subsidiary, directly or
indirectly, or Affiliate of more than one Person, the Common Stock 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 Stock 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 a sufficient number of
authorized shares of its Common Stock that have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and each Principal Party and
each other Person who may become a Principal Party as a result of such
consolidation, merger, sale or transfer 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 of
assets mentioned in paragraph (a) of this Section 13, the Principal Party at
its own expense shall:
(i) 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, will use its best efforts to cause such
registration statement to become effective as soon as practicable after
such filing and will use its best efforts to cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date;
(ii) use its best efforts to qualify or register the Rights and the
securities purchasable upon exercise of the Rights under the blue sky laws
of such jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party and
-24-
each of its Affiliates which comply in all material respects with the
requirements for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. The rights under this Section 13
shall be in addition to the rights to exercise Rights and adjustments under
Section 11(a)(ii) and shall survive any exercise thereunder.
(d) Notwithstanding anything in this Agreement to the contrary, Section 13
shall not be applicable to a transaction described in subparagraphs (x) and (y)
of Section 13(a) if (i) such transaction is consummated with a Person or Persons
who acquired shares of Common Stock pursuant to a Permitted Offer (or a wholly
owned subsidiary of any such Person or Persons), (ii) the price per share of
Common Stock offered in such transaction is not less than the price per share
of Common Stock paid to all holders of Common Stock whose shares were purchased
pursuant to such Permitted Offer and (iii) the form of consideration being
offered to the remaining holders of Common Stock pursuant to such transaction is
the same as the form of consideration paid pursuant to such Permitted Offer.
Upon consummation of any such transaction contemplated by this subsection (d),
all Rights hereunder shall expire.
14. Additional Covenants.
--------------------
(a) The Company covenants and agrees that after the Stock Acquisition Date
it shall not (i) consolidate with, (ii) merge with or into, or (iii) sell or
transfer to any other Person, in one or more transactions, assets or earning
power aggregating more than 50% of the assets or earning power of the Company
and its subsidiaries taken as a whole, if at the time of or after such
consolidation, merger or sale there are any charter or by-law provisions or any
rights, warrants or other instruments outstanding or any other action taken
which would diminish or otherwise eliminate the benefits intended to be afforded
by the Rights. The Company shall not consummate any such consolidation, merger
or sale unless prior thereto the Company and such other Person shall have
executed and delivered to the Rights Agent a supplemental agreement evidencing
compliance with this subsection.
(b) The Company covenants and agrees that, after the Stock Acquisition
Date, it will not, except as permitted by Section 24 hereof, take any action the
purpose or effect of which is to diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.
15. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights, except
prior to the Distribution Date as provided in
-25-
Section 11(n), 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 15(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 of the Rights for any day shall be the last sale price, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the Nasdaq National Market 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 reasonably and with good faith to the holders of Rights by the
Board of Directors of the Company shall be used and shall be binding on the
Rights Agent.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one one-
hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in integral
multiples of one one-hundredth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the shares of Preferred Stock represented by
such depositary receipts. In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-hundredth of a share of Preferred Stock,
the Company may pay to the registered holders of 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 one-hundredth of a share of
Preferred Stock. For purposes of this Section 15(b), the current market value
of one one-hundredth of a share of Preferred Stock shall be one one-hundredth of
the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of
such exercise.
(c) Following the occurrence of one of the transactions or events specified
in Section 11 or Section 13 giving rise to the
-26-
right to receive common stock equivalents (other than Preferred Stock) or other
securities upon the exercise of a Right, the Company shall not be required to
issue fractions of shares or units of such common stock equivalents or other
securities upon exercise of the Rights or to distribute certificates which
evidence fractional shares of such common stock equivalents or other securities.
In lieu of fractional shares or units of such common stock equivalents or other
securities, 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 a share or unit of such
common stock equivalent or other securities. For purposes of this Section
15(c), the current market value shall be determined in the manner set forth in
Section 11(d) hereof for the Trading Day immediately prior to the date of such
exercise and, if such common stock equivalent is not traded, each such common
stock equivalent shall have the value of one one-hundredth of a share of
Preferred Stock.
(d) Except as otherwise expressly provided herein, the holder of a Right by
the acceptance of the Rights expressly waives his right to receive any
fractional Rights or any fractional shares (other than, in the case of Preferred
Stock, fractions which are integral multiples of one one-hundredth of a share of
Preferred Stock) upon exercise of a Right.
16. Rights of Action. All rights of action in respect of this Agreement,
----------------
except those rights of action vested in the Rights Agent pursuant to Section 21,
are vested in the respective registered holders of the Rights Certificates
(and, prior to the Distribution Date, the registered holders of the Common
Stock); and any registered holder of any Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), without the consent of the Rights Agent
or of the holder of any other Rights Certificate (or, prior to the Distribution
Date, of the Common Stock), may, in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company 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 shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Holders of Rights shall be entitled to recover the reasonable costs and
expenses, including attorneys' fees, incurred by them in any action to enforce
the provisions of this Agreement.
-27-
17. 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 Common Stock;
(b) after the Distribution Date, the Rights Certificates are
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
(c) the Company and the Rights Agent may deem and treat the Person in
whose name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations
of ownership or writing on the Rights Certificates or the associated Common
Stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent shall be affected by any notice to the contrary.
