EXHIBIT 4.01
RIGHTS AGREEMENT
BETWEEN
HNC SOFTWARE INC.
AND
EQUISERVE TRUST COMPANY, N.A., RIGHTS AGENT
DATED AS OF MARCH 6, 2002
TABLE OF CONTENTS
Page
----
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 5
Section 3. Evidence of Rights Before Distribution; Date; Transfer; Legends 5
Section 4. Evidence of Rights After Distribution Date; Form of Right 6
Certificates; Countersignatures
Section 5. Distribution of Certificates; Registration 7
Section 6. Transfer, Split Up, Combination and Exchange of Right 7
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates
Section 7. Exercise of Rights; Purchase Price; Expiration Date; Void 8
Rights
Section 8. Cancellation and Destruction of Right Certificates 9
Section 9. Status and Availability of Preferred Shares 10
Section 10. Preferred Shares Record Date 10
Section 11. Adjustment of Purchase Price, Number of Shares or Number of 10
Rights
Section 12. Certificate of Adjusted Purchase Price or Number of Shares 17
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning 17
Power
Section 14. Fractional Rights and Fractional Shares 18
Section 15. Rights of Action 19
Section 16. Agreement of Right Holders 19
Section 17. Right Holder Not Deemed a Stockholder 20
Section 18. Compensation and Indemnity of the Rights Agent 20
Section 19. Merger or Consolidation or Change of Name of Rights Agent 20
Section 20. Rights and Duties of Rights Agent 21
Section 21. Change of Rights Agent 23
Section 22. Issuance of New Right Certificates 24
Section 23. Redemption 24
Section 24. Exchange 25
Section 25. Notice of Certain Events 26
Section 26. Notices 27
Section 27. Supplements and Amendments 27
Section 28. Successors 28
Section 29. Benefits of this Agreement 28
Section 30. Severability 28
Section 31. Governing Law 28
Section 32. Counterparts 28
Section 33. Descriptive Headings 28
Section 34. Entire Agreement 28
Signatures 29
Exhibits
--------
Exhibit A -- Form of Certificate of Designations of Series A Junior Participating
Preferred Stock
Exhibit B -- Form of Right Certificate
Exhibit C -- Summary of Rights to Purchase Preferred Shares
RIGHTS AGREEMENT
This Agreement, dated as of March 6, 2002 is entered into by and between
HNC Software Inc., a Delaware corporation (the "COMPANY"), and EquiServe Trust
Company, N.A. (the "RIGHTS AGENT").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "RIGHT") for each Common Share
(as hereinafter defined) of the Company outstanding at the Close of Business (as
hereinafter defined) on March 21, 2002 (the "RECORD DATE"), each Right
representing the right to purchase one one--hundredth of a Preferred Share (as
hereinafter defined), upon the terms and subject to the conditions herein set
forth, and has further authorized and directed the issuance of one Right with
respect to each Common Share that shall become outstanding (i) between the
Record Date and the earliest of the Distribution Date, the Redemption Date and
the Final Expiration Date (as such terms are hereinafter defined) or (ii)
following the Distribution Date and prior to the Redemption Date or Final
Expiration Date, pursuant to the exercise of stock options or under any employee
plan or arrangement or upon the exercise, conversion or exchange of other
securities of the Company, which options or securities were outstanding after
the Record Date and prior to the Distribution Date.
Accordingly, in consideration of the premises and the mutual agreements
set forth herein, the parties hereto hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "ACQUIRING PERSON" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of twenty percent (20%) (the "DESIGNATED PERCENTAGE") or more
of the Common Shares of the Company then outstanding, but shall not include (i)
the Company, (ii) any Subsidiary of the Company, (iii) any employee benefit plan
of the Company or of any Subsidiary of the Company or (iv) any entity holding
Common Shares for or pursuant to the terms of any such plan.
Notwithstanding the foregoing,
(A) No Person shall become an Acquiring Person if the Board of
Directors of the Company determines in good faith that a Person who would
otherwise be an Acquiring Person has become such inadvertently, and such Person
as promptly as practicable takes such actions as may be necessary so that such
Person would no longer be considered an Acquiring Person.
(B) No Person shall become an Acquiring Person as the result of
an acquisition of Common Shares by the Company which, by reducing the number of
shares outstanding, increases the proportionate number of shares beneficially
owned by such Person and such Person's Affiliates and Associates to the
Designated Percentage or more of the Common Shares of the Company then
outstanding; provided, however, that if a Person, together with such Person's
Affiliates and Associates, shall become the Beneficial Owner of the Designated
Percentage or more of the Common Shares of the Company then outstanding by
reason of share
6
purchases by the Company, and such Person, together with its Affiliates and
Associates, shall, after public announcement of such share purchases by the
Company, become the Beneficial Owner of any additional Common Shares of the
Company, then such Person shall be deemed to be an Acquiring Person.
(b) "AFFILIATE" and "ASSOCIATE" shall have the following meanings:
(i) An "AFFILIATE" of, or a Person "AFFILIATED" with, a
specified Person, is a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Person specified. For this purpose, "CONTROL" (including the terms
"CONTROLLING," "CONTROLLED BY" and "UNDER COMMON CONTROL WITH") means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise;
(ii) The term "ASSOCIATE" when used to indicate a relationship
with any Person shall mean (A) any corporation or organization (other than the
Company or a majority--owned subsidiary of the Company) of which such Person is
an officer or partner or is, directly or indirectly, the Beneficial Owner of 10%
or more of any class of equity securities, (B) any trust or other estate in
which such Person has a substantial beneficial interest or as to which such
Person serves as trustee or in a similar fiduciary capacity, and (C) any
relative or spouse of such Person, or any relative of such spouse, who has the
same home as such Person or who is a director or officer of the Company or of
any of its parents or Subsidiaries.
(c) A Person shall be deemed the "BENEFICIAL OWNER" of and shall be
deemed to "BENEFICIALLY OWN" any securities:
(i) which such Person owns, directly or indirectly;
(ii) which such Person has (A) the right to acquire (whether
such right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with respect
to a bona fide public offering of securities), written or otherwise, or upon the
exercise of conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person shall not be
deemed to be the Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or on behalf of such
Person until such tendered securities are accepted for purchase or exchange; or
(B) the right to vote pursuant to any agreement, arrangement or understanding;
provided, however, that a Person shall not be deemed the Beneficial Owner of, or
to beneficially own, any security if the agreement, arrangement or understanding
to vote such security (1) arises solely from a revocable proxy or consent given
to such Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations
promulgated under the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor report); or
2
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person has any agreement, arrangement or
understanding (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), written or otherwise, for the purpose of acquiring, holding, voting
(except to the extent contemplated by the proviso to Section 1(c)(ii)(B)) or
disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, (A) the phrase "THEN OUTSTANDING," when used with
reference to a Person's Beneficial Ownership of securities of the Company, shall
mean the number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which such
Person would be deemed to own beneficially hereunder, and (B) a Person who is a
director or officer of the Company or who is an Affiliate or Associate of a
director or officer of the Company (each, an "EXEMPTED PERSON") shall not be
deemed to "BENEFICIALLY OWN" Common Shares held by another Exempted Person
solely by reason of any agreement, arrangement or understanding, written or
otherwise, entered into in opposition to a transaction that, at the time such
agreement, arrangement or understanding was entered into, has not been approved
or recommended by the Board of Directors to the stockholders of the Company.
(d) "BUSINESS DAY" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the Commonwealth of
Massachusetts are authorized or obligated by law or executive order to close.
(e) "CLOSE OF BUSINESS" on any given date shall mean 5:00 p.m.,
Eastern Time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 p.m., Eastern Time, on the next succeeding
Business Day, where for this purpose "Eastern Time" means Eastern Standard Time
or Eastern Daylight Time, depending on which is in effect on the date in
question.
(f) "COMMON SHARES" when used with reference to the Company shall
mean the shares of common stock, par value $0.001 per share, of the Company.
"Common Shares" when used with reference to any Person other than the Company
shall mean the capital stock (or equity interest) with the greatest voting power
of such other Person or, if such other Person is a Subsidiary of another Person,
of the Person or Persons which ultimately control such first--mentioned Person.
(g) "DESIGNATED PERCENTAGE" shall have the meaning set forth in
Section 1(a) hereof.
