EXHIBIT 3
MIKOHN GAMING CORPORATION
AND
U.S. STOCK TRANSFER CORPORATION,
AS RIGHTS AGENT
RIGHTS AGREEMENT
JUNE 14, 1999
TABLE OF CONTENTS
PAGE
Section 1. Certain Definitions. 1
Section 2. Appointment of Rights Agent. 6
Section 3. Issue of Rights Certificates. 6
Section 4. Form of Rights Certificates. 8
Section 5. Countersignature and Registration. 9
Section 6. Transfer, Split Up, Combination, and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost,
or Stolen Rights Certificates. 10
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights. 11
Section 8. Cancellation and Destruction of Rights Certificates. 13
Section 9. Reservation and Availability of Capital Stock. 13
Section 10. Preferred Stock Record Date. 14
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares, or Number of Rights. 15
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. 24
Section 13. Consolidation, Merger, or Sale or Transfer of Assets
or Earning Power. 24
Section 14. Fractional Rights and Fractional Shares. 27
Section 15. Rights of Action. 28
Section 16. Agreement of Rights Holders. 29
Section 17. Rights Certificate Holder Not Deemed a Stockholder. 29
Section 18. Concerning the Rights Agent. 30
Section 19. Merger or Consolidation or Change of Name of Rights
Agent. 30
Section 20. Duties of Rights Agent. 31
TABLE OF CONTENTS
(CONTINUED)
PAGE(S)
Section 21. Change of Rights Agent. 33
Section 22. Issuance of New Rights Certificates. 34
Section 23. Redemption and Termination. 34
Section 24. Notice of Certain Events. 35
Section 25. Notices. 36
Section 26. Supplements and Amendments. 37
Section 27. Successors. 38
Section 28. Determinations and Actions by the Board of
Directors, Etc. 38
Section 29. Benefits of this Agreement. 38
Section 30. Severability. 38
Section 31. Governing Law. 39
Section 32. Counterparts. 39
Section 33. Interpretation. 39
TABLE OF CONTENTS
(CONTINUED)
Exhibit A [Form Of] Certificate of Designation, Preferences,
and Rights of Series a Junior Participating
Preferred Stock
Exhibit B Form of Rights Certificate
Exhibit C Summary of Rights to Purchase Securities of Mikohn
Gaming Corporation Pursuant to Rights Agreement
Dated as of June 14, 1999
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of June 14, 1999 (the "AGREEMENT"), between
Mikohn Gaming Corporation, a Nevada corporation (the "COMPANY"), and U.S. Stock
Transfer Corporation, a California corporation (the "RIGHTS AGENT").
BACKGROUND
On June 9, 1999 (the "RIGHTS DECLARATION DATE"), the Board of Directors
of the Company authorized and declared a dividend distribution of one preferred
stock purchase right (individually a "Right," and collectively the "Rights") for
each share of common stock, par value $.10 per share, of the Company (the
"COMMON STOCK") outstanding at the Close of Business on June 14, 1999 (the
"RECORD DATE"), and has authorized the issuance of one Right (as such number may
be adjusted pursuant to the provisions of SECTION 11(p)) for each share of
Common Stock of the Company issued between the Record Date (whether originally
issued or delivered from the Company's treasury) and the Distribution Date (as
hereinafter defined). Each Right initially represents the right to purchase one
one-thousandth of a share of Series A Junior Participating Preferred Stock of
the Company, par value $0.10 per share (each such one one-thousandth of a share
is a "Unit"), having the rights, powers, and preferences set forth in the form
of Certificate of Designation, Preferences, and Rights attached to this
Agreement as EXHIBIT A, upon the terms and subject to the conditions set forth
below.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth in this Agreement, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "ACQUIRING PERSON" means any Person that, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 20% or more of the shares of Common Stock then outstanding, but does 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; (iv) any Person
organized, appointed, or established by the Company for or pursuant to the terms
of any such plan; (v) any Person that has reported or is required to report such
beneficial ownership (but less than 25%) on Schedule 13G (or any comparable or
successor report) under the Exchange Act or on Schedule 13D (or any comparable
or successor report) under the Exchange Act, which Schedule 13D does not state
any intention to, or reserve the right to, control or influence the management
or policies of the Company or engage in any of the actions specified in Item 4
of such Schedule 13D (other than the disposition of the Common Stock) and,
within five (5) Business Days (as defined below) of being requested by the
Company to advise it regarding the same, certifies to the Company that such
Person acquired beneficial
ownership of shares of Common Stock in excess of 19.9% inadvertently or without
knowledge of the terms of the Rights and such certification is accepted as true
by a Requisite Majority (as defined below) acting in good faith and that,
together with all of such Person's Affiliates and Associates, thereafter does
not acquire additional shares of Common Stock while remaining the Beneficial
Owner of 20% or more of the shares of Common Stock then outstanding; provided,
however, that if the Person requested to so certify fails to do so within five
Business Days, then such Person will become an Acquiring Person immediately
after such five Business-Day Period; and (vi) any Person that becomes an
Acquiring Person solely as a result of a reduction in the number of outstanding
shares of Common Stock in a transaction that is approved by a Requisite
Majority, provided that such Person will immediately be an Acquiring Person in
the event such Person thereafter acquires any additional shares of Common Stock
(other than as a result of a stock split or stock dividend or the purchase of
shares pursuant to the exercise of employee stock options or under any employee
plan or arrangement) while remaining the Beneficial Owner of 20% or more of the
shares of Common Stock then outstanding.
