EXHIBIT 1
BANCTEC, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY,
Rights Agent
Rights Agreement Dated as of May 26, 1998
TABLE OF CONTENTS
Section Page
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1. Certain Definitions 1
2. Appointment of Rights Agent 6
3. Issue of Right Certificates 6
4. Form of Right Certificates 9
5. Countersignature and Registration 10
6. Transfer, Split-Up, Combination and
Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Certificates 11
7. Exercise of Rights, Purchase Price,
Expiration Date of Rights 12
8. Cancellation and Destruction of Right
Certificates 15
9. Reservation, Registration and Listing 16
10. Common Stock Record Date 18
11. Adjustment of Purchase Price, Number
of Shares or Number of Rights 19
12. Certificate of Adjusted Purchase Price
or Number of Shares 32
13. Consolidation, Merger, or Sale or
Transfer of Assets or Earning Power 32
14. Fractional Rights and Fractional Shares 36
15. Rights of Action 38
16. Agreement of Right Holders 39
17. Right Certificate Holder Not Deemed
a Xxxxxxxxxxx 00
00. Concerning the Rights Agent 40
19. Merger or Consolidation or Change
of Name of Rights Agent 41
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20. Duties of Rights Agent 42
21. Change of Rights Agent 46
22. Issuance of New Right Certificates 47
23. Redemption and Xxxxxxxxxxx 00
00. Notice of Certain Events 49
25. Notices 51
26. Supplements and Amendments 52
27. Successors 53
28. Determinations and Actions by the
Board of Directors, etc 53
29. Benefits of this Agreement 54
30. Severability 54
31. Governing Law 55
32. Counterparts 55
33. Descriptive Headings 55
ii
RIGHTS AGREEMENT
Rights Agreement, dated as of May 26, 1998, (the "Agreement") between
BancTec, Inc., a Delaware corporation (the "Company") and American Stock
Transfer & Trust Company (the "Rights Agent").
WHEREAS, on May 21, 1998 (the "Rights Dividend Declaration Date") the Board
of Directors of the Company authorized and declared a dividend distribution of
one Riqht (as hereinafter defined) for each share of Common Stock as hereinafter
defined) of the Company outstanding at the close of business on May 26, 1998
(the "Record Date"), each Right representing the right to purchase one share of
Common Stock, upon the terms and subject to the conditions herein set forth, and
has further authorized and directed the issuance of one Right with respect to
each share of Common Stock that shall become outstanding between the Record Date
and the earliest of the Distribution Date, the Redemption Date and the Final
Expiration Date (as such terms are hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions.
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" shall mean any Person (as such term is hereinafter
defined) who or which, together with all Affiliates and Associates (as such
terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is
hereinafter defined) of 20% or more of the shares of Common Stock then
outstanding, but shall not include the Company, any Subsidiary (as such term is
hereinafter defined) of the Company, any employee benefit plan of the Company,
or any Subsidiary of the Company, or any Person or entity holding shares of
Common Stock for or pursuant to the terms of any such plan. Notwithstanding the
foregoing, no person shall become an "Acquiring Person" as the result of an
acquisition of shares of Common Stock by the Company which, by reducing the
number of shares outstanding, increases the proportionate number of shares
beneficially owned by such person to 20% or more of the shares of Common Stock
of the Company then outstanding; provided, however, that if a person becomes the
Beneficial Owner of 20% or more of the shares of Common Stock of the Company
then outstanding by reason of share purchases by the Company and shall, after
such share purchases by the Company, become the Beneficial Owner of any
additional shares of Common Stock of the Company, then such person shall be
deemed to be an "Acquiring Person".
(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, as in effect on the date of
this Agreement (the "Exchange Act" ).
(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 to acquire (whether such right is exercisable
immediately or only
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after the passage of time) pursuant to 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 upon the exercise of
conversion rights, exchange rights, rights (other than these Rights),
warrants or options, or otherwise; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to beneficially own (A)
securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or exchange; or
(B) securities issuable upon exercise of Rights at any time prior to the
occurrence of a Triggering Event; or (C) securities issuable upon exercise
of Rights from and after the occurrence of a Triggering Event which Rights
were acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(a) or
Section 22 hereof (the "Original Rights") or pursuant to Section 11(i)
hereof in connection with an adjustment made with respect to any Original
Rights;
(iii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or
has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to "beneficially own," any
security under this subparagraph (iii) as a result of an agreement,
arrangement, or understanding to vote such security (1) which arises solely
from a revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations of the
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Exchange Act and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iv) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement, or understanding (whether or not
in writing) (other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public offering of
securities) for the purpose of acquiring, holding, voting (except to the
extent contemplated by the proviso to subparagraph (iii) of this paragraph)
of disposing of any securities of the Company.
(d) "Business Day" shall mean any day other than a Saturday, a Sunday, or
a day on which banking institutions in the State of Texas are authorized or
obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00 P. M., Dallas,
Texas time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M., Dallas, Texas time, on the next succeeding Business
Day.
(f) "Common Stock" when used with reference to the Company shall mean the
shares of common stock, presently $.01 par value, of the Company. "Common
Stock" when used with reference to any Person other than the Company shall mean
the capital stock (or equity interest) with the greatest voting power of such
other Person or the equity securities or other equity interest having power to
control or direct the management of such first-mentioned Person.
(g) "Continuing Director" shall mean (i) any member of the Board of
Directors of the Company, while such Person is a member of the Board, who is not
an Acquiring
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Person, or an Affiliate or Associate of an Acquiring Person, or a representative
of an Acquiring Person or of any such Affiliate or Associate, or otherwise
affiliated with an Acquiring Person or of any such Affiliate or Associate, and
was a member of the Board prior to the date of this Agreement, or (ii) any
Person who subsequently becomes a member of the Board, while such Person is a
member of the Board, who is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring person, or a representative of an Acquiring Person or
of any such Affiliate or Associate or otherwise affiliated with an Acquiring
Person or of any such Affiliate or Associate, if such Person's nomination for
election or election to the Board is recommended or approved by a majority of
the Continuing Directors.
(h) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(i) "Final Expiration Date" shall have the meaning set forth in Section 7
hereof.
(j) "Person" shall mean any individual, firm, corporation, or other
entity, and shall include any successor (by merger or otherwise) of such entity.
(k) "Redemption Date" shall have the meaning set forth in Section 7
hereof.