(h) "DISTRIBUTION DATE" shall mean the earlier of (i) the tenth
(10th) day after the Shares Acquisition Date or (ii) the tenth Business Day (or
such later date as may be determined by action of the Board of Directors of the
Company prior to such time as any Person becomes an Acquiring Person) after the
first public announcement of the intention of any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or of any Subsidiary of the Company or any entity holding Common Shares for or
3
pursuant to the terms of any such plan) to commence a tender or exchange offer
the consummation of which would result in any such Person becoming an Acquiring
Person (including any such date which is after the date of this Agreement and
prior to the issuance of the Rights).
(i) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
(j) "FINAL EXPIRATION DATE" shall have the meaning set forth in
Section 7(a) hereof.
(k) "PERSON" shall mean any individual, firm, corporation,
partnership, limited partnership, business trust, limited liability company,
unincorporated association or any other entity, and shall include any successor
(by merger, consolidation or otherwise) of such entity.
(l) "PURCHASE PRICE" shall have the meaning set forth in Section
7(b) hereof.
(m) "PREFERRED SHARES" shall mean shares of Series A Junior
Participating Preferred Stock, par value $0.001 per share, of the Company having
the rights and preferences set forth in the Certificate of Designations attached
to this Agreement as Exhibit A.
(n) "REDEMPTION DATE" shall have the meaning set forth in Section
7(a) hereof.
(o) "RIGHTS" shall have the meaning set forth in the second
paragraph of this Agreement, provided, however, that none of the following shall
be deemed "Rights" or "outstanding Rights" for any purpose under this Agreement
from and after the effective time of the event indicated: (i) Rights which have
become Void Rights pursuant to Section 7(f) hereof, and upon such occurrence,
all Right Certificates therefor shall be null and void and shall not be deemed
"outstanding Right Certificates"; (ii) all rights which have been redeemed
pursuant to Section 23 hereof, and upon such occurrence, all Right Certificates
therefor shall represent only the right to receive the consideration provided in
Section 23 hereof and shall not be deemed "outstanding Right Certificates", and
(iii) any Rights which have been exchanged pursuant to Section 24 hereof, and
upon such occurrence, all Right Certificates therefor shall represent only the
right to receive the consideration provided in Section 24 and shall not be
deemed "outstanding Right Certificates".
(p) "SHARES ACQUISITION DATE" shall mean the earlier of the date of
(i) the public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such or (ii) the public disclosure of facts by the
Company or an Acquiring Person indicating that an Acquiring Person has become
such.
(q) "SUBSIDIARY" of any Person shall mean any Person of which a
majority of the voting power of the voting equity securities or equity interest
is owned, directly or indirectly, by such Person.
4
(r) "SUCCESSOR" shall mean the estate or legal representative of a
deceased individual, the beneficiary of a deceased individual's estate, a trust
created by a deceased individual as grantor, or the beneficiary of a trust
created by a deceased individual as grantor.
(s) "VOID RIGHTS" shall have the meaning set forth in Section 7(f).
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co--Rights Agents as it may deem
necessary or desirable, upon ten (10) days' prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and in no event shall
be liable for, the acts or omissions of any such co--Rights Agent.
SECTION 3. EVIDENCE OF RIGHTS BEFORE DISTRIBUTION DATE; TRANSFER;
LEGENDS.
(a) From the Record Date until the earliest of the Distribution
Date, the Redemption Date or the Final Expiration Date (x) Rights will be
evidenced by the certificates for Common Shares registered in the names of the
holders thereof (which certificates shall also be deemed to be Right
Certificates) and not by separate Right Certificates (as defined below), and (y)
Rights will be transferable only in connection with the transfer of Common
Shares. On the Record Date, or as soon as practicable thereafter, the Company
will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form of Exhibit C hereto (the "SUMMARY OF RIGHTS"), by
first--class, postage--prepaid mail, to each record holder of Common Shares as
of the Close of Business on the Record Date, at the address of such holder shown
on the records of the Company. Until the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date, the surrender for transfer of any
certificate for Common Shares outstanding on the Record Date, with or without a
copy of the Summary of Rights attached thereto, shall also constitute the
surrender for transfer of the Rights associated with the Common Shares
represented thereby.
(b) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in the last
sentence of this Section 3(b)) after the Record Date but prior to the earliest
of the Distribution Date, the Redemption Date or the Final Expiration Date shall
have impressed on, printed on, written on or otherwise affixed to them the
following legend:
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO
CERTAIN RIGHTS (THE "RIGHTS") AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN
HNC SOFTWARE INC. (THE "COMPANY") AND EQUISERVE TRUST COMPANY, N.A., AS
RIGHTS AGENT, DATED AS OF MARCH 6, 2002, AS SUCH MAY SUBSEQUENTLY BE
AMENDED (THE "RIGHTS AGREEMENT"), THE TERMS OF WHICH ARE HEREBY
INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY. UNDER CERTAIN CIRCUMSTANCES,
AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED
5
BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS
CERTIFICATE. THE COMPANY WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A
COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT OF A WRITTEN
REQUEST THEREFOR. AS DESCRIBED IN SECTION 7(f) OF THE RIGHTS AGREEMENT,
RIGHTS BENEFICIALLY OWNED BY ANY PERSON WHO BECOMES AN ACQUIRING PERSON
(AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN OTHER PERSONS SHALL
BECOME NULL AND VOID.
In the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common Shares which
are no longer outstanding.
SECTION 4. EVIDENCE OF RIGHTS AFTER DISTRIBUTION DATE; FORM OF RIGHT
CERTIFICATES; COUNTERSIGNATURES.
(a) From and after the Distribution Date until the earlier of the
Redemption Date or the Final Expiration Date, Rights will be evidenced solely by
Right Certificates which, together with the forms of election to purchase
Preferred Shares and of assignment to be printed on the reverse thereof, shall
be substantially in the form set forth as Exhibit B hereto (each a "RIGHT
CERTIFICATE"), and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed or any automated
quotation system on which the Rights may be quoted or traded, or to conform to
usage. Subject to the other provisions of this Agreement, the Right Certificates
shall entitle the holders thereof to purchase such number of one one--hundredth
of a Preferred Share as shall be set forth therein at the Purchase Price, but
the number of such one one--hundredths of a Preferred Share and the Purchase
Price shall be subject to adjustment as provided herein.
(b) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive Officer, its
President, any of its Vice Presidents, or its Treasurer or Chief Financial
Officer, either manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested by the
Secretary or any Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent (unless applicable exchange rules and law permit facsimile
signature, in which case the Rights Agent signature may be by facsimile) and
shall not be valid for any purpose unless countersigned. In case any officer of
the Company who shall have signed any of the Right Certificates shall cease to
be such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless, may
be countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company. Any Right
6
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
SECTION 5. DISTRIBUTION OF CERTIFICATES; REGISTRATION.
(a) As soon as practicable after the Distribution Date (and so long
as the Redemption Date and the Final Expiration Date shall not have occurred),
the Company will prepare and execute, the Rights Agent will countersign and the
Company will send or cause to be sent (and the Rights Agent will, if requested
and provided with all necessary information, send) by first-class, insured,
postage-prepaid mail to each record holder of Common Shares as of the Close of
Business on the Distribution Date (other than the holder of Void Rights (as
defined in Section 7(f) hereof), at the address of such holder shown on the
records of the Company, Rights Certificates evidencing one Right for each Common
Share so held.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office, books for registration and transfer
of the Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Section 14 hereof, at any time
after the Close of Business on the Distribution Date, and at or prior to the
Close of Business on the earlier of the Redemption Date or the Final Expiration
Date, any Right Certificate or Right Certificates (other than Right Certificates
representing Void Rights or Rights that have been exchanged pursuant to Section
24 hereof) may be transferred, split up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered holder to purchase a
like number of one one--hundredths of a Preferred Share as the Right Certificate
or Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Right
Certificate or Right Certificates shall make such request in writing delivered
to the Rights Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at the principal
office of the Rights Agent. Thereupon the Company shall execute and the Rights
Agent shall countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient for all taxes and governmental
charges that may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate and, at the Company's request, reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and, (i) in
the case of loss, theft or destruction, of
7
indemnity or security satisfactory to them, or (ii) in the case of mutilation,
upon surrender to the Rights Agent and cancellation of the Right Certificate,
then, in either such case, the Company will make and deliver a new Right
Certificate of like tenor to the Rights Agent for delivery to the registered
holder in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE; VOID
RIGHTS.