(b) "ACT" means the Securities Act of 1933, as amended.
(c) "ADJUSTMENT SHARES" has the meaning set forth in
SECTION 11(a)(ii).
(d) "ADVERSE PERSON" means a Person (alone or together
with any other Person) as to which the Board of Directors has, after
consultation with such advisors and such other investigation as it considers
necessary, made the following determinations: (i) such Person or Persons at any
time after the Rights Declaration Date have become the Beneficial Owner of a
substantial (but in no event less than 10% of the shares of Common Stock then
outstanding) amount of Common Stock; and (ii) (A) such Person or Persons intend
to cause the Company or its Affiliates to repurchase such Common Stock
beneficially owned by such Person or Persons or to exert pressure against the
Company to take any action or enter into any transaction or series of
transactions with the intent or effect of providing such Person or Persons with
short-term gains or profits under circumstances in which the Board of Directors
of the Company determines that the long-term interests of the Company and its
stockholders would not be served by taking such action or entering into such
transaction or series of transactions; or (B) beneficial ownership of Common
Stock by such Person or Persons is reasonably likely to have a material adverse
effect on the business, competitive position, prospects, or financial condition
of the Company and its Subsidiaries. No delay or failure by the Board of
Directors to declare a Person to be an Adverse Person shall in any way waive or
otherwise affect the power of the Board of Directors subsequently to declare a
Person to be an Adverse Person.
(e) "AFFILIATE" of, or a Person "AFFILIATED" with, a
specified Person, means 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.
(f) "AGREEMENT" means this Rights Agreement, as amended
from time to
time.
(g) "ASSOCIATE" of a Person, means (i) any corporation or
organization (other than the Company or a 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, (ii) any
trust or other estate in which such Person has a substantial beneficial interest
or as to which suchPerson serves as trustee or in a similar fiduciary capacity,
and (iii) 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 any of its parents or subsidiaries.
(h) A Person will be deemed the "BENEFICIAL OWNER" of,
and will be deemed to "BENEFICIALLY OWN," any securities that:
(i) such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to
acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement, or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person will not be deemed the
"Beneficial Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by such Person or
any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, (B) securities
issuable upon exercise of Rights at any time prior to the occurrence of
a Triggering Event, or (C) securities issuable upon exercise of Rights
from and after the occurrence of a Triggering Event, which Rights were
acquired by such Person or any of suchPerson's Affiliates or Associates
prior to the Distribution Date or pursuant to SECTION 3(a) or SECTION
22 (the "ORIGINAL RIGHTS") or pursuant to SECTION 11(i) in connection
with an adjustment made with respect to any Original Rights;
(ii) such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to vote
or dispose of or has "beneficial ownership" of (as determined pursuant
to Rule 13d-3 of the General Rules and Regulations under the Exchange
Act), including pursuant to any agreement, arrangement, or
understanding, whether or not in writing; provided, however, that a
Person will not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this SECTION 1(h)(ii) as a
result of an agreement, arrangement, or understanding to vote such
security if such agreement, arrangement, or understanding: (A) arises
solely from a revocable proxy or consent given in response to a public
proxy or consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and Regulations under
the Exchange Act, and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iii) are beneficially owned, directly or
indirectly, by any other Person
(or any Affiliate or Associate of such Person) with which such Person
(or any of such Person's Affiliates or Associates) has any agreement,
arrangement, or understanding (whether or not in writing), for the
purpose of acquiring, holding, voting (except pursuant to a revocable
proxy as described in the proviso in SECTION 1(h)(ii)), or disposing of
any voting securities of the Company; provided, however, that nothing
in this SECTION 1(h) will cause a Person engaged in business as an
underwriter of securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired through such Person's
participation in good faith in a bona fide firm commitment underwriting
until the expiration of forty days after the date of such acquisition.