(l) "Shares Acquisition Date" shall mean the first date of public
announcement (which for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such.
(m) "Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii)(A) or (B) hereof.
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(n) "Section 13 Event" shall mean any event described in clauses (x), (y)
or (z) of Section 13(a) hereof.
(o) "Subsidiary" of any Person shall mean any corporation or other entity
of which a majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such Person.
(p) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 event.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights 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.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the tenth day after the Shares Acquisition
Date (or, if the tenth day after the Shares Acquisition Date occurs before the
Record Date, the close of business on the Record Date) or (ii) the tenth day
after the date of a tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the
Company, or of any Subsidiary of the Company, or any entity holding shares of
Common Stock for or pursuant to the terms of any such plan) is first published
or sent or given within the meaning of Rule 14d-2(a) of the Exchange Act, the
consummation of which would result in any Person becoming the
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Beneficial Owner of Common Stock aggregating 30% or more of the then outstanding
shares of Common Stock (the earlier of (i) and (ii) being herein referred to as
the "Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates evidencing the Common
Stock registered in the names of the holders thereof (which certificates for
Common Stock shall also be deemed to be Right Certificates) and not by separate
Right Certificates, and (y) the right to receive Right Certificates will be
transferable only in connection with the transfer of the underlying shares of
Common Stock. As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign, and the Company
will send or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, 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 Right Certificate, in substantially the
form of Exhibit A hereto (a "Right Certificate"), evidencing one Right for each
share of Common Stock so held, subject to adjustments as provided herein. As of
the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the Company
will send a copy of a Summary of Rights, in substantially the form of Exhibit B
hereto (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 Common Stock outstanding as of the Record Date,
until the Distribution Date, the Rights will be evidenced by such certificates
registered in the names of the holders thereof together with a copy of the
Summary of Rights attached thereto. Until the Distribution Date (or the earlier
of the Redemption Date or Final Expiration Date), the surrender for transfer of
any certificate for shares of Common Stock outstanding on the
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Record Date, with or without a copy of the Summary of Rights attached thereto,
shall also constitute the transfer of the Rights associated with the Common
Stock represented thereby.
(c) Certificates of Common Stock which become outstanding (including,
without limitation, reacquired Common Stock referred to in the last sentence of
this subparagraph (c)) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date, or the Final Expiration Date shall have
impressed on, printed on, written on, or otherwise affixed to them to the extent
practicable the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between BancTec,
Inc. and American Stock Transfer & Trust Company, dated as of May 26,
1998 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal executive offices of BancTec, Inc. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will
be evidenced by separate certificates and will no longer be evidenced
by this certificate. BancTec, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. As described in the Rights
Agreement, Rights issued to any Person who becomes an Acquiring Person
(as defined in the Rights Agreement) shall become null and void.
With respect to such certificates containing the foregoing legend, until the
earlier of the Distribution Date or the Final Expiration Date, 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 such
certificate shall also constitute the transfer of the Rights associated with the
Common Stock represented thereby. In the event that the Company purchases or
acquires any shares of Common Stock after the Record Date but prior to the
Distribution Date, any Rights associated with Common Stock shall be deemed
cancelled and retired so that the Company shall not be entitled to exercise
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any Rights associated with the Common Stock which are no longer outstanding.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase Common
Stock and of assignment to be printed on the reverse thereof) shall be
substantially the same as Exhibit A 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 22 hereof, the Right Certificates shall entitle the holders thereof
to purchase such number of shares of Common Stock as shall be set forth therein
at the price set forth therein (such exercise price per one share of Common
Stock, the "Purchase Price"), subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights beneficially owned by:
(i) an Acquiring Person or any Associate or Affiliate of an
Acquiring Person;
(ii) a transferee of an Acquiring Person (or of any such Associate
or Affiliate) who becomes a transferee after the Acquiring Person becomes
such; or
(iii) a transferee of an Acquiring Person (or of any such Associate
or Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring
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Person becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with
whom such Acquiring Person has any continuing agreement, arrangement, or
understanding regarding the transferred Rights or (B) a transfer which the
Board of Directors of the Company has determined is part of a plan,
arrangement, or understanding which has as a primary purpose or effect
avoidance of Section 7(e) hereof, and any Right Certificate issued pursuant
to Section 6 or Section 11 hereof upon transfer, exchange, replacement, or
adjustment of any other Right Certificate referred to in this sentence,
shall contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Right Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of such Agreement.
Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board,
President, or any Vice President, either manually or by facsimile signature,
shall have affixed thereto the Company's seal or a facsimile thereof, and shall
be attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose unless
countersigned. In case any officer of the Company who shall have signed any of
the Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as
10
though the person who signed such Right Certificates had not ceased to be such
officer of the Company; and any Right Certificate may be signed on behalf of the
Company by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at its principal office, books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of the Right Certificates, the number of Rights evidenced
on its face by each of the Right Certificates and the date of each of the Right
Certificates.
Section 6. Transfer, Split-up, Combination, and Exchange of Right
Certificates; Mutilated, Destroyed, Lost, or Stolen Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e), and Section
14 hereof, at any time after the close of business on the Distribution Date, and
at or prior to the close of business on the earlier of the Redemption Date or
the Final Expiration Date, any Right Certificate or Right Certificates may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number of
shares of Common Stock as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine, or exchange any Right Certificate or
Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined, or exchanged at the principal office of the
Rights Agent. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Right Certificate until the registered holder shall have
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completed and signed the certificate contained in the form of assignment on the
reverse side of such Right Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e), and
Section 14 hereof, countersign and deliver to the Person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination, or exchange of a Right Certificate.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction, or mutilation
of a Right Certificate, and, in case of loss, theft, or destruction, of
indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will make and
deliver a new Right Certificate of like tenor to the Rights Agent for delivery
to the registered holder in lieu of the Right Certificate so lost, stolen,
destroyed, or mutilated.
Section 7. Exercise of Rights, Purchase Price, Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(d), Section 11(a)(ii), and Section 23(a))
in whole or in part at any time after the Distribution Date upon surrender of
the Right Certificate, with the form of election to
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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 aggregate
Purchase Price with respect to the total number of shares of Common Stock (or
other securities, cash, or other assets, as the case may be) as to which the
Rights are exercised, at or prior to the earliest of (i) the close of business
on May 20, 2008 (the "Final Expiration Date") or (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof (the "Redemption Date").