18. Rights Certificate Holder Not Deemed a Stockholder. 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 shares of Preferred Stock, Common
Stock or any other securities of the Company which may at any time be issuable
upon 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 stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 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 thereof.
19. Concerning the Rights Agent. The Company agrees to pay to the Rights
---------------------------
Agent reasonable compensation for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and disbursements and other disbursements incurred in the
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,
-28-
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 therefrom, directly
or indirectly.
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 Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
20. 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 corporate trust or
stockholder services 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 22 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 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 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.
21. Duties of Rights Agent. The Rights Agent undertakes the duties and
----------------------
obligations imposed by this Agreement upon the
-29-
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 selected by it
(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
(including, without limitation, the identity of any Acquiring Person and
the determination of "current market price") be proved or established by
the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, any Vice Chairman of the
Board, the President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder 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 as to the fact that it has countersigned the
Rights Certificates) 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 adjustment
required under the provisions of Section 11 or 13 hereof or responsible
-30-
for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after receipt of certificate pursuant to Section 12
describing any such adjustment); nor shall it be responsible for any
determination by the Board of Directors of the Company of the current
market value of the Rights or Preferred Stock or Common Stock pursuant to
the provisions of Section 15 hereof; nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Preferred Stock or other securities to be
issued pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Preferred Stock or other securities will, when so
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder and
certificates delivered pursuant to any provision hereof from the Chairman
of the Board, any Vice Chairman of the Board, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, and is authorized to apply to such
officers for advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer. Any
application by the Rights Agent for written instructions from the Company
may, at the option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent with respect to its
duties or obligations under this Rights Agreement and the date on and/or
after which such action shall be taken or omitted and the Rights Agent
shall not be liable for any action taken or omitted in accordance with a
proposal included in any such application on or after the date specified
therein (which date shall not be less than three Business Days after the
date any such officer actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior
to taking or omitting any such action,
-31-
the Rights Agent has received written instructions in response to such
application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though
it were not 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, omission, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company
or to the holders of the Rights resulting from any such act, omission,
default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is
not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the Certificate attached to the form
of assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response to clause l
and/or 2 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise of transfer without first consulting
with the Company.
22. Change of Rights Agent. The Rights Agent or any successor Rights
----------------------
Agent may resign and 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 Stock and Preferred Stock by registered or certified mail, and to holders
of the Rights Certificates by first-class mail. The Company may remove the
Rights Agent or any successor Rights
-32-
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 Stock
and Preferred Stock 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 (a) a corporation organized and doing business under the laws of the
United States or of the State of New York or the State of California (or of any
other state of the United States so long as such corporation is authorized to do
business as a banking institution in the State of New York or the State of
California), in good standing, having a principal office in the State of New
York or the State of California, which is authorized under such laws to exercise
corporate trust or stockholder services powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000 or (b) an affiliate of a corporation described in clause (a) of this
sentence. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall mail notice
thereof in writing to the predecessor Rights Agent and each transfer agent of
the Common Stock and Preferred Stock, 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 22, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
23. 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 per share and the number or kind or class of shares or other
securities or property purchasable under the
-33-
Rights Certificates made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the redemption or expiration of the
Rights, the Company (a) shall, with respect to shares of Common Stock so issued
or sold pursuant to the exercise of stock options or otherwise under any
employee plan or arrangement, which plan or arrangement is existing as of the
Distribution Date, or upon the exercise, conversion or exchange of any other
securities issued by the Company on or prior to the Distribution Date, and (b)
may, in any other case, if deemed necessary or appropriate by the Board of
Directors of the Company, issue Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Rights Certificates shall be issued if, and
to the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax conse quences to the
Company or the Person to whom such Rights Certificates would be issued, and (ii)
no such Rights Certificates shall be issued if, and to the extent that appro-
priate adjustment shall otherwise have been made in lieu of the issuance
thereof.
24. Redemption, Termination and Exchange.
------------------------------------
(a) (i) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (x) the Stock Acquisition Date or (y) 5 P.M., San
Francisco time, on the Final Expiration Date, 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").
(ii) In addition, and notwithstanding the provisions of Section 24(a)(i),
the Board of Directors of the Company may redeem all but not less than all of
the then outstanding Rights at the Redemption Price following the Stock
Acquisition Date but prior to any event described in Section 13(a) either (x) in
connection with any event specified in Section 13(a) in which all holders of
Common Stock are treated alike and not involving (other than as a holder of
Common Stock being treated like all other such holders) an Acquiring Person or
an Affiliate or Associate thereof or any other Person in which such Acquiring
Person or Affiliate or Associate thereof has any interest, or any other Person
acting directly or indirectly on behalf of or in association with any such
Acquiring Person or Affiliate or Associate thereof, or (y) following the
occurrence of an event set forth in, and the expiration of any period during
which the holder of Rights may exercise the rights under, Section 11(a)(ii) if
and for as long as any Acquiring Person having triggered such event is not
thereafter the Beneficial Owner of securities representing 15% or more of the
outstanding shares,
-34-
and at the time of redemption there are no other Persons who are Acquiring
Persons.