(i) "BUSINESS DAY" means any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of Nevada are
authorized or obligated by law or executive order to close.
(j) "CLOSE OF BUSINESS" on any given date will mean 5:00
p.m., Las Vegas, Nevada time, on such date; provided, however, that if such date
is not a Business Day it will mean 5:00 p.m., Las Vegas, Nevada time, on the
next succeeding Business Day.
(k) "COMMON STOCK" means the common stock, par value $.10
per share, of the Company, or, in the event of a subdivision, combination or
consolidation with respect to such shares of Common Stock, the shares of Common
Stock resulting from such subdivision, combination or consolidation, except that
"COMMON STOCK" when used with reference to any Person other than the Company
will mean the capital stock of such Person with the greatest voting power, or
the equity securities or other equity interest having power to control or direct
the management, of such Person.
(l) "COMMON STOCK EQUIVALENT" has the meaning set forth
in SECTION 11(a)(iii).
(m) "COMPANY" means Mikohn Gaming Corporation, a Nevada
corporation.
(n) "CURRENT MARKET PRICE" has the meaning set forth in
SECTION 11(d).
(o) "CURRENT VALUE" has the meaning set forth in SECTION
11(a)(iii).
(p) "DISTRIBUTION DATE" has the meaning set forth in
SECTION 3(a).
(q) "EQUIVALENT PREFERRED STOCK" has the meaning set
forth in SECTION 11(b).
(r) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(s) "EXPIRATION DATE" has the meaning set forth in
SECTION 7.
(t) "FINAL EXPIRATION DATE" has the meaning set forth in
SECTION 7.
(u) "INTERESTED STOCKHOLDER" means any Acquiring Person
or any Affiliate or Associate of an Acquiring Person or any other Person in
which any such Acquiring Person, Affiliate or Associate has an interest, or any
other Person acting directly or indirectly on behalf of or in concert with any
such Acquiring Person, Affiliate or Associate.
(v) "PERSON" means any individual, firm, corporation,
partnership, or other public or private entity.
(w) "PREFERRED STOCK" mean shares of Series A Junior
Participating Preferred Stock, par value $.10 per share, of the Company, and, to
the extent that there are not a sufficient number of shares of Series A Junior
Participating Preferred Stock authorized to permit the full exercise of the
Rights, any other series of Preferred Stock, par value $.10 per share, of the
Company designated for such purpose containing terms substantially similar to
the terms of the Series A Junior Participating Preferred Stock.
(x) "PRINCIPAL PARTY" has the meaning set forth in
SECTION 13(b).
(y) "PURCHASE PRICE" has the meaning set forth in SECTION
4(a) and is initially the amount per Unit specified in SECTION 7(b).
(z) "RECORD DATE" means the Close of Business on June 14,
1999, as specified under Background.
(aa) "REDEMPTION PRICE" has the meaning set forth in
SECTION 23(a).
(bb) "REQUISITE MAJORITY" means, at any time, the
affirmative vote of a majority of the members of the Board of Directors of the
Company then in office.
(cc) "RIGHT" has the meaning set forth under Background.
(dd) "RIGHTS AGENT" has the meaning set forth in the
Preface.
(ee) "RIGHTS CERTIFICATE" means a certificate representing
a Right, in the form described in SECTION 4.
(ff) "RIGHTS DECLARATION DATE" has the meaning set forth
under Background.
(gg) "SECTION 11 (a) (ii) EVENT" means any event described
in SECTION 11 (a) (ii) .
(hh) "SECTION 11(a)(ii) TRIGGER DATE" has the meaning set
forth in Section 11(a)(iii).
(ii) "SECTION 13 EVENT" means any event described in
clauses (x), (y), or (z) of SECTION 13(a).
(jj) "SPREAD" has the meaning set forth in SECTION
11(a)(iii).
(kk) "STOCK ACQUISITION DATE" means the first date of
public announcement (which, for purposes of this definition, will include,
without limitation, a report filed pursuant to SECTION 13(d) under the Exchange
Act) by the Company or an Acquiring Person of the existence of an Acquiring
Person, provided that, if such a Person is determined not to have become an
Acquiring Person, such Stock Acquisition Date shall be deemed not to have
occurred.
(ll) "SUBSIDIARY" means, with reference to any Person, any
entity of which an amount of voting securities sufficient to elect at least a
majority of the directors or similar Persons of such entity is beneficially
owned, directly or indirectly, by such Person, or otherwise controlled by such
Person.