(b) The Purchase Price for each share of Common Stock pursuant to the
exercise of a Right shall initially be $85.00 and shall be subject to adjustment
from time to time as provided in Sections 11 and 13(a) 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 Right Certificate representing exercisable Rights,
with the form of election to purchase duly executed, accompanied by payment of
the Purchase Price for the shares of Common Stock (or other shares, securities,
cash, or other assets, as the case may be) to be purchased and an amount equal
to any applicable transfer tax required to be paid by the holder of such Right
Certificate by certified check, cashier's check, bank draft, or money order
payable to the order of the Company, the Rights Agent shall thereupon promptly
(i) requisition from any transfer agent of the Common Stock certificates (or
make available if the Rights Agent is the transfer agent for such shares) for
the number of shares of Common Stock to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests, (ii)
when appropriate, requisition from the Company the amount of cash to be paid in
lieu of issuance of fractional shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates, cause the same to be delivered to or
upon the order of the registered holder of such Right Certificate, registered in
such name or
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names as may be designated by such holder, and (iv) when appropriate, after
receipt, deliver such cash to or upon the order of the registered holder of such
Right Certificate. In the event that the Company is obligated to issue other
securities (including Common Stock) of the Company, pay cash and/or distribute
other property pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that other securities, cash, and/or other property are
available for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially
owned by
(i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person;
(ii) a transferee of an Acquiring Person (or of any such Associate
or Affiliate) who becomes a transferee after the Acquiring Person becomes
such; or
(iii) a transferee of an Acquiring Person (or of any such Associate
or Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person
to holders of equity interests in such Acquiring Person or to any Person
with whom the Acquiring Person has any continuing agreement, arrangement or
understanding regarding
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the transferred Rights or (B) a transfer which the Board of Directors of
the Company has determined is part of a plan, arrangement, or understanding
which has a primary purpose or effect the avoidance of this Section 7(e),
shall become null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise. The Company
shall use all reasonable efforts to insure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but shall have no
liability to any holder of Right Certificates or other Person as a result
of its failure to make any determinations with respect to any Acquiring
Person or its Affiliates, Associates, or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination, or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the
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Rights Agent shall so cancel and retire, any other Right Certificate purchased
or acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Right Certificates to the Company, or shall,
at the written request of the Company, destroy such cancelled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Reservation, Registration, and Listing.
(a) Following the occurrence of a Triggering Event, the Company covenants
and agrees that it will cause to be reserved and kept available out of its
authorized and unissued shares of Common Stock or out of its authorized and
issued shares held in its treasury, the number of shares of Common Stock that
will be sufficient to permit the exercise in full of all outstanding Rights.
(b) Following the occurrence of a Triggering Event, the Company covenants
and agrees that it will take all such action as may be necessary to ensure that
all Common Stock delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such Common Stock (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
non-assessable shares.
(c) So long as the Common Stock issuable and deliverable upon the exercise
of the Rights may be listed on any national securities exchange, the Company
shall use its best efforts to promptly cause, from and after such time as the
Rights become exercisable, all shares of Common Stock and other securities
reserved for such issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
(d) The Company shall use its best efforts to (i) file, as soon as
practicable
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following the earliest date after the first occurrence of a Section 11(a)(ii)
Event on which the consideration to be delivered by the Company upon exercise of
the Rights has been determined in accordance with Section 11(a)(iii) hereof or
as soon as is required by law following the Distribution Date, as the case may
be, 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 the filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities and (B) the Final
Expiration Date. The Company will also take all action necessary to ensure
compliance with the securities laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a period
of time not to exceed ninety (90) days after the date set forth in clause (i) of
the first sentence of this Section 9(d), the exercisability of the Rights in
order to prepare and file such registration statements. Upon any suspension, the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. Notwithstanding any provision of
this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in that jurisdiction shall have
been obtained.
(e) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any shares of Common Stock 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
17
delivery of Right Certificates to a Person other than, or the issuance or
delivery of certificates for the Common Stock in a name other than, that of the
registered holder of the Right Certificate evidencing Rights surrendered for
exercise or to issue or to deliver any certificates for Common Stock upon the
exercise of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time of surrender)
or until it has been established to the Company's satisfaction that no such tax
is due.
Section 10. Common Stock Record Date. Each person in whose name any
certificate for shares of Common Stock is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Common Stock represented thereon, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Common Stock 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 Common
Stock transfer books of the Company are open. Prior to the exercise of the
Rights evidenced thereby, the holder of a Right Certificate 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 limitations, the
right to vote, to receive dividends or other distributions, or to exercise any
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
18
Section 11. Adjustment of Purchase Price, Number of Shares, or Number of
Rights. The Purchase Price, the number of shares of Common Stock 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 dividend on the Common Stock payable in shares
of Common Stock, (B) subdivide the outstanding Common Stock, (C) combine
the outstanding Common Stock into a smaller number of shares of Common
Stock, or (D) issue any shares of its capital stock in a reclassification
of Common 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
Section 7(e) hereof, the Purchase Price in effect the time of the record
date for such dividend or of the effective date of such subdivision,
combination, or reclassification, and the number of kind of shares of
Common Stock or capital stock, as the case may be, issuable on such date,
shall be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the aggregate number and kind
of shares of Common Stock or capital stock, as the case may be, which, if
such Right has been exercised immediately prior to such date and at a time
when the Common Stock transfer books of the Company were open, he would
have owned upon such and been entitled to receive by virtue of such
dividend, subdivision, combination, or reclassification. If an event occurs
which would require an adjustment under both this Section 11(a)(i) and
Section (a)(ii) hereof, the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) hereof.