(b) In the case of a redemption permitted under Section 24(a)(i),
immediately upon the action of the Board of Directors of the Company ordering
the redemption of the Rights, evidence of which shall have been filed with the
Rights Agent 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. In the case of a redemption
permitted only under Section 24(a)(ii), evidence of which shall have been filed
with the Rights Agent, the right to exercise the Rights will terminate and
represent only the right to receive the Redemption Price only after ten Business
Days following the giving of notice of such redemption to the holders of such
Rights if no event set forth in Section 11(a)(ii) shall have occurred, and, if
such event shall have occurred, upon the later of ten Business Days following
the giving of such notice or the expiration of any period during which the
rights under Section 11(a)(ii) may be exercised. Within ten days after the
action of the Board of Directors ordering any such redemption of the Rights, the
Company shall give notice of such redemption to the Rights Agent and the holders
of the then outstanding Rights by mailing such notice to the Rights Agent and to
all such holders at their last addresses as they appear upon the registry books
of the Rights Agent or, prior to the Distribution Date, on the registry books of
the Transfer Agent for the Common Stock. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made.
In the case of a redemption permitted under Section 24(a)(i) or (ii), the
Company may, at its option, discharge all of its obligations with respect to the
Rights by (i) issuing a press release announcing the manner of redemption of the
Rights and (ii) mailing payment of the Redemption Price to the registered
holders of the Rights at their last addresses as they appear on the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the Transfer Agent of the Common Stock, and upon such action, all
outstanding Rights Certificates shall be null and void without any further
action by the Company.
(c) (i) Subject to the limitations of applicable law, 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 7(e) hereof) for (A) shares of Common
Stock at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof
-35-
(the "Exchange Shares") or (B) Substitute Consideration (as that term is defined
below). The Board of Directors may determine, in its sole discretion, whether
to deliver Exchange Shares or Substitute Consideration. 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 Stock 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 Stock then outstanding.
(ii) In the event the Board of Directors shall determine to deliver
Substitute Consideration in exchange for Rights, the Company shall (1) determine
the value of the Exchange Shares (the "Exchange Value"), and (2) with respect to
each Right to be exchanged, make adequate provision to substitute for Exchange
Shares the following (the "Substitute Consideration"): (v) cash, (w) Common
Stock or common stock equivalents (as that term is defined in Section 11(a)(iii)
hereof) or Preferred Stock or equivalent preferred stock (as that term is
defined in Section 11(b) hereof), (x) debt securities of the Company, (y) other
assets, or (z) any combination of the foregoing, having an aggregate value equal
to the Exchange Value, where such aggregate value has been determined by the
Board of Directors of the Company based upon the advice of a nationally
recognized investment banking firm selected by the Board of Directors of the
Company. For purposes of this Section 24(c), the value of a share of Common
Stock shall be the current market price (as determined pursuant to Section 11(d)
hereof) per share of Common Stock on the day that is the later of (x) the first
occurrence of an event described in Section 11(a)(ii) hereof and (y) the date on
which the Company's right of redemption pursuant to Section 24(a) expires; and
the value of any common stock equivalent shall be deemed to have the same value
as the Common Stock on such date.
(iii) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to this Section 24(c), 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 Exchange Shares or Substitute Consideration for each Right
exchanged 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
-36-
of Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(e) hereof) held
by each holder of Rights.
(iv) In the event that there shall not be sufficient shares of Common
Stock or Preferred Stock issued but not outstanding or authorized but unissued
to permit any exchange of Rights as contemplated in accordance with this Section
24(c), the Company shall take all such action as may be necessary to authorize
additional shares of Common Stock or Preferred Stock for issuance upon exchange
of the Rights.
(v) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Company
shall pay to the registered holders of the Rights Certificates with regard to
which such fractional shares of Common Stock would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole
share of Common Stock. For the purposes of this Section 24(c)(v), the current
market value of a whole share of Common Stock shall be the closing price of a
share of Common Stock (as determined pursuant to Section 11(d) hereof) for the
Trading Day immediately prior to the date of exchange pursuant to this Section
24(c).
25. Notice of Certain Events. In case the Company shall propose (a) to
------------------------
pay any dividend payable in stock of any class to the holders of Preferred Stock
or to make any other distribution to the holders of Preferred Stock (other than
a regular quarterly cash dividend out of earnings or retained earnings of the
Company) or (b) to offer to the holders of Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of Preferred Stock or shares
of stock of any class or any other securities, rights or options, or (c) to
effect any reclassification of its Preferred Stock (other than a reclassi-
fication involving only the subdivision of outstanding shares of Preferred
Stock), or (d) 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 more than
50% of the assets or earning power of the Company and its subsidiaries (taken
as a whole) to, any other Person, or (e) to effect the liquidation, dissolution
or winding up of the Company, 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 the
purposes of such stock dividend, distribution of rights or warrants, or the date
on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation
-37-
therein by the holders of the shares of Preferred Stock, if any such date is to
be fixed, and such notice shall be so given in the case of any action covered by
clause (a) or (b) above at least 20 days prior to the record date for
determining holders of the shares of Preferred Stock for purposes of such
action, and in the case of any such other action, at least 20 days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of the shares of Preferred Stock whichever shall be the earlier.
In case any of the events set forth in Section 11(a)(ii) or 13(a) of this
Agreement shall occur, then, in any such case, the Company or the Principal
Party, as the case may be, 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 shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii) or 13(a)
hereof, as the case may be.