(a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the Rights Agent,
together with payment of the Purchase Price for each one one--hundredth of a
Preferred Share as to which the Rights are exercised and payment of all taxes
and governmental charges required to be paid by the holder of such Right
Certificate as provided in Section 9 hereof, at or prior to the earliest of (i)
the Close of Business on March 21, 2012 (the "FINAL EXPIRATION DATE"), (ii) the
time at which the Rights are redeemed as provided in Section 23 hereof (the
"REDEMPTION DATE"), or (iii) the time at which such Rights are exchanged as
provided in Section 24 hereof.
(b) The purchase price for each one one--hundredth of a Preferred
Share pursuant to the exercise of a Right (the "PURCHASE PRICE") shall initially
be $125.00, shall be subject to adjustment from time to time as provided in
Sections 11 and 13 hereof and shall be payable in lawful money of the United
States of America in accordance with Section 7(c) hereof.
(c) Upon receipt of a Right Certificate representing exercisable
Rights within the time permitted in Section 7(a), with the form of election to
purchase and certificate duly executed, accompanied by payment of the Purchase
Price for the shares to be purchased and an amount equal to all applicable taxes
and governmental charges required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check, cashier's
check or money order payable to the order of the Company, the Rights Agent shall
promptly (i) (A) requisition from any transfer agent of the Preferred Shares
certificates for the number of one one--hundredths of a Preferred Share to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) requisition from any depositary agent for
the Preferred Shares depositary receipts representing such number of one
one--hundredths of a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company
hereby directs the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional Preferred Shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates or depositary receipts, cause the same
to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, deliver such cash to or upon
the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the
8
Rights remaining unexercised shall be issued by the Rights Agent to the
registered holder of such Right Certificate or to such holder's duly authorized
assigns, subject to the provisions of Section 6 and Section 14 hereof.
(e) The Company covenants and agrees that it will cause to be
reserved and kept available, out of its authorized and unissued Preferred Shares
or any Preferred Shares held in its treasury, the number of Preferred Shares
that will be sufficient to permit the exercise in full of all outstanding Rights
in accordance with this Section 7.
(f) From and after the time that any Person becomes an Acquiring
Person, (i) all Rights that are or were acquired or beneficially owned by such
Acquiring Person (and all Rights that are or were acquired or beneficially owned
by each Associate and by each Affiliate of such Acquiring Person) shall be null
and void without any further action on the part of the Company, the Rights Agent
or any other Person (all such Rights, "VOID RIGHTS") and (ii) any holder thereof
shall thereafter have no right to exercise such Void Rights under any provision
of this Agreement. No Right Certificate shall be issued pursuant to Sections 5
or 6 that represents Rights beneficially owned by an Acquiring Person whose
Rights have become Void Rights pursuant to the preceding sentence or by any
Associate or Affiliate thereof; no Right Certificate shall be issued at any time
upon the transfer of any Rights to an Acquiring Person whose Rights have become
Void Rights pursuant to the preceding sentence or to any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate or Affiliate; and
any Right Certificate delivered to the Rights Agent for transfer to an Acquiring
Person whose Rights have become Void Rights pursuant to the preceding sentence
or for transfer to any Associate or Affiliate thereof shall be cancelled. This
Section 7(f) shall apply not only to an initial Acquiring Person, and each of
its Affiliates and Associates, but also to all subsequent Acquiring Persons, and
each of their Affiliates and Associates.
(g) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) properly completed and signed the certificate following the form of election
to purchase set forth on the reverse side of the Right Certificate surrendered
for such exercise and (ii) provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall cancel
and retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written
9
request of the Company, destroy such cancelled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
SECTION 9. STATUS AND AVAILABILITY OF PREFERRED SHARES. The Company
covenants and agrees that it will take all such action as may be necessary to
ensure that all Preferred Shares delivered upon valid exercise of Rights in
compliance with Section 7 shall, at the time of delivery of the certificates for
such Preferred Shares (subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and non--assessable shares.
The Company further covenants and agrees that it will pay when due and
payable any and all taxes and governmental charges which may be payable in
respect of the issuance or delivery of the Right Certificates or of any
Preferred Shares upon the exercise of Rights. The Company shall not, however, be
required (i) to pay any transfer tax which may be payable in respect of any
transfer or delivery of Right Certificates to a Person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or (ii) to issue or to
deliver any certificates or depositary receipts for Preferred Shares upon the
exercise of any Rights until all such taxes and governmental charges shall have
been paid (all such taxes and governmental charges being payable by the holder
of such Right Certificate at the time of surrender for exercise) or until it has
been established to the Company's reasonable satisfaction that no such tax or
governmental charge is due.
SECTION 10. PREFERRED SHARES RECORD DATE. Each person in whose name any
certificate for Preferred Shares is issued upon the valid exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Preferred Shares represented thereby on, and such certificate shall be dated,
the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable taxes and
governmental charges) was made. Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate shall not be entitled to any rights
of a holder of Preferred Shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF
RIGHTS. The Purchase Price, the number of Preferred Shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11; provided, however, that no adjustment, payment
or distribution of securities or other change in the Rights or securities
issuable upon exercise of any Rights as provided in this Section 11 shall apply
to any Void Rights.
(a) (i) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Preferred Shares payable in Preferred
Shares, (B) subdivide the outstanding Preferred Shares, (C) combine the
outstanding Preferred Shares into a smaller number of Preferred Shares or (D)
issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
then,
10
except as otherwise provided in this Section 11(a), upon the time on the record
date for such dividend at which a Person must be a holder of outstanding
Preferred Shares in order to receive such dividend or the time on the effective
date of such subdivision, combination or reclassification upon which such
subdivision, combination or reclassification becomes effective (either such
time, as applicable, being hereinafter called the "RELEVANT TIME") the Purchase
Price in effect immediately prior to the relevant time and the number and kind
of shares of capital stock that would be issuable upon exercise of a Right
immediately prior to such relevant time (if such Right was then exercisable)
shall be proportionately adjusted so that the holder of any Right exercised
after such relevant time shall be entitled to receive, upon exercise of such
Right (including payment of the Purchase Price in effect immediately prior to
such relevant time), the aggregate number and kind of shares of capital stock
which, if such Right had been exercised immediately prior to the relevant time,
such holder would have owned as a result of such exercise after taking into
account the effect of such dividend, subdivision, combination or
reclassification on such shares; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of the class or series of capital stock of the
Company issuable upon exercise of one Right.
(ii) Subject to Section 7(f) and Section 24 of this Agreement,
in the event that any Person shall become an Acquiring Person, unless the event
causing the Designated Percentage threshold to be crossed and the Person to
thereby become an Acquiring Person is a transaction set forth in Section 13
hereof, each holder of a Right shall thereafter have a right to receive, upon
exercise of such right at a price equal to the then current Purchase Price
multiplied by the number of one one--hundredths of a Preferred Share for which a
Right is then exercisable, in accordance with the terms of this Agreement and in
lieu of Preferred Shares, such number of Common Shares of the Company as shall
equal the result obtained by (x) multiplying the then current Purchase Price by
the number of one one--hundredths of a Preferred Share for which a Right is then
exercisable and dividing that product by (y) 50% of the then current per share
market price of the Company's Common Shares (determined pursuant to Section
11(d) hereof) on the date such Person became an Acquiring Person.