19
(ii) In the event (A) any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after the date of this
Agreement, directly or indirectly, (1) shall merge into the Company or
otherwise combine with the Company and the Company shall be the continuing
or surviving corporation of such merger or combination and the Common Stock
of the Company shall remain outstanding and unchanged, (2) shall receive
any compensation from the Company or any of the Company's Subsidiaries
other than compensation for full-time employment as a regular employee at
rates in accordance with the Company's (or its Subsidiaries') past
practices, or (3) shall receive the benefit, directly or indirectly (except
proportionately as a stockholder and except if resulting from a requirement
of law or governmental regulation), of any loans, advances, guarantees,
pledges, or other financial assistance or any tax credits or other tax
advantage provided by the Company or any of its Subsidiaries, or (B) any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any
Person or entity organized, appointed, or established by the Company for or
pursuant to the terms of any such plan), alone or together with its
Affiliates and Associates, shall, at any time after the Rights Dividend
Declaration Date, become the Beneficial Owner of 35% or more of the shares
of Common Stock then outstanding, unless the event causing the 35%
threshold to be crossed is a transaction set forth in Section 13(a) hereof,
or is an acquisition of shares of Common Stock pursuant to a tender offer,
or exchange offer for all outstanding shares of Common Stock at a price and
on terms determined by at least a majority of the Continuing Directors,
after receiving advice from one or more investment banking firms, to be (1)
at a price which is fair to stockholders (taking into account all factors
which such members of the Board deem relevant
20
including, without limitation, prices which could reasonably achieved if
the Company or its assets were sold on an orderly basis designed to realize
maximum value) and (2) otherwise in the best interests of the Company and
its stockholders, then, promptly following the occurrence of any event
described in Section 11(a)(ii)(A) or (B) hereof, proper provision shall be
made so that each holder of a Right (except as provided below) shall
thereafter have the right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement, such
number of shares of Common Stock of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then
number of shares of Common Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event, and
(y) dividing that product (which, following such first occurrence, shall
thereafter be referred to as the "Purchase Price" for each Right and for
all purposes of this Agreement) by 50% of the current market price
(determined pursuant to Section 11(d)(i) hereof) per share of Common Stock
on the date of such first occurrence (such number of shares, the
"Adjustment Shares").
(iii) In the event that the number of shares of Common Stock which
are authorized by the Company's certificate of incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise
of the Rights are not sufficient to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii) of this Section
11(a), the Company shall: (A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the "Current
Value") over (2) the Purchase Price (such excess, the "Spread"), and (B)
with respect to each Right, make adequate provision to substitute for the
Adjustment Shares, upon payment of the
21
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price,
(3) Common Stock or other equity securities of the Company (including,
without limitation, shares, or units of shares, of preferred stock which
the Board of Directors of the Company has deemed to have the same value as
shares of Common Stock (such shares of preferred stock, "common stock
equivalents")), (4) debt securities of the Company, (5) other assets, or
(6) any combination of the foregoing, having an aggregate value equal to
the Current 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; provided, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty (30)
days following the later of (x) the first occurrence of a Section 11(a)(ii)
Event and (y) the date on which the Company's right of redemption pursuant
to Section 23(a) expires (the later of (x) and (y) being referred to herein
as the "Section 11(a)(ii) Trigger Date"), then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares of Common Stock (to
the extent available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. If the Board of Directors
of the Company shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be authorized for
issuance upon exercise in full of the Rights, the thirty (30) day period
set forth above may be extended to the extent necessary, but not more than
ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that
the Company may seek stockholder approval for the authorization of such
additional shares (such period, as it may be extended, the "Substitution
Period"). To the extent that the Company determines that some action need
be taken pursuant to the first and/or second
22
sentences of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 7(e) hereof, that such action shall apply uniformly to
all outstanding Rights, and (y) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine
the value thereof. In the event of any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. For purposes of this Section
11(a)(iii), the value of the Common Stock shall be the current market price
(as determined pursuant to Section 11(d) hereof per share of the Common
Stock on the Section 11(a)(ii) Trigger Date) and the value of any "common
stock equivalent" shall be deemed to have the same value as the Common
Stock on such date.
(b) In case the Company shall fix a record date for the issuance of
rights, options, or warrants to all holders of Common Stock entitling them (for
a period expiring within 45 calendar days after such record date) to subscribe
for or purchase shares of Common Stock (or shares having the same rights,
privileges and preferences as the Common Stock ("common stock equivalents")) or
securities convertible into Common Stock or common stock equivalents at a price
per share of Common Stock or common stock equivalents (or having a conversion
price per share, if a security convertible into Common Stock or common stock
equivalents) less than the then current per share market price of the Common
Stock (as defined in Section 11(d) hereof) 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 Common Stock
23
outstanding on such record date plus the number of shares of Common Stock which
the aggregate offering price of the total number of Common Stock and/or common
stock equivalents so 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 Common Stock outstanding on such record date plus number of additional shares
of Common Stock and/or common stock equivalents 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 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. Common Stock owned by or held for the account of
the Company shall not be deemed outstanding for the purpose of any computation.
Such adjustment shall be made successively whenever such a record date is fixed;
and in the event that such rights or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness or assets
(other than a regular quarterly cash dividend or a dividend payable in Common
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 then current
per share market price of the Common Stock (as defined in Section 11(d)
24
hereof) such record date, less the fair market value (as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent) of the portion of the
assets or evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one share of Common Stock and the denominator
of which shall be such current per share market price of the Common 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 then be in effect if such
record date had not been fixed.
(d) For the purpose of any computation hereunder, other than computations
made pursuant to Section 11(a)(iii) hereof, the "current market price" of any
security (a "Security" for the purpose of this Section 11(d)(i)) on any date
shall be deemed to be the average of the daily closing prices per share of such
Security for the thirty (30) consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the "current market
price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the ten (10)
consecutive Trading Days immediately following such date, provided, however,
that in the event that the current market price per share of the Security is
determined during a period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in shares of
such Security of securities convertible into such shares (other than the
Rights), or (B) any subdivision, combination, or reclassification of such
Security and prior to the expiration of the requisite thirty (30) Trading Days
or ten (10) Trading Days, as set forth above, or 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
25
appropriately adjusted to reflect the 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 ("NYSE") or, if the Security is not
listed or admitted to trading on the NYSE, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or admitted to trading on
any national securities exchange, the last closing price or, if no such sale
takes place on such day, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or such other system then
in use, or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Security selected by the Board
of Directors of the Company. If on such date no market maker is making a market
in the Security, the fair value of each share of such on such date as determined
in good faith by the Board of Directors of the issuer of such Security shall be
used. The term "Trading Day" shall mean a day on which the principal national
securities exchange on which the Security is listed or admitted to trading is
open for the transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange, a Business Day.
If shares of Common Stock are not 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.