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:
ETEC SYSTEMS, INC.
00000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxx Xxxxxxxx
Subject to the provisions of Section 22, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
BANK OF BOSTON
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xx. Xxxxxxx Xxxxxx
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. Supplements and Amendments. The Company and the Rights Agent may from
--------------------------
time to time supplement or amend this Agreement without approval of any holders
of Rights or Rights Certificates in order (i) to cure any ambiguity, (ii) to
correct
-38-
or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) prior to the Distribution
Date, to change or supplement any provision hereunder in any manner which the
Company may deem necessary or desirable or (iv) on or following the Distribution
Date, to change or supplement any provision hereunder in any manner which the
Company may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Rights Certificates. Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment unless the
Rights Agent shall have determined in good faith that such supplement or
amendment would adversely affect its interests under this Agreement. Prior to
the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
28. Determination and Actions by the Board of Directors, etc. For all
--------------------------------------------------------
purposes of this Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding shares of Common Stock 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. Except as otherwise provided herein, the Board of Directors of the
Company shall have the exclusive power and authority to adminis ter this
Agreement and to exercise all rights and powers specifically granted to the
Board, or the Company, or as may be necessary or advisable in the administration
of this Agreement, including, 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 a determination to redeem or not redeem the Rights or to amend the
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 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, and (y) not subject the Board to
any liability to the holders of the Rights Certificates.
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. Benefits of This Agreement. Nothing in this Agreement shall be
--------------------------
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Rights
-39-
Certificates (and, prior to the Distribution Date, the Common Stock) 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 the Rights Certificates (and, prior to the
Distribution Date, the Common Stock).
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. Governing Law. This Agreement, each Right and each Rights Certificate
-------------
issued hereunder shall be deemed to be a contract made under the laws of the
State of Nevada 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 to
be performed entirely within such state.
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. Descriptive Headings. Descriptive headings of the several Sections of
--------------------
this Agreement are inserted for convenience
-40-
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 their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
Attest: ETEC SYSTEMS, INC., a Nevada corporation
/s/ Xxxx X. Xxxxxx By /s/ Xxxxxxx X. Xxxxxx
---------------------------- ----------------------------
Title Assistant Secretary Title President and CEO
----------------------- -------------------------
Attest: BANK OF BOSTON
/s/ Xxxxxxx X. Xxxxxx By /s/ Xxxxxxx X. Xxxx
---------------------------- ----------------------------
Title Account Manager Title Administration Manager
----------------------- -------------------------
-41-
EXHIBIT A
---------
CERTIFICATE OF DESIGNATION,
--------------------------
PREFERENCES AND RIGHTS
----------------------
OF SERIES A PARTICIPATING PREFERRED STOCK
-----------------------------------------
OF
--
ETEC SYSTEMS, INC.
------------------
We, Xxxxxxx X. Xxxxxx, Chairman of the Board, Chief Executive Officer and
President, and Xxxx Xxxxxx, Assistant Secretary, of ETEC SYSTEMS, INC., a
corporation organized and existing under the General Corporation Law of the
State of Nevada, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Seventh Amended and Restated Articles of Incorporation of the Corporation, the
said Board of Directors on January 15, 1997, adopted the following resolution
creating a series of shares of Preferred Stock designated as Series A
Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of the 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 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:
1. Designation and Amount. The shares of such series shall be designated
----------------------
as "Series A Participating Preferred Stock," $.01 par value per share, and the
number of shares constituting such series shall be the number of shares of
authorized Common Stock divided by 100. Such number of shares may be increased
or decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Participating Preferred Stock to a
number less than that of the shares then outstanding plus the number of shares
issuable upon exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Corporation.
2. Dividends and Distributions.
---------------------------
(A) Subject to the prior and superior rights of the holders of any shares
of any series of Preferred Stock ranking prior and superior to the shares of
Series A Participating Preferred Stock with respect to dividends, the holders of
shares of Series A Participating Preferred Stock in preference to the
A-1
holders of shares of Common Stock, par value $.01 per share (the "Common
Stock"), of the Corporation and any other junior stock, shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the first day
of October, January, April and July in each fiscal year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Participating Preferred Stock in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1600, or (b)
subject to the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Participating Preferred Stock. In the event the Corporation
shall at any time after the close of business on January 31, 1997 (the "Rights
Declaration Date") (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, by reclassification
or otherwise, then in each such case the amount to which holders of shares of
Series A Participating Preferred Stock were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Series
A Participating Preferred Stock as provided in paragraph (A) above immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1600 per share on the Series A
Participating Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series A Participating Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issue of such shares of Series A Participating
Preferred Stock unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in
A-2
which case dividends on such shares shall begin to accrue from the date of issue
of such shares, or unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of holders of shares of
Series A Participating Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Participating Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date
for the determination of holders of shares of Series A Participating Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date fixed
for the payment thereof.