(iii) In the event that the number of Common Shares which are
authorized by the Company's certificate of incorporation and not outstanding or
subscribed for, or reserved or otherwise committed for issuance for purposes
other than upon exercise of the Rights, is not sufficient to permit the holder
of each Right to purchase the number of Common Shares to which such holder would
be entitled upon the exercise in full of the Rights in accordance with Section
11(a)(ii), the Company shall: (A) determine the excess of (1) the value of the
Common Shares issuable upon the exercise of a Right (calculated as provided in
the last sentence of this Section 11(a)(iii)) pursuant to Section 11(a)(ii)
hereof (the "CURRENT VALUE") over (2) the Purchase Price (such excess, the
"SPREAD"), and (B) with respect to each Right, make adequate provision to
substitute for such Common Shares, upon payment of the applicable Purchase
Price, (1) cash, (2) a reduction in the Purchase Price, (3) Common Shares or
other equity securities of the Company (including, without limitation, shares of
the Company's Preferred Stock, or units of shares of the Company's capital stock
which the Board of Directors of the Company has determined to have the same
value as shares of common stock (such equity securities, "COMMON STOCK
EQUIVALENTS")), (4) debt securities of the Company, (5) other assets or (6) any
combination of the foregoing, having an aggregate value equal to the Current
Value,
11
where such aggregate value has been determined by the Board of Directors of the
Company in good faith; provided, however, if the Company shall not have made
adequate provision to deliver value pursuant to clause (B) of this paragraph
within 30 days following the first occurrence of an event triggering the rights
to purchase Common Shares described in Section 11(a)(ii) (the "SECTION 11(a)(ii)
TRIGGER DATE"), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right without requiring payment of the Purchase
Price (other than the par value of a Common Share, which shall be payable to the
Company in cash), Common Shares (to the extent available) and then, if
necessary, cash, which shares and cash have an aggregate value equal to the
Spread. If the Board of Directors of the Company shall determine in good faith
that it is likely that sufficient additional Common Shares could be authorized
for issuance upon exercise in full of the Rights, the 30 day period set forth
above may be extended to the extent necessary, but not more than 90 days after
the Section 11(a)(ii) Trigger Date, in order that the Company may seek
stockholder approval for the authorization of such additional shares (such
period, as it may be extended, the "SUBSTITUTION PERIOD"). To the extent that
the Company determines that some action need be taken pursuant to the first
and/or second sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(g) hereof, that such action shall apply uniformly
to all Rights, and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value thereof. In the
event of any such suspension, the Company shall make a public announcement, and
shall deliver to the Rights Agent a statement, stating that the exercisability
of the Rights has been temporarily suspended. At such time as the suspension is
no longer in effect, the Company shall make another public announcement, and
deliver to the Rights Agent a statement, so stating. For purposes of this
Section 11(a)(iii), the value of the Common Shares shall be the current per
share market price (as determined pursuant to Section 11(d)(i) hereof) of the
Common Shares on the Section 11(a)(ii) Trigger Date and the value of any "common
stock equivalent" shall be deemed to have the same value as the Common Shares 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 Shares entitling them to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("EQUIVALENT PREFERRED
SHARES")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the then current per
share market price of the Preferred Shares (as defined in Section 11(d)) on such
record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying (x) the Purchase Price in effect immediately prior to
such record date by (y) a fraction, (1) the numerator of which shall be the sum
of (A) the number of Preferred Shares outstanding on such record date plus (B)
the number of Preferred Shares which the aggregate offering price of the total
number of Preferred Shares and/or equivalent preferred shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price and (2) the
denominator of which shall be the sum of (A) the number of Preferred Shares
outstanding on such record date plus (B) the number of additional Preferred
Shares and/or equivalent preferred shares to be offered for
12
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the class or series of shares of capital stock of the
Company issuable upon exercise of one Right. In case such subscription price may
be paid in a consideration part or all of which shall be in a form other than
cash, then the value of such consideration shall be as determined in good faith
by the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all
purposes. Preferred Shares owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed; and
in the event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying (x) the Purchase Price in effect
immediately prior to such record date by (y) a fraction, (1) the numerator of
which shall be the difference of (A) the then current per share market price of
the Preferred Shares on such record date, less (B) the fair market value (as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes) of the portion of the assets or evidences
of indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and (2) the denominator of which shall be such
current per share market price of the Preferred Shares; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the class or series of shares of capital
stock of the Company to be issued upon exercise of one Right. Such adjustments
shall be made successively whenever such a record date is fixed. In the event
that such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "CURRENT
PER SHARE MARKET PRICE" of any security (a "SECURITY" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30 consecutive Trading Days
(as such term is hereinafter defined) immediately prior to but not including
such date; provided, however, that in the event that the current per share
market price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or distribution on
such Security payable in shares of such Security or securities convertible into
such shares, or (B) any subdivision, combination or reclassification of such
Security, and prior to but not including the expiration of 30 Trading Days after
the ex--dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification, then, and in each such case,
the current per share market price of such Security shall be appropriately
adjusted to reflect the
13
current market price per share equivalent of such Security. The closing price
for each day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Security is not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or admitted to trading on
any national securities exchange, the last 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 Stock Market ("NASDAQ") or such other system
then in use, or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Security selected by the Board
of Directors of the Company. The term "TRADING DAY" shall mean a day on which
the principal national securities exchange on which the Security is listed or
admitted to trading is open for the transaction of business or, if the Security
is not listed or admitted to trading on any national securities exchange, a
Business Day.
(ii) For the purpose of any computation hereunder, the "current
per share market price" of the Preferred Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the Preferred
Shares are not publicly traded, the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be the current per share market
price of the Common Shares as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect each stock split, stock combination, stock
dividend or similar transaction occurring after the date hereof), multiplied by
one hundred. If neither the Common Shares nor the Preferred Shares are publicly
held or so listed or traded, "current per share market price" shall mean the
fair value per share as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes.
(e) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest one one--millionth of a
Preferred Share or one one--thousandth of any other share or security as the
case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than three years
from the date of the transaction which, but for such sentence of this Section
11(e), would have required such adjustment.
(f) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred Shares,
the number of such other shares so receivable upon exercise of any Right shall
thereafter be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Section 11(a) through (c), inclusive, and the
provisions of
14
Sections 7, 9, 10 and 13 with respect to the Preferred Shares shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one--hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one--hundredths of
a Preferred Share (calculated to the nearest one one--millionth of a Preferred
Share) obtained by (i) multiplying (x) the number of one one--hundredths of a
share covered by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights in substitution for any
adjustment in the number of one one--hundredths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one--hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights and outstanding thereafter shall become that
number of Rights (calculated to the nearest one one--thousandth obtained by
dividing (x) the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by (y) 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 Right Certificates have been distributed, shall be
at least 10 days later than the date of the public announcement. If Right
Certificates have been distributed, 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 Right Certificates on such
record date Right Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right Certificates evidencing
all the Rights to which such holders shall be entitled after such adjustment.
Right Certificates to be so distributed shall be issued, executed and
countersigned in the manner provided for herein and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of one one--hundredths of a Preferred Share issuable upon the
exercise of the Rights, the
15
Right Certificates theretofore and thereafter issued may continue to express the
Purchase Price and the number of one one--hundredths of a Preferred Share which
were expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one--hundredth of the then par value of the
Preferred Shares issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
non--assessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, then 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 the additional Preferred Shares and other capital stock or securities of
the Company, if any, issuable upon such exercise over and above the Preferred
Shares and other capital stock or securities of the Company, if any, issuable
upon such exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to such holder a
due xxxx or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any (i) subdivision, combination or consolidation of the Preferred
Shares, (ii) issuance wholly for cash of Preferred Shares or securities which by
their terms are convertible into or exchangeable for Preferred Shares, (iii)
dividends on Preferred Shares payable in Preferred Shares or (iv) issuance of
any rights, options or warrants referred to hereinabove in Section 11(b),
hereafter made by the Company to holders of its Preferred Shares shall not be
taxable to such stockholders.
(n) In the event that at any time after the date of this Agreement,
the Company shall (i) declare or pay any dividend on the Common Shares payable
in Common Shares or (ii) effect a subdivision, combination or consolidation of
the Common Shares (by reclassification or otherwise other than by payment of
dividends in Common Shares) into a greater or lesser number of Common Shares,
then in any such case (i) the number of one one--hundredths of a Preferred Share
purchasable after such event upon proper exercise of each Right shall be
determined by multiplying (x) the number of one one--hundredths of a Preferred
Share so purchasable immediately prior to such event by (y) a fraction, (1) the
numerator of which is the number of Common Shares outstanding immediately before
such event and (2) the denominator of which is the number of Common Shares
outstanding immediately after such event, and (ii) each Common Share outstanding
immediately after such event shall have issued with respect to it that number of
Rights which each Common Share outstanding immediately prior to such event had
issued with respect to it. The adjustments provided for in this Section 11(n)
shall be made successively whenever such a dividend is declared or paid or such
a subdivision, combination or consolidation is effected.