(mm) "SUBSTITUTION PERIOD" has the meaning set forth in
SECTION 11(a)(iii).
(nn) "TRADING DAY" has the meaning set forth in SECTION
11(d)(i).
(oo) "TRIGGERING EVENT" means any Section 11(a)(ii) Event
or any Section 13 Event.
(pp) "UNIT" has the meaning set forth under Background.
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 of this Agreement,
and the Rights Agent hereby accepts such appointment. The Company may from time
to time appoint such Co-Rights Agents as it may deem necessary or desirable.
SECTION 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the earlier of (i) the Close of Business on the
tenth day after the
Stock Acquisition Date (or, if the tenth day after the Stock Acquisition Date
occurs before the Record Date, the Close of Business on the Record Date)
involving an Acquiring Person that has become such in a transaction as to which
a Requisite Majority has not made the determination specified in SECTION
11(a)(ii)(B); (ii) the Close of Business on the tenth Business Day (or such
later date as the Board determines) after the date that a tender offer or
exchange offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed, or established by the
Company for or pursuant to the terms of any such plan) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if upon consummation thereof, such Person
would be the Beneficial Owner of 20% or more of the shares of Common Stock then
outstanding; or (iii) the Close of Business on the tenth Business Day after a
Person has become an Adverse Person (the earlier of the times referred to in
CLAUSES (i), (ii), and (iii) being referred to as the "DISTRIBUTION DATE"), (x)
the Rights will be evidenced (subject to the provisions of this SECTION 3(b)) by
the certificates for the Common Stock registered in the names of the holders of
the Common Stock (which certificates for Common Stock will be deemed also to be
certificates for Rights) and not by separate certificates, and (y) the Rights
will be transferable only in connection with the transfer of the underlying
shares of Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent will send by
first-class, postage prepaid mail, to each record holder of the Common Stock as
of the Distribution Date, at the address of such holder shown on the records of
the Company, one or more Rights Certificates, in substantially the form of
EXHIBIT B evidencing one Right for each share of Common Stock so held, subject
to adjustment as provided in this Agreement. In the event that an adjustment in
the number of Rights per share of Common Stock has been made pursuant to SECTION
11(p), at the time of distribution of the Rights Certificates, the Company will
make the necessary and appropriate rounding adjustments (in accordance with
SECTION 14(a)) so that Rights Certificates representing only whole numbers of
Rights are distributed and cash is paid in lieu of any fractional Rights. As of
and after the Distribution Date, the Rights will be evidenced solely by such
Rights Certificates.
(b) As promptly as practicable following the Record Date,
the Company will send a copy of a Summary of Rights, in substantially the form
of EXHIBIT C, by first-class, postage prepaid mail, to each record holder of the
Common Stock as of the Close of Business on the Record Date, at the address of
such holder shown on the records of the Company. With respect to certificates
for the Common Stock outstanding as of the Record Date, until the Distribution
Date, the Rights will be evidenced by such certificates for the Common Stock and
the registered holders of the Common Stock will also be the registered holders
of the associated Rights. Until the earlier of the Distribution Date or the
Expiration Date (as defined in SECTION 7), the transfer of any certificates
representing shares of Common Stock in respect of which Rights have been issued
will also constitute the transfer of the Rights associated with such shares of
Common Stock.
(c) Rights will be issued in respect of all shares of
Common Stock that are issued (whether originally issued or from the Company's
treasury) after the Record Date but
prior to the earlier of the Distribution Date or the Expiration Date.
Certificates representing such shares of Common Stock will also be deemed to be
certificates for Rights and, as soon as practicable after the Record Date, the
Company will cause all newly issued certificates representing its Common Stock
to bear the following legend:
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER TO CERTAIN
RIGHTS AS SET FORTH IN THE RIGHTS AGREEMENT BETWEEN MIKOHN GAMING
CORPORATION (THE "COMPANY") AND U.S. STOCK TRANSFER CORPORATION (THE
"RIGHTS AGENT") DATED AS OF JUNE 14, 1999 (AS AMENDED FROM TIME TO
TIME, THE "RIGHTS AGREEMENT"), THE TERMS OF WHICH ARE HEREBY
INCORPORATED IN THIS CERTIFICATE BY REFERENCE AND A COPY OF WHICH IS ON
FILE AT THE PRINCIPAL OFFICES OF THE COMPANY. UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL
BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED
BY THIS CERTIFICATE. THE COMPANY WILL MAIL TO THE HOLDER OF THIS
CERTIFICATE A COPY OF THE RIGHTS AGREEMENT, AS IN EFFECT ON THE DATE OF
MAILING, WITHOUT CHARGE PROMPTLY AFTER RECEIPT OF A WRITTEN REQUEST
THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS BENEFICIALLY OWNED BY ANY PERSON WHO IS, WAS, OR
BECOMES AN ACQUIRING PERSON OR AN ADVERSE PERSON OR ANY AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON OR AN ADVERSE PERSON (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON
BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND
VOID.