26
(e) No such adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one ten-thousandth of a
share of Common Stock or any other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which requires such adjustment or
(ii) the date of the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than Common
Stock, 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 provision with respect to the
Common Stock contained in Sub-Sections 11(a), (b), (c), (e), (g), (h), (i), (j),
(k), and (m), and the provisions of Sections 7, 9, 10, 13, and 14 with respect
to the shares of Common 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 Common Stock
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
27
(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 shares of Common Stock
(calculated to the nearest one ten-thousandth) obtained by (i) multiplying (x)
the number of shares 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 Common Stock purchasable upon the exercise
of a Right. Each of the Rights outstanding after such adjustment of the number
of Rights shall be exercisable for the number of shares of Common 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 ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be made.
This record date may be the date on which the Purchase Price is adjusted or any
date thereafter, but, if the Right Certificates have been issued, shall be at
least ten (10) days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section
28
11(i), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for herein
and shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of shares of Common Stock issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue to express the
Purchase Price and the number of shares of Common Stock which were expressed in
the initial Right 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 Common Stock
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 non-assessable shares of
Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuing to the holder
29
of any Right exercised after such record date of the shares of Common Stock and
other capital stock or securities of the Company, if any, issuable upon such
exercise over and above the shares of Common 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 in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Common Stock, issuance wholly
for cash of any Common Stock at less than the current market price, issuance
wholly for cash of Common Stock or securities which by their terms are
convertible into or exchangeable for Common Stock, stock dividends or issuance
of rights, options or warrants referred to in this Section 11, hereafter made by
the Company to holders of its Common Stock shall not be taxable to such
stockholders.
(n) The Company covenants and agrees that it shall not, at any time after
the Distribution Date, (i) consolidate with, (ii) merge with or into, or (iii)
sell or transfer to, 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, any other Person (other than a Subsidiary of the
Company in a transaction that complies with Section 11(0) hereof) if (x) at the
time of or immediately after such consolidation, merger, or sale there are any
rights, warrants or other instruments outstanding or agreements in effect which
would substantially diminish or otherwise eliminate the
30
benefits intended to be afforded by the Rights or (y) the shareholders of the
Person who constitutes, or would constitute the "Principal Party" for purposes
of Section 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Shares Acquisition
Date, it will not, except as permitted by Section 23 or Section 26 hereof, take
any action the purpose or effect of which is to substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, unless
such action is approved by a majority of the Continuing Directors.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend Declaration
Date 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 shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock then outstanding, or issued
or delivered thereafter 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 event shall equal the result obtained
by multiplying the number of Rights associated with each share of Common Stock
immediately prior to such event by a fraction, the numerator 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.
31
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 and Section 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common Stock
a copy of such certificate, and (c) mail a brief summary thereof to each holder
of a Right Certificate in accordance with Section 25 hereof.
Section 13. Consolidation, Merger, or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following the Shares Acquisition Date, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company), and the Company shall not
be the continuing or surviving corporation, (y) any Person (other than a
Subsidiary of the Company) shall consolidate with, or merge with or into, the
Company, and the Company shall be the continuing or surviving corporation and,
in connection with such consolidation or merger, all or part of the outstanding
shares of Common Stock shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property, or (z) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer), in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any Person or Persons
(other than the Company or any Subsidiary of the Company in one or more
transactions), then, and in each such case (except as contemplated by Section
13(d) hereof), proper provision shall be made so that:
(i) each holder of a Right, except as provided in Section 7(e)
hereof,
32
shall thereafter 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 validly authorized and issued, fully paid, non-
assessable and freely tradeable shares of Common Stock of the Principal
Party (as such term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal, or other adverse claims, as shall be
equal to the result obtained by (A) multiplying the then current Purchase
Price by the number of shares of Common Stock for which a Right is
exercisable immediately prior to the first occurrence of a Section 13 Event
(or, if a Section 11(a)(ii) Event has occurred prior to the first
occurrence of Section 13 Event, multiplying the number of such shares of
Common Stock for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event by the Purchase Price in
effect immediately prior to such first occurrence), and dividing that
product (which, following the first occurrence of a Section 13 Event, shall
be referred to as the "Purchase Price" for each Right and for all purposes
of this Agreement) by (B) 50% of the current market price (determined
pursuant to Section 11(d)(i) hereof) per share of the Common Stock or other
securities of such Principal Party on the date of consummation of such
Section 13 Event;
(ii) such Principal Party shall thereafter be liable for, and shall
automatically assume by virtue of such Section 13 Event, 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 only to such Principal Party following the
first occurrence of a Section 13 Event;
33
(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 connection with the consummation of any such transaction as may
be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its shares of
Common Stock or other securities thereafter deliverable upon the exercise
of the Rights; and
(v) the provisions of Section 11(a)(ii) hereof shall be of no effect
the following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), 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 such merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), 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 or other
securities of such Person is not at such time and has not been continuously over
the preceding twelve (12) month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of another
Person the Common Stock of which is and has been so registered, "Principal
Party" shall refer to such other Person; and (2)
34
in case such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stocks 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.
(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 which 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 such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger, or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will
(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, and will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after
such filing and (B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Final Expiration Date; and
(ii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply
in all respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations, or sales or other transfers. In the event that a
Section 13 Event shall
35
occur at any time after the occurrence of a Section 11(a)(ii) Event, the Rights
which have not theretofore been exercised shall thereafter become exercisable in
the manner described in Section 13(a).
(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 tender offer or exchange
offer for all outstanding shares of Common Stock which complies with the
provisions of Section 11(a)(ii)(B) hereof (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
shares of Common Stock whose shares were purchased pursuant to such tender
offer or exchange offer; and
(iii) the form of consideration being offered to the remaining
holders of shares of Common Stock pursuant to such transaction is the same
as the form of consideration paid pursuant to such tender offer of exchange
offer.
Upon consummation of any such transaction contemplated by this Section
13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights, except
36
prior to the Distribution Date as provided in Section 11(p) hereof, or to
distribute Right Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Date immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the NYSE or, if the Rights are
not listed or admitted to trading on the NYSE, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights the fair value of the
Rights on such date as determined in good faith by the Board of Directors of the
Company shall be used.
(b) The Company shall not be required to issue fractions of shares of
Common Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock, and in lieu thereof, the Company
shall pay to the
37
registered holders of Right Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one share of Common Stock. For purposes of this Section 14(b),
the current market value of one share of Common Stock shall be the closing price
of one share of Common Stock (as determined pursuant to Section 11(d)(i) hereof)
for the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any Right Certificate (or, prior to the Distribution
Date, of the Common Stock), may, in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or preceding against
the Company to enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Right Certificate in the manner provided in such
Right Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Agreement.