16
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Sections 23, 24 and 27, take (or
permit any Subsidiary to take) any action if the purpose of such action is to,
or if at the time such action is taken it is reasonably foreseeable that such
action will, diminish substantially or eliminate the benefits intended to be
afforded by the Rights.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Sections 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts and computations accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for the
Common Shares or the Preferred Shares a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Right Certificate in accordance with
Section 25 hereof.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER. In the event that any Person shall become an Acquiring Person,
and, directly or indirectly, (a) the Company shall consolidate with, or merge
with and into, an Acquiring Person, or an Affiliate or Associate of an Acquiring
Person, (b) an Acquiring Person or an Affiliate or Associate of an Acquiring
Person, shall consolidate with the Company, or merge with and into the Company
and the Company shall be the continuing or surviving corporation of such merger
and, in connection with such merger, all or part of the Common Shares shall be
changed into or exchanged for stock or other securities of any other Person (or
the Company) or cash or any other property, or (c) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or earning power aggregating 50%
or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, 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
Rights) shall thereafter have the right to receive, upon the exercise thereof at
a price equal to the then current Purchase Price multiplied by the number of one
one--hundredths of a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of Preferred Shares,
such number of Common Shares of the Person in the transaction (including the
Company as successor thereto or as the surviving corporation) who is issuing the
consideration with the greatest fair market value to the Company and its
stockholders in connection with such transaction (the "PRINCIPAL ISSUER") as
shall equal the result obtained by (A) multiplying the then current Purchase
Price by the number of one one--hundredths of a Preferred Share for which a
Right is then exercisable and dividing that product by (B) 50% of the then
current per share market price of the Common Shares of the Principal Issuer
(determined pursuant to Section 11(d) hereof) on the date of consummation of
such consolidation, merger, sale or transfer; (ii) the Principal Issuer shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Company pursuant
to this Agreement; (iii) the term "Company" shall thereafter be deemed to refer
to the Principal Issuer; and (iv) the Principal Issuer shall take such steps
(including, but not limited to, the reservation of a sufficient number of its
Common Shares in accordance with Section 9 hereof) in connection with such
consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
Common Shares thereafter deliverable upon the exercise of the Rights. The
Company covenants and
17
agrees that it shall not consummate any such consolidation, merger, sale or
transfer unless prior thereto the Company and the Principal Issuer shall have
executed and delivered to the Rights Agent a supplemental agreement so
providing. The Company shall not enter into any transaction of the kind referred
to in this Section 13 if at the time of such transaction there are any rights,
warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights. The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over--the--counter market, as reported by Nasdaq or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one--hundredth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one--hundredth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one
one--hundredth of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it; provided, that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Shares represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not integral multiples of one
one--hundredth of a Preferred Share, the Company shall pay to the registered
holders of Right Certificates at the time such Rights are exercised as herein
provided an amount
18
in cash equal to the same fractions of the current market value of one Preferred
Share. For the purposes of this Section 14(b), the current market value of a
Preferred Share shall be the closing price of a Preferred Share (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly
waives any right to receive fractional Rights or fractional shares upon exercise
of a Right (except as provided above).
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, excepting the rights of action of the Rights Agent and the Company,
are vested in the respective registered holders of the Rights; and any
registered holder of any Right may, without the consent of the Rights Agent or
of the holder of any other Right, in such holder's own behalf and for such
holder's own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
such holder's right to exercise the Rights in the manner provided in this
Agreement and in any issued and outstanding Right Certificate representing such
rights. Without limiting the foregoing or any remedies available to the holders
of Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and will be
entitled to specific performance of the obligations under, and injunctive relief
against actual or threatened violations of the obligations of any Person subject
to, this Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books maintained by the Rights Agent if
surrendered at the principal office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer and any payment of taxes and
governmental charges as provided in Section 6 hereof; and
(c) the Company and the Rights Agent may deem and treat the Person
in whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice (other than notice provided by transfer documentation
properly completed and tendered in accordance with this Agreement) to the
contrary.
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its failure to perform any of its
obligations under this Agreement by reason of any
19
preliminary or permanent injunction or other order, decree, judgment or ruling
(whether interlocutory final) 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.
SECTION 17. RIGHT HOLDER NOT DEEMED A STOCKHOLDER. No holder, as such,
of any Right shall be entitled to vote, receive dividends or be deemed for any
purpose the holder of the Preferred Shares or any other securities of the
Company which may at any time be issuable on the exercise of such Rights nor
shall anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Rights, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise, until such Right
shall have been properly exercised in accordance with the provisions hereof.
SECTION 18. COMPENSATION AND INDEMNITY OF THE RIGHTS AGENT. The Company
agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent,
its reasonable expenses and counsel fees and other disbursements incurred in the
preparation, delivery, amendment, administration and execution of this Agreement
and the exercise and performance of its duties hereunder. The Company also
agrees to indemnify the Rights Agent (including employees, directors, officers
and agents of the Rights Agent) for, and to hold it harmless against, any loss,
liability, or expense, incurred without gross negligence, bad faith or willful
misconduct, as determined by a court of competent jurisdiction, on the part of
the Rights Agent (including employees, directors, officers and agents of the
Rights Agent), for any action taken, suffered or omitted by the Rights Agent
(including employees, directors, officers and agents of the Rights Agent) in
connection with the acceptance and administration of this Agreement.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
Any Person into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any Person resulting from any
merger or consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any Person succeeding to the stock transfer or corporate
trust business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such Person would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement any
of the Right Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of the predecessor
Rights Agent and deliver such Right Certificates so countersigned; and in case
at that time any of the Right Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
20
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
SECTION 20. RIGHTS AND 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, by their
acceptance of Rights, the holders of Rights shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the advice or opinion of such counsel shall
be full and complete authorization and protection to the Rights Agent as to any
action taken, suffered or omitted by it in good faith and in accordance with
such advice or opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking, suffering or omitting any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the General Counsel,
the Treasurer or Chief Financial Officer or the Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
and protection to the Rights Agent and the Rights Agent shall incur no liability
for or in respect of any action taken, suffered or omitted in good faith by it
under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be authorized and protected and shall
incur no liability for any action taken, suffered or omitted by it in good faith
unless a court of competent jurisdiction determines that the Rights Agent's
gross negligence, bad faith or willful misconduct was the cause of any loss to
the Company or any holder of a Right. The Rights Agent makes no representation
or warranty with respect to and is not responsible for the validity, value or
availability of the Rights, the Right Certificates or the Preferred Shares.
(d) The Rights Agent shall be authorized and protected and shall
incur no liability for any action taken, suffered or omitted by it in connection
with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in this Section 20.
21
(e) The Rights Agent shall not be assumed to have knowledge of and
shall not be required to take note of or act upon any fact or circumstance
including, without limitation, the occurrence of facts or circumstances leading
to the Shares Acquisition Date or the Distribution Date, facts or circumstances
relating to whether any Person may be an Affiliate or an Associate of any other
Person, facts or circumstances relevant to an adjustment to the Purchase Price,
facts or circumstances relevant to events described in Section 13
(consolidations, mergers, etc.), Section 23 (redemption) and Section 24
(exchange) which may be relevant to performance by the Rights Agent under this
Agreement unless the Company has provided written notice thereof to the Rights
Agent; and the Company agrees that it will (i) promptly notify the Rights Agent
in writing of the occurrence of the Shares Acquisition Date (including the
identity of the Acquiring Person and the date on which the Shares Acquisition
Date occurred), the Distribution Date, the Redemption Date, and of any events
described in Section 13 (consolidations, mergers, etc.), and (ii) promptly
provide the Rights Agent with such other information as the Rights Agent may
reasonably request in connection with the performance of its duties under this
Agreement.
(f) Anything in this Agreement to the contrary notwithstanding, in
no event shall the Rights Agent be liable for special, indirect or consequential
damage or loss of any kind whatsoever (including but not limited to lost
profits), even if the Rights Agent has been advised of the likelihood of such
loss or damage and regardless of the form of action, provided the Rights Agent
has acted in good faith under this Agreement.
