Exhibit 4.1
OPTIKA INC.
and
EQUISERVE TRUST COMPANY, N.A.
as Rights Agent
AMENDED AND RESTATED
RIGHTS AGREEMENT
Dated as of January 23, 2002
TABLE OF CONTENTS
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SECTION PAGE
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Section 1. Certain Definitions...................................................... 1
Section 2. Appointment of Rights Agent.............................................. 5
Section 3. Issue of Rights Certificates............................................. 6
Section 4. Form of Rights Certificates.............................................. 7
Section 5. Countersignature and Registration........................................ 7
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates................. 8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights............ 9
Section 8. Cancellation and Destruction of Rights Certificates...................... 10
Section 9. Reservation and Availability of Capital Stock............................ 11
Section 10. Preferred Stock Record Date.............................................. 12
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............... 20
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power..... 20
Section 14. Fractional Rights and Fractional Shares.................................. 24
Section 15. Rights of Action......................................................... 25
Section 16. Agreement of Rights Holders.............................................. 25
Section 17. Rights Certificate Holder Not Deemed a Stockholder....................... 26
Section 18. Concerning the Rights Agent.............................................. 26
Section 19. Merger or Consolidation or Change of Name of Rights Agent................ 26
Section 20. Duties of Rights Agent................................................... 27
Section 21. Change of Rights Agent................................................... 29
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Section 22. Issuance of New Rights Certificates...................................... 30
Section 23. Redemption and Termination............................................... 30
Section 24. Notice of Certain Events................................................. 31
Section 25. Notices.................................................................. 32
Section 26. Supplements and Amendments............................................... 32
Section 27. Successors............................................................... 33
Section 28. Determinations and Actions by the Board of Directors, etc................ 33
Section 29. Benefits of this Agreement............................................... 33
Section 30. Severability............................................................. 34
Section 31. Governing Law............................................................ 34
Section 32. Counterparts............................................................. 34
Section 33. Descriptive Headings..................................................... 34
Section 34. Exchange................................................................. 34
Exhibit A Form of Rights Certificate............................................... A-1
Exhibit B Form of Summary of Rights................................................ B-1
Exhibit C Certificate of Designation............................................... C-1
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AMENDED AND RESTATED RIGHTS AGREEMENT
AMENDED AND RESTATED RIGHTS AGREEMENT, dated as of January 23, 2002 (the
"Agreement"), between Optika Inc., a Delaware corporation (the "Company"), and
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EquiServe Trust Company, N.A. (the "Rights Agent").
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WHEREAS, the Company and Fleet National Bank, as predecessor to the Rights
Agent, entered into a Rights Agreement dated as of July 18, 2001; and
WHEREAS, effective July 18, 2001 (the "Rights Dividend Declaration Date"),
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the Board of Directors of the Company (i) authorized and declared a dividend
distribution of one Right for each share of the Company's common stock, par
value $.001 per share (the "Company Common Stock") outstanding at the Close of
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Business on July 18, 2001 (the "Record Date"), and (ii) authorized the issuance
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of one Right (as such number may hereinafter be adjusted pursuant hereto) for
each share of Company Common Stock issued between the Record Date (whether
originally issued or delivered from the Company's treasury) and, except as
otherwise provided in Section 22, the Distribution Date, each Right initially
representing the right to purchase upon the terms and subject to the conditions
hereinafter set forth one Unit of Series B Preferred Stock (the "Rights"); and
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WHEREAS, Section 26 of the Rights Agreement provides that prior to the
Distribution Date (as defined in the Rights Agreement), the Company may
supplement or amend the Rights Agreement in any respect without the approval of
holders of Rights; and
WHEREAS, the Board of Directors of the Company has determined that it is in
the best interest of the Company and the holders of the Company Common Stock to
amend and restate the Rights Agreement as set forth herein, and in connection
therewith the Company is entering into this Amended and Restated Rights
Agreement and directing the Rights Agent to enter into this Amended and Restated
Rights Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
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following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
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with all Affiliates or Associates of such Person, shall be the Beneficial
Owner of 15% or more of the shares of Company Common Stock then
outstanding. Notwithstanding the foregoing: (i) an "Acquiring Person"
shall not include: (A) the Company; (B) any Subsidiary of the Company; (C)
any employee benefit plan maintained by the Company or any of its
Subsidiaries; (D) any trustee or fiduciary with respect to such employee
benefit plan acting in such capacity or a trustee or fiduciary holding
shares of Company Common Stock for the purpose of funding any such plan or
employee benefits; (E) any Person if the Board of Directors of the Company
determines in good faith that such Person who would otherwise be an
"Acquiring Person" became such inadvertently (including, without
limitation, because (x) such Person was unaware that it beneficially owned
a percentage
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of Company Common Stock that would otherwise cause such Person to be an
"Acquiring Person" or (y) such Person was aware of the extent of its
Beneficial Ownership of Company Common Stock but had no actual knowledge of
the consequences of such Beneficial Ownership under this Agreement) and
without any intention of changing or influencing control of the Company,
and if such Person does not acquire any additional shares of Company Common
Stock and as promptly as practicable divested or divests itself of
Beneficial Ownership of a sufficient number of shares of Company Common
Stock so that such Person would no longer be an "Acquiring Person;" or (F)
any Person who is or becomes the Beneficial Owner of 15% or more of the
then outstanding shares of Company Common Stock as a result of the
acquisition of shares of Company Common Stock in one or more transactions
approved by a majority of the Board of Directors, and (ii) no Person shall
be deemed an "Acquiring Person" as a result of the acquisition of shares of
Company Common Stock by the Company which, by reducing the number of shares
of Company Common Stock outstanding, increases the proportional number of
shares beneficially owned by such Person; provided, however, that if (x) a
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Person would become an Acquiring Person (but for the operation of this
subclause (ii)) as a result of the acquisition of shares of Company Common
Stock by the Company and (y) after such share acquisition by the Company,
such Person becomes the Beneficial Owner of any additional shares of
Company Common Stock, then such Person shall be deemed an Acquiring Person
unless upon becoming the Beneficial Owner of such additional shares such
Person is the Beneficial Owner of less than 15% of the then outstanding
shares of Company Common Stock. Each Person identified in subclauses (A),
(B), (C) and (D) of this Section (1)(a) is individually an "Exempt Person"
and collectively "Exempt Persons."
(b) "Affiliate" and "Associate" shall have the respective meanings
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ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
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as in effect on the date hereof.
(c) A Person shall be deemed the "Beneficial Owner" of, and shall be
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deemed to have "Beneficial Ownership" of and to "beneficially own", any
securities:
(i) of which such Person or any of such Person's Affiliates or
Associates is considered to be a "beneficial owner" under Rule 13d-3
of the General Rules and Regulations under the Exchange Act (the
"Exchange Act Regulations") as in effect on the date hereof; provided,
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however, that a Person shall not be deemed the "Beneficial Owner" of,
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or to "beneficially own", any securities under this subparagraph (i)
as a result of an agreement, arrangement or understanding to vote such
securities if such agreement, arrangement or understanding (A) arises
solely from a revocable proxy or consent given in response to a public
proxy or consent solicitation made pursuant to, and in accordance
with, the applicable provisions of the Exchange Act and the Exchange
Act Regulations, and (B) is not reportable by such Person on Schedule
13D under the Exchange Act (or any comparable or successor report);
(ii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate of such other Person)
with which such Person (or any of such Person's Affiliates or
Associates) has any agreement,
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arrangement or understanding (whether or not in writing), for the
purpose of acquiring, holding, voting (except pursuant to a revocable
proxy or consent as described in the proviso to subparagraph (i) of
this paragraph (c)) or disposing of such securities; or
(iii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether
such right is exercisable immediately or only after the passage of
time or upon the satisfaction of conditions) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or
upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise;
provided, however, that under this paragraph (c) a Person shall not be
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deemed the "Beneficial Owner" of, to have "Beneficial Ownership" of, or to
"beneficially own", (A) securities tendered pursuant to a tender or
exchange offer made in accordance with Exchange Act Regulations by such
Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, (B) securities that may
be issued upon exercise of Rights at any time prior to the occurrence of a
Triggering Event, or (C) securities that may be issued upon exercise of
Rights from and after the occurrence of a Triggering Event, which Rights
were acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(c) or
Section 22 hereof (the "Original Rights") or pursuant to Section 11(i)
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hereof in connection with an adjustment made with respect to any Original
Rights; and further provided, however, that (x) nothing in this paragraph
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(c) shall cause a Person engaged in business as an underwriter of
securities to be the "Beneficial Owner" of, or to "beneficially own," any
securities acquired through such Person's participation in good faith in a
firm commitment underwriting until the expiration of forty days after the
date of such acquisition, (y) no decision reached, or action taken, by the
Board of Directors of the Company or any committee thereof shall cause any
Person (or any Affiliate or Associate of such Person) who is a member of
the Board of Directors of the Company or such committee to be deemed, for
the purposes of this Agreement, to be a Beneficial Owner of any securities
beneficially owned by any other Person (or any Affiliate or Associate of
such Person) who is a member of the Board of Directors of the Company or
any committee thereof solely by reason of such membership of the Board of
Directors or any committee thereof or participation in the decisions or
actions thereof on the part of either or both of such Persons and (z) no
Person who is an officer, director or employee of an Exempt Person shall be
deemed, solely by reason of such Person's status or authority as such, to
be the "Beneficial Owner" of, to have "Beneficial Ownership" of or to
"beneficially own" any securities that are "beneficially owned" (as defined
in this paragraph (c)), including, without limitation, in a fiduciary
capacity, by an Exempt Person or by any other such officer, director or
employee of an Exempt Person.
(d) "Business Day" shall mean any day other than a Saturday, Sunday
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or a day on which banking institutions in the Commonwealth of Massachusetts
are authorized or obligated by law or executive order to close.
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(e) "Close of Business" on any given date shall mean 5:00 P.M.,
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Massachusetts time, on such date; provided, however, that if such date is
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not a Business Day it shall mean 5:00 P.M., Massachusetts time, on the next
succeeding Business Day.
(f) "Common Stock" of any Person other than the Company shall mean
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the capital stock of such Person with the greatest voting power, or, if
such Person shall have no capital stock, the equity securities or other
equity interest having power to control or direct the management of such
Person.
(g) "Company" means Optika Inc., a Delaware corporation, and also
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means a Principal Party to the extent provided in Section 13(a).
(h) "Company Common Stock" has the meaning set forth in the Whereas
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Clause.
(i) "Distribution Date" has the meaning set forth in Section 3(a).
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(j) "Expiration Date" has the meaning set forth in Section 7(a).
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(k) "Person" shall mean any individual, partnership, firm,
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corporation, association, trust, unincorporated organization or other
entity, as well as any syndicate or group deemed to be a person under
Section 14(d)(2) of the Exchange Act as in effect on the date hereof.
(l) "Preferred Stock" shall mean the Series B Preferred Stock, par
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value $.001 per share, of the Company having the voting powers,
designation, preferences and relative, participating, optional or other
special rights and qualifications, limitations and restrictions described
in the Certificate of Designation set forth as Exhibit C hereto and as
amended from time to time.
(m) "Purchase Price" has the meaning set forth in Section 7(b).
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(n) "Record Date" has the meaning set forth in the Whereas Clause.
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(o) "Right" has the meaning set forth in the Whereas Clause.
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(p) "Rights Certificate" has the meaning set forth in Section 3(a).
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(q) "Rights Dividend Declaration Date" has the meaning set forth in
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the Whereas Clause.
(r) "Section 11(a)(ii) Event" shall mean the event described in
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Section 11(a)(ii) hereof.
(s) "Section 13 Event" shall mean any event described in clause (x),
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(y) or (z) of Section 13(a) hereof.
(t) "Stock Acquisition Date" shall mean the first date of public
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announcement (including, without limitation, the filing of any report
pursuant to Section 13(d) of the
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Exchange Act (or any comparable or successor report)) by the Company or an
Acquiring Person that an Acquiring Person has become such.
