IVC INDUSTRIES, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
Rights Agreement
Dated as of May 15, 2000
TABLE OF CONTENTS
Section 1. Certain Definitions................................................1
Section 2. Appointment of Rights Agent........................................4
Section 3. Issuance of Right Certificates.....................................4
Section 4. Form of Right Certificate..........................................6
Section 5. Countersignature and Registration..................................7
Section 6. Transfer, Split-Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificate........................................................7
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights......8
Section 8. Cancellation and Destruction of Right Certificates................10
Section 9. Reservation and Availability of Preferred Stock...................10
Section 10. Preferred Stock Record Date.......................................11
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights..................................................12
Section 12. Certificate of Adjusted Purchase Price or Number of Shares........18
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.....................................................18
Section 14. Fractional Rights and Fractional Shares...........................21
Section 15. Rights of Action..................................................22
Section 16. Agreement of Right Holders........................................22
Section 17. Right Certificate Holder Not Deemed a Stockholder.................23
Section 18. Concerning the Rights Agent.......................................23
Section 19. Merger or Consolidation or Change of Name of Rights Agent.........24
Section 20. Duties of Rights Agent............................................24
Section 21. Change of Rights Agent............................................27
Section 22. Issuance of New Right Certificates................................28
Section 23. Redemption and Termination........................................28
Section 24. Notice of Certain Events..........................................29
Section 25. Notices...........................................................30
Section 26. Supplements and Amendments........................................30
Section 27. Determination and Actions by the Board of Directors, etc..........31
Section 28. Successors........................................................31
Section 29. Benefits of this Agreement........................................31
Section 30. Severability......................................................31
Section 31. Governing Law.....................................................32
Section 32. Counterparts......................................................32
Section 33. Descriptive Headings..............................................32
Exhibit A - Form of Certificate of Designation Powers, Preferences and
Rights of the Series A Preferred Stock of IVC Industries Inc.
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred Stock
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Defined Term Cross Reference Sheet
Acquiring Person Section 1(a)
Adjustment Shares Section 11(a)(ii)
Adjusted Number of Shares Section 11(a)(iii)
Adjusted Purchase Price Section 11(a)(iii)
Affiliate Section 1(d)
Agreement Preface
Associate Section 1(d)
Beneficial Owner Section 1(e)
Beneficially Own Section 1(e)
Business Day Section 1(f)
Capital Stock Equivalent Section 11(a)(iii)
Close of Business Section 1(g)
Common Stock Section 1(h)
Corporation Preface
Current Per Market Price Section 11(d)
Current Per Share Market Price Section 11(d)(i)
Distribution Date Section 3(a)
Xxxxx Family Section 1(j)
Equivalent Preferred Shares Section 11(b)
Exchange Act Section 1(c)
Exempt Stockholder Section 1(k)
Final Expiration Date Section 7(a)
Interested Stockholder Section 1(m)
Permitted Offer Section 1(n)
ii
Person Section 1(o)
Preferred Stock Section 1(p)
Principal Party Section 13(b)
Proration Factor Section 11(a)(iii)
Purchase Price Section 4(a)
Record Date Preface
Redemption Date Section 7(a)
Redemption Price Section 23
Right Preface
Right Certificate Section 3(a)
Right Agent Preface
Rights Agreement Section 3
Section 11(a)(ii) Event Section 11(a)(ii)
Section 13 Event Section 13(a)
Security Section 11(d)(i)
Securities Act Section 1(b)
Shares Acquisition Date Section 1(t)
Subsidiary Section 1(u)
Summary of Rights Section 3(b)
Then outstanding Section 1(e)(iii)
Trading Day Section 11(d)(i)
Triggering Event Section 1(v)
Voting Securities Section 13(a)
Window Period Section 3(a)
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of May 15, 2000, between IVC INDUSTRIES INC., a
Delaware corporation (the "Corporation"), and AMERICAN STOCK TRANSFER & TRUST
COMPANY (the "Rights Agent").
The Board of Directors of the Corporation has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each share of
Common Stock of the Corporation outstanding at the close of business on May 24,
2000 (the "Record Date"), each Right representing the right to purchase
one-thousandth of a Preferred Share, 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 and, to the extent
provided in Section 22 of this Agreement, between the Distribution Date and the
earlier of the Redemption Date and the Final Expiration Date.
Certain terms used in this Agreement are defined in Section 1 of this
Agreement.
The parties hereto hereby agree as follows:
Section 1. Certain Definitions. For the purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 15% or more of the then outstanding Common Stock (other than as a result of a
Permitted Offer) or was such a Beneficial Owner at any time after the date
hereof, whether or not such person continues to be the Beneficial Owner of 15%
or more of the then outstanding Common Stock. Notwithstanding the foregoing, (A)
the term "Acquiring Person" shall not include (i) the Corporation, (ii) any
Subsidiary of the Corporation, (iii) any employee benefit plan of the
Corporation or of any Subsidiary of the Corporation, (iv) any Person or entity
organized, appointed or established by the Corporation for or pursuant to the
terms of any such plan (each entity referred to in clauses (i) to (iv) hereof
being a "Company Related Entity"), or (v) any Exempt Stockholder and (B) no
Person shall be deemed to be an Acquiring Person either (X) as a result of the
acquisition of Common Stock by the Corporation which, by reducing the number of
shares of Common Stock outstanding, increases the proportional number of shares
beneficially owned by such Person together with all Affiliates and Associates of
such Person; except that if (i) a Person would become an Acquiring Person (but
for the operation of this subclause (X)) as a result of the acquisition of
Common Stock by the Corporation, and (ii) after such share acquisition by the
Corporation, such Person, or an Affiliate or Associate of such Person, becomes
the Beneficial Owner of any additional shares of Common Stock, then such Person
shall be deemed an Acquiring Person, (Y) if (i) within eight days after such
Person would otherwise have become an Acquiring Person (but for the operation of
this subclause (Y)), such Person notifies the Board of Directors that such
Person did so inadvertently and (ii) within two days after such notification,
such Person is the Beneficial Owner of less than 15% of the outstanding Common
Stock, or (Z) if the acquisition of shares of Common Stock by such Person, or an
Affiliate or Associate of such Person, is approved prior to such acquisition by
the Board of Directors of the Corporation.
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(b) "Securities Act" shall mean the Securities Act of 1933, in
effect on the date of this Agreement.
(c) "Exchange Act" shall mean the Securities Exchange Act in effect
on the date of this Agreement.
(d) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act as in effect on the date of this Agreement.
(e) 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 after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered pursuant to a tender or
exchange offer made by 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) the right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such security (1) arises solely
from a revocable proxy or consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act and (2) is
not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which such Person
(or any of such person's Affiliates or Associates) has any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities) relating to the acquisition, holding, voting (except to
the extent contemplated by the proviso to Section 1(d)(ii)(B)) or disposing of
any securities of the Corporation.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Corporation, shall mean the number of
such securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to own beneficially hereunder.
(f) "Business Day" shall mean any day other than a Saturday, Sunday,
New Jersey State holiday or U.S. federal holiday.
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(g) "Close of business" on any given date shall mean 5:00 p.m., New
York time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 p.m., New York time, on the next succeeding Business Day.
(h) "Common Stock" when used with reference to the Corporation shall
mean the Common Stock, par value $0.08 per share, of the Corporation or, in the
event of a subdivision, combination or consolidation with respect to such shares
of Common Stock, the shares of Common Stock resulting from such subdivision,
combination or consolidation. "Common Stock" when used with reference to any
Person other than the Corporation shall mean the capital stock (or equity
interest) with the greatest voting power of such other Person or, if such other
Person is a Subsidiary of another Person, the Person or Persons which ultimately
control such first-mentioned Person.
(i) "Distribution Date" shall have the meaning set forth in Section
3 hereof.
(j) "Xxxxx Family" shall mean (i) E. Xxxxxx Xxxxx, Xxxxxx X. Xxxxx,
Xxxx X. Xxxxx (ii) their respective spouses and descendants and the spouses of
such descendants and (iii) any trust, the entire beneficial interest of which
is, during the term of such trust held for the benefit of one or more of the
foregoing individuals.
(k) "Exempt Stockholder" shall mean at any time (i) any Person who
or which, together with all Affiliates and Associates of such Person (which for
the purpose of this definition shall exclude any Company Related Entity), as of
the close of business on the day the Corporation publicly announces that the
Board of Directors has adopted this Agreement (the "Announcement Date"), was the
Beneficial Owner of more than 15 percent of the shares of Common Stock, (ii) any
member of the Xxxxx Family and (iii) Xxxxxx Xxxxxxxxx; provided, however, that
any such Person, together with all Affiliates and Associates of such Person,
shall not be an Exempt Stockholder if the number of shares of Common Stock
Beneficially Owned by that Person, together with all Affiliates and Associates
of such Person (other than as a result of a stock dividend, stock split or stock
distribution by the Corporation), exceeds by more than one percent the number of
shares of Common Stock Beneficially Owned by that Person, together with all
Affiliates and Associates of such Person, as of the Announcement Date.
(l) "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.
(m) "Interested Stockholder" shall mean any Acquiring Person or any
Affiliate or Associate of an Acquiring Person or any other Person in which any
such Acquiring Person, Affiliate or Associate has an interest, or any other
Person acting directly or indirectly on behalf of or in concert with any such
Acquiring Person, Affiliate or Associate.