(g) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(h) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the General Counsel, the Secretary or the Treasurer or Chief
Financial Officer 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, suffered or omitted by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken, suffered or omitted by the Rights Agent with
respect to its duties or obligations under this Rights Agreement and the date on
and/or after which such action shall be taken, suffered or omitted and the
Rights Agent shall not be liable for any action taken, suffered or omitted in
accordance with a proposal included in any such application on or after the date
specified therein (which date shall not be less than three Business Days after
the date any such officer actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking, suffering or omitting any such action, the Rights Agent has received
written instructions in response to such application specifying the action to be
taken, suffered or omitted.
(i) The Rights Agent and any stockholder, director, Affiliate,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the
22
Company or become pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company or otherwise
act as fully and freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other capacity
for the Company or for any other Person.
(j) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days notice in writing mailed to the Company and to each transfer agent
of the Common Shares or Preferred Shares by registered or certified mail, and to
the holders of the Rights by first--class mail. In the event that the Transfer
Agency and Service Agreement between the Company and EquiServe Trust Company,
N.A. terminates, the Rights Agent will be deemed to have resigned automatically
upon the effective date of such termination; and any notice required to be given
by the Rights Agent under the preceding sentence will be sent by the Company.
The Company may remove the Rights Agent or any successor Rights Agent upon 30
days notice in writing, mailed to the Rights Agent or successor Rights Agent, as
the case may be, and to each transfer agent of the Common Shares or Preferred
Shares by registered or certified mail, and to the holders of the Right
Certificates by first--class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right (who shall,
with such notice, submit such holder's Right Certificate or, before the
Distribution Date, certificate representing Common Shares, for inspection by the
Company), then the registered holder of any Right 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 (i)
a Person organized and doing business under the laws of the United States or of
the State of California (or of any other state of the United States) so long as
such Person is in good standing and is authorized to do business as a banking
institution in the State of California, has an office in the State of
California, is authorized under such laws to exercise corporate trust or stock
transfer powers and is subject to supervision or examination by federal or state
authority and at the time of its appointment as Rights Agent has a combined
capital and surplus of at least $50 Million or (ii) an Affiliate of a Person
described in clause (i) of this sentence. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares or Preferred Shares, and mail a
notice thereof in
23
writing to the registered holders of the Rights. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Rights made in accordance with the
provisions of this Agreement. In addition, following the Distribution Date and
prior to the Redemption Date or Final Expiration Date, in connection with the
issuance or sale of Common Shares pursuant to the exercise of stock options or
under any employee plan or arrangement or upon the exercise, conversion or
exchange of other securities of the Company, in each case, which options or
securities are outstanding prior to the Distribution Date, the Board of
Directors shall issue Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) no
such Right Certificate shall be issued and this sentence shall be null and void
ab initio if, and to the extent that, such issuance or this sentence would
create a significant risk of or result in material adverse tax consequences to
the Company or the Person to whom such Right Certificate would be issued or
would create a significant risk of or result in such options' or employee plans'
or arrangements' failing to qualify for otherwise available special tax
treatment and (ii) no such Right 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.
(a) The Board of Directors of the Company may, by a resolution of
the Board of Directors, at its option, at any time from and after the Record
Date and prior to such time as any Person becomes an Acquiring Person (the
"REDEMPTION PERIOD"), redeem all but not less than all the then outstanding
Rights at a redemption price of $0.001 per Right, appropriately adjusted to
reflect each stock split, stock combination, stock dividend or similar
transaction occurring after the date hereof (such redemption price, as so
adjusted, being hereinafter referred to as the "REDEMPTION PRICE"). After the
Redemption Period has expired, the Board of Directors may not extend the period
for redemption of the Rights or otherwise provide for their redemption. The
redemption of the Rights by the Board of Directors may be made effective at such
time during the Redemption Period, on such basis and subject to such conditions
as the Board of Directors in its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to this Section 23(a),
and without any further action and without any notice, the right to exercise all
then outstanding Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption; provided, however, that the
failure to give, or any defect in, any such notice shall not affect the validity
of such redemption. Within 10 days after such action of the Board of Directors
ordering the redemption of the Rights
24
pursuant to this Section 23, the Company shall mail a notice of redemption to
all the holders of the then outstanding Rights at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the Common Shares. Any
notice which is mailed in the manner herein provided shall be deemed given upon
mailing, whether or not the holder receives the notice. If the payment of the
Redemption Price is not included in such notice, each such notice shall state
the method by which the payment of the Redemption Price will be made. Neither
the Company nor any of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner other than (i) as
specifically set forth in this Section 23 or in Section 24 hereof, or (ii) in
connection with the purchase of Common Shares prior to the Distribution Date.
SECTION 24. EXCHANGE.
(a) The Board of Directors of the Company may, at its option, at any
time after any Person becomes an Acquiring Person, authorize and direct the
exchange of all or part of the then outstanding and exercisable Rights (which
shall not include Rights that have become Void Rights) for Common Shares at an
exchange ratio (the "EXCHANGE RATIO") of one Common Share per Right,
appropriately adjusted to reflect each stock split, stock combination, stock
dividend or similar transaction occurring after the date hereof. Notwithstanding
the foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or any such Subsidiary or
any entity holding Common Shares for or pursuant to the terms of any such plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of a majority of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant Section 24(a) hereof and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of Common Shares equal to the number of 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 when mailed, whether or not the holder
receives the notice. Each such notice of exchange will state the method by which
the exchange of the Common Shares for Rights will be effected and, in the event
of any partial exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number of Rights (other
than Rights which have become Void Rights) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Shares (or common stock equivalents, as such
term is defined in Section 11(a)(iii) hereof) for Common Shares exchangeable for
Rights, at the initial rate of one one--hundredth of a Preferred Share (or
common stock equivalents) for each Common Share, as appropriately adjusted to
reflect adjustments in the voting rights of the Preferred Shares pursuant
25
to the terms thereof, so that the fraction of a Preferred Share delivered in
lieu of each Common Share shall have the same voting rights as one Common Share.
(d) In the event that there shall not be sufficient Common Shares,
Preferred Shares or common stock equivalents authorized by the Company's
certificate of incorporation and not outstanding or subscribed for, or reserved
or otherwise committed for issuance for purposes other than upon exercise of
Rights, to permit any exchange of Rights as contemplated in accordance with this
Section 24, the Company shall take all such action as may be necessary to
authorize additional Common Shares, Preferred Shares or common stock equivalents
for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares. In
lieu of such fractional Common Shares, the Company shall pay to the registered
holders of the Right Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current per share market value of a whole Common Share. For the purposes
of this Section 24(e), the current per share market value of a whole Common
Share shall be the closing price of a Common Share (as determined pursuant to
the second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
SECTION 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose (i) to pay any dividend
payable in stock of any class to the holders of its Preferred Shares or to make
any other distribution to the holders of its Preferred Shares (other than a
regular quarterly cash dividend), (ii) to offer to the holders of its Preferred
Shares rights or warrants to subscribe for or to purchase any additional
Preferred Shares or shares of stock of any class or any other securities, rights
or options, (iii) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares), (iv) to effect any consolidation or merger into or with, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of 50% or more
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person, (v) to effect the liquidation, dissolution or
winding up of the Company, or (vi) to declare or pay any dividend on the Common
Shares payable in Common Shares or to effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares), then, in each such case, the Company
shall give to the Rights Agent and each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, or distribution
of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
Common Shares and/or Preferred Shares, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (i) or (ii)
above at least 10 days prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and in the case of any such other
action, at least 10 days prior
26
to the date of the taking of such proposed action or the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, whichever
shall be the earlier.
(b) If any event set forth in Section 11(a)(ii) hereof shall occur,
then the Company shall as soon as practicable thereafter give to each holder of
a Right Certificate, in accordance with Section 26 hereof, a notice of the
occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii) hereof.
SECTION 26. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right to or on the
Company shall be sufficiently given or made if sent by first--class mail,
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:
HNC Software Inc.