(u) "Subsidiary" shall mean, with reference to any Person, any other
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Person of which an amount of voting securities or equity interests
sufficient to elect at least a majority of the directors or equivalent
governing body of such other Person is beneficially owned, directly or
indirectly, by such Person, or otherwise controlled by such first-mentioned
Person.
(v) "Summary of Rights" has the meaning set forth in Section 3(b).
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(w) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
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Section 13 Event.
(x) "Unit" has the meaning set forth in Section 7(b).
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In addition, the following terms are defined in the Sections indicated
below:
Defined Term Section Number
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Adjustment Shares 11(a)(ii)
common stock equivalents 11(a)(iii)
Current Value 11(a)(iii)
Depositary Agent 7(c)
Equivalent Preferred Stock 11(b)
Exchange Act 1(b)
Exchange Act Regulations 1(c)
Exchange Ratio 34(a)
Exempt Person 1(a)
Expiration Date 7(a)
Final Expiration Date 7(a)
Nasdaq 11(d)(i)
Original Rights 1(c)
Purchase Price 7(b)
Redemption Price 23(a)
Registered Common Stock 13(b)(ii)
Registration Date 9(c)
Registration Statement 9(c)
Rights Certificates 3(a)
Section 11(a)(iii) Trigger Date 11(a)(iii)
Securities Act 9(c)
Spread 11(a)(iii)
Trading Day 11(d)(i)
Section 2. Appointment of Rights Agent. The Company hereby appoints the
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Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. With
the consent of the Rights Agent, the Company may from time to time appoint such
co-rights agents as it may deem necessary or desirable, upon ten (10) days'
prior written notice to the Rights Agent. The Rights Agent shall
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have no duty to supervise, and in no event be liable for, the acts or omissions
of any such co-Rights Agent.
Section 3. Issue of Rights Certificates. (a) Until the earlier of (i) the
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Close of Business on the tenth Business Day after the Stock Acquisition Date,
and (ii) the Close of Business on the tenth Business Day (or such later date as
may be determined by action of a majority of the Board of Directors of the
Company prior to the occurrence of a Section 11(a)(ii) Event) after the date
that a tender or exchange offer by any Person (other than an Exempt Person) is
first published or sent or given within the meaning of Rule 14d-4(a) of the
Exchange Act Regulations or any successor rule, if upon consummation thereof
such Person would be an Acquiring Person (including, in the case of both clause
(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 (i) and (ii) above being the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
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provisions of paragraph (b) of this Section 3) by the certificates for shares of
Company Common Stock registered in the names of the holders of shares of Company
Common Stock as of and subsequent to the Record Date (which certificates for
shares of Company Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the underlying shares of
Company Common Stock including a transfer to the Company; provided, however,
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that if a tender or exchange offer is terminated prior to the occurrence of a
Distribution Date, then no Distribution Date shall occur as a result of such
tender or exchange offer. As soon as practicable after the Distribution Date,
the Rights Agent will send by first-class, insured, postage prepaid mail, to
each record holder of shares of Company Common Stock as of the Close of Business
on the Distribution Date, at the address of such holder shown on the records of
the Company, one or more rights certificates, in substantially the form of
Exhibit A hereto (the "Rights Certificates"), evidencing one Right for each
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share of Company Common Stock so held, subject to adjustment as provided herein.
In the event that an adjustment in the number of Rights per share of
Company Common Stock has been made pursuant to Section 11(p) hereof, at the time
of distribution of the Rights Certificates, the Company may make the necessary
and appropriate rounding adjustments (in accordance with Section 14(a) hereof)
so that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of and after
the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) As promptly as practicable following the Record Date, the Company
will send a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form attached hereto as Exhibit B (the "Summary of Rights"),
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by first-class, postage prepaid mail, to each record holder of shares of Company
Common Stock as of the Close of Business on the Record Date, at the address of
such holder shown on the records of the Company. With respect to certificates
for Company 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 the Summary of Rights. Until
the Distribution Date (or, if earlier, the Expiration Date), the surrender for
transfer of any such certificate for Company Common Stock outstanding as of the
Record Date, with or without a copy of the Summary of Rights, shall also
constitute the transfer of the Rights associated with the Company Common Stock
represented thereby.
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(c) Rights shall, without any further action, be issued in respect of
all shares of Company Common Stock which are issued (including any shares of
Company Common Stock held in treasury) after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date. Certificates,
representing such shares of Company Common Stock, issued after the Record Date
shall bear the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Amended and Restated Rights Agreement between
Optika Inc. (the "Company") and EquiServe Trust Company, N.A. (the "Rights
Agent") dated as of January 23, 2002, as amended from time to time (the
"Rights Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal office of the
stock transfer administration office of the Rights Agent. 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. The Company will mail to the holder of this certificate a copy
of the Rights Agreement, as in effect on the date of mailing, without
charge promptly 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 ANY AFFILIATE
OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT),
WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT
HOLDER, MAY BECOME NULL AND VOID.
With respect to certificates representing shares of Company Common Stock that
bear the foregoing legend until the earlier of the Distribution Date and the
Expiration Date, the Rights associated with the shares of Company Common Stock
represented by such certificates shall be evidenced by such certificates alone
and registered holders of the shares of Company Common Stock shall also be the
registered holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the shares of Company Common Stock represented by such certificates.
Section 4. Form of Rights Certificates. (a) The Rights Certificates (and
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the forms of election to purchase, assignment and certificate to be printed on
the reverse thereof) shall each be substantially in the form set forth in
Exhibit A hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or any rule or
regulation thereunder or with any rule or regulation of any stock exchange or
automated quotation system on which the Rights may from time to time be listed
or to conform to usage. Subject to the provisions of Section 11 and Section 22
hereof, the Rights Certificates, whenever distributed, shall be dated as of the
Record Date and on their face shall entitle the holders thereof to purchase such
number of Units of Preferred Stock as shall be set forth therein at the price
set forth therein, but the amount and type of securities, cash or other assets
that may be acquired upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration . (a) Rights Certificates
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shall be executed on behalf of the Company by its Chairman, its President or one
of its Vice Presidents under its
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corporate seal reproduced thereon attested by its Secretary, its Treasurer or
one of its Assistant Secretaries. The signature of any of these officers on the
Rights Certificates may be manual or facsimile. Rights Certificates bearing the
manual or facsimile signatures of the individuals who were at any time the
proper officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
countersignature of such Rights Certificates or did not hold such offices at the
date of such Rights Certificates. No Rights Certificate shall be entitled to any
benefit under this Agreement or be valid for any purpose unless there appears on
such Rights Certificate a countersignature duly executed by the Rights Agent by
manual signature of an authorized signatory, and such countersignature upon any
Rights Certificate shall be conclusive evidence, and the only evidence, that
such Rights Certificate has been duly countersigned as required hereunder.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office designated for surrender of Rights Certificates
upon exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the name and address of
each holder of the Rights Certificates, the number of Rights evidenced on its
face by each Rights Certificate and the date of each Rights Certificate.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
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Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates. (a)
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Subject to the provisions of Sections 4, 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 Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a like number of Units
of Preferred Stock (or, following a Triggering Event, other securities, cash or
other assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate or
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Certificates to be transferred,
split up, combined or exchanged at the office of the Rights Agent designated for
such purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder shall have completed and executed
the certificate set forth in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) of the Rights
represented by such Rights Certificate or Affiliates or Associates thereof as
the Company shall reasonably request; whereupon the Rights Agent shall, subject
to the provisions of Section 7(e) and Section 14 hereof, countersign and deliver
to the Person entitled thereto a Rights Certificate or Rights Certificates, as
the case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights
Certificates.
(b) Subject to Section 7(e) hereof, if a Rights Certificate shall be
mutilated, lost, stolen or destroyed, upon request by the registered holder of
the Rights represented thereby and upon payment to the Company and the Rights
Agent of all reasonable expenses incident thereto, there shall be issued, in
exchange for and upon cancellation of the mutilated Rights Certificate, or in
substitution for the lost, stolen or destroyed Rights Certificate, a new Rights
Certificate, in
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substantially the form of the prior Rights Certificate, of like tenor and
representing the equivalent number of Rights, but, in the case of loss, theft or
destruction, only upon receipt of evidence satisfactory to the Company and the
Rights Agent of such loss, theft or destruction of such Rights Certificate and,
if requested by the Company or the Rights Agent, indemnity also satisfactory to
it.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
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(a) Prior to the earlier of (i) the Close of Business on the tenth anniversary
hereof (the "Final Expiration Date"), (ii) the time at which the Rights are
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redeemed as provided in Section 23 hereof and (iii) the time at which the Rights
are exchanged as provided in Section 34 hereof (the earlier of (i), (ii) and
(iii) being the "Expiration Date"), the registered holder of any Rights
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Certificate may, subject to the provisions of Sections 7(e) and 9(c) hereof,
exercise the Rights evidenced thereby, in whole or in part, at any time after
the Distribution Date upon surrender of the Rights Certificate, with the form of
election to purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, together with payment of the aggregate Purchase Price (as
hereinafter defined) for the number of Units of Preferred Stock (or, following a
Triggering Event, other securities, cash or other assets, as the case may be)
for which such surrendered Rights are then exercisable.
(b) The purchase price for each one one-hundredth of a share (each
such one one-hundredth of a share being a "Unit") of Preferred Stock upon
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exercise of Rights shall be $30, subject to adjustment from time to time as
provided in Sections 11 and 13(a) hereof (such purchase price, as so adjusted,
being the "Purchase Price"), and shall be payable in accordance with paragraph
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(c) below.
(c) As promptly as practicable following the occurrence of the
Distribution Date, the Company shall deposit with the Rights Agent or other
corporation in good standing organized under the laws of the United States or
any State of the United States, 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 (such institution being the
"Depositary Agent"), certificates representing the shares of Preferred Stock
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that may be acquired upon exercise of the Rights and shall cause such Depositary
Agent to enter into an agreement pursuant to which the Depositary Agent shall
issue receipts representing interests in the shares of Preferred Stock so
deposited. Upon receipt of a Rights Certificate representing exercisable Rights,
with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price for the Units of Preferred Stock (or, following a Triggering Event, other
securities, cash or other assets, as the case may be) to be purchased thereby as
set forth below and an amount equal to any applicable transfer tax or evidence
satisfactory to the Company of payment of such tax, the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly (i) requisition from the
Depositary Agent depositary receipts representing such number of Units of
Preferred Stock as are to be purchased and the Company will direct the
Depositary Agent to comply with such request, (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, and (iv) after receipt thereof, deliver such cash, if
any, to or upon the order of the registered holder of such Rights Certificate.
In the event that the Company
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is obligated to issue Company Common Stock, other securities of the Company, pay
cash and/or distribute other property pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such Company Common Stock,
other securities, cash and/or other property are available for distribution by
the Rights Agent, if and when appropriate. The payment of the Purchase Price (as
such amount may be reduced pursuant to Section 11(a)(iii) hereof) may be made in
cash or by certified or bank check or money order payable to the order of the
Company.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing the Rights remaining unexercised shall be issued by the Rights Agent
and delivered to, or upon the order of, the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of any Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) which becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) which becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and which receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person (or any such Associate or Affiliate) to holders of equity interests in
such Acquiring Person (or any such Associate or Affiliate) or to any Person with
whom the Acquiring Person (or such Associate or Affiliate) has any continuing
agreement, arrangement or understanding regarding the transferred Rights, shares
of Company Common Stock or the Company or (B) a transfer which the Board of
Directors has determined to be part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this Section 7(e),
shall be null and void without any further action, and no holder of such Rights
shall have any rights whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise. The Company shall use all reasonable
efforts to ensure that the provisions of this Section 7(e) hereof are complied
with, but shall have no liability to any holder of Rights or any other Person as
a result of its failure to make any determination under this Section 7(e) with
respect to an Acquiring Person or its Affiliates, Associates or transferees.