(n) "Permitted Offer" shall mean a tender or exchange offer which is
for all outstanding shares of Common Stock at a price and on terms determined,
prior to the purchase of shares under such tender or exchange offer, by at least
a majority of the members of the Board of Directors who are not Acquiring
Persons or Affiliates, Associates, nominees or representatives of an Acquiring
Person, to be adequate (taking into account all factors that such Directors deem
relevant, including, without limitation, prices that could reasonably be
achieved if the Corporation
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or its assets were sold on an orderly basis designed to realize maximum value)
and otherwise in the best interests of the Corporation, its stockholders (other
than the Person or any Affiliate or Associate thereof on whose basis the offer
is being made) and its other relevant constituencies, taking into account all
factors that such Directors may deem relevant.
(o) "Person" shall mean any individual, firm, partnership,
corporation, limited liability company, trust, association, joint venture or
other entity, and shall include any successor (by merger or otherwise) of such
entity.
(p) "Preferred Stock" shall mean the Series A Preferred Stock, par
value $0.001 per share, of the Corporation having the relative rights,
preferences and limitations set forth in the Form of Certificate of Designation,
Powers, Preferences and Rights attached to this Agreement as Exhibit A.
(q) "Redemption Date" shall have the meaning set forth in Section 7
hereof.
(r) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii) hereof.
(s) "Section 13 Event" shall mean any event described in clause (x),
(y) or (z) of Section 13(a) hereof.
(t) "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 the Exchange Act) by the Corporation or
an Acquiring Person that an Acquiring Person has become such; provided, however,
that, if such Person is determined not to have become an Acquiring Person
pursuant to Section 1(a)(Y) hereof, then no Shares Acquisition Date shall be
deemed to have occurred.
(u) "Subsidiary" of any Person shall mean any corporation or other
Person of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
(v) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
Section 2. Appointment of Rights Agent. The Corporation hereby appoints
the Rights Agent to act as agent for the Corporation and the holders of the
Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of shares of Common Stock) in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment.
Section 3. Issuance of Right Certificates.
(a) Until the earlier of (i) the expiration of the 10 day period (or
any extension thereof as determined by the Board of Directors of the
Corporation) (the "Window Period") following the Shares Acquisition Date or (ii)
the close of business on the tenth day (or such later date as may be determined
by action of the Corporation's Board of Directors) after the date of the
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commencement by any Person (other than the Corporation, any Subsidiary of the
Corporation, any employee benefit plan of the Corporation or of any Subsidiary
of the Corporation or any Person or entity organized, appointed or established
by the Corporation for or pursuant to the terms of any such plan) of, or of the
first public announcement of the intention of any Person (other than the
Corporation, any Subsidiary of the Corporation, any employee benefit plan of the
Corporation or of any Subsidiary of the Corporation or any Person or entity
organized, appointed or established by the Corporation for or pursuant to the
terms of any such plan) to commence (which intention to commence remains in
effect for five Business Days after such announcement), a tender or exchange
offer, the consummation of which would result in any Person becoming an
Acquiring Person (including, in the case of both clauses (i) and (ii), any such
date which is after the date of this Agreement and prior to the issuance of the
Rights) (the earlier of such dates being herein referred to as the "Distribution
Date") (x) the Rights will be evidenced (subject to the provisions of Section
3(b) hereof) by the certificates for shares of Common Stock registered in the
names of the holders thereof (which certificates 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 (including a transfer to the
Corporation); provided, however, that if a tender offer is terminated prior to
the occurrence of a Distribution Date, then no Distribution Date shall occur as
a result of such tender offer. As soon an practicable after the Distribution
Date, the Corporation will prepare and execute, the Rights Agent will
countersign, and the Corporation will send or cause to be sent, at the
Corporation's expense, by first-class, postage-prepaid mail, to each record
holder of shares of Common Stock as of the close of business on the Distribution
Date, at the address of such holder shown on the records of the Corporation, a
Right Certificate, substantially in the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right for each share of Common Stock so held. As
of and after the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
(b) As promptly as practicable following the Record Date, the
Corporation will send a copy of a Summary of Rights to Purchase Preferred Stock,
in substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage-prepaid mail, to each record holder of shares of Common
Stock as of the close of business on the Record Date, at the address of such
holder shown on the records of the Corporation, with respect to certificates for
shares of 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
the Final Expiration Date), the surrender for transfer of any certificate for
shares of Common Stock outstanding on the Record Date, with or without a copy of
the Summary of Rights attached thereto, shall also constitute the transfer of
the Rights associated with such shares of Common Stock.
(c) Certificates for shares of Common Stock which become outstanding
(including, without limitation, reacquired shares of Common Stock referred to in
the last sentence of this paragraph (c)) after the Record Date but prior to the
earliest of the Distribution Date, the Redemption Date or the Final Expiration
Date, shall be deemed also to be certificates for Rights, and shall bear the
following legend:
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THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN
RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN IVC INDUSTRIES, INC.
("IVC") AND AMERICAN STOCK TRANSFER & TRUST COMPANY, DATED AS OF MAY 15,
2000 (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 IVC. 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. IVC WILL MAIL TO THE
HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE
AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES
SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY
PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE THEREOF (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN RELATED
PERSONS, WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY
SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.
With respect to such certificates containing the foregoing legend, until
the Distribution Date, the Rights associated with the shares of 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 shares of Common Stock represented
thereby. In the event that the Corporation purchases or acquires any shares of
Common Stock after the Record Date but prior to the Distribution Date, any
Rights associated with such shares shall be deemed cancelled and retired so that
the Corporation shall not be entitled to exercise any Rights associated with the
shares of Common Stock which are no longer outstanding.
Section 4. Form of Right Certificate.
(a) The Right Certificates (and the forms of election to purchase
and of assignment to be printed on the reverse thereof) shall be substantially
in the form set forth in Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Corporation 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 Sections 11 and 22 hereof, the Right Certificates shall entitle
the holders thereof to purchase such number of one-thousandths (1/1000) of a
share of Preferred Stock as shall be set forth therein at the price per
one-thousandth of a share of Preferred Stock set forth therein (the "Purchase
Price"), but the amount and type of securities purchasable upon the exercise of
each Right and the Purchase Price thereof shall be subject to adjustment as
provided herein.
(b) Any Right Certificate issued pursuant to Sections 3(a) or 22
hereof that represents Rights which are null and void pursuant to Section 7(e)
hereof and any Right
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Certificate issued pursuant to Sections 6 or 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 ARE NULL AND VOID.
The Corporation shall instruct the Rights Agent in writing of the Rights
which should be legended and shall supply the Rights Agent with such legended
Right Certificates. Provisions of Section 7(e) hereof shall be operative whether
or not the foregoing legend is contained on any such Right Certificate.
Section 5. Countersignature and Registration. The Right Certificates shall
be executed on behalf of the Corporation by its Chief Executive Officer, either
manually or by facsimile signature, shall have affixed thereto the Corporation's
seal or a facsimile thereof, and shall be attested by the Secretary or an
Assistant Secretary of the Corporation, either manually or by facsimile
signature. The Right Certificates shall be countersigned by an authorized
signatory of the Rights Agent which need not be the same authorized signatory
for all of the Right Certificates and shall not be valid for any purpose unless
so countersigned. In case any officer of the Corporation who shall have signed
any of the Right Certificates shall cease to be such officer of the Corporation
before countersignature by the Rights Agent and issuance and delivery by the
Corporation, such Right Certificates may nevertheless be countersigned by an
authorized signatory of the Rights Agent and issued and delivered by the
Corporation with the same force and effect as though the person who signed such
Right Certificates had not ceased to be such officer of the Corporation; and any
Right Certificate may be signed on behalf of the Corporation by any person who,
at the actual date of the execution of such Right Certificate, shall be a proper
officer of the Corporation 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 office or offices designated as the appropriate place for surrender
of such Right Certificates or transfer, 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
certificate number 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 Right Certificate. Subject to
the provisions of Sections 4(b), 7(e) and 14 hereof, at any time after the close
of business on the Distribution Date, and at or prior to the close of business
on the earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate may be transferred, split up, combined or exchanged for another
Right Certificate, entitling the registered holder to purchase a like number of
one-thousandth of a share of Preferred Stock (or, following a Triggering Event,
other securities, as the case may be) as the
7
Right Certificate surrendered then entitled such holder (or former holder in the
case of a transfer) to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right Certificate
to be transferred, split up, combined or exchanged at the office or offices of
the Rights Agent designated for such purpose. Neither the Rights Agent nor the
Corporation 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 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 Corporation and/or
Rights Agent shall reasonably request. Thereupon the Rights Agent shall, subject
to Sections 4(b), 7(e) and 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 Corporation may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
Upon receipt by the Corporation 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 Corporation's request,
reimbursement to the Corporation 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, along with a signature guarantee and such
other and further documents as the Rights Agent may reasonably request, the
Corporation will make and deliver a new Right Certificate of like tenor to the
Rights Agent for countersignature and 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) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights
Agent at the office or offices of the Rights Agent designated for such purpose,
along with a signature guarantee and such other and further documents as the
Rights Agent may reasonably request, together with payment of the aggregate
Purchase Price for the total number of one-thousandths of a share of Preferred
Stock (or other securities, as the case may be) as to which such surrendered
Rights are exercised, at or prior to the earliest of (i) the close of business
on May 15, 2010 (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 one-thousandth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be $21,
shall be subject to adjustment from time to time as provided in the next
sentence and in Sections 11 and 13(a) hereof and shall be payable in accordance
with paragraph (c) below. Anything in this Agreement to the contrary
notwithstanding, in the event that at any time after the date of this Agreement
and prior to the Distribution Date, the Corporation shall (i) declare or pay any
dividend on the Common Stock payable in shares of Common Stock or (ii) effect a
subdivision, combination or consolidation of
8
the Common Stock (by reclassification or otherwise than by payment of dividends
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in any such case, each share of Common Stock outstanding following
such subdivision, combination or consolidation shall continue to have a Right
associated therewith, and the Purchase Price following any such event shall be
proportionately adjusted to equal the result obtained by multiplying the
Purchase Price 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. The adjustment provided for in the
preceding sentence shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
effected.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment of the Purchase Price for the Preferred Stock (or other
securities, 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 in accordance with Section 6 hereof by certified check, cashier's
check or money order payable to the order of the Corporation, the Rights Agent
shall thereupon promptly (i) (A) requisition from any transfer agent of the
Preferred Stock certificates for the number of shares of Preferred Stock to be
purchased, and the Corporation hereby irrevocably authorizes its transfer agent
to comply with all such requests, or (B) if the Corporation, in its sole
discretion, shall have elected to deposit the Preferred Stock issuable upon
exercise of the Rights hereunder into a depositary, requisition from the
depositary agent depositary receipts representing such number of one-thousandths
of a share of Preferred Stock as are to be purchased (in which case certificates
for the Preferred Stock represented by such receipts shall be deposited by the
transfer agent with the depositary agent), and the Corporation will direct the
depositary agent to comply with such requests, (ii) when appropriate,
requisition from the Corporation the amount of cash to be paid in lieu of
issuance of fractional shares in accordance with Section 14 hereof, (iii) after
receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, and (iv) when appropriate, after receipt thereof, deliver such cash to
or upon the order of the registered holder of such Right Certificate. In the
event that the Corporation is obligated to issue other securities (including
Common Stock) of the Corporation pursuant to Section 11(a) hereof, the
Corporation will make all arrangements necessary so that such other securities
are available for distribution by the Rights Agent, if and when appropriate.