0000 Xxxxxxxxxxx Xxxxx Xxxx
Xxx Xxxxx, XX 00000
Attention: Chief Financial Officer
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right to or on the Rights Agent shall be sufficiently given or made if
sent by first--class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
EquiServe Trust Company, N.A.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: 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 Right Certificate shall be
sufficiently given or made if sent by first--class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. The Company may, by a resolution
of the Board of Directors, from time to time, and the Rights Agent shall, if the
Company directs, supplement or amend this Agreement without the approval of any
holders of Rights in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, or to make any other provisions or changes with respect to
the Rights which the Company may deem necessary or desirable, including, without
limitation, to modify or amend the definition of Acquiring Person set forth in
Section 1(a) hereof, to change the Purchase Price set forth in Section 7(b), or
to extend or shorten the period for redemption of the Rights; provided, however,
that from and after such time as any Person becomes an Acquiring Person, this
Agreement shall not be amended in any manner which would adversely affect the
interests of the holders of Rights (other than Void Rights of an Acquiring
Person and its Affiliates and Associates), including, without limitation, to
extend the period for redemption of the Rights, or otherwise provide for their
redemption, or to provide for
27
an earlier Final Expiration Date. Any such supplement or amendment will be
evidenced by a writing signed by the Company and the Rights Agent. The Rights
Agent shall not be obligated to enter into any amendment or supplement to this
Agreement which in the opinion of the Rights Agent, may materially adversely
affect the rights, duties, and liabilities to the Company or immunities to the
Company of the Rights Agent.
SECTION 28. 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 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 any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Rights.
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, then such term, provision,
covenant or restriction shall be enforced to the maximum extent permissible, and
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.
SECTION 31. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
SECTION 32. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
SECTION 33. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
SECTION 34. ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof.
[THE REMAINDER OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK]
28
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement
to be duly executed and attested, all as of the day and year first above
written.
Company:
-------
HNC SOFTWARE INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
-----------------------------------
Title: Chief Financial Officer
----------------------------------
Rights Agent:
------------
EQUISERVE TRUST COMPANY, N.A.
By: /s/ Xxxxx Xxxxxx-Xxxx
-------------------------------------
Name: Xxxxx Xxxxxx-Xxxx
-----------------------------------
Title: Managing Director
----------------------------------
[SIGNATURE PAGE TO RIGHTS AGREEMENT]
29
EXHIBIT A
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
HNC SOFTWARE INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
-------------------------
HNC Software Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"CORPORATION"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on February 26, 2002:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (hereinafter called the "BOARD OF
DIRECTORS" or the "BOARD") in accordance with the provisions of the Certificate
of Incorporation of the Corporation, the Board of Directors hereby creates a
series of Preferred Stock, par value $0.001 per share (the "PREFERRED STOCK"),
of the Corporation and hereby states the designation and number of shares, and
fixes the relative rights, preferences, and limitations thereof as follows:
Series A Junior Participating Preferred Stock:
SECTION 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "SERIES A JUNIOR PARTICIPATING PREFERRED STOCK" (the "SERIES A
PREFERRED STOCK") and the number of shares constituting the Series A Preferred
Stock shall be One Million (1,000,000) shares. Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided, that
no decrease shall reduce the number of shares of Series A Preferred Stock to a
number less than the number of shares of Series A Preferred Stock then
outstanding plus the number of shares of Series A Preferred Stock reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation that are
convertible into Series A Preferred Stock.
1
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any other stock) ranking prior and superior to the Series
A Preferred Stock with respect to dividends, the holders of shares of Series A
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September and
December in each year (each such date being referred to herein as a "QUARTERLY
DIVIDEND PAYMENT DATE"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount (if any) per share (rounded to the nearest cent), subject to
the provision for adjustment hereinafter set forth, equal to one hundred (100)
times the aggregate per share amount of all cash dividends, and one hundred
(100) times the aggregate per share amount (payable in kind) of all non--cash
dividends or other distributions, other than a dividend payable in shares of
Common Stock, par value $0.001 per share (the "COMMON STOCK"), of the Company or
a subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under the
preceding sentence shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock).
(C) Dividends due pursuant to paragraph (A) of this Section shall
begin to accrue and be cumulative on outstanding shares of Series A Preferred
Stock from the Quarterly Dividend Payment Date next preceding the date of issue
of such shares, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of Series
A Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share--by--share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the
2
determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than sixty (60) days prior to the date fixed for the
payment thereof.
SECTION 3. VOTING RIGHTS. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to one
hundred (100) votes on all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the number of votes per share to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Series A Preferred Stock and the holders of shares
of Common Stock and any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.
SECTION 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A
3
Preferred Stock and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all such
shares are then entitled; or
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the Corporation ranking
junior (as to dividends and upon dissolution, liquidation or winding up) to the
Series A Preferred Stock.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
SECTION 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Upon any liquidation, dissolution or winding up of the
Corporation, the holders of shares of Series A Preferred Stock shall be entitled
to receive, prior and in preference to any distribution of any assets of the
Corporation to the holders of Common Stock, the amount of $1.00 per share for
each share of Series A Preferred Stock then held by them. Thereafter, the
holders of shares of Series A Preferred Stock shall be entitled to receive an
aggregate amount per share, subject to the provision for adjustment hereinafter
set forth, equal to one hundred (100) times the aggregate amount to be
distributed per share to holders of shares of Common Stock plus an amount equal
to any accrued and unpaid dividends. In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) If the assets of the Corporation legally available for
distribution to the holders of shares of Series A Preferred Stock upon
liquidation, dissolution or winding up of the Corporation are insufficient to
pay the full preferential amount set forth in the first sentence of
4
paragraph (A) above, then the entire assets of the Corporation legally available
for distribution to the holders of Series A Preferred Stock shall be distributed
among such holders in proportion to the shares of Series A Preferred Stock then
held by them.
(C) The foregoing rights upon liquidation, dissolution or winding up
provided to the holders of Series A Preferred Stock shall be subject to the
rights of the holders of any other series of Preferred Stock (or any other
stock) ranking prior and superior to the Series A Preferred Stock upon
liquidation, dissolution or winding up.
SECTION 7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to one hundred (100) times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series A Preferred Stock shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
SECTION 8. NO REDEMPTION. The shares of Series A Preferred Stock shall
not be redeemable.
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation this _____ day of March, 2002.
HNC SOFTWARE INC.
By:
--------------------------------------
Xxxxxxx X. Xxxxxxxx, Chief Financial
Officer
5
EXHIBIT B
FORM OF RIGHT CERTIFICATE
Certificate No. R-- _____ Rights
NOT EXERCISABLE AFTER MARCH 21, 2012 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.001 PER
RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
RIGHT CERTIFICATE
HNC SOFTWARE INC.
This certifies that _________________________ or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of March 6, 2002, as such may be amended (the
"RIGHTS AGREEMENT"), between HNC Software Inc., a Delaware corporation (the
"COMPANY"), and EquiServe Trust Company, N.A. (the "RIGHTS AGENT"), to purchase
from the Company at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and prior to 5:00 p.m., Pacific Time, on March
21, 2012 at the principal office of the Rights Agent, or at the office of its
successor as Rights Agent, one one--hundredth of a fully paid non--assessable
share of Series A Junior Participating Preferred Stock, par value $0.001 per
share (the "PREFERRED SHARES"), of the Company, at a purchase price of $125.00
per one one--hundredth of a Preferred Share (the "PURCHASE PRICE"), upon
presentation and surrender of this Right Certificate with the Certification and
the Form of Election to Purchase duly executed. The number of Rights evidenced
by this Right Certificate (and the number of one one--hundredths of a Preferred
Share which may be purchased upon exercise hereof) set forth above, and the
Purchase Price set forth above, are the number and Purchase Price as of
__________________, based on the Preferred Shares as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number of one
one--hundredths of a Preferred Share which may be purchased upon the exercise of
the Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above--mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall
1
be exercised in part, the holder shall be entitled to receive upon surrender
hereof another Right Certificate or Right Certificates for the number of whole
Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price of
$0.001 per Right or (ii) may be exchanged in whole or in part for Preferred
Shares or shares of the Company's Common Stock, par value $0.001 per share.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one--hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depository receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of ____________________.
ATTEST:
HNC SOFTWARE INC.
By: By:
--------------------------------- -------------------------------
Countersigned:
EQUISERVE TRUST COMPANY, N. A.
By:
---------------------------------
Authorized Signature
2
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfers unto _________________________ (Please print name and address of
transferee) this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
_________________________, Attorney, to transfer the within Right Certificate on
the books of the within--named Company, with full power of substitution.
Dated:
---------------------
--------------------------------
Signature
Signature(s) Guaranteed:
SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.