(f) Notwithstanding anything in this Agreement or any Rights
Certificate to the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise by such registered holder unless such
registered holder shall have (i) completed and executed the certificate
following the form of election to purchase set forth on the reverse side of the
Rights Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) of the Rights represented by such Rights Certificate or
Affiliates or Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
---------------------------------------------------
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or 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,
10
and no Rights Certificates shall be issued in lieu thereof except as expressly
permitted by this Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any Rights Certificates acquired by the Company otherwise than upon the exercise
thereof. The Rights Agent shall deliver all cancelled Rights Certificates to the
Company, or shall, at the written request of the Company, destroy such cancelled
Rights Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Reservation and Availability of Capital Stock. (a) The Company
---------------------------------------------
shall at all times prior to the Expiration Date cause to be reserved and kept
available, out of its authorized and unissued shares of preferred stock, the
number of shares of Preferred Stock that, as provided in this Agreement, will be
sufficient to permit the exercise in full of all outstanding Rights. Upon the
occurrence of any events resulting in an increase in the aggregate number of
shares of Preferred Stock (or other equity securities of the Company) issuable
upon exercise of all outstanding Rights above the number then reserved, the
Company shall make appropriate increases in the number of shares so reserved to
the extent practicable.
(b) If the shares of Preferred Stock to be issued and delivered upon
the exercise of the Rights may be listed on any national securities exchange or
automated quotation system, the Company shall during the period from the
Distribution Date through the Expiration Date use its best efforts to cause all
securities reserved for such issuance to be listed on such exchange upon
official notice of issuance upon such exercise.
(c) The Company shall use its best efforts (i) as soon as practicable
following the occurrence of a Section 11(a)(ii) Event and a determination by the
Company in accordance with Section 11(a)(iii) hereof of the consideration to be
delivered by the Company upon exercise of the Rights or, if so required by law,
as soon as practicable following the Distribution Date (such date being the
"Registration Date"), to file a registration statement on an appropriate form
-----------------
under the Securities Act of 1933, as amended (the "Securities Act"), with
--------------
respect to the securities that may be acquired upon exercise of the Rights (the
"Registration Statement"), (ii) to cause the Registration Statement to become
----------------------
effective as soon as practicable after such filing, (iii) to cause the
Registration Statement to continue to be effective (and to include a prospectus
complying with the requirements of the Securities Act) until the earlier of (A)
the date as of which the Rights are no longer exercisable for the securities
covered by the Registration Statement, and (B) the Expiration Date, and (iv) to
take as soon as practicable following the Registration Date such action as may
be required to ensure that any acquisition of securities upon exercise of the
Rights complies with any applicable state securities or "blue sky" laws. The
Company may temporarily suspend, for a period of time not to exceed one hundred
twenty (120) days after the date set forth in clause (i) of the first sentence
of this Section 9(c), the exercisability of the Rights in order to prepare and
file such registration statement and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. In
addition, if the Company shall determine that a registration statement is
required following the Distribution Date, the Company may temporarily suspend
the exercisability of the Rights until such time as a registration statement has
been declared effective. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction shall not have
11
been obtained, the exercise thereof shall not be permitted under applicable law
or a registration statement shall not have been declared effective.
(d) The Company shall take such action as may be necessary to ensure
that all shares of Preferred Stock (and, following the occurrence of a
Triggering Event, any other securities that may be delivered upon exercise of
Rights) shall be, at the time of delivery of the certificates or depositary
receipts for such securities (subject to payment of the Purchase Price), duly
and validly authorized and issued and fully paid and non-assessable.
(e) The Company shall pay any documentary, stamp or transfer tax
imposed in connection with the issuance or delivery of the Rights Certificates
or upon the exercise of Rights; provided, however, the Company shall not be
-------- -------
required to pay any such tax imposed in connection with the issuance or delivery
of Units of Preferred Stock, or any certificates or depositary receipts for such
Units of Preferred Stock (or, following the occurrence of a Triggering Event,
any other securities, cash or assets, as the case may be) to any person other
than the registered holder of the Rights Certificates evidencing the Rights
surrendered for exercise. The Company shall not be required to issue or deliver
any certificates or depositary receipts for Units of Preferred Stock (or,
following the occurrence of a Triggering Event, any other securities, cash or
assets, as the case may be) to, or in a name other than that of, the registered
holder upon the exercise of any Rights until any such tax shall have been paid
(any such tax being payable by the holder of such Rights Certificate at the time
of surrender) or until it has been established to the Company's satisfaction
that no such tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose name any
---------------------------
certificate or depositary receipt for Units of Preferred Stock (or, following
the occurrence of a Triggering Event, other securities) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of the Units of Preferred Stock (or, following the occurrence of a
Triggering Event, other securities) represented thereby on, and such certificate
shall be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that if the date of such
-------- -------
surrender and payment is a date upon which the Preferred Stock (or, following
the occurrence of a Triggering Event, other securities) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such securities on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or, following the occurrence of a
Triggering Event, other securities) transfer books of the Company are open and,
further provided, however, that if delivery of Units of Preferred Stock is
------- -------- -------
delayed pursuant to Section 9(c) hereof, such Persons shall be deemed to have
become the record holders of such Units of Preferred Stock only when such Units
first become deliverable. Prior to the exercise of the Rights evidenced thereby,
the holder of a Rights Certificate shall not be entitled to any rights of a
stockholder of the Company with respect to securities for which the Rights shall
be exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
----------------------------------------------------------
Number of Rights. The Purchase Price, the number and kind of securities
----------------
purchasable upon exercise of each
12
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding
Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller
number of shares, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of
the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of
shares of Preferred Stock or capital stock, as the case may be, issuable on
such date upon exercise of the Rights, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be entitled to
receive, upon payment of the Purchase Price then in effect, the aggregate
number and kind of shares of Preferred Stock or capital stock, as the case
may be, which, if such Right had been exercised immediately prior to such
date, 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 Company issuable
upon the exercise of one Right. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof,
the adjustment provided for in this Section 11(a)(i) shall be in addition
to, and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii) hereof.
(ii) In the event any Person shall become an Acquiring Person, other
than pursuant to any transaction set forth in Section 13(a) hereof, then,
----
immediately upon the occurrence of such event (a "Section 11(a)(ii)
-----------------
Event"), proper provision shall be made so that each holder of a Right
(except as provided below and in Section 7(e) hereof) shall, subject to
Section 34 hereof, thereafter have the right to receive, upon exercise of
such Right at the then current Purchase Price in accordance with the terms
of this Agreement, in lieu of the number of Units of Preferred Stock for
which a Right was exercisable immediately prior to the first occurrence of
a Section 11(a)(ii) Event (whether or not such Right was then exercisable),
such number of Units of Preferred Stock as shall equal the result obtained
by (x) multiplying the then current Purchase Price by the then number of
Units of Preferred Stock for which a Right was exercisable immediately
prior to the first occurrence of a Section 11(a)(ii) Event (whether or not
such Right was then exercisable) (such product thereafter being, for all
purposes of this Agreement, other than Section 13 hereof, the "Purchase
--------
Price"), and (y) dividing that product by 50% of the then current market
-----
price (determined pursuant to Section 11(d) hereof) per Unit of Preferred
Stock on the date of such first occurrence (such Units of Preferred Stock
being the "Adjustment Shares"); provided, however, that the Purchase Price
----------------- -------- -------
and the number of Units of Preferred Stock so receivable upon exercise of a
Right shall, following the Section 11(a)(ii) Event, be subject to further
adjustment as appropriate in accordance with Section 11 hereof.
Notwithstanding the foregoing, the Rights shall not be exercisable
16
pursuant to this Section 11(a)(ii) until the time period during which the
Rights may be redeemed pursuant to Section 23 hereof shall have expired.
(iii) The Company, by the vote of a majority of the Board of
Directors, may at its option substitute for a Unit of Preferred Stock
issuable upon the exercise of Rights in accordance with the foregoing
subparagraph (ii), shares of Company Common Stock or fractions thereof
having a current market price (as determined by Section 11(d) hereof) equal
to the current market price of a Unit of Preferred Stock on the date of the
Section 11(a)(ii) Event. In the event that the number of shares of
Preferred Stock which are authorized by the Company's Amended and Restated
Certificate of Incorporation but not outstanding or reserved for issuance
for purposes other than upon exercise of the Rights is not sufficient to
permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company, by the vote of a
majority of the Board of Directors, shall to the extent permitted by
applicable law and any material agreements then in effect to which the
Company is a party or by which it is bound: (A) determine the excess of (1)
the value of the Adjustment Shares issuable upon the exercise of a Right
(the "Current Value") over (2) the Purchase Price (such excess being the
-------------
"Spread"), and (B) with respect to each Right (other than Rights which have
------
become void pursuant to Section 7(e)), make adequate provision to
substitute, in whole or in part, for such Adjustment Shares, upon exercise
of a Right and payment of the applicable Purchase Price, (1) cash, (2) a
reduction in the Purchase Price, (3) shares of Company Common Stock or
other equity securities of the Company (including, without limitation,
shares, or units of shares, of preferred stock (such other shares being
"common stock equivalents")), (4) debt securities of the Company, (5) other
------------------------
assets, or (6) any combination of the foregoing, having an aggregate value
which, when added to the value of the Units of Preferred Stock actually
issued upon exercise of such Right, shall have an aggregate value equal to
the Current Value (less the amount of any reduction in such Purchase
Price), where such aggregate value has been determined by a majority of the
Board of Directors, after receiving advice from a nationally recognized
investment banking firm; provided, however, that if the Company shall not
-------- -------
have made adequate provision to deliver value pursuant to clause (B) above
within thirty days following the later of (x) the first occurrence of a
Section 11(a)(ii) Event and (y) the date on which the Company's right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y)
being referred to herein as the "Section 11(a)(iii) Trigger Date"), then,
-------------------------------
subject to Section 34 hereof, the Company shall be obligated (to the extent
permitted by applicable law and any material agreements then in effect to
which the Company is a party or by which it is bound) to deliver, upon the
surrender for exercise of a Right and without requiring payment of the
Purchase Price, Units of Preferred Stock (to the extent available) and
then, if necessary, shares (or fractions of shares, at the discretion of
the Board of Directors) of Company Common Stock, cash or a combination
thereof, which Units of Preferred Stock, shares (or fractions of shares) of
Company Common Stock and/or cash shall have an aggregate value equal to the
Spread; further provided, however, that if the Company is unable to comply
------- -------- -------
with the immediately foregoing provision within such thirty day period,
then the Company shall (to the extent permitted by law) take all such
action as may be necessary to comply with such provision, including the
calling of a meeting of stockholders to authorize additional shares of
Preferred Stock or Company Common Stock. To the extent that the Company
determines that some action need be
14
taken pursuant to the first sentence of this Section 11(a)(iii), the
Company shall provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights. For purposes of this
Section 11(a)(iii), the value of a Unit of Preferred Stock or share of
Company Common Stock shall be the current market price (as determined
pursuant to Section 11(d) hereof) per Unit of Preferred Stock or share of
Company Common Stock, as the case may be, on the Section 11(a)(iii) Trigger
Date and the value of any common stock equivalent shall be deemed to have
the same value as the Preferred Stock on such date.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling
them to subscribe for or purchase (for a period expiring within forty-five
calendar days after such record date) shares of Preferred Stock (or shares
having substantially the same rights, privileges and preferences as shares
of Preferred Stock ("Equivalent Preferred Stock")) or securities
--------------------------
convertible into Preferred Stock or Equivalent Preferred Stock at a price
per share of Preferred Stock or per share of Equivalent Preferred Stock (or
having a conversion price per share, if a security convertible into
Preferred Stock or Equivalent Preferred Stock) less than the current market
price (as determined pursuant to Section l1(d) hereof) per share of
Preferred Stock on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the sum of the number of shares of Preferred
Stock outstanding on such record date plus the number of shares of
Preferred Stock which the aggregate offering price of the total number of
shares of Preferred Stock and/or Equivalent Preferred Stock so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price,
and the denominator of which shall be the number of shares of Preferred
Stock outstanding on such record date plus the number of additional shares
of Preferred Stock and/or Equivalent Preferred Stock to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be
paid by delivery of consideration part or all of which may be in a form
other than cash, the value of such consideration shall be as determined in
good faith by a majority of the Board of Directors, whose determination
shall be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights. Shares of
Preferred Stock owned by or held for the account of the Company or any
Subsidiary shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights, options or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not
been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of shares of Preferred Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is
the continuing or surviving corporation) of evidences of indebtedness, cash
(other than a regular quarterly cash dividend paid out of funds legally
available therefor), assets (other than a dividend payable in shares of
Preferred Stock, but including any dividend payable in stock other than
Preferred Stock) or subscription rights, options or warrants (excluding
those referred
15
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price (as determined pursuant to Section 11(d)
hereof) per share of Preferred Stock on such record date less the fair
market value (as determined in good faith by a majority of the Board of
Directors, whose determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent and the holder of
the Rights) of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights, options or warrants
distributable in respect of a share of Preferred Stock and the denominator
of which shall be such current market price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock. Such adjustments shall
be made successively whenever such a record date is fixed, and in the event
that such distribution is not so made, the Purchase Price shall be adjusted
to be the Purchase Price which would have been in effect if such record
date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current
market price" per share of Company Common Stock or Common Stock on any date
shall be deemed to be the average of the daily closing prices per share of
such shares for the ten consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided, however, if
-------- -------
prior to the expiration of such requisite ten Trading Day period the issuer
announces either (A) a dividend or distribution on such shares payable in
such shares or securities convertible into such shares (other than the
Rights), or (B) any subdivision, combination or reclassification of such
shares, then, following the ex-dividend date for such dividend or the
record date for such subdivision, combination or reclassification, as the
case may be, the "current market price" shall be properly adjusted to take
into account such event. The closing price for each day shall be, if the
shares are listed and admitted to trading on a national securities
exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national
securities exchange on which such shares are listed or admitted to trading
or, if such shares are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter
market, as reported by the Nasdaq National Market ("Nasdaq") or such other
------
system then in use, or, if on any such date such shares 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 such shares
selected by a majority of the Board of Directors. If on any such date no
market maker is making a market in such shares, the fair value of such
shares on such date as determined in good faith by a majority of the Board
of Directors shall be used. If such shares are not publicly held or not so
listed or traded, "current market price" per share shall mean the fair
value per share as determined in good faith by a majority of the Board of
Directors, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes. The term
"Trading Day" shall mean, if such shares are listed or admitted to trading
-----------
on any national securities exchange, a day on which the principal national
securities exchange on which such shares are listed or admitted to trading
is open for the transaction of business or, if such shares are not so
listed or admitted, a Business Day.