In addition, in the case of an exercise of the Rights by a holder pursuant
to Section 11(a)(ii) hereof, the Rights Agent shall return such Right
Certificate to the registered holder thereof after imprinting, stamping or
otherwise indicating thereon that the rights represented by such Right
Certificate no longer include the rights provided by said Section 11(a)(ii) and
if less than all the Rights represented by such Right Certificate were so
exercised, the Rights Agent shall indicate on the Right Certificate the number
of Rights represented thereby which continue to include the rights provided by
said Section 11(a)(ii).
(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
9
Right Certificate or to his duly authorized assigns, subject to the provisions
of Section 14 hereof, or the Rights Agent shall place an appropriate notation on
the Right Certificate with respect to those Rights exercised.
(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 Affiliate or Associate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any Affiliate
or Associate thereof) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any Affiliate
or Associate thereof) 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 a continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Corporation has determined is part of a plan, arrangement or
understanding which has as 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
Corporation 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 an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Corporation 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 Corporation 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 Corporation 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 Corporation shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Right Certificate purchased or acquired by the
Corporation otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Right Certificates to the Corporation.
Section 9. Reservation and Availability of Preferred Stock. The
Corporation covenants and agrees that at all times prior to the occurrence of a
Section 11(a)(ii) Event it will cause to be reserved and kept available out of
its authorized and unissued Preferred Stock, or any authorized and issued
Preferred Stock held in its treasury, the number of shares of Preferred Stock
that will be sufficient to permit the exercise in full of all outstanding
Rights, and, after the
10
occurrence of a Section 11(a)(ii) Event, shall, to the extent reasonably
practicable, so reserve and keep available a sufficient number of shares of
Common Stock (and/or other securities) which may be required to permit the
exercise in full of the Rights pursuant to this Agreement.
So long as the Preferred Stock (and, after the occurrence of a Section
11(a)(ii) Event, Common Stock or any other securities) issuable upon the
exercise of the Rights may be listed on any national securities exchange, the
Nasdaq National Market or the Nasdaq SmallCap Market, the Corporation shall use
its best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such exchange
upon official notice of issuance upon such exercise, or to be listed on the
Nasdaq National Market or the Nasdaq SmallCap Market, as the case may be.
The Corporation covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Stock (or Common Stock and/or
other securities, as the case may be) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such stock or other securities
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and non-assessable shares or securities.
The Corporation further covenants and agrees that it will pay when due and
payable any and all U.S. 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 Preferred Stock (or Common Stock and/or other securities, as the case may
be) upon the exercise of Rights. The Corporation shall not, however, be required
to pay any transfer tax which may be payable in respect of any transfer or
delivery of Right Certificates to a person other than, or the issuance or
delivery of certificates or depositary receipts for the Preferred Stock (or
Common Stock and/or other securities, as the case may be) 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 or
depositary receipts for Preferred Stock (or Common Stock and/or other
securities, as the case may be) upon the exercise of any Rights, until any such
tax shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Corporation's reasonable satisfaction that no such tax is due.
The Corporation shall use its best efforts to (i) file, as soon as
practicable following the Shares Acquisition Date, a registration statement
under the Securities Act, with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Securities Act and the rules and
regulations thereunder) until the date of the expiration of the Rights provided
by Section 11(a)(ii) hereof. The Corporation will also take such action as may
be appropriate under the blue sky laws of the various states.
Section 10. Preferred Stock Record Date. Each person in whose name any
certificate for Preferred Stock (or Common Stock and/or other securities, as the
case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Stock (or Common
Stock and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any
11
applicable transfer taxes) was made; provided, however, that, if the date of
such surrender and payment is a date upon which the Preferred Stock (or Common
Stock and/or other securities, as the case may be) transfer books of the
Corporation are closed, such person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Stock (or Common Stock and/or
other securities, as the case may be) transfer books of the Corporation are
open.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered by
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 Corporation shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Stock payable in
shares of Preferred Stock, (B) subdivide the outstanding shares of Preferred
Stock, (C) combine the outstanding shares of Preferred Stock into a smaller
number of shares of Preferred Stock or (D) issue any shares of its capital stock
in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Corporation 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 at the time of the record date for such dividend or of the effective date
of such subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Stock transfer books of the Corporation were open, such holder would
have owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the
Corporation issuable upon exercise of one Right. If an event occurs which would
require an adjustment under both Sections 11(a)(i) and 11(a)(ii), the adjustment
provided for in Section 11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) In the event any Person, alone or together with its
Affiliates and Associates, shall become an Acquiring Person, then proper
provision shall be made so that each holder of a Right (except as provided below
and in Section 7(e) hereof) shall, for a period of 60 days after the later of
the expiration of the Window Period following the occurrence of any such event
or the effective date of an appropriate registration statement under the
Securities Act pursuant to Section 9 hereof, have a right to receive, upon
exercise thereof at a price equal to the then current Purchase Price, in
accordance with the terms of this Agreement, such number of shares of Common
Stock (or, in the discretion of the Board of Directors, one-thousandths of a
share of Preferred Stock) as shall equal the result obtained by (y) multiplying
the then current Purchase Price by the then number of one-thousandths of a share
of Preferred Stock for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event (equal to the product of 1000 and
the number of shares of Preferred Stock for which a Right was then exercisable),
and dividing that product by (z) 50% of the then current per share market price
of the Corporation's Common Stock (determined pursuant to Section 11(d) hereof)
on the date of such first occurrence (such number of shares being referred to as
the "Adjustment Shares");
12
provided, however, that if the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of Section 13 hereof,
then only the provisions of Section 13 hereof shall apply and no adjustment
shall be made pursuant to this Section 11(a)(ii);
(iii) In the event that there shall not be sufficient treasury
shares or authorized but unissued (and unreserved) shares of Common Stock to
permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) and the Rights become so exercisable (and the Board has
determined to make the Rights exercisable into fractions of a share of Preferred
Stock), notwithstanding any other provision of this Agreement, to the extent
necessary and permitted by applicable law, each Right shall thereafter represent
the right to receive, upon exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, (x) a number of (or fractions
of) shares of Common Stock (up to the maximum number of shares of Common Stock
which may permissibly be issued) and (y) one-thousandth of a share of Preferred
Stock or a number of, or fractions of other equity securities of the Corporation
(or, in the discretion of the Board of Directors, debt) which the Board of
Directors of the Corporation has determined to have the same aggregate current
market value (determined pursuant to Section 11(d)(i) and (ii) hereof, to the
extent applicable) as one share of Common Stock (such number of, or fractions
of, shares of Preferred Stock, debt, or other equity securities or debt of the
Corporation being referred to as a "capital stock equivalent"), equal in the
aggregate to the number of Adjustment Shares; provided, however, if sufficient
Common Stock and/or capital stock equivalents are unavailable, then the
Corporation shall, to the extent permitted by applicable law, take all such
action as may be necessary to authorize additional shares of Common Stock or
capital stock equivalents for issuance upon exercise of the Rights, including
the calling of a meeting of stockholders; and provided, further, that if the
Corporation is unable to cause sufficient shares of Common Stock and/or capital
stock equivalents to be available for issuance upon exercise in full of the
Rights, then each Right shall thereafter represent the right to receive the
Adjusted Number of Shares upon exercise at the Adjusted Purchase Price (as such
terms are hereinafter defined). As used herein, the term "Adjusted Number of
Shares" shall be equal to that number of (or fractions of) shares of Common
Stock (and/or capital stock equivalents) equal to the product of (x) the number
of Adjustment Shares and (y) a fraction, the numerator of which is the number of
shares of Common Stock (and/or capital stock equivalents) available for issuance
upon exercise of the Rights and the denominator of which is the aggregate number
of Adjustment Shares otherwise issuable upon exercise in full of all Rights
(assuming there were a sufficient number of shares of Common Stock available)
(such fraction being referred to as the "Proration Factor"). The "Adjusted
Purchase Price" shall mean the product of the Purchase Price and the Proration
Factor. The Board of Directors may, but shall not be required to, establish
procedures to allocate the right to receive Common Stock and capital stock
equivalents upon exercise of the Rights among holders of Rights.