3. Voting Rights. The holders of shares of Series A Participating
-------------
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Participating Preferred Stock shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock into a greater number of shares, or (iii) combine the
outstanding Common Stock into a smaller number of shares, by
reclassification or otherwise, then in each such case the number of votes
per share to which holders of shares of Series A Participating Preferred
Stock were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock outstanding
immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Participating Preferred Stock and the holders of shares
of Common Stock shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
A-3
(C) (i) If at any time dividends on any Series A Participating
Preferred Stock shall be in arrears in an amount equal to six quarterly
dividends thereon, the occurrence of such contingency shall xxxx the
beginning of a period (herein called a "default period") which shall extend
until such time when all accrued and unpaid dividends for all previous
quarterly dividend periods and for the current quarterly dividend period on
all shares of Series A Participating Preferred Stock then outstanding shall
have been declared and paid or set apart for payment. During each default
period, all holders of Preferred Stock (including holders of the Series A
Participating Preferred Stock) with dividends in arrears in an amount equal
to six quarterly dividends thereon, voting as a class, irrespective of
series, shall have the right to elect two Directors.
(ii) During any default period, such voting right of the holders of
Series A Participating Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this Section 3(C)
or at any annual meeting of stockholders, and thereafter at annual meetings
of stockholders, provided that neither such voting right nor the right of
the holders of any other series of Preferred Stock, if any, to increase, in
certain cases, the authorized number of Directors shall be exercised unless
the holders of ten percent (10%) in number of shares of Preferred Stock
outstanding shall be present in person or by proxy. The absence of a
quorum of the holders of Common Stock shall not affect the exercise by the
holders of Preferred Stock of such voting right. At any meeting at which
the holders of Preferred Stock shall exercise such voting right initially
during an existing default period, they shall have the right, voting as a
class, to elect Directors to fill such vacancies, if any, in the Board of
Directors as may then exist up to two Directors or, if such right is
exercised at an annual meeting, to elect two Directors. If the number
which may be so elected at any special meeting does not amount to the
required number, the holders of the Preferred Stock shall have the right to
make such increase in the number of Directors as shall be necessary to
permit the election by them of the required number. After the holders of
the Preferred Stock shall have exercised their right to elect Directors in
any default period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of the holders
of Preferred Stock as herein provided or pursuant to the rights of any
equity securities ranking senior to or pari passu with the Series A
Participating Preferred Stock.
A-4
(iii) Unless the holders of Preferred Stock shall, during an existing
default period, have previously exercised their right to elect Directors,
the Board of Directors may order, or any stockholder or stockholders owning
in the aggregate not less than ten percent (10%) of the total number of
shares of Preferred Stock outstanding, irrespective of series, may request,
the calling of a special meeting of the holders of Preferred Stock, which
meeting shall thereupon be called by the President, a Vice President or
the Secretary of the Corporation. Notice of such meeting and of any annual
meeting at which holders of Preferred Stock are entitled to vote pursuant
to this paragraph (C)(iii) shall be given to each holder of record of
Preferred Stock by mailing a copy of such notice to him at his last address
as the same appears on the books of the Corporation. Such meeting shall be
called for a time not earlier than ten days and not later than 60 days
after such order or request or in default of the calling of such meeting
within 60 days after such order or request, such meeting may be called on
similar notice by any stockholder or stockholders owning in the aggregate
not less than ten percent (10%) of the total number of shares of Preferred
Stock outstanding. Notwithstanding the provisions of this paragraph
(C)(iii), no such special meeting shall be called during the period within
60 days immediately preceding the date fixed for the next annual meeting of
the stockholders.
(iv) In any default period, the holders of Common Stock, and other
classes of stock of the Corporation, if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of
Preferred Stock shall have exercised their right to elect two Directors
voting as a class, after the exercise of which right (x) the Directors so
elected by the holders of Preferred Stock shall continue in office until
their successors shall have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in the Board of
Directors may (except as provided in paragraph (C)(ii) of this Section 3)
be filled by vote of a majority of the remaining Directors theretofore
elected by the holders of the class of stock which elected the Director
whose office shall have become vacant. References in this paragraph (C) to
Directors elected by the holders of a particular class of stock shall
include Directors elected by such Directors to fill vacancies as provided
in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the right
of the holders of Preferred
A-5
Stock as a class to elect Directors shall cease, (y) the term of any
Directors elected by the holders of Preferred Stock as a class shall
terminate, and (z) the number of Directors shall be such number as may be
provided for in, or pursuant to, the Articles of Incorporation or By-Laws
irrespective of any increase made pursuant to the provisions of paragraph
(C)(ii) of this Section 3 (such number being subject, however, to change
thereafter in any manner provided by law or in the Articles of
Incorporation or By-Laws). Any vacancies in the Board of Directors
effected by the provisions of clauses (y) and (z) in the preceding sentence
may be filled by a majority of the remaining Directors, even though less
than a quorum.
(D) Except as set forth herein, holders of Series A Participating
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.