16
(ii) For the purpose of any computation hereunder, the "current
market price" per share of Preferred Stock shall be determined in the same
manner as set forth above for Company Common Stock in clause (i) of this
Section 11(d) (other than the fourth sentence thereof). If the current
market price per share of Preferred Stock cannot be determined in the
manner provided above or if the Preferred Stock is not publicly held or
listed or traded in a manner described in clause (i) of this Section 11(d),
the "current market price" per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 100 (as such amount may be
appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to Company Common Stock occurring after the
date of this Agreement) multiplied by the current market price per share of
Company Common Stock. If neither Company Common Stock nor Preferred Stock
is publicly held or so listed or traded, "current market price" per share
of the Preferred Stock shall mean the fair value per share as determined in
good faith by a majority of the Board of Directors whose determination
shall be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights. For all purposes
of this Agreement, the "current market price" of a Unit of Preferred Stock
shall be equal to the "current market price" of one share of Preferred
Stock divided by 100.
(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-hundredth of a share of Company
Common Stock or Common Stock or other share or ten-thousandth of a share of
Preferred Stock, as the case may be. Notwithstanding the first sentence of
this Section 11(e), any adjustment required by this Section 11 shall be
made no later than the earlier of (i) three years from the date of the
transaction which mandates such adjustment and (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than
Preferred Stock, thereafter the number of such other shares so receivable
upon exercise of any Right and the Purchase Price thereof shall be subject
to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred
Stock contained in Sections 11(a), (b), (c), (d), (e), (g), (h), (i), (j),
(k), (l) and (m), and the provisions of Sections 7, 9, 10, 13 and 14 hereof
with respect to the Preferred Stock shall apply on like terms to any such
other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Units of Preferred
Stock (or other securities or amount of cash or combination thereof) that
may be acquired from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
17
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of
the calculations made in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number
of Units of Preferred Stock (calculated to the nearest one ten-thousandth
of a Unit) obtained by (i) multiplying (x) the number of Units of Preferred
Stock covered by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the
Purchase Price and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of Units of Preferred Stock that may be acquired
upon the exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the number of
Units of Preferred Stock for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Rights Certificates have been
issued, shall be at least ten days later than the date of such public
announcement. If Rights Certificates have been issued, upon each adjustment
of the number of Rights pursuant to this Section 11(i), the Company shall,
as promptly as practicable, cause to be distributed to holders of record of
Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights
to which such holders shall be entitled after such adjustment. Rights
Certificates to be so distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the
option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of Rights Certificates on the record
date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Units of Preferred Stock issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per Unit and the number of Units of
Preferred Stock which were expressed in the Initial Rights Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value of the number of Units of
Preferred Stock
18
issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that
the Company may validly and legally issue such fully paid and non-
assessable number of Units of Preferred Stock at such adjusted Purchase
Price.
(1) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for
a specified event, the Company may elect to defer until the occurrence of
such event the issuance to the holder of any Right exercised after such
record date of that number of Units of Preferred Stock and shares of other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of Units of Preferred Stock and shares
of other capital stock or securities of the Company, if any, issuable upon
such exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to such
-------- -------
holder a due xxxx or other appropriate instrument evidencing such holder's
right to receive such additional shares (fractional or otherwise) or
securities upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and
to the extent that in their good faith judgment a majority of the Board of
Directors shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Stock, (ii) issuance wholly
for cash of any shares of Preferred Stock at less than the current market
price, (iii) issuance wholly for cash of shares of Preferred Stock or
securities which by their terms are convertible into or exchangeable for
shares of Preferred Stock, (iv) stock dividends or (v) issuance of rights,
options or warrants referred to in this Section 11, hereafter made by the
Company to holders of its Preferred Stock, shall not be taxable to such
holders or shall reduce the taxes payable by such holders.
(n) The Company shall not, at any time after the Distribution Date,
(i) consolidate with any other Person (other than a wholly owned Subsidiary
of the Company in a transaction which complies with Section 11(o) hereof),
(ii) merge with or into any other Person (other than a wholly owned
Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), or (iii) sell or transfer (or permit any Subsidiary to sell
or transfer), in one transaction, or a series of transactions, assets or
earning power aggregating more than 50% of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its Subsidiaries in one or
more transactions each of which complies with Section 11(o) hereof), if (x)
at the time of or immediately after such consolidation, merger or sale
there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights or
(y) prior to, simultaneously with or immediately after such consolidation,
merger or sale, the Person which constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof shall have
distributed or otherwise transferred to its shareholders or other persons
holding an equity interest in such Person Rights previously owned by such
Person or any of its Affiliates and Associates; provided, however, this
-------- -------
Section 11(n) shall not affect the ability of any
19
wholly owned Subsidiary of the Company to consolidate with, merge with or
into, or sell or transfer assets or earning power to, any other wholly
owned Subsidiary of the Company.
(o) After the Distribution Date, the Company shall not, except as
permitted by Section 23, Section 26 or Section 34 hereof, take (or permit
any Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date (i) declare a dividend
on the outstanding shares of Company Common Stock payable in shares of
Company Common Stock, (ii) subdivide the outstanding shares of Company
Common Stock, (iii) combine the outstanding shares of Company Common Stock
into a smaller number of shares, or (iv) issue any shares of its capital
stock in a reclassification of Company Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), the number of Rights
associated with each share of Company Common Stock then outstanding, or
issued or delivered thereafter prior to the Distribution Date or in
accordance with Section 22 hereof, shall be proportionately adjusted so
that the number of Rights thereafter associated with each share of Company
Common Stock following any such event shall equal the result obtained by
multiplying the number of Rights associated with each share of Company
Common Stock immediately prior to such event by a fraction the numerator of
which shall be the total number of shares of Company Common Stock
outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Company Common
Stock outstanding immediately following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
----------------------------------------------------------
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Company Common Stock, a copy of such certificate, and
(c) mail a brief summary thereof to each holder of a Rights Certificate (or, if
prior to the Distribution Date, to each holder of a certificate representing
shares of Company Common Stock) 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 any
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, following the first occurrence of a Section
-----
11(a)(ii) Event, directly or indirectly, either (x) the Company shall
consolidate with, or merge with and into, any other Person (other than a wholly
owned Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), and the Company shall not be the continuing or surviving
corporation of such consolidation or merger, (y) any Person (other than a wholly
owned Subsidiary of the Company
20
in a transaction which complies with Section 11(o) hereof) shall consolidate
with, or merge with or into, the Company, and the Company shall be the
continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the outstanding
shares of Company Common Stock shall be changed into or exchanged for stock or
other securities of the Company or any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer) to any Person or Persons
(other than the Company or any of its wholly owned Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) and such
transaction shall not have received the approval of a majority of the Board of
Directors (any such event being a "Section 13 Event"), then, and in each such
----------------
case, proper provision shall be made so that: (i) each holder of a Right, (other
than Rights which have become void as provided in Section 7(e) hereof), shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price, in accordance with this Agreement and in lieu of Units
of Preferred Stock or shares of Company Common Stock, such number of validly
authorized and issued, fully paid, non-assessable and freely tradeable shares of
Common Stock of the Principal Party (as such term is hereinafter defined), which
shares shall not be subject to any liens, encumbrances, rights of call or first
refusal, transfer restrictions or other adverse claims, as shall be equal to the
result obtained by (1) multiplying the then current Purchase Price by the number
of Units of Preferred Stock for which a Right is exercisable immediately prior
to the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event
has occurred prior to the first occurrence of a Section 13 Event, multiplying
the number of such Units for which a Right would be exercisable hereunder but
for the occurrence of such Section 11(a)(ii) Event by the Purchase Price which
would be in effect hereunder but for such first occurrence) and (2) dividing
that product (which, following the first occurrence of a Section 13 Event, shall
be the "Purchase Price" for all purposes of this Agreement) by 50% of the
current market price (determined pursuant to Section 11(d) hereof) per share of
the Common Stock of such Principal Party on the date of consummation of such
Section 13 Event, provided, however, that the Purchase Price (as theretofore
-------- -------
adjusted in accordance with Section 11(a)(ii) hereof) and the number of shares
of Common Stock of such Principal Party so receivable upon exercise of a Right
shall be subject to further adjustment as appropriate in accordance with Section
11(f) hereof to reflect any events occurring in respect of the Common Stock of
such Principal Party after the occurrence 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 Company pursuant to
this Agreement; (iii) the term "Company" shall thereafter be deemed to refer to
such Principal Party in all respects; (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock in accordance with Section 9 hereof) in connection
with the consummation of any such transaction as may be necessary to assure that
the provisions of this Agreement shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights, to its shares of Common Stock;
provided, however, that, upon the subsequent occurrence of any merger,
-------- -------
consolidation, sale of all or substantially all of the assets, recapitalization,
reclassification of shares, reorganization or other extraordinary transaction in
respect of such Principal Party, each holder of a Right shall thereupon be
entitled to receive, upon exercise of a Right and payment of the Purchase Price,
such cash, shares, rights, warrants and other property which such holder
21
would have been entitled to receive had it, at the time of such transaction,
owned the shares of Common Stock of the Principal Party purchasable upon the
exercise of a Right, and such Principal Party shall take such steps (including,
but not limited to, reservation of shares of stock) as may be necessary to
permit the subsequent exercise of the Rights in accordance with the terms hereof
for such cash, shares, rights, warrants and other property; and (v) the
provisions of Section 11(a)(ii) hereof shall be of no further effect following
the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a), (A) the Person that is the
issuer of any securities into which shares of Company Common Stock are
converted in such merger or consolidation, or, if there is more than
one such issuer, the issuer of Common Stock that has the highest
aggregate current market price (determined pursuant to Section 11(d)
hereof) and (B) if no securities are so issued, the Person that is the
other party to such merger or consolidation, or, if there is more than
one such Person, the Person the Common Stock of which has the highest
aggregate current market price (determined pursuant to Section 11(d)
hereof); 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 largest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives
the same portion of the assets or earning power transferred pursuant
to such transaction or transactions or if the Person receiving the
largest portion of the assets or earning power cannot be determined,
whichever Person the Common Stock of which has the highest aggregate
current market price (determined pursuant to Section 11(d) hereof);
provided, however, that in any such case, (1) if the Common Stock of
-------- -------
such Person is not at such time and has not been continuously over the
preceding twelve-month period registered under Section 12 of the
Exchange Act ("Registered Common Stock"), or such Person is not a
-----------------------
corporation, and such Person is a direct or indirect Subsidiary of
another Person that has Registered Common Stock outstanding,
"Principal Party" shall refer to such other Person; (2) if the Common
Stock of such Person is not Registered Common Stock or such Person is
not a corporation, and such Person is a direct or indirect Subsidiary
of another Person but is not a direct or indirect Subsidiary of
another Person which has Registered Common Stock outstanding,
"Principal Party" shall refer to the ultimate parent entity of such
first-mentioned Person; (3) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and such
Person is directly or indirectly controlled by more than one Person,
and one or more of such other Persons has Registered Common Stock
outstanding, "Principal Party" shall refer to whichever of such other
Persons is the issuer of the Registered Common Stock having the
highest aggregate current market price (determined pursuant to Section
11(d) hereof); and (4) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and such
Person is directly or indirectly controlled by
22
more than one Person, and none of such other Persons have Registered
Common Stock outstanding, "Principal Party" shall refer to whichever
ultimate parent entity is the corporation having the greatest
shareholders equity or, if no such ultimate parent entity is a
corporation, shall refer to whichever ultimate parent entity is the
entity having the greatest net assets.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number
of authorized shares of its Common Stock which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13, and unless prior thereto the Company and
such Principal Party shall have executed and delivered to the Rights Agent
a supplemental agreement providing for the terms set forth in paragraphs
(a) and (b) of this Section 13 and further providing that the Principal
Party, at its own expense, shall:
(i) (A) file on an appropriate form, as soon as practicable
following the execution of such agreement, a registration statement
under the Securities Act with respect to the Common Stock that may be
acquired upon exercise of the Rights, (B) cause such registration
statement to remain effective (and to include a prospectus complying
with the requirements of the Securities Act) until the Expiration
Date, and (C) as soon as practicable following the execution of such
agreement, take such action as may be required to assure that any
acquisition of such Common Stock upon the exercise of the Rights
complies with any applicable state securities or "blue sky" laws; and
(ii) as soon as practicable following the execution of such
agreement, deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form
10 under the Exchange Act.