(b) In case the Corporation shall fix a record date for the issuance
of rights (other than the Rights), options or warrants to all holders of
Preferred Stock entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Preferred Stock (or shares
having the same rights, privileges and preferences as the Preferred Stock
("equivalent preferred shares")) or securities convertible into Preferred Stock
or equivalent preferred shares at a price per share of Preferred Stock or
equivalent preferred share (or having a conversion price per share, if a
security convertible into Preferred Stock or equivalent preferred shares) less
than the then current per share market price of the Preferred Stock (as
determined
13
pursuant to 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 Preferred Stock outstanding
on such record date plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock and/or
equivalent preferred shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current per share market price, and the denominator of which shall be
the number of shares of Preferred Stock outstanding on such record date plus the
number of additional shares of Preferred Stock and/or equivalent preferred
shares to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the
Corporation issuable upon exercise of one Right. In case such subscription price
may be paid in a consideration part or all of which shall be in a form other
than cash, the value of such consideration shall be determined in good faith by
the Board of Directors of the Corporation, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the
Rights Agent. Preferred Stock owned by or held for the account of the
Corporation shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights, options or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Corporation shall fix a record date, and shall give
simultaneous written notice to the Rights Agent for the making of a distribution
to all holders of the Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Corporation is the
continuing or surviving corporation) of evidences of indebtedness or assets
(other than a regular quarterly cash dividend or a dividend payable in shares of
Preferred Stock) or subscription rights or warrants (excluding those referred to
in Section 11(b) hereof), the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
then current per share market price (as determined pursuant to Section 11(d)
hereof) of the Preferred Stock on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the Corporation, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on 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 Preferred Stock and the denominator of which shall be
such current per share market price of the Preferred Stock; provided, however,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of the
Corporation to be issued upon exercise of one Right. Such adjustments shall be
made successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall again be adjusted to
be the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation hereunder, the "current
per share market price" of any security on any date shall be deemed to be the
average of the daily closing prices per share of such security for the 30
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date; provided, however, that in the event that the current per
14
share market price of such security is determined during a period following the
announcement by the issuer of such security of (A) a dividend or distribution on
such Security payable in shares of such security or securities convertible into
such shares, or (B) any subdivision, combination or reclassification of such
security and prior to the expiration of 30 Trading Days after the ex- dividend
date for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the current per
share market price shall be appropriately adjusted to reflect the current market
price per share equivalent of such security. 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, the Nasdaq National Market or the Nasdaq SmallCap Market, or if
such security is not listed or admitted to trading on the New York Stock
Exchange, the Nasdaq National Market or the Nasdaq SmallCap Market, as reported
in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange, on which such
security is listed or admitted to trading or, if such security is not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or such other system then
in use, or, if on any such date such 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 such security selected by the Board
of Directors of the Corporation. If on any such date no such market maker is
making a market in such security, the fair value of such security on such date
as determined in good faith by the Board of Directors of the Corporation shall
be used. The term "Trading Day" shall mean a day on which the principal national
securities exchange on which such security is listed or admitted to trading is
open for the transaction of business or, if such security is not listed or
admitted to trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market prices" of the Preferred Stock shall be determined in
accordance with the method set forth in Section 11(d)(i) hereof. If the
Preferred Stock is not publicly traded, the "current per share market price" of
the Preferred Stock shall be conclusively deemed to be the current per share
market price of the Common Stock as determined pursuant to Section 11(d)(i)
hereof (appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof), multiplied by 1000. If
neither the Common Stock nor the Preferred Stock is publicly listed or traded,
"current per share market price" shall mean the fair value per share as
determined in good faith by the Board of Directors of the Corporation, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent.
(e) Anything herein to the contrary notwithstanding, no adjustment
in the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one-thousandth of a share of Preferred Stock or
ten-thousandth of any other share or security, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any
15
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction which mandates such
adjustment or (ii) the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to Sections
11(a)(ii) or 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the Corporation other
than Preferred Stock, thereafter the number of other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Stock contained in Sections 11(a) through (c) hereof,
and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the
Preferred Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Corporation subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one-thousandths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Corporation shall have exercised its election as
provided in Section 11(i) hereof, upon each adjustment of the Purchase Price as
a result of the calculations made in Sections 11(b) and (c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one-thousandths of a share of Preferred Stock (calculated to the nearest one-
millionth of a share of Preferred Stock) obtained by (i) multiplying (x) the
number of one- thousandths of a share covered by a Right immediately prior to
this adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Corporation may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in lieu of any adjustment
in the number of one- thousandths of a Preferred Share purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of one-thousandths of a
share of Preferred Stock for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest
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 Corporation shall make a
public announcement, and shall give simultaneous written notice to the Rights
Agent, of its election to adjust the number of Rights, indicating the record
date for the adjustment, and, if known at the time, the amount of the adjustment
to be made. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Right Certificates have been issued,
shall be at least ten days later than the date of the public announcement. If
Right Certificates have been issued, upon each adjustment of the number of
Rights pursuant to this Section 11(h), the Corporation 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
16
such adjustment, or, at the option of the Corporation, 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 Corporation, 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 one-thousandths of a share of Preferred 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 one-thousandths of
a share of Preferred 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 number of
one-thousandths of a share of Preferred Stock, shares of Common Stock or other
securities issuable upon exercise of the Rights, the Corporation shall take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Corporation may validly and legally issue such number of fully paid and
non-assessable one-thousandths of a share of Preferred Stock, shares of Common
Stock or other securities 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 Corporation may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the Preferred Stock, Common Stock or other securities of the Corporation, if
any, issuable upon such exercise over and above the Preferred Stock, Common
Stock or other securities of the Corporation, if any, issuable upon exercise on
the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Corporation 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
Corporation 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 (i) any consolidation or subdivision of the Preferred Stock, (ii)
issuance wholly for cash of Preferred Stock at less than the current market
price, (iii) issuance wholly for cash of Preferred Stock or securities which by
their terms are convertible into or exchangeable for Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Corporation to holders of its Preferred Stock
shall not be taxable to such stockholders.
(n) The Corporation covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Corporation in a transaction which does not violate
Section 11(n) hereof), (ii) merge with or into any other Person (other than a
Subsidiary of the Corporation in a transaction which does not violate said
Section 11(n)), or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in
17
one transaction, or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Corporation and
its Subsidiaries (taken as a whole) to any other Person or Persons (other than
the Corporation and/or any of its Subsidiaries in one or more transactions each
of which does not violate said Section 11(n)), if (x) at the time of or
immediately after such consolidation, merger, sale or transfer there are any
charter or by-law provisions or any rights, warrants or other instruments or
securities outstanding or agreements in effect or other actions taken, which
would materially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger or sale, the stockholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of Section
13(a) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates and Associates. The Corporation shall not
consummate any such consolidation, merger, sale or transfer unless prior thereto
the Corporation and such other Person shall have executed and delivered to the
Rights Agent a supplemental agreement evidencing compliance with this Section
11(m).
(o) The Corporation covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Sections 23 or 26 hereof,
take (or permit any Subsidiary to take) any action the purpose of which is to,
or if at the time such action is taken it is reasonably foreseeable that the
effect of such action is to, materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
(p) The exercise of Rights under Section 11(a)(ii) hereof shall only
result in the loss of rights under said Section 11(a)(ii) to the extent so
exercised and shall not otherwise affect the rights represented by the Rights
under this Agreement, including the rights represented by Section 13 hereof.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 or 13 hereof, the
Corporation 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
and the Preferred 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. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall not be deemed to
have knowledge of such adjustment unless and until it shall have received such
certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, on or following the Shares Acquisition Date,
directly or indirectly, (x) the Corporation shall consolidate with, or merge
with and into, any Interested Stockholder or, if in such merger or consolidation
all holders of Common Stock are not treated alike, any other Person, (y) the
Corporation shall consolidate with, or merge with, any Interested Stockholder
or, if in such merger or consolidation all holders of Common Stock are not
treated alike, any other Person, and the Corporation shall be the continuing or
surviving corporation of such consolidation or merger (other than, in a case of
any transaction described in clauses (x) or (y), a merger or consolidation which
would result in all of the securities generally entitled to vote in the election
of directors ("voting securities") of the Corporation outstanding immediately
prior
18
thereto continuing to represent (either by remaining outstanding or by being
converted into securities of the surviving entity) all of the voting securities
of the Corporation or such surviving entity outstanding immediately after such
merger or consolidation and the holders of such securities not having changed as
a result of such merger or consolidation), or (z) the Corporation 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
Corporation and its Subsidiaries (taken as a whole) to any Interested
Stockholder or Stockholders or, if in such transaction all holders of Common
Stock are not treated alike, any other Person (other than the Corporation or any
Subsidiary of the Corporation in one or more transactions each of which does not
violate Section 11(n) hereof), then, and in each such case (except as provided
in 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, shall thereafter have the
right to receive, upon the exercise thereof at a price equal to the then current
Purchase Price, in accordance with the terms of this Agreement and in lieu of
Preferred Stock, such number of freely tradeable shares of Common Stock of the
Principal Party (as hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall equal
the result obtained by (A) multiplying the then current Purchase Price by the
number of one-thousandths of a share of Preferred Stock for which a Right is
then exercisable (without taking into account any adjustment previously made
pursuant to Section 11(a)(ii) hereof) and dividing that product by (B) 50% of
the then current per share market price of the Common Stock of such Principal
Party (determined pursuant to Section 11(d) hereof) on the date of consummation
of such Section 13 Event; (ii) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such Section 13 Event, all the obligations
and duties of the Corporation pursuant to this Agreement; (iii) the term
"Corporation" 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; and (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of its shares of 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 the Common Stock thereafter
deliverable upon the exercise of the Rights.