--------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
--------------------------------
Signature
1
Form of Reverse Side of Right Certificate--continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate)
To ____________________:
The undersigned hereby irrevocably elects to exercise _______________
Rights represented by this Right Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights and requests that certificates for
such Preferred Shares be issued in the name of:
Please insert social
security or other
identifying number
-------------------------------------
(Please print name and address)
-------------------------------------
-------------------------------------
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
Please insert social
security or other
identifying number
-------------------------------------
(Please print name and address)
-------------------------------------
-------------------------------------
Dated: ____________________
--------------------------------
Signature
Signature(s) Guaranteed:
SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.
2
Form of Reverse Side of Right Certificate--continued
-------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement).
--------------------------------
Signature
-------------------------------------------------------------
NOTICE
The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Right Certificate in every
particular, without alteration or any change whatsoever.
In the event the certification set forth above in the Form of Assignment
or the Form of Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored.
3
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
On February 26, 2002, the Board of Directors of HNC Software Inc.
("HNC") declared a distribution of one preferred share purchase right (a
"RIGHT") for each share of HNC common stock, par value $0.001 per share (the
"HNC COMMON SHARES"), outstanding at the close of business on March 21, 2002
(the "RECORD DATE"). In addition, one Right will be issued with each HNC common
share that becomes outstanding after the Record Date until the earliest of the
Distribution Date (as defined below), the date the Rights are redeemed by HNC or
the date the Rights expire. Until the Rights are redeemed or expire, Rights will
also be issued after the Distribution Date with each HNC common share issued
pursuant to the exercise of stock options or under any employee plan or
arrangement or upon the exercise, conversion or exchange of other HNC securities
if the options or other securities were outstanding prior to the Distribution
Date. A complete description of the terms of the Rights is set forth in a Rights
Agreement between HNC and EquiServe Trust Company, N.A., as Rights Agent (the
"RIGHTS AGREEMENT").
Each Right initially entitles the registered holder thereof to purchase
from HNC one one--hundredth of a share of a new series of HNC preferred stock,
designated as Series A Junior Participating Preferred Stock (the "PREFERRED
SHARES") at a exercise price of $125.00 per one one--hundredth of a Preferred
Share, subject to adjustment. The Rights are not exercisable until the
Distribution Date. The Rights will expire on March 21, 2012, unless the
expiration date is extended or unless the Rights are earlier redeemed or
exchanged by HNC, as described below. Until a Right is exercised, the holder of
a Right, as such, will have no rights as a stockholder of HNC including, without
limitation, the right to vote or receive dividends.
Before the Distribution Date, the Rights will be represented by HNC
common share certificates with a copy of this Summary of Rights attached
thereto, and no separate certificates for the Rights will be distributed. A
notation incorporating the Rights Agreement by reference will be included on new
certificates for HNC common shares issued after the Record Date until the
Distribution Date or earlier upon the redemption or expiration of the Rights.
Until the Distribution Date, the Rights can be transferred only with the HNC
common shares in respect of which such Rights were issued and the transfer of
any certificates for HNC common shares will constitute the transfer of such
Rights (even without a notation or a copy of the Summary of Rights). After the
Distribution Date, separate certificates representing the Rights will be mailed
to record holders of HNC common shares as of the close of business on the
Distribution Date and such separate certificates alone will evidence the Rights.
The "DISTRIBUTION DATE" is the earlier of: (i) 10 days after a public
announcement, or a public disclosure of facts indicating, that a person, entity
or group of affiliated or associated persons or entities (other than HNC, any
subsidiary of HNC or any employee benefit plan of HNC or any subsidiary) has
acquired, or has obtained the right to acquire, beneficial ownership of 20% or
more of the outstanding HNC common shares (such person, entity or group thereby
becoming an "ACQUIRING PERSON"); or (ii) 10 business days (or a later date
determined by HNC's Board of Directors before a person, entity or group becomes
an Acquiring Person) after the
1
announcement by a person, entity or group of an intention to make a tender offer
or exchange offer, the consummation of which would result in such person, entity
or group becoming an Acquiring Person. No person, entity or group will become an
Acquiring Person if HNC's Board of Directors determines that the ownership
threshold was crossed inadvertently, and the person, entity or group promptly
sells enough HNC common shares that the person, entity or group owns less than
20% of the outstanding HNC common shares. In addition, no person, entity or
group will become an Acquiring Person if it becomes an owner of 20% or more of
the outstanding HNC common shares as a result of HNC's reacquisition of
outstanding HNC common shares, unless such person, entity or group thereafter
purchases or acquires additional HNC common shares.
In the event that any person, entity or group becomes the beneficial
owner of 20% or more of the outstanding HNC common shares and thereby becomes an
Acquiring Person (unless the event causing the person, entity or group to become
an Acquiring Person is a merger, acquisition or other business combination
described in the next paragraph), each holder of a Right (other than the
Acquiring Person) will have the right to receive upon exercise and payment of
the exercise price that number of HNC common shares having a market value of two
times the exercise price of the Right. If HNC does not have enough authorized
but unissued HNC common shares to satisfy this obligation, then upon exercise of
a Right and payment of the required exercise price for the HNC common shares
issuable on such exercise, HNC will instead deliver to the holder exercising the
Right an amount of cash and/or other securities (and/or provide a reduction in
the exercise price of the Right), in an aggregate amount equivalent in value to
the difference between the value of the HNC common shares issuable upon exercise
of a Right and the exercise price for those HNC common shares.
In the event that any person, entity or group becomes an Acquiring
Person and HNC merges into or engages in certain other business combination
transactions with the Acquiring Person, or 50% or more of HNC's consolidated
assets or earning power are sold to the Acquiring Person, then each holder of a
Right (other than the Acquiring Person) will have the right to receive upon the
exercise and payment of the exercise price, that number of shares of common
stock of the acquiring company which at the time of such transaction would have
a market value of two times the exercise price of the Right.
After a person, entity or group becomes an Acquiring Person but before
the person, entity or group acquires a majority of the outstanding HNC common
shares, HNC's Board of Directors may exchange all or some of the Rights (other
than Rights owned by the Acquiring Person), at an exchange ratio of one HNC
common share, or one one--hundredth of a Preferred Share (or equivalent
securities), per Right, subject to adjustment.
Before a person, entity or group becomes an Acquiring Person, HNC's
Board of Directors may redeem all (but not some) of the Rights at a price of
$0.001 per Right on such terms and conditions as they may establish. Immediately
upon any redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
redemption price.
2
The terms of the Rights may be amended by HNC's Board of Directors
without the consent of the holders of the Rights, except that after a person,
entity or group becomes an Acquiring Person, no amendment may adversely affect
the interests of the holders of the Rights (other than an Acquiring Person) or
extend the period for redemption of the Rights.
The exercise price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment to prevent dilution. The number of outstanding Rights and the number
of one one-hundredths of a Preferred Share issuable upon exercise of each Right
are also subject to adjustment upon certain events occurring before the
Distribution Date.
While the distribution of the Rights should not be taxable to
stockholders or to HNC, holders of Rights may, depending upon the circumstances,
recognize taxable income in the event that the Rights become exercisable for HNC
common shares or Preferred Shares (or other consideration) or the common stock
of an Acquiring Person in the instance described above or upon any redemption or
exchange of the Rights as described above.
The Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a quarterly dividend
payment of 100 times the dividend declared per HNC common share. In the event of
liquidation, each Preferred Share will be entitled to a $1.00 preference, and
thereafter the holders of the Preferred Shares will, in addition, be entitled to
an aggregate liquidation payment of 100 times the aggregate liquidation payment
made per HNC common share. Each Preferred Share will have 100 votes, voting
together with the HNC common shares. Finally, in the event of any merger,
consolidation or other transaction in which HNC common shares are exchanged,
each Preferred Share will be entitled to receive 100 times the amount received
per HNC common share. These rights are protected by customary antidilution
provisions to reflect splits of the HNC common shares and similar events.
Because of the nature of the dividend, liquidation and voting rights for the
Preferred Shares, the value of the one one-hundredth interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of
one HNC common share.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A
dated March 6, 2002. A copy of the Rights Agreement is available free of charge
from HNC. THIS SUMMARY DESCRIPTION OF THE RIGHTS DOES NOT PURPORT TO BE COMPLETE
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE RIGHTS AGREEMENT, WHICH IS
INCORPORATED HEREIN BY REFERENCE.
3