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or
other instrument governing its corporate affairs, which provision would
have the effect of (i) causing such Principal Party to issue, in connection
with, or as a consequence of, the consummation of a transaction referred to
in this Section 13, shares of Common Stock of such Principal Party at less
than the then current market price per share (determined pursuant to
Section 11(d) hereof) or securities exercisable for, or convertible into,
Common Stock of such Principal Party at less than such then current market
price (other than to holders of Rights pursuant to this Section 13) or (ii)
providing for any special payment, tax or similar provisions in connection
with the issuance of the Common Stock of such Principal Party pursuant to
the provisions of this Section 13; then, in such event, the Company shall
not consummate any such transaction unless prior thereto the Company and
such Principal Party shall have executed and delivered to the Rights Agent
a supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable
23
provision will have no effect in connection with, or as a consequence of,
the consummation of the proposed transaction.
(e) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the
event that a Section 13 Event shall occur at any time after the occurrence
of a Section 11(a)(ii) Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable, in the manner and for the
securities described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares. (a) The Company
---------------------------------------
shall not be required to issue fractions of Rights or to distribute Rights
Certificates which evidence fractional Rights. In lieu of issuing such
fractional Rights, there shall be paid to the Persons to which such fractional
Rights would otherwise be issuable, an amount in cash equal to such fraction of
the market value of a whole Right. For purposes of this Section 14(a), the
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price of the Rights for any day shall
be, if the Rights are listed or admitted to trading on a national securities
exchange, 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 a majority
of the Board of Directors. 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 a majority of the Board of Directors shall be used and such
determination shall be described in a statement filed with the Rights Agent and
the holders of the Rights.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one one-
hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence such fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock); provided, however, that in lieu of fractions of
-------- -------
shares of Preferred Stock which are integral multiples of one one-hundredth of a
share of Preferred Stock, the Company may provide for the issuance of depositary
receipts pursuant to Section 7(c) hereof. In lieu of such fractional shares of
Preferred Stock that are not integral multiples of one one-hundredth of a share,
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the then current market price of a share of Preferred Stock on the
day of exercise, determined in accordance with Section 11(d) hereof.
(c) The holder of a Right by the acceptance of the Rights expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
24
Section 15. Rights of Action. All rights of action in respect of this
----------------
Agreement, other than rights of action vested in the Rights Agent pursuant to
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
certificates representing shares of Company Common Stock); and any registered
holder of a Rights Certificate (or, prior to the Distribution Date, of a
certificate representing shares of Company Common Stock), without the consent of
the Rights Agent or of the holder of any other Rights Certificate (or, prior to
the Distribution Date, of a certificate representing shares of Company Common
Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company or any
other Person to enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
---------------------------
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Company Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the office of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates duly executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company and
the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Company
Common Stock certificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Rights Certificates or the associated Company Common
Stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of Section 7 (e) hereof, shall be
affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or any other Person as a result of its inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its
-------- -------
25
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as promptly as practicable.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
--------------------------------------------------
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of shares of
Preferred Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or, except as provided in Section 24 hereof, to
receive notice of meetings or other actions affecting stockholders, or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof. This Section 17 shall also apply to
holders, as such, of Rights prior to the issuance of Rights Certificates.
Section 18. Concerning the Rights Agent. (a) The Company agrees to pay to
---------------------------
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses, including reasonable fees and disbursements of its counsel, incurred
in connection with the execution and administration of this Agreement and the
exercise and performance of its duties hereunder. The Company shall indemnify
the Rights Agent for, and 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 the reasonable costs and expenses of defending against any claim of
liability hereunder.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Preferred Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document believed by it to be genuine and to have been signed, executed
and, where necessary, verified or acknowledged by the proper Person or Persons.
(c) The indemnity provided herein shall survive the expiration of the
Rights and the termination of this Agreement. In no case will the Rights Agent
be liable for special, indirect, incidental or consequential loss or damage of
any kind whatsoever (including but not limited to lost profits), even if the
Rights Agent has been advised of the possibility of such loss or damage.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the corporate
trust or shareholder services businesses 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 document or any further act on the part
of any of the parties hereto;
26
provided, however, that such corporation would be eligible for appointment as a
-------- -------
successor Rights Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of a
predecessor Rights Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties
----------------------
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person
and the determination of "current market price") be proved or established
by the Company prior to taking or suffering any action hereunder, such fact
or matter (unless other evidence in respect thereof be specified herein)
may be deemed to be conclusively proved and established by a certificate
signed by the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company and delivered to the
Rights Agent; provided, however, that so long as any Person is an Acquiring
-------- -------
Person hereunder, such certificate shall be signed and delivered by a
majority of the Board of Directors; 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
Rights Certificates or be required
27
to verify the same (except as to its countersignature on such Rights
Certificates), but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not have any responsibility for the
validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or for the validity or execution
of any Rights Certificate (except its countersignature thereof); nor shall
it be responsible for any breach by the Company of any covenant or failure
by the Company to satisfy conditions contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any adjustment required
under the provisions of Section 11 or Section 13 hereof or for the manner,
method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Rights Certificates after
receipt by the Rights Agent of the certificate describing any such
adjustment contemplated by Section 12); nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any shares of Preferred Stock or any other securities to be
issued pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Preferred Stock or any other securities will, when so
issued, be validly authorized and issued, fully paid and non-assessable.
(f) The Company shall perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such
further acts, instruments and assurances as may reasonably be required by
the Rights Agent for the performance by the Rights Agent of its duties
under 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 Chairman of the Board, the Chief Executive Officer, the President, any
Vice President, the Secretary, any Assistant Secretary, the Treasurer or
any Assistant Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be
liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer; provided, however, that
-------- -------
so long as any Person is an Acquiring Person hereunder, the Rights Agent
shall accept such instructions and advice only from a majority of the Board
of Directors and shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with such instructions of the
majority of the Board of Directors. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken or omitted by
the Rights Agent under this Rights Agreement and the date on and/or after
which such action shall be taken or such omission shall be effective. 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 such officer
of the Company actually receives such application, unless any such officer
shall have consented in writing to an earlier date) unless, prior to taking
any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
28
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or have a pecuniary interest in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for
any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents.
(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 or in the exercise of its rights
hereunder if the Rights Agent shall have reasonable grounds for believing
that repayment of such funds or adequate indemnification against such risk
or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has
either not been completed, not signed or indicates an affirmative response
to clause 1 and/or 2 thereof, the Rights Agent shall not take any further
action with respect to such requested exercise or transfer without first
consulting with the Company. If such certificate has been completed and
signed and shows a negative response to clauses 1 and 2 of such
certificate, unless previously instructed otherwise in writing by the
Company (which instructions may impose on the Rights Agent additional
ministerial responsibilities, but no discretionary responsibilities), the
Rights Agent may assume without further inquiry that the Rights Certificate
is not owned by a Person described in Section 7(e) hereof and shall not be
charged with any knowledge to the contrary.
Section 21. Change of Rights Agent. The Rights Agent or any successor
----------------------
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty days' prior notice in writing mailed to the Company, and to each
transfer agent of the Preferred Stock and the Company Common Stock, by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. In the event the Transfer Agency and Services Agreement
terminates, the Rights Agent will be deemed to resign automatically on the
effective date of such termination, and any required notice will be sent by the
Company. The Company may remove the Rights Agent or any successor Rights Agent
upon thirty days' prior notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Preferred Stock and the Company Common Stock, by registered or certified mail,
and to the holders of the Rights Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of thirty days after giving notice
of such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by
29
the Company), then any registered holder of any Rights Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) a corporation organized and doing business under the laws of the
United States or any state of the United States in good standing, shall be
authorized under applicable laws to exercise corporate trust or stock transfer
powers and shall be subject to supervision or examination by federal or state
authorities or (b) an Affiliate of a corporation described in clause (a). After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Preferred Stock and the
Company Common Stock, and mail a notice thereof in writing to the registered
holders of the Rights Certificates. Failure to give any notice provided for in
this Section 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.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
-----------------------------------
the provisions of this Agreement or the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by a majority of the Board of Directors to reflect any
adjustment or change made in accordance with the provisions of this Agreement in
the Purchase Price or the number or kind or class of shares or other securities
or property that may be acquired under the Rights Certificates. In addition, in
connection with the issuance or sale of shares of Company Common Stock following
the Distribution Date and prior to the Expiration Date, the Company (a) shall,
with respect to shares of Company Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by a
majority of the Board of Directors, issue Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided,
--------
however, that (i) no such Rights Certificate shall be issued if, and to the
-------
extent that, the Company shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to the Company or
the Person to whom such Rights Certificate would be issued, and (ii) no such
Rights Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination. (a) Subject to Section 30 hereof,
--------------------------
the Company may, at its option, by action of a majority of the Board of
Directors, at any time prior to the earlier of (i) the Close of Business on the
tenth Business Day following the Stock Acquisition Date or (ii) the Final
Expiration Date, redeem all but not less than all of the then outstanding Rights
at a redemption price of $.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being the "Redemption
----------
Price"). The Company may, at its option, by action of a majority of the Board
-----
of Directors, pay the Redemption Price either in shares of Company Common Stock
(based on the "current market price", as defined in Section 11(d) hereof, of the
shares of Company Common Stock at the time of redemption) or cash and
30
the redemption of the Rights shall be effective on the basis and with such
conditions as the Board of Directors may in its sole discretion establish.