38
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of shares of Common Stock;
(b) after the Distribution Date, the Right Certificate is 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;
(c) subject to Section 7(e) hereof, the Company and the Rights Agent may
deem and treat the person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right 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; and
(d) notwithstanding anything in this Agreement to the contrary, neither the
Company nor the Rights Agent shall have any liability to any holder of a Right
or other Person as a result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent injunction or
other order, decree, or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory, or administrative agency or commission, or any
statute, rule, regulation, or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must use
39
its best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends,
or be deemed for any purpose the holder of a share of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote 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 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution of this Agreement and
the exercise and performance of its duties hereunder. The Company also agrees
to indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without negligence, bad faith, or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of
40
defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability for,
or in respect of any action taken, suffered or omitted by it in connection with,
its administration of this Agreement in reliance upon any Right 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, or otherwise upon the
advice of counsel as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21 hereof. In case
at the time such successor Rights Agent shall succeed to the agency created by
this Agreement, any of the Right Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of
41
the predecessor Rights Agent or in the name of the successor Rights Agent; and
in all such cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) The Rights Agent shall not be deemed to have knowledge of any fact or
matter pertaining to the performance of its duties under this Agreement, except
such facts or matters as are evidenced by records which are required to be
created and maintained by it hereunder, until it shall have been advised thereof
in writing by the Company or by a holder of Rights. Whenever in the performance
of its duties under this
42
Agreement the Rights Agent shall deem it necessary or desireable that any fact
or matter be proved or established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman of the
Board, the President, any Vice President, the Treasurer, or the Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any other
Person only for its own negligence, bad faith, or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements under this Agreement, except such facts or matters
as are evidenced by records which are required to be created and maintained by
it hereunder, until it shall have been advised thereof in writing by the Company
or by a holder of Rights. Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
President, any Vice President, the Treasurer, or the Secretary of the Company
and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith
by
43
it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any other
Person only for its own negligence, bad faith, or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(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 of
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment in
the terms of the Rights (including the manner, method, or amount thereof)
provided for in Section 11 or Section 13 hereof or the ascertaining of the
existence of facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after actual
notice that such change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock to be issued pursuant
to this Agreement or any Right Certificate or as to whether any shares of Common
Stock will, when issued, be validly authorized and issued, fully paid, and non-
assessable.
44
(f) The Company agrees that it will perform, execute, acknowledge, and
deliver or cause to be performed, executed, acknowledged, and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President, any Vice President, the
Treasurer, or the Secretary of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be liable
for any action taken or suffered by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions.
(h) The Rights Agent and any stockholder, director, officer, or employee of
the Rights Agent may buy, sell, or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect, or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any such act, default,
neglect, or misconduct, provided, reasonable care was exercised in the selection
and continued employment thereof.
45
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon thirty (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 by registered or certified
mail, and to the holders of the Right Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of thirty (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 Right Certificate (who shall, with such notice, submit his
Right Certificate for inspection by the Company), then the registered holder of
any Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of the States of New
York or Texas (or of any other state in the United States so long as such
corporation is authorized to do business as a banking institution in the States
of New York or Texas), in good standing, having an office in the States of New
York or Texas) which is authorized under such laws to exercise corporate trust
or stock transfer powers and is subject to supervision or examination by federal
or state authority and which has at the time of its appointment as Rights Agent
a combined capital and surplus of at least $10 million. After appointment, the
successor Rights Agent shall be vested
46
with the same powers, rights, duties, and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act, or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option, at any time
prior to the earlier of (i) the close of business on the fifteenth day following
the Shares Acquisition Date (or, if the Shares Acquisition Date shall have
occurred prior to the Record Date, the close of business on the fifteenth day
following the Record Date), or (ii) the Final Expiration Date, redeem all but
not less than all the then outstanding Rights at a redemption price of $.05 per
Right, subject to appropriate adjustment to reflect any
47
stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "Redemption
Price"). Notwithstanding the foregoing, if (i) a Person becomes an Acquiring
Person, or (ii) a change resulting from a Solicitation (as hereinafter defined)
occurs in a majority of the directors in office at the commencement of such
Solicitation, then redemption of the Rights may only be authorized by a majority
of Continuing Directors then in office. Notwithstanding the foregoing, if,
following the occurrence of a Shares Acquisition Date and following the
expiration of the right of redemption hereunder, but prior to any Triggering
Event, (i) a Person who is an Acquiring Person shall have transferred or
otherwise disposed of a number of shares of Common Stock in one transaction or
series of transactions, not directly or indirectly involving the Company or any
of its Subsidiaries, such that such Person is thereafter a Beneficial Owner of
10% or less of the outstanding shares of Common Stock, and (ii) there are no
other Persons, immediately following the occurrence of the event described in
clause (i), who are Acquiring Persons, then the right of redemption shall be
reinstated and thereafter be subject to the provisions of this Section 23.
Notwithstanding anything contained in this Agreement to the contrary, the Rights
shall not be exercisable after the first occurrence of a Section 11(a)(ii) Event
until such time as the Company's right of redemption hereunder has expired. As
used in this Section 23, the term "Solicitation" means a proxy or consent
solicitation by a Person participating in such solicitation who has stated (or,
if upon the commencement of such solicitation, a majority of the Board of
Directors of the Company has determined in good faith) that such Person (or any
of its Affiliates or Associates) intends to take, or may consider taking, any
action which would result in such Person becoming an Acquiring Person or which
would cause the occurrence of a Triggering Event, but does not include a
solicitation by any Person (or one or more of its Affiliates or Associates)
concurrent with a cash tender offer pursuant to Schedule 14D-1 (or any successor
form) filed with the Securities and Exchange
48
Commission for all outstanding shares of Common Stock not beneficially owned by
such Person (or by its Affiliates or Associates).
(b) 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 for each Right so
held. Promptly after the action of the Board of Directors ordering the
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 all such holders at each holder's last address as it appears upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the Transfer Agent 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.
Section 24. Notice of Certain Events.