(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) hereof, the Person that is the issuer
of any securities into which Common Stock of the Corporation is 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 (including, if
applicable, the Corporation if it is the surviving corporation); and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions;
provided, however, that in either of the foregoing cases, (1) if the shares of
Common Stock of such Person are not at such time and have not been continuously
over the preceding 12 month period registered under Section 12 of the Exchange
Act, and such Person is a direct or indirect
19
Subsidiary of another Person the shares of Common Stock of which are and have
been so registered, "Principal Party" shall refer to such other Person; (2) in
case such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stock of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value; and (3)
in case such Person is owned, directly or indirectly, by a joint venture formed
by two or more Persons that are not owned, directly or indirectly, by the same
Person, the rules set forth in clauses (1) and (2) above shall apply to each of
the chains of ownership having an interest in such joint venture as if such
party were a Subsidiary of both or all of such joint venturers and the Principal
Parties in each such chain shall bear the obligations set forth in this Section
13 in the same ratio as their direct or indirect interests in such Person bear
to the total of such interests.
(c) The Corporation shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of its authorized shares of 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 Corporation and such Principal
Party shall have executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in paragraphs (a) and (b) of this
Section 13 and further providing that, as soon as practicable after the date of
any consolidation, merger, sale or transfer mentioned in paragraph (a) of this
Section 13, the Principal Party at its own expense shall:
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, 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 Securities Act) until the Final Expiration Date;
(ii) use its best efforts to qualify or register the Rights
and the securities purchasable upon exercise of the Rights under the blue sky
laws of such jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party 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. The rights under this
Section 13 shall be in addition to the rights to exercise Rights and adjustments
under Section 11(a)(ii) hereof and shall survive any exercise thereof.
(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) hereof if: (i) such transaction is consummated with
a Person or Persons who acquired Common Stock pursuant to a Permitted Offer (or
a wholly owned Subsidiary of any such Person or Persons); (ii) the price per
share of Common Stock offered in such transaction is not less than the price per
share of Common Stock paid to all holders of Common Stock whose shares were
purchased pursuant to such Permitted Offer; and (iii) the form of consideration
offered in such
20
transaction is the same as the form of consideration paid pursuant to such
Permitted 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 Corporation shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the 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 Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap Market or, if
the Rights are not listed or admitted to trading on the New York Stock Exchange,
the Nasdaq National Market or the Nasdaq SmallCap Market, 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
Corporation. 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 Corporation shall be used.
(b) The Corporation shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are one-thousandth or
integral multiples of one- thousandth of a share of Preferred Stock) upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of Preferred Stock (other than fractions which are one- thousandth or
integral multiples of one-thousandth of a share of Preferred Stock). Fractions
of shares of Preferred Stock in integral multiples of one-thousandth of a share
of Preferred Stock may, at the election of the Corporation, be evidenced by
depositary receipts, pursuant to an appropriate agreement between the
Corporation and a depositary selected by it; provided, however, that such
agreement shall provide that the holders of such depositary receipts shall have
the rights, privileges and preferences to which they are entitled as beneficial
owners of the Preferred Stock represented by such depositary receipts. In lieu
of fractional shares of Preferred Stock that are not one-thousandth or integral
multiples of one-thousandth of a share of Preferred Stock, the Corporation shall
pay to the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one share of Preferred Stock. For the purposes of this
Section 14(b), the current market value of a share of
21
Preferred Stock shall be the closing price of a share of Preferred Stock (as
determined pursuant to Section 11(d)(ii) hereof) for the Trading Day immediately
prior to the date of such exercise.
(c) Following the occurrence of one of the transactions or events
specified in Section 11 hereof giving rise to the right to receive Common Stock,
capital stock equivalents (other than shares of Preferred Stock) or other
securities upon the exercise of a Right, the Corporation shall not be required
to issue fractions of shares or units of such Common Stock, capital stock
equivalents or other securities upon exercise of the Rights or to distribute
certificates which evidence fractions of such shares of Common Stock, capital
stock equivalents or other securities. In lieu of fractional shares or units of
such shares of Common Stock, capital stock equivalents or other securities, the
Corporation may pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of a share or unit of such Common Stock,
capital stock equivalents or other securities. For purposes of this Section
14(c), the current market value shall be determined in that manner set forth in
Section 11(d) hereof for the Trading Day immediately prior to the date of such
exercise and, if such capital stock equivalent is not traded, each such capital
stock equivalent shall have the value of one-thousandth of a share of Preferred
Stock.
(d) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional share upon
exercise of a Right (except as provided above).
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 other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Corporation 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.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Corporation and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent
22
designated for such purpose, duly endorsed or accompanied by a proper instrument
of transfer and with the appropriate form fully executed, along with a signature
guarantee and such other further documentation as the Rights Agent may
reasonably request;
(c) subject to Sections 6 and 7(f) hereof, the Corporation and the
Rights Agent may deem and treat the person in whose name the Right Certificate
(or, prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificate
or the associated Common Stock certificate made by anyone other than the
Corporation or the Rights Agent) for all purposes whatsoever, and neither the
Corporation nor the Rights Agent, subject to the last sentence of Section 7(e)
hereof, shall be required to be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Corporation nor the Rights Agent shall have any liability to any
holder of a Right or a beneficial interest in 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 Corporation must use 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 the Preferred Stock or any other
securities of the Corporation 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 Corporation 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 other distributions or to exercise any preemptive 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. The Corporation agrees to pay to
the Rights Agent such compensation as shall be agreed to in writing in advance
of execution of this Agreement between the Corporation and the Rights Agent 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 expenses and other
disbursements incurred in the administration and execution of this Agreement and
the exercise and performance of its duties hereunder. The Corporation also
agrees to indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability, or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including, without limitation, the costs and
23
expenses of defending against any claim of liability in the premises. The
indemnity provided for herein shall survive the expiration of the Rights and the
termination of this Agreement.
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 Corporation,
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 and executed by the
proper Person or Persons.
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
all or substantially all of the 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 a predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor 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 only those
duties and obligations expressly imposed by this Agreement, and no implied
duties or obligations shall be read into this Agreement against the Rights
Agent, upon the following terms and conditions, by all of which the Corporation
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 Corporation), 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.
24
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of an Acquiring Person and the
determination of the current market price of any security) be proved or
established by the Corporation prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Corporation and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except to countersignature on such Right Certificates) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Corporation only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Corporation 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 7(e) hereof) or any
adjustment required under the provisions of Sections 11 or 13 hereof or
responsible for the manner, method or amount of any change in the exercisability
of the Rights or any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after receipt of the
certificate described in Section 12 hereof); nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any Preferred Stock or Common Stock to be issued pursuant to this
Agreement or any Right Certificate or as to whether any Preferred Stock or
Common Stock will, when issued, be validly authorized and issued, fully paid and
non-assessable; nor shall the Rights Agent be responsible for the legality of
the terms hereof in its capacity as an administrative agent.
(f) The Corporation 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 the
Chief Executive Officer of the Corporation, and to apply to such officer for
advice or instructions in connection with its duties, and shall not be liable
for any action taken or suffered by it in good faith or lack of action in
accordance with instructions of any such officer or for any delay in acting
while waiting for those instructions. Any application by the Rights Agent for
written instructions from the Corporation
25
may, at the option of the Rights Agent, set forth in writing any action proposed
to be taken or omitted by the Rights Agent under this Rights Agreement and the
date on or after which such action shall be taken or such omission shall be
effective. The Rights Agent shall not be liable for any action taken by, or
omission of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date shall
not be less than five Business Days after the date any officer of the
Corporation actually receives such application, unless any such officer shall
have consented in writing to an earlier date) unless, prior to taking any such
action (or the effective date in the case of an omission), the Rights Agent
shall have received written instruction in response to such application
specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Corporation or become pecuniarily interested in any
transaction in which the Corporation may be interested, or contract with or lend
money to the Corporation 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 Corporation 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 Corporation resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has not been
completed, the Rights Agent shall not take any further action with respect to
such requested exercise of transfer without first consulting with the
Corporation.