(b) Immediately upon the action of a majority of the Board of
Directors ordering the redemption of the Rights, evidence of which shall be
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. The Company shall promptly give public notice of any such
redemption; provided, however, that the failure to give, or any defect in, any
-------- -------
such notice shall not affect the validity of such redemption. Promptly after the
action of a majority of the Board of Directors ordering the redemption of the
Rights, the Company shall give notice of such redemption to the Rights Agent and
the holders of the then outstanding Rights by mailing such notice to all such
holders at each holder's last address as it appears upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry books of
the transfer agent for the Company Common Stock. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made.
Section 24. Notice of Certain Events. (a) In case the Company shall
------------------------
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend paid out of funds legally available therefor), (ii) to
offer to the holders of Preferred Stock rights or warrants to subscribe for or
to purchase any additional shares of Preferred Stock or shares of stock of any
class or any other securities, rights or options, (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification involving
only the subdivision of outstanding shares of Preferred Stock), (iv) to effect
any consolidation or merger into or with any other Person, or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person or Persons (other than a transfer by the Company and/or any
of its wholly owned Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Rights Certificate, to the extent feasible and in
accordance with Section 25 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, 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 shares of Preferred
Stock, if any such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (i) or (ii) above at least twenty (20) days
prior to the record date for determining holders of the shares of Preferred
Stock for purposes of such action, and in the case of any such other action, at
least twenty (20) days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the shares of Preferred
Stock whichever shall be the earlier; provided, however, no such notice shall be
-------- -------
required pursuant to this Section 24, if any wholly owned Subsidiary of the
Company effects a consolidation or merger with or into, or effects a sale or
other transfer of assets or earnings power to, any other wholly owned Subsidiary
of the Company.
31
(b) In case any Triggering Event shall occur, then, in any such case,
(i) the Company shall as soon as practicable thereafter give to each holder of a
Rights Certificate, to the extent feasible and in accordance with Section 25
hereof, a notice of the occurrence of such event, which shall specify the event
and the consequences of the event to holders of Rights under Section 11(a)(ii)
or Section 13 hereof, as the case may be.
Section 25. Notices. All notices and other communications provided for
-------
hereunder shall, unless otherwise stated herein, be in writing (including by
telex, telegram or cable) and mailed or sent or delivered, if to the Company, at
its address at:
Optika Inc.
0000 Xxxxxx Xxxxx, 0/xx/ Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attn: Chief Financial Officer
Facsimile: (000) 000-0000
and if to the Rights Agent, at its address at:
EquiServe Trust Company, N.A.
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Client Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Company 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 Company.
Section 26. Supplements and Amendments. Prior to the Distribution Date
--------------------------
and subject to the penultimate sentence of this Section 26, the Company may, in
its sole and absolute discretion, and the Rights Agent shall, if the Company so
directs, supplement or amend any provision of this Agreement in any respect
without the approval of any holders of certificates representing shares of
Company Common Stock. From and after the Distribution Date and subject to the
penultimate sentence of this Section 26, the Company and the Rights Agent shall,
if the Company so directs, supplement or amend this Agreement without the
approval of any holders of Rights Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein, (iii) to
shorten or lengthen any time period hereunder, or (iv) to change or supplement
the provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Rights 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) subject to Section 30 hereof, a time period relating to when the Rights may
be redeemed at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the
32
benefits to, the holders of Rights. Without limiting the foregoing, the Company
may at any time prior to such time as any Person becomes an Acquiring Person
amend this Agreement to lower the thresholds set forth in Section 1(a) to not
less than the greater of (i) the sum of .001% and the largest percentage of the
outstanding shares of Company Common Stock then known by the Company to be
beneficially owned by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any Subsidiary of the
Company, or any entity holding Company Common Stock for or pursuant to the terms
of any such plan), and (ii) 10%. Upon the delivery of a certificate from an
appropriate officer of the Company or, so long as any Person is an Acquiring
Person hereunder, from the majority of the Board of Directors which states that
the proposed supplement or amendment is in compliance with the terms of this
Section 26, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, (i) no
supplement or amendment shall be made which changes the Redemption Price, the
Purchase Price, the Expiration Date or the number of Units of Preferred Stock or
other securities or assets for which a Right is exercisable without the approval
of a majority of the Board of Directors, and (ii) following the occurrence of a
Section 11(a)(ii) Event, no supplement or amendment whatsoever shall be made
without the approval of the Board of Directors. Prior to the Distribution Date,
the interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Company Common Stock.
Section 27. Successors. All the covenants and provisions of this Agreement
----------
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
Section 28. Determinations and Actions by the Board of Directors, etc.
---------------------------------------------------------
For all purposes of this Agreement, any calculation of the number of shares of
Company Common Stock outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding shares of Company
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Exchange Act
Regulations as in effect on the date hereof. Except as otherwise specifically
provided herein, the Board of Directors of the Company shall have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board of Directors or to the Company, or as
may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power (i) to interpret the
provisions of this Agreement, and (ii) to make all determinations deemed
necessary or advisable for the administration of this Agreement. All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board of Directors in good faith shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject the Board or any member
thereof to any liability to the holders of the Rights.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall
--------------------------
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of shares of Company Common Stock) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the
33
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of shares of Company 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;
provided, however, that notwithstanding anything in this Agreement to the
-------- -------
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and a majority of the
Board of Directors determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement and the Rights shall not then be redeemable, the right
of redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the Close of Business on the tenth Business Day following the date
of such determination by a majority of the Board of Directors.
Section 31. Governing Law. This Agreement, each Right and each Rights
-------------
Certificate issued hereunder shall be governed by, and construed in accordance
with, the laws of the State of Delaware applicable to contracts executed in and
to be performed entirely in such State.
Section 32. Counterparts. This Agreement may be executed (including by
------------
facsimile) in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
instrument.
Section 33. Descriptive Headings. The headings contained in this
--------------------
Agreement are for descriptive purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 34. Exchange. (a) The Company, upon resolution of a majority of
--------
the Board of Directors may, at its option, at any time after the first
occurrence of a Section 11(a)(ii) Event, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to Section 7(e) hereof) for Units of Preferred Stock or
shares of Company Common Stock (at the election of the Board of Directors) at an
exchange ratio of one Unit of Preferred Stock or one share of Company Common
Stock, as the case may be, per Right, as appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being the "Exchange Ratio"). Notwithstanding the
--------------
foregoing, the Board of Directors shall not be empowered to effect such exchange
at any time after any Person (other than an Exempt Person), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of shares
of Company Common Stock aggregating 50% or more of the shares of Company Common
Stock then outstanding. From and after the occurrence of a Section 13(a) Event,
any Rights that theretofore have not been exchanged pursuant to this Section
34(a) shall thereafter be exercisable only in accordance with Section 13 and may
not be exchanged pursuant to this Section 34(a). The exchange of the Rights by
the Board of Directors may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish.
34
(b) Immediately upon the action of a majority of the Board of
Directors ordering the exchange of any Rights pursuant to Section 34(a) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of Units of Preferred Stock or shares of Company
Common Stock, as the case may be, equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however, that the failure to give,
-------- -------
or any defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange shall state the method by which the exchange of
Units of Preferred Stock or shares of Company Common Stock, as the case may be,
for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 7(e) hereof) held by each holder of
Rights.
(c) In the event that the number of shares of Preferred Stock or
Company Common Stock, as the case may be, which are authorized by the Company's
Amended and Restated Certificate of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit any exchange of Rights as contemplated in accordance
with this Section 34, the Company, upon a resolution of a majority of the Board
of Directors, shall take all such action as may be necessary to authorize
additional shares of Preferred Stock or Company Common Stock, as the case may
be, for issuance upon exchange of the Rights or make adequate provision to
substitute, in whole or in part, (1) cash, (2) other equity securities of the
Company, (3) debt securities of the Company, (4) other assets, or (5) any
combination of the foregoing, having an aggregate value for each Right to be
exchanged equal to the per share market price of one Unit of Preferred Stock or
share of Company Common Stock, as the case may be (determined pursuant to
Section 11(d) hereof) as of the date of a Section 11(a)(ii) Event, where such
aggregate value has been determined by a majority of the Board of Directors.
(d) The Company shall not be required to issue fractions of Units of
Preferred Stock or fractions of shares of Company Common Stock or to distribute
certificates which evidence fractional Units or fractional shares. In lieu of
issuing fractional Units or fractional shares, the Company may pay to the
registered holders of Rights Certificates at the time such Rights are exchanged
as herein provided an amount in cash equal to the same fraction of the current
market price (determined pursuant to Section 11(d) hereof) of one Unit of
Preferred Stock or one share of Company Common Stock, as the case may be, on the
Trading Day immediately prior to the date of exchange pursuant to this Section
34.
35
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, all as of the date first above written.
OPTIKA INC.
By: /s/ Xxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxxxx
-------------------------- ----------------------------
Name: Xxxx Xxxxxx Name: Xxxxxx X. Xxxxxxx
Title: Chairman, President and Title: Chief Financial Officer and
Chief Executive Officer Secretary
EQUISERVE TRUST COMPANY, N.A.
By: /s/ Xxxxx Xxxxxx-Xxxx
----------------------------
Name: Xxxxx Xxxxxx-Xxxx
Title: Managing Director
36
EXHIBIT A
---------
FORM OF RIGHTS CERTIFICATE
Certificate No. ______ ______ Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE RIGHTS AGREEMENT
REFERRED TO BELOW). THE RIGHTS ARE SUBJECT TO REDEMPTION OR EXCHANGE, AT THE
OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES (SPECIFIED IN THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY
OWNED BY ACQUIRING PERSONS (AS DEFINED IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
Rights Certificate
OPTIKA INC.
This certifies that ______________________, or registered assigns, is the
registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms and conditions of
the Amended and Restated Rights Agreement dated as of January 23, 2002, as
amended from time to time (the "Rights Agreement''; terms defined therein are
used herein with the same meaning unless otherwise defined herein) between
Optika Inc., a Delaware corporation (the "Company"), and EquiServe Trust
Company, N.A., as Rights Agent (which term shall include any successor Rights
Agent under the Rights Agreement), to purchase from the Company at any time
after the Distribution Date and prior to the Expiration Date at the office of
the Rights Agent, one one-hundredth of a fully paid and nonassessable share of
Series B Preferred Stock, par value $.001 per share (the ''Preferred Stock"), of
the Company at the Purchase Price initially of $30 per one one-hundredth share
of Preferred Stock (each such one one-hundredth of a share being a "Unit"), upon
presentation and surrender of this Rights Certificate with the Election to
Purchase and related certificate duly executed. The number of Rights evidenced
by this Rights Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per Unit set forth
above, and the Purchase Price per share set forth above, are the number and
Purchase Price as of July 18, 2001 based on the Preferred Stock as constituted
at such date. The Company reserves the right to require prior to the occurrence
of a Triggering Event (as such term is defined in the Rights Agreement) that a
number of Rights be exercised so that only whole shares of Preferred Stock will
be issued.
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights evidenced
by this Rights Certificate are beneficially owned by an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person or, under certain
circumstances described in the Rights Agreement, a transferee of any such
Acquiring Person, Associate or Affiliate, 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.
1
In certain circumstances described in the Rights Agreement, the Rights
evidenced hereby may entitle the registered holder thereof to purchase capital
stock of an entity other than the Company or receive common stock, cash or other
assets, all as provided in the Rights Agreement.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of shares of Preferred Stock or other securities, which may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are subject
to modification and adjustment upon the happening of certain events, including a
Triggering Event.