(a) In case the Company shall propose at any time after the Distribution
Date (i) to pay any dividend payable in stock of any class to the holders of its
Common Stock or to make any other distribution to the holders of its Common
Stock (other than a regular quarterly cash dividend), (ii) to offer to all of
the holders of its outstanding shares of Common Stock rights or warrants to
subscribe for or to purchase any additional shares of Common Stock or shares of
stock of any class or any other securities, rights, or options, (iii) to effect
any reclassification of its Common Stock (other than a reclassification
involving only the subdivision of outstanding shares of Common Stock),
49
(iv) to effect any consolidation or merger into or with, or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to, any other Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof), (v) to effect the liquidation,
dissolution, or winding up of the Company, or (vi) to declare or pay any
dividend on the Common Stock payable in shares of Common Stock or to effect a
subdivision, combination, or consolidation of the Common Stock (by
reclassification or otherwise that by payment of dividends in Common Stock),
then, in each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 25 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, or 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
therein by the holders of the Common Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by clause (i) or
(ii) above at least twenty (20) days prior to the record date for determining
holders of the Common Stock for purposes of such action, and in the case of any
such other action, at least twenty (20) days prior to the date of the taking of
such proposed action or the date of participation therein by the holders of the
Common Stock, whichever shall be the earlier.
(b) In case a Section 11(a)(ii) Event shall occur, then the Company shall
as soon as practicable thereafter give to each holder of a Right Certificate, in
accordance with Section 25 hereof, a notice of the occurrence of such event,
which notice shall describe the event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof.
50
Section 25. Notices. Notices or demand authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right 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:
BancTec, Inc.
0000 XXX Xxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Corporate Secretary
With a copy to:
Xxxxxx & Xxxxxx, L.L.C.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxx Xxxxxx
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right 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:
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Notices or demand authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right 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.
51
Section 26. Supplements and Amendments. Prior to the Distribution Date
and subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement without the approval of any holders of certificates
representing shares of Common Stock. From and after the Distribution Date and
subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Right Certificates in order (i)
to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder (which lengthening or
shortening, following the first occurrence of an event set forth in clauses (i)
and (ii) of the first proviso to Section 23(a) hereof, shall be effective only
if there are Continuing Directors and shall require the concurrence of a
majority of such Continuing Directors), or (iv) to change or supplement the
provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Right Certificates; provided, this Agreement may not be supplemented or amended
to lengthen, pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the Rights are not
then redeemable, or (B) any other time period unless such lengthening is for the
purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 26, the Rights Agent
shall execute such supplement or amendment. Notwithstanding anything contained
in this Agreement to the contrary, no supplement or amendment shall be made
which changes the Redemption Price, the Final Expiration Date, the Purchase
Price or the number of shares of Common Stock for which a Right is exercisable.
Prior to the Distribution Date,
52
the interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock.
Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. Determinations 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
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. The Board of Directors of the Company (with, where
specifically provided for herein, the concurrence of the Continuing Directors)
shall have the exclusive power and authority to administer' this Agreement and
to exercise all rights and powers specifically granted to the Board (with, where
specifically provided for herein, the concurrence of the Continuing Directors)
or to 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 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 (with, where specifically provided for herein, the
concurrence of the Continuing Directors) in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
53
Rights, and all other parties, and (y) not subject the Board (or the Continuing
Directors) to any liability to the holders of the Rights.
Section 29. 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 Right Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
exclusive benefit of the Company, the Rights Agent, and the registered holders
of the Right Certificates (and, prior to the Distribution Date, registered
holders of the Common Stock).
Section 30. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable present or future laws, but if any provision of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid,
illegal, or unenforceable, in any respect under any such applicable law, such
invalidity, illegality, or unenforceability will not affect the remaining
provisions of this Agreement, but this Agreement will be reformed, construed,
and enforced in such jurisdiction or by such authority as if such invalid,
illegal, or unenforceable provision had never been contained herein.
Section 31. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts to be made and
performed entirely within such state.
54
Section 32. 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.
Section 33. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the date and year first above written.
BANCTEC, INC.
By /s/ Xxxxxxxx Xxxxxx
Senior Vice President, Treasurer, and Chief Financial Officer
AMERICAN STOCK TRANSFER & TRUST COMPANY
By /s/ Xxxx Xxxxxx
Vice President
55
EXHIBIT A
---------
Form of Right Certificate
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER MAY 20, 2008 OR EARLIER IF REDEEMED BY THE COMPANY. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.05 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM
IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
MAY BECOME NULL AND VOID.
Right Certificate
BANCTEC, 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 May 26, 1998 (the "Rights Agreement"), between
BancTec, Inc., a Delaware corporation (the "Company"); and American Stock
Transfer & Trust Company (the "Rights Agent"), to purchase from the Company at
any time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M., New York time, on May 20, 2008 at the
principal office of the Rights Agent or at the office of its successor as Rights
Agent, one fully paid non-assessable share of Common Stock ("Common Stock") of
the Company, at a purchase price of $85.00 per share of Common Stock (the
"Purchase Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase duly executed. The number of Rights
evidenced by this Right Certificate (and the number of shares of Common Stock
which may be purchased upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of May 26, 1998,
based on the Common Stock as constituted at such date. As provided in the
Rights Agreement, the Purchase Price and the number of shares of Common Stock
which may be purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of
certain events.
This Right 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 Right Certificates. Copies of
the Right Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the
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Rights Agent.
The Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase like aggregate number of
shares of Common Stock as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person (as such terms are defined in the Rights Agreement),
(ii) a transferee of any such Acquiring Person, Associate, or Affiliate, or
(iii) under certain circumstances specified in the Rights Agreement, a
transferee of a person who; after such transfer, became an Acquiring Person, or
an Affiliate or Associate of an Acquiring Person, such Rights shall become null
and void and no holder hereof shall have any right with respect to such Rights
from and after the occurrence of such Section 11(a)(ii) Event.
No fractional shares of Common Stock will be issued upon the exercise of
any Right or Rights evidenced hereby, but in lieu thereof a cash payment may be
made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of Common Stock or
of any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right 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 Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
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WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of ________________________, 19___.
BANCTEC, INC.
ATTEST:
_________________________ By _________________________
Secretary Its _________________________
Countersigned:
By ______________________
Authorized Signature
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Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer Right Certificate)
FOR VALUE RECEIVED ____________________________________
hereby sells, assigns, and transfers unto ______________________________________
________________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title, and interest therein,
and does hereby irrevocably constitute and appoint ______________________
Attorney, to transfer the within Right Certificate on the books of the within-
named Company, with full power of substitution.