4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Participating Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Participating
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Participating Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Participating
Preferred Stock except dividends paid ratably on the Series A Participating
Preferred Stock and all such parity stock on which dividends are payable or
in arrears in proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation,
A-6
dissolution or winding up) with the Series A Participating Preferred Stock
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Participating
Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Participating Preferred Stock or any shares of stock ranking on a
parity with the Series A Participating Preferred Stock except in accordance
with a purchase offer made in writing or by publication (as determined by
the Board of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
5. Reacquired Shares. Any shares of Series A Participating Preferred
-----------------
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
6. Liquidation, Dissolution or Winding Up.
--------------------------------------
(A) Upon any liquidation (voluntary or otherwise), dissolution or winding
up of the Corporation, no distribution shall be made to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Participating Preferred Stock unless, prior thereto,
the holders of shares of Series A Participating Preferred Stock shall have
received per share, the greater of 100 times $200 or 100 times the payment made
per share of Common Stock, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment
(the "Series A Liquidation Preference"). Following the payment of the full
amount of the Series A Liquidation Preference, no additional distributions shall
be made to the
A-7
holders of shares of Series A Participating Preferred Stock unless, prior
thereto, the holders of shares of Common Stock shall have received an amount per
share (the "Common Adjustment") equal to the quotient obtained by dividing (i)
the Series A Liquidation Preference by (ii) 100 (as appropriately adjusted as
set forth in subparagraph (C) below to reflect such events as stock splits,
stock dividends and recapitalization with respect to the Common Stock) (such
number in clause (ii), the "Adjustment Number"). Following the payment of the
full amount of the Series A Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series A Participating Preferred Stock and
Common Stock, respectively, holders of Series A Participating Preferred Stock
and holders of shares of Common Stock shall receive their ratable and propor-
tionate share of the remaining assets to be distributed in the ratio of the
Adjustment Number to 1 with respect to such Preferred Stock and Common Stock, on
a per share basis, respectively.
(B) In the event there are not sufficient assets available to permit
payment in full of the Series A Liquidation Preference and the liquidation
preferences of all other series of Preferred Stock, if any, which rank on a
parity with the Series A Participating Preferred Stock then such remaining
assets shall be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In the event there are
not sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably to the
holders of Common Stock.
(C) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, by reclassification
or otherwise, then in each such case the Adjustment Number in effect immediately
prior to such event shall be adjusted by multiplying such Adjustment Number by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
7. Consolidation, Merger, etc. In case the Corporation shall enter into
--------------------------
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case the shares of Series A
Participating Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into
A-8
which or for which each share of Common Stock is changed or exchanged. In the
event the Corporation shall at any time after the Rights Declaration Date (i)
declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of shares
of Series A Participating 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 are outstanding immediately prior to
such event.
8. Redemption. The shares of Series A Participating Preferred Stock
----------
shall not be redeemable.
9. Ranking. The Series A Participating Preferred Stock shall rank junior
-------
to all other series of the Corporation's Preferred Stock as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise.
10. Amendment. The Articles of Incorporation and the By-Laws of the
---------
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least 66-2/3% of the outstanding shares of
Series A Participating Preferred Stock voting separately as a class.
11. Fractional Shares. Series A Participating Preferred Stock may be
-----------------
issued in fractions of a share which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Participating Preferred Stock.
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
January, 1997.
__________________________________
President
Attest:
__________________________________
Assistant Secretary
A-9
EXHIBIT B
---------
[Form of Rights Certificate]
Certificate No. R-______________ _____________ Rights
NOT EXERCISABLE AFTER TEN YEARS AFTER RECORD DATE OR EARLIER IF NOTICE OF
REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION
OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE WERE ISSUED
TO A Person WHO WAS AN ACQUIRING Person OR AN AFFILIATE OR AN ASSOCIATE OF
AN ACQUIRING Person, AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT.
THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID
UNDER THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS
AGREEMENT.]/*/
Rights Certificate
ETEC SYSTEMS, 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 January 15, 1997 (the "Rights Agreement") between ETEC
SYSTEMS, INC., a Delaware corporation (the "Company"), and BANK OF BOSTON (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 P.M. (San
Francisco time) on January 31, 2007, at the office of the Rights Agent
designated for such purpose, one one-hundredth of a fully paid, nonassessable
share of Series A Participating Preferred Stock (the "Preferred Stock") of the
Company, at a purchase price of $200 per one one-hundredth of a share (the
"Purchase Price"), upon presentation and surrender of this Rights Certificate
with the appropriate Form of Election to purchase and certificate duly executed.
The number of Rights evidenced by this Rights Certificate (and the number of
shares which may be purchased upon exercise thereof) set forth above, and the
Purchase Price set forth above, are the number and Purchase Price as of the
close of business on January 31, 1997, based on the Preferred Stock as
constituted at such date.
-----------------------
/*/ The portion of the legend in brackets shall be inserted only if applicable.
B-1
As provided in the Rights Agreement, the Purchase Price and the number of
shares of Preferred Stock or other securities which may be purchased upon the
exercise of the Rights evidenced by this 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 office of the Company and are
also available upon written request to the Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of shares of Preferred Stock 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 (other than pursuant
to Section 11(a)(ii) of the Rights Agreement) 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. If this Rights
Certificate shall be exercised in whole or in part pursuant to Section 11(a)(ii)
of the Rights Agreement, the holder shall be entitled to receive this Rights
Certificate duly marked to indicate that such exercise has occurred as set
forth in the Rights Agreement.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $.01 per Right. Subject to the provisions of the Rights Agreement, the
Company, at its option, may elect to mail payment of the redemption price to the
registered holder of the Right at the time of redemption, in which event this
certificate may become void without any further action by the Company.
No fractional shares of Preferred Stock 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 share of Preferred Stock, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any
B-2
purpose the holder of shares of Preferred Stock or of any other securities of
the Company which may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed to confer upon
the holder hereof, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated: ____________, 19__.