This Rights Certificate is subject to all of the terms and conditions of
the Rights Agreement, which terms and conditions are hereby incorporated herein
by reference and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent, the Company
and the holders of the Rights Certificates, 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 office of the Rights Agent and are available from
the Rights Agent upon written request.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing an aggregate number of Rights equal to the aggregate number
of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company under certain circumstances at
its option at a redemption price of $.001 per Right, at any time prior to the
earlier of the close of business on (i) the tenth business day following the
Stock Acquisition Date (as such time period may be extended pursuant to the
Rights Agreement), and (ii) the Final Expiration Date. In addition, the Rights
may be exchanged, in whole or in part, for shares of the Company Common Stock or
Units of Preferred Stock. Immediately upon the action of the Board of Directors
of the Company authorizing any such exchange, and without any further action or
any notice, the Rights (other than Rights which are not subject to such
exchange) will terminate and the Rights will only enable holders to receive the
shares issuable upon such exchange.
No fractional shares of Preferred Stock will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a share of Preferred Stock or depositary
receipts representing such fractions), but in lieu thereof a cash payment will
be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Preferred Stock or
of any other securities 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
2
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends of subscription rights, or otherwise, until
the Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
3
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company.
Dated as of ____________.
OPTIKA INC.
By:______________________
Name:_________________
Title:________________
By:______________________
Name:_________________
Title:________________
Countersigned:
EQUISERVE TRUST COMPANY, N.A.
as Rights Agent
By:__________________
Name:_____________
Title:____________
4
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Rights Certificate.)
FOR VALUE RECEIVED ____________________ hereby sells, assigns and transfers
unto:_________________________________________________ (Please print name and
address of transferee) ___________________________________ this Rights
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint _____________________ Attorney, to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated __________________
________________________________
Signature
Signature Guaranteed:
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes in (1)
and (2) that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated ___________________
_________________________________
Signature
Signature Guaranteed:
5
NOTICE
------
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by an approved eligible financial institution
acceptable to the Rights Agent in its sole discretion or by a participant in the
Securities Transfer Agents Medallion Program, the Stock Exchange Medallion
Program or the New York Stock Exchange Medallion Program.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
6
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise
Rights represented by the Rights Certificate.)
To: OPTIKA INC.
The undersigned hereby irrevocably elects to exercise ________________
Rights represented by this Rights Certificate to purchase the Units of Preferred
Stock issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person or other property which may be issuable upon the
exercise of the Rights) and requests that certificates for such Units be issued
in the name of and delivered to: _______________________________________________
(Please print name and address) _______________________________ (Please insert
social security or other identifying number).
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
__________________________________________________________ (Please print name
and address) ______________________________________________ (Please insert
social security or other identifying number).
Dated ___________________
_________________________________
Signature
Signature Guaranteed:
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes in
(1) and (2) that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
beneficially owned by an Acquiring Person or an Affiliate or an Associate
thereof (as defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.
Dated: ___________________
_______________________________
Signature
Signature Guaranteed:
7
NOTICE
The signature in the foregoing Election to Purchase and Certificate must
conform to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by an approved eligible financial institution
acceptable to the Rights Agent in its sole discretion or by a participant in the
Securities Transfer Agents Medallion Program, the Stock Exchange Medallion
Program or the New York Stock Exchange Medallion Program.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
8
EXHIBIT B
---------
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
UNDER CERTAIN CIRCUMSTANCES
(SPECIFIED IN THE RIGHTS AGREEMENT),
RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS
(AS DEFINED IN THE RIGHTS AGREEMENT)
OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
MAY BECOME NULL AND VOID.
On July 12, 2001 the Board of Directors of Optika Inc. (the "Company")
authorized and declared a dividend distribution of one Right for each
outstanding share of its Common Stock, par value $.001 per share (the "Company
Common Stock"), to stockholders of record at the close of business on July 18,
2001 (the "Record Date"), and authorized the issuance of one Right with each
share of Company Common Stock issued (including shares distributed from
Treasury) by the Company thereafter between the Record Date and the Distribution
Date (as defined below). Each Right entitles the registered holder, subject to
the terms of the Rights Agreement (as defined below), to purchase from the
Company one one-hundredth of a share (a "Unit") of Series B Preferred Stock, par
value $.001 per share (the "Preferred Stock"), at a purchase price of $30 per
Unit, subject to adjustment. The purchase price is payable in cash or by
certified or bank check or money order payable to the order of the Company. The
description and terms of the Rights are set forth in the Amended and Restated
Rights Agreement between the Company and EquiServe Trust Company, N.A., as
Rights Agent, dated as of January 23, 2002, as amended from time to time (the
"Rights Agreement").
A copy of the Rights Agreement, including the Certificate of Designation
for the Preferred Stock, has been filed by the Company with the Securities and
Exchange Commission as an exhibit to the Company's Current Report on Form 8-K
dated January 23, 2002. Copies of the Rights Agreement and the Certificate of
Designation are available free of charge from the Company. This summary
description of the Rights and the Preferred Stock does not purport to be
complete and is qualified in its entirety by reference to all of the provisions
of the Rights Agreement and the Certificate of Designation, including the
definitions therein of certain terms, which Rights Agreement and Certificate of
Designation are incorporated herein by reference.
The Rights Agreement
--------------------
Initially, the Rights will attach to all certificates representing shares
of outstanding Company Common Stock, and no separate Rights Certificates will be
distributed. The Rights will separate from the Company Common Stock and the
"Distribution Date" will occur upon the earlier of (i) ten business days
following a public announcement (the date of such announcement being the "Stock
Acquisition Date") that a person or group of affiliated or associated persons
has acquired or otherwise obtained beneficial ownership of 15% or more of the
then outstanding shares of Company Common Stock (an "Acquiring Person"), and
(ii) ten business days (or such later date as may be determined by action of the
Board of Directors prior to such time as any person becomes an Acquiring Person)
following the commencement of a tender offer or exchange offer that would result
in a person or group beneficially owning 15% or more of the
1
then outstanding shares of Company Common Stock. Until the Distribution Date,
(i) the Rights will be evidenced by Company Common Stock certificates and will
be transferred with and only with such Company Common Stock certificates, (ii)
new Company Common Stock certificates issued after the Record Date (also
including shares distributed from Treasury) will contain a notation
incorporating the Rights Agreement by reference, and (iii) the surrender for
transfer of any certificates representing outstanding Company Common Stock will
also constitute the transfer of the Rights associated with the Company Common
Stock represented by such certificates.
An "Acquiring Person" does not include (A) the Company; (B) any Subsidiary
of the Company; (C) any employee benefit plan maintained by the Company or any
of its Subsidiaries; (D) any trustee or fiduciary with respect to such employee
benefit plan acting in such capacity or a trustee or fiduciary holding shares of
Company Common Stock for the purpose of funding any such plan or employee
benefits; (E) any Person if the Board of Directors of the Company determines in
good faith that such Person who would otherwise be an "Acquiring Person" became
such inadvertently (including, without limitation, because (x) such Person was
unaware that it beneficially owned a percentage of Company Common Stock that
would otherwise cause such Person to be an "Acquiring Person" or (y) such Person
was aware of the extent of its Beneficial Ownership of Company Common Stock but
had no actual knowledge of the consequences of such Beneficial Ownership under
this Agreement) and without any intention of changing or influencing control of
the Company, and if such Person does not acquire any additional shares of
Company Common Stock and as promptly as practicable divested or divests itself
of Beneficial Ownership of a sufficient number of shares of Company Common Stock
so that such Person would no longer be an "Acquiring Person;" or (F) any Person
who is or becomes the Beneficial Owner of 15% or more of the then outstanding
shares of Company Common Stock as a result of the acquisition of shares of
Company Common Stock in one or more transactions approved by a majority of the
Board of Directors, and (ii) no Person shall be deemed an "Acquiring Person" as
a result of the acquisition of shares of Company Common Stock by the Company
which, by reducing the number of shares of Company Common Stock outstanding,
increases the proportional number of shares beneficially owned by such Person;
provided, however, that if (A) a Person would become an Acquiring Person (but
-------- -------
for the operation of this subclause (ii)) as a result of the acquisition of
shares of Company Common Stock by the Company and (B) after such share
acquisition by the Company, such Person becomes the Beneficial Owner of any
additional shares of Company Common Stock, then such Person shall be deemed an
Acquiring Person unless upon becoming the Beneficial Owner of such additional
shares such Person is the Beneficial Owner of less than 15% of the then
outstanding shares of Company Common Stock.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on the tenth anniversary of the Rights Agreement unless
earlier redeemed or exchanged by the Company as described below. Under certain
circumstances the exercisability of the Rights may be suspended. In no event,
however, will the Rights be exercisable prior to the expiration of the period in
which the Rights may be redeemed.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of Company Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights.
2
In the event that a person becomes an Acquiring Person, then, in such case,
each holder of a Right will thereafter have the right to receive, upon exercise,
shares of Company Common Stock (or, in certain circumstances, cash, property or
other securities of the Company) having a value equal to two times the exercise
price of the Right. The exercise price is the purchase price multiplied by the
number of Units of Preferred Stock issuable upon exercise of a Right prior to
the event described in this paragraph. Notwithstanding any of the foregoing,
following the occurrence of the event set forth in this paragraph, all Rights
that are, or (under certain circumstances specified in the Rights Agreement)
were, beneficially owned by any Acquiring Person will be null and void.
In the event that, at any time following the date that any person becomes
an Acquiring Person, (i) the Company is acquired in a merger or other business
combination transaction and the Company is not the surviving corporation, (ii)
any person merges with the Company and all or part of the Company Common Stock
is converted or exchanged for securities, cash or property of the Company or any
other person or (iii) 50% or more of the Company's assets or earning power is
sold or transferred, each holder of a Right (except Rights which previously have
been voided as described above) shall thereafter have the right to receive, upon
exercise, common stock of the Acquiring Person having a value equal to two times
the exercise price of the Right unless such transaction is approved by the Board
of Directors.
The purchase price payable, and the number of Units of Preferred Stock
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) if
holders of the Preferred Stock are granted certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the current
market price of the Preferred Stock, or (iii) upon the distribution to the
holders of the Preferred Stock of evidences of indebtedness, cash or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the purchase price will be
required until cumulative adjustments amount to at least 1% of the purchase
price. The Company is not required to issue fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock which may be evidenced by depositary receipts). In lieu
thereof, an adjustment in cash may be made based on the current market price of
a share of Preferred Stock on the day of exercise.
At any time until ten business days following the Stock Acquisition Date, a
majority of the Board of Directors may redeem the Rights in whole, but not in
part, at a price of $.001 per Right (subject to adjustment in certain events)
(the "Redemption Price") payable, at the election of the majority of the Board
of Directors, in cash or shares of Company Common Stock. Immediately upon the
action of a majority of the Board of Directors ordering the redemption of the
Rights, the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
The Company may at any time after there is an Acquiring Person, by action
of a majority of the Board of Directors, exchange all or part of the then
outstanding and exercisable Rights
3
(other than Rights that shall have become null and void) for shares of Company
Common Stock pursuant to a one-for-one exchange ratio, as adjusted.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Units of Preferred Stock (or other consideration).
Any of the provisions of the Rights Agreement may be amended without the
approval of the holders of Company Common Stock at any time prior to the
Distribution Date, including an amendment to lower certain thresholds described
above to not less than the greater of (i) the sum of .001% and the largest
percentage of the outstanding shares of Company Common Stock then known to the
Company to be beneficially owned by any person or group of affiliated or
associated persons, and (ii) 10%. After the Distribution Date, the provisions of
the Rights Agreement may be amended 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 to
shorten or lengthen any time period under the Rights Agreement; provided,
--------
however, that no amendment to adjust (i) the time period governing redemption
-------
shall be made at such time as the Rights are not redeemable or (ii) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the Rights of and/or benefiting, the holders of Rights. In
addition, after a person becomes an Acquiring Person, no amendment or supplement
may be made without the approval of a majority of the Board of Directors.