Dated: _______________, 19___
_________________________
Signature
Signature Guaranteed:
--------------------------------------------------------------------------------
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right 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
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Right evidenced by this Right Certificate from
any Person who is, was, or subsequently became an Acquiring Person or an
Associate or Affiliate of an Acquiring Person.
Dated: _______________, 19___
_________________________
Signature
Signature Guaranteed:
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NOTICE
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
A-5
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right represented
by the Right Certificate.
To: BANCTEC, INC.
The undersigned hereby irrevocably elects to exercise __________________
Rights represented by this Right Certificate to purchase the shares of Common
Stock issuable upon the exercise of such Rights and requests that certificates
for such shares of Common Stock be issued in the name of:
Please insert social security or other identifying number
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
Dated: _______________, 19___
_________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
A-6
Form of Reverse Side of Right Certificate - continued
--------------------------------------------------------------------------------
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right 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
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Right evidenced by this Right Certificate from
any Person who is, was, or subsequently became an Acquiring Person or an
Associate or Affiliate of an Acquiring Person.
Dated: _______________, 19___
_________________________
Signature
Signature Guaranteed:
--------------------------------------------------------------------------------
NOTICE
------
The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Assignment
or the Form of Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored.
A-7
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On May 21, 1998, the Board of Directors of BancTec, Inc. (the "Company")
declared a dividend distribution of one Right for each outstanding share of
Common Stock, $.01 par value, of the Company to stockholders of record at the
close of business on May 26, 1998. Each Right entitles the registered holder to
purchase from the Company one share of Common Stock of the Company, at a
Purchase Price of $85.00 per share of Common Stock, subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and American Stock Transfer & Trust
Company, as Rights Agent.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Right Certificates will be
distributed. The Rights will separate from the Common Stock and a Distribution
Date will occur upon the earlier of (i) ten (10) days following 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 20% or more of the outstanding shares of Common Stock (the "Shares
Acquisition Date"), or (ii) ten (10) business days following the commencement of
a tender offer or exchange offer that would result in a person or group
beneficially owning 30% or more of such outstanding shares of Common Stock.
Until the Distribution Date, (i) the Rights will be evidenced by the Common
Stock certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after the Record Date
will contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and will expire at
the close of business on May 20, 2008, unless earlier redeemed by the Company as
described below.
As soon as practicable after the Distribution Date, Right Certificates will be
mailed to holders of record of the Common Stock as of the close of business on
the Distribution Date and, thereafter, the separate Right Certificates alone
will represent the Rights. Except as otherwise determined by the Board of
Directors, and except in certain circumstances described in the Rights
Agreement, only shares of Common Stock issued prior to the Distribution Date
will be issued with Rights.
In the event that, at any time following the Distribution Date, (i) the
Company is the surviving corporation in a merger with an Acquiring Person and
its Common Stock is not changed or exchanged, (ii) a Person becomes the
beneficial owner of more than 35% of the then outstanding shares of Common Stock
other than pursuant to an offer for all outstanding shares of Common Stock which
the independent directors determine to be
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fair to, and otherwise in the best interest of stockholders, or (iii) an
Acquiring Person engages in one or more "self-dealing" transactions as set forth
in the Rights Agreement, each holder of a Right will thereafter have the right
to receive, upon exercise, Common Stock (or, in certain circumstances, cash,
property, or other securities of the Company) having a value equal to two times
the exercise price of the Right. Notwithstanding any of the foregoing, following
the occurrence of any of the events set forth in this paragraph, all Rights that
are, or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by an Acquiring Person will be null and void. However, Rights
are not exercisable following the occurrence of either of the events set forth
above until such time as the Rights are no longer redeemable by the Company as
set forth below.
In the event that, at any time following the Shares Acquisition Date, (i) the
Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation (other than a merger
described in the preceding paragraph or a merger which follows an offer
described in the preceding paragraph), or (ii) 50% or more of the Company's
assets or earning power is sold or transferred, each holder of a Right (except
Rights which previously have been voided as set forth above) shall thereafter
have the right to receive, upon exercise, common stock of the acquiring company
having a value equal to two times the exercise price of the Right. The events
set forth in this paragraph and in the preceding paragraph are referred to as
the "Triggering Events."
The Purchase Price payable, and the number of shares of Common 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 Common
Stock, (ii) if holders of the Common Stock are granted certain rights or
warrants to subscribe for Common Stock or convertible securities at less than
the current market price of the Common Stock, or (iii) upon the distribution to
holders of the Common Stock of evidences of indebtedness or assets (excluding
regular quarterly cash dividends) or of subscription rights or warrants (other
than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be required
until cumulative adjustments amount to at least 1% of the Purchase Price. No
fractional shares of Common Stock will be issued and, in lieu thereof, an
adjustment in cash may 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 until fifteen days following the Shares Acquisition Date, the
Company may redeem the Rights in whole, but not in part, at a price of $.05 per
Right, payable in cash. Under certain circumstances set forth in the Rights
Agreement, the decision to redeem shall require the concurrence of a majority of
the Continuing Directors. After the redemption period has expired, the
Company's right of redemption may be reinstated if an Acquiring Person reduces
his beneficial ownership to 10% or less of the outstanding shares of Common
Stock in a transaction or series of transactions not involving the Company.
Immediately upon the action of the Board of Directors ordering
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redemption of the Rights, with, where required, the concurrence of the
Continuing Directors, the Rights will terminate and the only right of the
holders of Rights will be to receive the $.05 redemption price.
The term "Continuing Directors" means any member of the Board of Directors of
the Company who was a member of the Board prior to the date of the Rights
Agreements, and any person who is subsequently elected to the Board if such
person is recommended or approved by a majority of the Continuing Directors, but
shall not include an Acquiring Person, or any representative of, or person
affiliated with, the foregoing entities.
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. While the distribution of the Rights will not be
taxable to stockholders or to the Company, stockholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.
Other than those provisions relating to the principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board (in certain circumstances, with the concurrence of the Continuing
Directors) in order to cure any ambiguity, to make changes which do not
adversely affect the interests of holders of Rights (excluding the interests of
any Acquiring Person), or to shorten or lengthen any time period under the
Rights Agreement; provided, however, that no amendment to adjust the time period
governing redemption shall be made at such time as the Rights are not
redeemable.
A copy of the Rights Agreement is being filed with the Securities and Exchange
Commission as an Exhibit to a Registration 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.
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