Attest: ETEC SYSTEMS, INC.
____________________________ By _______________________________
Title ______________________ Title ____________________________
Countersigned:
BANK OF BOSTON
By _________________________
B-3
[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)
_______________________________________________________________ this Rights
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint _______________ Attorney, to transfer
the within Rights Certificate on the books of the within-named Company, with
full power of substitution.
Dated: ____________, 19___.
__________________________________
Signature
Signature Guaranteed:
B-4
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are 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 Acquiring 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 an Acquiring Person.
Dated: ____________, 19__.
__________________________________
Signature
NOTICE
------
The signature to the foregoing Assignment must correspond to the name
as written upon the face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
B-5
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Rights Certificate pursuant to
Section 11(a)(ii) of the Rights Agreement.)
To ETEC SYSTEMS, INC.:
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the shares of Common Stock
(or such other securities of the Company) issuable upon the exercise of the
Rights and requests that certificates for such shares be issued in the name of:
________________________________________________________________________________
(Please insert social security or other identifying number)
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
The Rights Certificate indicating the balance, if any, of such Rights which
may still be exercised pursuant to Section 11(a)(ii) of the Rights Agreement
shall be returned to the undersigned unless such Person requests that the Rights
Certificate be registered in the name of and delivered to:
________________________________________________________________________________
Please insert social security or other identifying number (complete only if
Rights Certificate is to be registered in a name other than the undersigned)
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: ____________, 19__.
__________________________________
Signature
Signature Guaranteed:
B-6
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) 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 Acquiring Person (as such terms are defined
in the Rights Agreement);
(3) 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 an Acquiring Person.
Dated: ____________, 19__.
__________________________________
Signature
NOTICE
------
The signature to the foregoing Election to Purchase must correspond to
the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
B-7
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise
the Rights Certificate other than pursuant to
Section 11(a)(ii) of the Rights Agreement.)
To ETEC SYSTEMS, INC.:
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the shares of Preferred Stock
(or such other securities of the Company or any other Person) issuable upon the
exercise of the Rights and requests that certificates for such shares be issued
in the name of:
________________________________________________________________________________
(Please insert social security or other identifying number)
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
The Rights Certificate indicating the balance, if any, of such Rights which
may still be exercised pursuant to Section 11(a)(ii) of the Rights Agreement
shall be returned to the undersigned unless such Person requests that the Rights
Certificate be registered in the name of and delivered to:
________________________________________________________________________________
Please insert social security or other identifying number
(complete only if Rights Certificate is to be registered in
a name other than the undersigned)
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: ____________, 19__.
__________________________________
Signature
Signature Guaranteed:
B-8
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are 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 Acquiring 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 an Acquiring Person.
Dated: ____________, 19__.
__________________________________
Signature
NOTICE
------
The signature to the foregoing Election to Purchase must correspond to the
name as written upon the fact of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
B-9
EXHIBIT C
---------
SUMMARY OF RIGHTS
-----------------
On January 15, 1997 the Board of Directors of ETEC SYSTEMS, INC. (the
"Company") declared a dividend distribution of one Right for each outstanding
share of common stock, $.01 par value (the "Common Stock"), of the Company to
stockholders of record at the close of business on January 31, 1997 (the "Record
Date"). Except as set forth below, each Right, when exercisable, entitles the
registered holder to purchase from the Company one one-hundredth share of a new
series of preferred stock, designated as Series A Participating Preferred Stock,
$.01 par value (the "Preferred Stock"), at a price of $200 per 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 Bank of Boston, as Rights Agent.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights certificates will
be distributed. The Rights will separate from the Common Stock and a
Distribution Date will occur upon the earliest of (i) a public announcement that
a Person or group of affiliated or associated Persons (an "Acquiring Person")
has acquired, or obtained the right to acquire beneficial ownership of
securities having 15% or more of the voting power of all outstanding voting
securities of the Company or (ii) ten days (unless such date is extended by the
Board of Directors) following the commencement of (or a public announcement of
an intention to make) a tender offer or exchange offer which would result in any
Person or group and related Persons becoming an Acquiring Person.
Until the Distribution Date the Rights will be evidenced, with respect to
any of the Common Stock certificates outstanding as of the Record Date, by such
Common Stock certificate together with this Summary of Rights. The Rights
Agreement provides that, until the Distribution Date, the Rights will be trans-
ferred with and only with Common Stock certificates. From as soon as
practicable after the Record Date and until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Stock certificates issued
after the Record Date upon transfer or new issuance of the Common Stock will
contain a notation 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 Stock outstanding as of
the Record Date (with or without this Summary of Rights attached) will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights
C-1
("Rights Certificates") will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date, and the separate Rights
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on the earliest of (i) January 31, 2007, (ii) consummation of a
merger transaction with a Person or group who acquired Common Stock pursuant to
a Permitted Offer (as defined below), and is offering in the merger the same
price per share and form of consideration paid in the Permitted Offer, or (iii)
redemption or exchange of the Rights by the Company as described below.
The Purchase Price payable, and the number of shares of Preferred Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Preferred
Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights
or warrants to subscribe for Preferred Stock, certain convertible securities or
securities having the same or more favorable rights, privileges and preferences
as the Preferred Stock at less than the current market price of the Preferred
Stock, or (iii) upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular quarterly cash dividends
out of earnings or retained earnings) or of subscription rights or warrants
(other than those referred to above).