Description of Preferred Stock
------------------------------
The Units of Preferred Stock that may be acquired upon exercise of the
Rights will be nonredeemable and subordinate to any other shares of preferred
stock that may be issued by the Company.
Each Unit of Preferred Stock will have a minimum preferential quarterly
dividend of $.01 per Unit or any higher per share dividend declared on the
Company Common Stock.
In the event of liquidation, the holder of a Unit of Preferred Stock will
receive a preferred liquidation payment equal to the greater of $.01 per Unit
and the per share amount paid in respect of a share of the Company Common Stock.
Each Unit of Preferred Stock will have one vote, voting together with the
Company Common Stock.
In the event of any merger, consolidation or other transaction in which
shares of Company Common Stock are exchanged, each Unit of Preferred Stock will
be entitled to receive the per share amount paid in respect of each share of
Company Common Stock.
The rights of holders of the Preferred Stock with respect to dividends,
liquidation and voting, and in the event of mergers and consolidations, are
protected by customary antidilution provisions.
4
Because of the nature of the Preferred Stock's dividend, liquidation and
voting rights, the economic value of one Unit of Preferred Stock that may be
acquired upon the exercise of each Right should approximate the economic value
of one share of Company Common Stock.
5
EXHIBIT C
---------
CERTIFICATE OF DESIGNATION
OPTIKA INC.
CERTIFICATE OF DESIGNATION
OF THE
SERIES B PREFERRED STOCK
_____________________________________
Pursuant to Section 151 of the General Corporation Law of the State of Delaware
_____________________________________
The undersigned officers of Optika Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), in accordance with the provisions of Section 103 thereof, DO
HEREBY CERTIFY:
That, pursuant to the authority conferred upon the Board of Directors of
the Corporation by its Second Amended and Restated Certificate of Incorporation
(the "Certificate"), the said Board of Directors, at a duly called meeting held
on July 12, 2001, at which a quorum was present and acted throughout, adopted
the following resolution, which resolution remains in full force and effect on
the date hereof creating a series of Series B shares of preferred stock having a
par value of $.001 per share, designated as Series B Preferred Stock (the
"Series B Preferred Stock") out of the class of 2,000,000 shares of preferred
stock, par value $.001 per share (the "Preferred Stock"):
RESOLVED, that pursuant to the authority vested in the Board of Directors
in accordance with the provisions of its Certificate, the Board of Directors
does hereby create, authorize and provide for the issuance of 200,000 shares of
its authorized Preferred Stock to be designated and issued as the Series B
Preferred Stock, having the voting powers, designation, relative, participating,
optional and other special rights, preferences and qualifications, limitations
and restrictions that are set forth as follows:
1. Dividends and Distributions. (A) Subject to the prior and superior
---------------------------
rights of the holders of any shares of any other series of Preferred Stock or
any other shares of stock of the Corporation ranking prior and superior to the
shares of Series B Preferred Stock with respect to dividends, each holder of one
one-hundredth (1/100) of a share (a "Unit") of Series B Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for that purpose, (i) quarterly dividends payable in
cash on the first day of March, June, September and December in each year (each
such date being a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of such Unit of Series
B Preferred Stock, in an amount per Unit (rounded to the nearest cent) equal to
the greater of (a) $.01 or (b) subject to the provision for adjustment
hereinafter set forth, the aggregate per share amount of all cash dividends
declared on shares of the Common Stock since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of a Unit of Series B Preferred
1
Stock, and (ii) subject to the provision for adjustment hereinafter set forth,
quarterly distributions (payable in kind) on each Quarterly Dividend Payment
Date in an amount per Unit equal to 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 shares of Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or with respect to the
first Quarterly Dividend Payment Date, since the first issuance of a Unit of
Series B Preferred Stock. In the event that the Corporation shall at any time
after July 18, 2001 (the "Rights Declaration Date") (i) declare any dividend on
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide outstanding shares of Common Stock or (iii) combine outstanding shares
of Common Stock into a smaller number of shares, then in each such case the
amount to which the holder of a Unit of Series B Preferred Stock was 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
shall be the number of shares of Common Stock that are outstanding immediately
after such event and the denominator of which shall be 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 Units of
Series B Preferred Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the shares of Common Stock (other than a
dividend payable in shares of Common Stock); provided, however, that, in the
-------- -------
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $.01 per Unit on the
Series B Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and shall be cumulative on each
outstanding Unit of Series B Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issuance of such Unit of Series B Preferred
Stock, unless the date of issuance of such Unit is prior to the record date for
the first Quarterly Dividend Payment Date, in which case, dividends on such Unit
shall begin to accrue from the date of issuance of such Unit, or unless the date
of issuance is a Quarterly Dividend Payment Date or is a date after the record
date for the determination of holders of Units of Series B Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall begin to accrue and
be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on Units of Series B Preferred
Stock in an amount less than the aggregate amount of all such dividends at the
time accrued and payable on such Units shall be allocated pro rata on a unit-by-
unit basis among all Units of Series B Preferred Stock at the time outstanding.
The Board of Directors may fix a record date for the determination of holders of
Units of Series B Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
2. Voting Rights. The holders of Units of Series B Preferred Stock shall
-------------
have the following voting rights:
2
(A) Subject to the provision for adjustment hereinafter set forth, each
Unit of Series B Preferred Stock shall entitle the holder thereof to one vote on
all matters submitted to a vote of the stockholders of the Corporation. In the
event the Corporation shall at any time after the Rights Declaration Date (i)
declare any dividend on outstanding shares of Common Stock payable in shares of
Common Stock, (ii) subdivide outstanding shares of Common Stock or (iii) combine
the outstanding shares of Common Stock into a smaller number of shares, then in
each such case the number of votes per Unit to which holders of Units of Series
B Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the numerator of which shall
be the number of shares of Common Stock outstanding immediately after such event
and the denominator of which shall be the number of shares of Common Stock that
were outstanding immediately prior to such event; and
(B) Except as otherwise provided herein, in the Certificate or the Bylaws
of the Corporation or as required by law, the holders of Units of Series B
Preferred Stock and the holders of shares of Common Stock shall vote together as
one class on all matters submitted to a vote of stockholders of the Corporation,
and such holders shall have no special voting rights and their consents shall
not be required for taking any corporate action.
3. Certain Restrictions. (A) Whenever quarterly dividends or other
--------------------
dividends or distributions payable on Units of Series B Preferred Stock as
provided herein are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on outstanding Units of
Series B Preferred Stock shall have been paid in full, the Corporation shall not
(i) declare or pay dividends on, make any other distributions on, or redeem or
purchase or otherwise acquire for consideration any shares of junior stock; (ii)
declare or pay dividends on or make any other distributions on any shares of
parity stock, except dividends paid ratably on Units of Series B Preferred Stock
and shares of all such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of such Units and all
such shares are then entitled; (iii) redeem or purchase or otherwise acquire for
consideration shares of any parity stock, provided, however, that the
-------- -------
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such parity stock in exchange for shares of any junior stock; (iv) purchase or
otherwise acquire for consideration any Units of Series B Preferred Stock,
except in accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such Units.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 3,
purchase or otherwise acquire such shares at such time and in such manner.
4. Reacquired Shares. Any Units of Series B 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 Units shall, upon
their cancellation, become authorized but unissued shares (or fractions of
shares) of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
3
5. Liquidation, Dissolution or Winding Up. (A) Upon any voluntary or
--------------------------------------
involuntary liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (i) to the holders of shares of junior stock unless
the holders of Units of Series B Preferred Stock shall have received, subject to
adjustment as hereinafter provided in paragraph (B), the greater of either (a)
$.01 per Unit plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not earned or declared, to the date of such
payment, or (b) the amount equal to the aggregate per share amount to be
distributed to holders of shares of Common Stock, or (ii) to the holders of
shares of parity stock, unless simultaneously therewith distributions are made
ratably on Units of Series B Preferred Stock and all other shares of such parity
stock in proportion to the total amounts to which the holders of Units of Series
B Preferred Stock are entitled under clause (i)(a) of this sentence and to which
the holders of shares of such parity stock are entitled, in each case upon such
liquidation, dissolution or winding up.
(B) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on outstanding shares of Common Stock
payable in shares of Common Stock, (ii) subdivide outstanding shares of Common
Stock, or (iii) combine outstanding shares of Common Stock into a smaller number
of shares, then in each such case the aggregate amount to which holders of Units
of Series B Preferred Stock were entitled immediately prior to such event
pursuant to clause (i)(b) of paragraph (A) of this Section 5 shall be adjusted
by multiplying such amount by a fraction the numerator of which shall be the
number of shares of Common Stock that are outstanding immediately after such
event and the denominator of which shall be the number of shares of Common Stock
that were outstanding immediately prior to such event.
6. Consolidation, Merger, etc. In case the Corporation shall enter into
--------------------------
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are exchanged for or converted into other stock or securities,
cash and/or any other property, then in any such case Units of Series B
Preferred Stock shall at the same time be similarly exchanged for or converted
into an amount per Unit (subject to the provision for adjustment hereinafter set
forth) equal to the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is converted or exchanged. In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare any dividend on
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide outstanding shares of Common Stock, or (iii) combine outstanding
Common Stock into a smaller number of shares, then in each such case the amount
set forth in the immediately preceding sentence with respect to the exchange or
conversion of Units of Series B Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which shall be the number of shares
of Common Stock that are outstanding immediately after such event and the
denominator of which shall be the number of shares of Common Stock that were
outstanding immediately prior to such event.
7. Redemption. The Units of Series B Preferred Stock and shares of
----------
Series B Preferred Stock shall not be redeemable.
8. Ranking. The Units of Series B Preferred Stock and shares of Series B
-------
Preferred Stock shall rank junior to all other series of the Preferred Stock and
to any other class of Preferred Stock that hereafter may be issued by the
Corporation as to the payment of dividends and the distribution of assets,
unless the terms of any such series or class shall provide otherwise.
4
9. Fractional Shares. The Series B Preferred Stock may be issued in
-----------------
Units or other fractions of a share, which Units or fractions shall entitle the
holder, in proportion to such holder's units or fractional shares, to exercise
voting rights, receive dividends, participate in distributions and to have the
benefit of all other rights of holders of Series B Preferred Stock.
10. Certain Definitions. As used in this resolution with respect to the
-------------------
Series B Preferred Stock, the following terms shall have the following meanings:
(A) The term "Common Stock" shall mean the class of stock designated as
the common stock, par value $.001 per share, of the Corporation at the date
hereof or any other class of stock resulting from successive changes or
reclassification of the common stock.
(B) The term "junior stock" (i) as used in Section 3 shall mean the Common
Stock and any other class or series of capital stock of the Corporation
hereafter authorized or issued over which the Series B Preferred Stock has
preference or priority as to the payment of dividends and (ii) as used in
Section 5, shall mean the Common Stock and any other class or series of capital
stock of the Corporation over which the Series B Preferred Stock has preference
or priority in the distribution of assets on any liquidation, dissolution or
winding up of the Corporation.
(C) The term "parity stock" (i) as used in Section 3 shall mean any class
or series of stock of the Corporation hereafter authorized or issued ranking
pari passu with the Series B Preferred Stock as to dividends and (ii) as used in
---- -----
Section 5, shall mean any class or series of capital stock ranking pari passu
---- -----
with the Series B Preferred Stock in the distribution of assets on any
liquidation, dissolution or winding up.
5
IN WITNESS WHEREOF, Optika Inc. has caused this Certificate to be
signed by its Chairman, President and Chief Executive Officer and its Chief
Financial Officer and Secretary this 18th day of July, 2001.
OPTIKA INC.
By:/s/ Xxxx X. Xxxxxx
---------------------------
Name: Xxxx X. Xxxxxx
Title: Chairman, President and Chief
Executive Officer
By:/s/Xxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial Officer and Secretary
6