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 30 days' notice in writing mailed to the Corporation. The Corporation may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Stock or Preferred Stock by
registered or certified mail, and to 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 Corporation shall appoint a successor
to the Rights Agent. If the Corporation shall fail to make such appointment
within a period of 30 days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights
26
Agent or by the holder of a Right Certificate (who shall, with such notice,
submit his Right Certificate for inspection by the Corporation), then the
Corporation shall become the Rights Agent until a successor Rights Agent has
been appointed, and 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 Corporation or by such a
court, shall be a corporation organized and doing business under the laws of the
United States or of the State of Delaware or of the State of New York (or of any
other state of the United States so long as such corporation is authorized to do
business as a banking institution in the State of Delaware or in the State of
New York), in good standing, having an office in the State of Delaware or in the
State of New York, 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 $100,000,000. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment the Corporation shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock or
Preferred 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 Corporation
may, at its option, subject to Section 4 hereof, 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.
In addition, in connection with the issuance or sale of Common Stock
following the Distribution Date and prior to the earlier of the Redemption Date
and the Final Expiration Date, the Corporation (a) shall with respect to Common
Stock so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise, conversion or exchange of
securities, notes or debentures issued by the Corporation, and (b) may, in any
other case, if deemed necessary or appropriate by the Board of Directors of the
Corporation, issue Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) the
Corporation shall not be obligated to issue any such Right Certificates if, and
to the extent that, the Corporation shall be advised by counsel that such
issuance would create a significant risk of material adverse tax consequences to
the Corporation or the Person to whom such Right Certificate would be issued,
and (ii) no Right Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
27
Section 23. Redemption and Termination.
(a) (i) The Board of Directors of the Corporation may, at its
option, redeem all but not less than all of the then outstanding Rights at a
redemption price of $.01 per Right, as such amount may be appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such redemption price being hereinafter referred to as
the "Redemption Price"), (A) at any time prior to the earlier of (x) the
occurrence of a Section 11(a)(ii) Event (and after giving effect to the Window
Period), or (y) the Final Expiration Date, or (B) within 10 days after any
Person becomes an Acquiring Person if (x) the Acquiring Person notifies the
Board of Directors that such person became an Acquiring Person inadvertently and
(y) during such 10 day period, and at the time of redemption, the Acquiring
Person is no longer the Beneficial Owner of 15% or more of the then outstanding
Common Stock, or (C) the Board chooses to redeem the rights within the Window
Period. The Corporation may, at its option, pay the Redemption Price either in
Common Stock (based on the "current per share market price," as defined in
Section 11(d) hereof, of the Common Stock at the time of redemption) or cash;
provided that if the Corporation elects to pay the Redemption Price in Common
Stock, the Corporation shall not be required to issue any fractional shares of
Common Stock and the number of shares of Common Stock issuable to each holder of
Rights shall be rounded down to the next whole share.
(ii) In addition, the Board of Directors of the Corporation
may at its option, at any time following the occurrence of a Section 11(a)(ii)
Event (and after giving effect to the Window Period) and the expiration of any
period during which the holder of Rights may exercise the rights, under Section
11(a)(ii) hereof but prior to any Section 13 Event, redeem all but not less than
all of the then outstanding Rights at the Redemption Price (x) in connection
with any merger, consolidation or sale or other transfer (in one transaction or
in a series of related transactions) of assets or earning power aggregating 50%
or more of the earning power of the Corporation and its Subsidiaries (taken as a
whole) in which all holders of Common Stock are treated alike and not involving
(other than as a holder of Common Stock being treated like all other such
holders) an Interested Stockholder or (y)(A) if and for so long as the Acquiring
Person is not thereafter the Beneficial Owner of 15% of the Common Stock, and
(B) at the time of redemption no other Persons are Acquiring Persons.
(b) In the case of a redemption permitted under Section 23(a)(i)
hereof, immediately upon the date for redemption set forth (or determined in the
manner specified) in a resolution of the Board of Directors 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. In the case of a redemption permitted only under Section 23(a)(ii) hereof,
evidence of which shall have been filed with the Rights Agent, the right to
exercise the Rights will terminate and represent only the right to receive the
Redemption Price upon the later of the tenth Business Day following the giving
of such notice or the expiration of any period during which the rights under
Section 11(a)(ii) hereof may be exercised. The Corporation shall promptly give
public notice of any such redemption; provided, however, that the failure to
give, or any defect in, any such notice shall not affect the validity of such
redemption. Within ten days after such date for redemption set forth in a
resolution of the Board of Directors ordering the redemption of the Rights, the
Corporation shall
28
mail a notice of redemption to all the holders of the then outstanding Rights at
their last addresses as they appear upon the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the transfer agent
for the Common Stock, and to the Rights Agent. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. Neither the Corporation not any of
its Affiliates or Associates may redeem, acquire or purchase for value any
Rights at any time in any manner other than that specifically set forth in this
Section 23 and other than in connection with the purchase of Common Stock prior
to the Distribution Date.
(c) The Corporation may, at its option, discharge all of its
obligations with respect to the Rights by (i) issuing a press release, and
giving simultaneous written notice to the Rights Agent, announcing the manner of
redemption of the Rights in accordance with this Agreement and (ii) mailing
payment of the Redemption Price to the registered holders of the Rights at their
last addresses as they appear on the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent of
the Common Stock, and upon such action, all outstanding Rights and Right
Certificates shall be null and void without any further action by the
Corporation.
Section 24. Notice of Certain Events.
(a) In case the Corporation shall propose (i) to pay any dividend
payable in stock of any class to the holders of its Preferred Stock or to make
any other distribution to the holders of its Preferred Stock (other than a
regularly quarterly cash dividend), (ii) to offer to the holders of its
Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of Preferred Stock or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of its
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding Preferred Stock), (iv) to effect any consolidation or merger into or
with any other Person (other than a Subsidiary of the Corporation in a
transaction which does not violate Section 11(n) hereof), or to affect any sale
or other transfer (or to permit one or more of its Subsidiaries to affect any
sale or other transfer) in one or more transactions, of 50% or more of the
assets or earning power of the Corporation and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Corporation and/or any of
its Subsidiaries in one or more transactions each of which does not violate said
Section 11(n)), or (v) to effect the liquidation, dissolution or winding up of
the Corporation, then, in each such case, the Corporation shall give to each
holder of a Right Certificate, in accordance with Section 25 hereof, a notice of
such proposed action to the extent feasible and file a certificate with the
Rights Agent to that effect, 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 Preferred Stock, if any such date is
to be fixed, and such notice shall be so given in the case of any action covered
by clause (i) or (ii) above at least 20 days prior to the record date for
determining holders of the Preferred Stock for purposes of such action, and in
the case of any such other action, at least 20 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Preferred Stock, whichever shall be the earlier.
29
(b) In case of a Section 11(a)(ii) Event, then (i) the Corporation
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 such event and the consequences of such
event to holders of Rights under Section 11(a)(ii) hereof, and (ii) all
references in the preceding paragraph (a) to Preferred Stock shall be deemed
thereafter to refer also to Common Stock and/or, if appropriate, other
securities of the Corporation.
Section 25. Notices. Notices or demands 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 Corporation 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:
IVC Industries, Inc.
000 Xxxxx Xxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx, 00000
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Corporation 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 Corporation) as follows:
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Compliance Department
Notices or demands authorized by this Agreement to be given or made by the
Corporation or the Rights Agent to the holder of any Right Certificate or, if
prior to the Distribution Date, to the holder of certificates representing
Common Stock 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 Corporation.
Section 26. Supplements and Amendments. Prior to the Distribution Date,
the Corporation and the Rights Agent shall, if the Corporation so directs,
supplement or amend any provision of this Agreement without the approval of any
holders of certificates representing Common Stock. From and after the
Distribution Date, the Corporation and the Rights Agent shall, if the
Corporation 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 provision hereof (iii) to shorten or lengthen any
time period herein provided or (iv) to change or supplement the provisions
hereof in any manner which the Corporation may deem necessary or desirable and
which shall not adversely affect the interests of the holders of Right
Certificates (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person); provided, however, that 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
30
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 Corporation 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, provided that such supplement
or amendment does not adversely affect the rights or obligations of the Rights
Agent under Sections 18 or 20 hereof. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the interests
of the holders of Common Stock. Notwithstanding any other provision hereof, the
Rights Agent's consent must be obtained regarding any amendment or supplement
pursuant to this Section 26 which alters the Rights Agent's rights or duties.
Section 27. Determination and Actions by the Board of Directors, etc. The
Board of Directors shall have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers specifically granted to the
Board of Directors, or the Corporation, or as may be necessary or advisable in
the administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including, without limitation, a determination to redeem or not
redeem the Rights or to amend the Agreement and whether any proposed amendment
adversely affects the interests of the holders of Right Certificates). For all
purposes of this Agreement, any calculation of the number of shares of Common
Stock or other securities outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock or any other securities of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i)
of the General Rules and Regulations under the Exchange Act as in effect on the
date of this Agreement. All such actions, calculations, interpretations and
determinations (including, for the purposes of clause (y) below, all omissions
with respect to the foregoing) which are done or made by the Board of Directors
in good faith, shall (x) be final, conclusive and binding on the Corporation,
the Rights Agent, the holders of the Right Certificates and all other parties,
and (y) not subject the Board to any liability to the holders of the Right
Certificates.
Section 28. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Corporation or the Rights Agent shall bind and
inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Corporation, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Stock) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Corporation, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Stock).
Section 30. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
31
Section 31. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Jersey 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.
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 and attested, all as of the date and year first above written.
IVC INDUSTRIES, INC.