In the event that, after the first date of public announcement by the
Company or an Acquiring Person that an Acquiring Person has become such, the
Company is involved in a merger or other business combination transaction
(whether or not the Company is the surviving corporation) or 50% or more of the
Company's assets or earning power are sold (in one transaction or a series of
transactions), proper provision shall be made so that each holder of a Right
(other than an Acquiring Person) shall thereafter have the right to receive,
upon the exercise thereof at the then current exercise price of the Right, that
number of shares of common stock of either the Company, in the event that it is
the surviving corporation of a merger or consolidation, or the acquiring company
(or, in the event there is more than one acquiring company, the acquiring
company receiving the greatest portion of the assets or earning power
transferred) which at the time of such transaction would have a market value of
two times the exercise price of the Right (such right being called the "Merger
Right"). In the event that a Person becomes the beneficial owner of securities
having 15% or more of the voting power of all then outstanding voting securities
of the Company (unless pursuant to a tender offer or exchange offer for all
outstanding shares of Common Stock at a price and on terms determined prior to
the date of the first
C-2
acceptance of payment for any of such shares by at least a majority of the
members of the Board of Directors who are not officers of the Company and are
not Acquiring Persons or Affiliates or Associates thereof to be both adequate
and otherwise in the best interests of the Company and its stockholders (a
"Permitted Offer")), then proper provision shall be made so that each holder of
a Right will for a 60-day period (subject to extension under certain
circumstances) thereafter have the right to receive upon exercise that number of
shares of Common Stock having a market value of two times the exercise price of
the Right, to the extent available, and then (after all authorized and
unreserved shares of Common Stock have been issued) a common stock equivalent
(such as Preferred Stock or another equity security with at least the same
economic value as the Common Stock) having a market value of two times the
exercise price of the Right, with Common Stock to the extent available being
issued first (such right being called the "Subscription Right"). The holder of
a Right will continue to have the Merger Right whether or not such holder
exercises the Subscription Right. Notwithstanding the foregoing, upon the
occurrence of any of the events giving rise to the exercisability of the Merger
Right or the Subscription Right, any Rights that are or were at any time after
the Distribution Date owned by an Acquiring Person shall immediately become null
and void.
With certain exceptions, no adjustments in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractions of shares will be issued and, in lieu
thereof, an adjustment in cash will be made based on the market price of the
Common Stock on the last trading date prior to the date of exercise.
At any time prior to the earlier to occur of (i) a Person becoming an
Acquiring Person or (ii) the expiration of the Rights, the Company may redeem
the Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"), which redemption shall be effective upon the action of the
Board of Directors. Additionally, the Company may thereafter redeem the then
outstanding Rights in whole, but not in part, at the Redemption Price (i) if
such redemption is incidental to a merger or other business combination
transaction or series of transactions involving the Company but not involving an
Acquiring Person or certain related Persons or (ii) following an event giving
rise to, and the expiration of the exercise period for, the Subscription Right
if and for as long as an Acquiring Person beneficially owns securities
representing less than 15% of the voting power of the Company's voting
securities. The redemption of Rights described in the preceding sentence shall
be effective only as of such time when the Subscription Right is not
exercisable, and in any event, only after ten Business Days' prior notice. Upon
the effective date of the redemption of the Rights, the right to exercise the
Rights will terminate and the
C-3
only right of the holders of Rights will be to receive the Redemption Price.
Subject to applicable law, the Board of Directors, at its option, may at
any time after a Person becomes an Acquiring Person (but not after the
acquisition by such Person of 50% or more of the outstanding Common Stock),
exchange all or part of the then outstanding and exercisable rights (except for
Rights which have become void) for shares of Common Stock equivalent to one
share of Common Stock per Right or, alternatively, for substitute consideration
consisting of cash, securities of the Company or other assets (or any
combination thereof).
The Preferred Stock purchasable upon exercise of the Rights will be
nonredeemable and junior to any other series of preferred stock the Company may
issue (unless otherwise provided in the terms of such stock). Each share of
Preferred Stock will have a preferential quarterly dividend in an amount equal
to 100 times the dividend declared on each share of Common Stock, but in no
event less than $1600. In the event of liquidation, the holders of Preferred
Stock will receive a preferred liquidation payment equal to the greater of 100
times $200 or 100 times the payment made per each share of Common Stock. Each
share of Preferred Stock will have 100 votes, voting together with the shares of
Common Stock. In the event of any merger, consolidation or other transaction
in which shares of Common Stock are exchanged, each share of Preferred Stock
will be entitled to receive 100 times the amount and type of consideration
received per share of Common Stock. The rights of the Preferred Stock as to
dividends, liquidation and voting, and in the event of mergers and
consolidations, are protected by customary antidilution provisions. Fractional
shares of Preferred Stock will be issuable; however, the Company may elect to
distribute depositary receipts in lieu of such fractional shares. In lieu of
fractional shares other than fractions that are multiples of one one-hundredth
of a share, an adjustment in cash will be made based on the market price of the
Preferred Stock on the last trading date prior to the date of exercise.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registra tion Statement on Form 8-A. 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
incorporated herein by reference.
C-4