Attest:
By: /s/ Xxxxxx X. Xxxxxx By: /s/ E. Xxxxxx Xxxxx
-------------------------- --------------------------
Name: Xxxxxx X. Xxxxxx Name: E. Xxxxxx Xxxxx
Title: Assistant Secretary Title: Chief Executive Officer
AMERICAN STOCK TRANSFER &
TRUST COMPANY
Attest:
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
-------------------------- --------------------------
Name: Xxxxx Xxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Assistant Secretary Title: Vice President
32
Exhibit A
CERTIFICATE OF DESIGNATION,
POWERS, PREFERENCES AND RIGHTS
OF
SERIES A
PREFERRED STOCK
PAR VALUE $.01 PER SHARE
OF
IVC INDUSTRIES, INC.
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
IT IS HEREBY CERTIFIED that:
1. The name of the Company is IVC INDUSTRIES, INC., a corporation
organized and existing under the General Corporation Law of the State of
Delaware.
2. The amended certificate of incorporation of the Company authorizes the
issuance of 2,000,000 shares of preferred stock, $.01 par value per share
("Preferred Stock"), and expressly vests in the Board of Directors of the
Company the authority provided therein to issue any or all of said shares in one
or more series and by resolution or resolutions to establish the designation and
number and to fix the relative rights and preferences of each series to be
issued.
3. The Board of Directors of the Company, pursuant to the authority
expressly vested in it as aforesaid, and pursuant to the provisions of Section
151 of the General Corporation Law of the State of Delaware, has adopted the
resolutions set forth below creating an issue of Series A Preferred Stock.
RESOLVED, that 5,000 shares of the 2,000,000 authorized shares of Preferred
Stock of the Company shall be designated Series A Preferred Stock, $.01 par
value per share, and shall possess the rights and preferences set forth below:
Series A Preferred Stock:
(1) Creation and Designation The Corporation has authorized the
creation of a series of Preferred Stock, consisting of 5,000 shares of
Preferred Stock, to be designated "Series A Preferred Stock." Such number
of shares may be increased or decreased by resolution of the Board of
Directors; provided, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than
that of the shares then outstanding plus the number of shares issuable
upon exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Corporation. The Series
A Preferred Stock shall have a par value of $0.01 per share.
(2) Dividends
(a) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to
the Series A Preferred Stock with respect to dividends, the holders of
shares of Series A Preferred Stock in preference to the holders of shares
of Common Stock of the Corporation and any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, dividends payable in cash
in an amount per share (rounded to the nearest cent) equal to, subject to
the provision for adjustment hereinafter set forth, 1000 times the
aggregate per share amount of all cash dividends, and dividends payable in
kind in an amount per share (rounded to the nearest cent) equal to,
subject to the provision for adjustment hereinafter set forth, 1000 times
the aggregate per share amount of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or
a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock. In the event
the Corporation shall at any time after May 15, 2000 (the "Rights
Declaration Date") (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (a) above
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock) and shall
pay such dividend or distribution on the Series A Preferred Stock
immediately before it pays a dividend or distribution on the Common Stock.
(c) The Board of Directors may fix a record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which
record date shall be no more than 60 days prior to the date fixed for the
payment thereof.
(3) Voting The holders of shares of Series A Preferred Stock shall
have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 1000 votes on all matters submitted to a vote of the
shareholders of the Corporation. In the event the
2
Corporation shall at any time after the Rights Declaration Date (i)
declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each
such case the number of votes per share to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event.
(b) Except as otherwise provided herein or by law, the holders
of shares of Series A Preferred Stock and the holders of shares of Common
Stock shall vote together as one class on all matters submitted to a vote
of shareholders of the Corporation.
(4) Redmption The shares of Series A Preferred Stock shall not be
redeemable. Any shares of Series A Preferred Stock purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such shares shall
upon their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new class or series of Preferred
Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set
forth herein.
(5) Liquidation Upon any liquidation (voluntary or otherwise),
dissolution or winding up of the Corporation, the holders of the Series A
Preferred Stock will first be entitled to a preferential liquidation
payment of $0.01 per share; thereafter, subject to the provision for
adjustment hereinafter set forth, the holders of Series A Preferred Stock
and holders of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio
of 1000 to 1. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding common stock, or
(iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the ratio of distribution in effect
immediately prior to such event shall be adjusted by multiplying the first
number of such ratio by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(6) Extraordinary Transactions If the Corporation shall enter into
any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such event the
shares of Series A Preferred Stock shall at the same time be similarly
exchanged for or changed into such other stock, securities, and or such
other property in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 1000 times the aggregate amount
of stock, securities, cash and/or any other property, as the case may be,
into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
3
Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Series A
Preferred Stock shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that are outstanding immediately prior to such
event.
(7) Fractional Shares. Series A Preferred Stock may be issued in the
discretion of the Board of Directors of the Corporation in fractions of a
share which shall entitle the holder, in proportion to such holder's
fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights
of holders of Series A Preferred Stock.
(8) Amendment. The Certificate of Incorporation of the Corporation
shall not be further amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of at least a majority of the outstanding shares of Series A
Preferred Stock, voting separately as a class."
4. This Certificate of Designation Powers, Preferences and Rights has been
duly authorized by unanimous consent of the Board of Directors of the
Corporation.
4
IN WITNESS WHEREOF, the undersigned have signed this Certificate and
affirm under the penalties of perjury that the statements made herein are true
this th day of May, 2000.
-------------------------------
E. Xxxxxx Xxxxx,
Chief Executive Officer
Chairman of the Board
-------------------------------
Xxxxxxx Xxxxxx,
Secretary
5
Exhibit B
Form of Right Certificate
IVC INDUSTRIES, INC.
Certificate No. R- _____________ Rights
NOT EXERCISABLE AFTER May 15, 2010 OR EARLIER IF REDEEMED BY THE
CORPORATION. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.01 PER RIGHT ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
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 15, 2000 (the "Rights Agreement"), between
IVC Industries, Inc., a Delaware corporation (the "Corporation"), and American
Stock Transfer & Trust Company (the "Rights Agent"), to purchase from the
Corporation 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 15, 2010,
unless the Rights evidenced hereby shall have been previously redeemed by the
Corporation, at the principal office of the Rights Agent, one-thousandth of a
fully paid non-assessable share of Series A Preferred Stock, par value $0.01 per
share (the "Preferred Stock"), of the Corporation, at a purchase price of $21
per one-thousandth of a share of Preferred 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 one-thousandths of a share of Preferred 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 15, 2000,
based on the Preferred Stock as constituted at such date.
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 Right
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 who becomes a transferee after the Acquiring Person becomes such, or
(iii) under certain circumstances specified in the Rights Agreement, a
transferee of any such Acquiring Person, Associate or Affiliate who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such,
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.
As provided in the Rights Agreement, the Purchase Price and the
number of one-thousandths of a share of Preferred Stock or other securities
which may be purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and
adjustment upon the happening of certain events, including Triggering Events (as
such term is defined in the Rights Agreement).
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 Corporation and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal executive offices of
the Corporation and the principal office or offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificate of like tenor and date evidencing
Rights entitling the holder to purchase a like aggregate number of shares of
Preferred Stock or other securities as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Corporation at a redemption
price of $0.01 per Right (subject to adjustment as provided in the Rights
Agreement) payable in cash.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
one-thousandth or integral multiples of one-thousandth of a share of Preferred
Stock, which may, at the election of the Corporation, be evidenced by depositary
receipts), but in lieu thereof a cash payment will be made, as provided in the
Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the shares of
Preferred Stock or of any other securities of the Corporation 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 Corporation 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 other
distributions or to exercise any preemptive 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.
WITNESS the facsimile signature of the proper officers of the
Corporation and its corporate seal.
[SEAL]
ATTEST: IVC INDUSTRIES, INC.
_______________________________ By _____________________________
Name: Name: E. Xxxxxx Xxxxx
Title: Secretary Title: Chief Executive Officer
Dated: _______________
Countersigned:
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By ____________________________
Authorized Officer
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the 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 attached Right Certificate on the books of the within-named
Corporation, with full power of substitution.
Dated: _____________, ____
_____________________________________
Signature
Signature Guaranteed:
--------------------------------------------------------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by
this Right Certificate are not being sold, assigned or transferred by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Right Agreement) and (2)
after due inquiry and to the best knowledge of the undersigned, the undersigned
did not acquire the Rights evidenced by this Right Certificate from any Person
who is or was an Acquiring Person or an Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement).
_____________________________________
Signature
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Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder
if such holder desires to exercise Rights
represented by the Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise
__________________ Rights represented by this Right Certificate to purchase the
shares of Preferred Stock, Common Stock or other securities issuable upon the
exercise of such Rights and requests that certificates for such shares of
Preferred Stock, Common Stock or other securities be issued in the name of:
________________________________________________________________________________
(Please print name and address)
Please insert social security or other identifying number_______________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
________________________________________________________________________________
(Please print name and address)
Please insert social security or other identifying number ______________________
Dated: __________________, ___
_____________________________________
Signature
Form of Reverse Side of Right Certificate -- continued.
Signature Guaranteed:
--------------------------------------------------------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by
this Right Certificate are not being exercised by or on behalf of a Person who
is or was an Acquiring Person or an Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement) and (2) after due inquiry and to the
best knowledge of the undersigned, the undersigned did not acquire the Rights
evidenced by this Right Certificate from any Person who is or was an Acquiring
Person or an Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement).
_________________________________________
Signature
--------------------------------------------------------------------------------
NOTICE
The signature on the foregoing Form of Assignment or Form of
Election to Purchase and certificates, must conform to the name as written above
on 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 Corporation 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 such terms are defined in the Rights
Agreement) and such Assignment or Election to Purchase will not be honored.
Exhibit C
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO,
OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN
AFFILIATE OR AN ASSOCIATE THEREOF (AS DEFINED IN THE RIGHTS AGREEMENT) AND
CERTAIN RELATED PERSONS, WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON
OR BY ANY SUBSEQUENT HOLDER, SHALL BECOME NULL AND VOID.
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On May 15, 2000, the Board of Directors of IVC Industries, Inc. (the
"Corporation") declared a dividend distribution of one preferred share purchase
right (a "Right") for each outstanding share of Common Stock, par value $0.08
per share (the "Common Stock"), of the Corporation. The dividend is payable to
the shareholders of record on May 24, 2000 (the "Record Date"), and with respect
to shares of Common Stock issued thereafter until the Distribution Date (as
defined below) and, in certain circumstances, with respect to shares of Common
Stock issued after the Distribution Date. Except as set forth below, each Right,
when it becomes exercisable, entitles the registered holder to purchase from the
Corporation one-thousandth of a share of Series A Preferred Stock, par value
$0.01 per share (the "Preferred Stock"), of the Corporation at a price of $21
per one-thousandth of a share of Preferred Stock (the "Purchase Price"), subject
to adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Corporation and American Stock
Transfer & Trust Company as Rights Agent (the "Rights Agent"), dated as of
May__, 2000.
Initially, the Rights will be attached to all certificates
representing shares of Common Stock then outstanding, and no separate Right
Certificates will be distributed. The Rights will separate from the Common Stock
upon the earliest to occur of (i) expiration of the Board's right to redeem the
Rights during the 10 day period ("Window Period"), or any extension of the
Window Period, after a person or group of affiliated or associated persons
(other than exempted shareholders) becoming the beneficial owner of 15% or more
of the outstanding Common Stock (except pursuant to a Permitted Offer, as
hereinafter defined, or if the acquisition is approved in advance by the
Corporation's Board of Directors); or (ii) 10 days (or such later date as the
Board may determine) following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer, the consummation of which
would result in a person or group becoming an Acquiring Person (as hereinafter
defined) (the earliest of such dates being called the "Distribution Date"). A
person or group whose acquisition of Common Stock causes a Distribution Date
pursuant to clause (i) above is an "Acquiring Person." The date that a person or
group becomes an Acquiring Person is the "Shares Acquisition Date."
Notwithstanding the foregoing, an Acquiring Person shall not include (i) any
person who or which, together with all affiliates and associates of such person,
as of the close of business on the day the Corporation publicly announces that
the Board of Directors has adopted the Rights
Agreement (the "Announcement Date"), was the beneficial owner of 15% or more of
the shares of Common Stock, (ii) E. Xxxxxx Xxxxx, Xxxxxx X. Xxxxx, Xxxx X.
Xxxxx, their respective spouses and descendants and the spouses of such
descendants, and any trust, the entire beneficial interest of which is, during
the term of such trust held for the benefit of one or more of the foregoing
individuals and (iii) Xxxxxx Xxxxxxxxx; provided, however, that any such person,
together with all affiliates and associates of such person, shall cease to be
exempt from being an Acquiring Person if the number of shares of Common Stock
beneficially owned by that person, together with all affiliates and associates
of such person (other than as a result of a stock dividend, stock split or stock
distribution by the Corporation) exceeds by more than one percent the number of
shares of Common Stock beneficially owned by that person, together with all
affiliates and associates of such person, as of the Announcement Date.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date upon transfer or new
issuance of shares of Common Stock will contain a notation incorporating the
Rights Agreement by reference. Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer of any
certificates for shares of Common Stock outstanding as of the Record Date, even
without such notation or a copy of this Summary of Rights being attached
thereto, also will constitute the transfer of the Rights associated with the
shares of Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of Common Stock as of
the close of business on the Distribution Date (and to each initial record
holder of certain shares of Common Stock issued after the Distribution Date),
and such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on May 15, 2010, unless earlier redeemed by the
Corporation as described below.
In the event that any person becomes an Acquiring Person (except (i)
pursuant to a tender or exchange offer which is for all outstanding Common Stock
at a price and on terms which a majority of the Board of Directors determines to
be adequate and in the best interests of the Corporation, its shareholders and
other relevant constituencies, other than such Acquiring Person, its affiliates
and associates (a "Permitted Offer") or (ii) if such acquisition of shares of
Common Stock is approved in advance by the Board of Directors of the
Corporation), each holder of a Right will thereafter have the right (the
"Flip-In Right") to receive upon exercise the number of shares of Common Stock
or, in the discretion of the Board of Directors, the number of one-thousandths
of a share of Preferred Stock (or, in certain circumstances, other securities of
the Corporation) having a value (immediately prior to such triggering event)
equal to two times the exercise price of the Right. Notwithstanding the
foregoing, following the occurrence of the event described above, all Rights
that are, or (under certain circumstances specified in the Rights Agreement)
were, beneficially owned by any Acquiring Person or any affiliate or associate
thereof will be null and void. However, in the event that any person becomes an
Acquiring Person, the Board of Directors may, within a 10-day period following
the date of public announcement that such person has become an Acquiring Person
(the "Window Period") redeem
the rights or extend the Window Period in order to prevent or delay the Flip-In
Right from triggering.
In the event that, at any time following the Shares Acquisition
Date, (i) the Corporation is acquired in a merger or other business combination
transaction in which the holders of all of the outstanding shares of Common
Stock immediately prior to the consummation of the transaction are not the
holders of all of the surviving corporation's voting power, or (ii) more than
50% of the Corporation's assets or earning power is sold or transferred, in
either case with or to an Acquiring Person or any affiliate or associate or any
other person in which such Acquiring Person, affiliate or associate has an
interest or any person acting on behalf of or in concert with such Acquiring
Person, affiliate or associate, or, if in such transaction all holders of Common
Stock are not treated alike, any other person, then each holder of a Right
(except Rights which previously have been voided as set forth above) shall
thereafter have the right (the "Flip-Over 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 holder of a Right will continue to have the
Flip-Over Right whether or not such holder exercises or surrenders the Flip-In
Right.
The Purchase Price payable, and the number of shares of Preferred
Stock, Common Stock or other securities issuable, upon exercise of the Rights
are subject to adjustment from time to time to prevent dilution (i) in the event
of a stock dividend on, or a subdivision, combination or reclassification of,
the Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for or purchase shares of Preferred
Stock at a price, or securities convertible into shares of Preferred Stock with
a conversion price, less than the then current market price of the Preferred
Stock or (iii) upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular quarterly cash dividends)
or of subscription rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one-thousandths
of a share of Preferred Stock issuable upon exercise of each Right are also
subject to adjustment in the event of a stock split of the Common Stock or a
stock dividend on the Common Stock payable in shares of Common Stock or
subdivisions, consolidations or combinations of the Common Stock occurring, in
any such case, prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the Rights
will not be redeemable. Each share of Preferred Stock will be entitled to an
aggregate dividend per share of 1000 times the dividend declared per share of
Common Stock. In the event of liquidation, first the holders of the
Corporation's Class A Preferred Stock will be entitled to a preferential
liquidation payment of $.01 per share; thereafter, the holders of the shares of
Preferred Stock and the shares of Common Stock will share the remaining assets
in the ratio of 1000 to 1 (as adjusted) for each share of Preferred Stock and
Common Stock so held, respectively.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock will be issued
(other than fractions which are one-thousandth or integral multiples of
one-thousandth of a share of Preferred Stock, which may, at the election of the
Corporation, be evidenced by depositary receipts) and in lieu thereof, an
adjustment in
cash will be made based on the market price of the Preferred Stock on the last
trading day prior to the date of exercise.
At any time prior to the earlier to occur of (i) the expiration of
the Window Period or any extension thereof following a person becoming an
Acquiring Person or (ii) the expiration of the Rights, and under certain other
circumstances, the Corporation may redeem the Rights in whole, but not in part,
at a price of $0.01 per Right (the "Redemption Price") which redemption shall be
effective upon the action of the Board of Directors. Additionally, following a
Shares Acquisition Date and the expiration of the period during which the holder
of Rights may exercise the Rights, the Corporation may redeem the then
outstanding Rights in whole, but not in part, at the Redemption Price, provided
that such redemption (a) is in connection with a merger or other business
combination transaction or series of transactions involving the Corporation in
which all holders of Common Stock are treated alike but not involving an
Acquiring Person or its affiliates or associates, or (b) if and for so long as
the Acquiring Person does not own 15% or more of the voting power of the
Corporation and there are no other Acquiring Persons.
All of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Corporation prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board in order to cure any ambiguity, defect or inconsistency, to make changes
which do not adversely affect the interests of holders of Rights (excluding the
interests of any Acquiring Person), or, subject to certain limitations, to
shorten or lengthen any time period under the Rights Agreement.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a shareholder of the Corporation, including, without limitation,
the right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to shareholders of the Corporation, shareholders may,
depending upon the circumstances, recognize taxable income should the Rights
become exercisable or upon the occurrence of certain events thereafter.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A
dated May __, 2000. A copy of the Rights Agreement will be provided upon written
request (directed to Xxxxxxx Xxxxxx, Secretary, at the Corporation's executive
offices) for a fee limited to the Corporation's reasonable expenses in
furnishing such exhibit. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to the Rights
Agreement, which is hereby incorporated herein by reference.