With respect to such stock certificates containing the
foregoing legend, until the earlier of (i) the Distribution Date or (ii) the
Expiration Date, the Rights associated with the Common Stock represented by such
certificates will be evidenced by such certificates alone, registered holders of
Common Stock will also be the registered holders of the associated Rights, and
the transfer of any of such certificates will also constitute the transfer of
the Rights associated with the Common Stock represented by such certificates.
SECTION 4. FORM OF RIGHTS CERTIFICATES.
(a) Each certificate representing a Right (a "Rights
Certificate") and the forms of election to purchase and of assignment to be
printed on the reverse of the Rights Certificates will besubstantially in the
form set forth in EXHIBIT B and may have such marks of identification or
designation and such legends, summaries, or endorsements 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 or quotation system on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of SECTION 11 and
SECTION 22, each Rights Certificate, whenever distributed, will be dated as of
the Record Date and state on its face that it entitles the holder to purchase
such number of Units as is set forth in such Rights Certificate at the price set
forth therein (such exercise price per Unit, the "PURCHASE PRICE"), but the
amount and type of securities purchasable upon the exercise of each Right and
the Purchase Price will be subject to adjustment as provided in this Agreement.
(b) Any Rights Certificate issued pursuant to SECTION
3(a) or SECTION 22 that represents Rights beneficially owned by (i) an Acquiring
Person or an Adverse Person or any Associate or Affiliate of an Acquiring Person
or an Adverse Person, (ii) a transferee from an Acquiring Person or an Adverse
Person (or from any Associate or Affiliate of an Acquiring Person or an Adverse
Person) that becomes a transferee after the Acquiring Person or an Adverse
Person becomes an Acquiring Person or an Adverse Person, or (iii) a transferee
from an Acquiring Person or an Adverse Person (or of any Associate or Affiliate
of an Acquiring Person or an Adverse Person) that becomes a transferee prior to
or concurrently with the Acquiring Person or an Adverse Person becoming an
Acquiring Person or an Adverse Person and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person or Adverse Person to holders of equity interests in such Acquiring Person
or Adverse Person or to any Person with whom such Acquiring Person or Adverse
Person has any continuing agreement, arrangement, or understanding regarding the
transferred Rights or (B) a transfer that the Board of Directors of the Company
has determined is part of an agreement, plan, arrangement, or understanding that
has as a substantial purpose or effect avoidance of SECTION 7(e), and any Rights
Certificate issued pursuant to SECTION 6 or SECTION 11 upon transfer, exchange,
replacement, or adjustment of any other Rights Certificate referred to in this
SECTION 4(b), will contain (to the extent feasible) the following legend:
THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO IS, WAS, OR BECAME AN ACQUIRING
PERSON OR AN ADVERSE PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON OR AN ADVERSE PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BE OR MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SUCH AGREEMENT.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates will be executed on behalf of
the Company by its Chairman of the Board, its Chief Executive Officer, its Chief
Operating Officer, its President, or any Vice President, either manually or by
facsimile signature; will have affixed thereto the
Company's seal or a facsimile thereof; and will be attested by the Secretary or
an Assistant Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates will be countersigned by the Rights Agent,
either manually or by facsimile signature, and will not be valid for any purpose
unless so countersigned. In case any officer of the Company who has signed any
of the Rights Certificates ceases to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force andeffect as though
the Person who signed such Rights Certificates had not ceased to be such officer
of the Company, and any Rights Certificate may be signed on behalf of the
Company by any Person who, at the actual date of the execution of such Rights
Certificate, is a proper officer of the Company to sign such Rights Certificate,
although at the date of the execution of such Rights Certificate any such Person
was not such an officer.
(b) Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at its principal office or offices designated as
the appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
under this Agreement. Such books will show the names and addresses of the
respective holders of the Rights Certificates, the number of Rights evidenced on
the face of each Rights Certificate, and the date of each Rights Certificate.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION, AND EXCHANGE OF
RIGHTS CERTIFICATES; MUTILATED, DESTROYED, LOST, OR STOLEN
RIGHTS CERTIFICATES.
(a) Subject to the provisions of SECTION 4(b), SECTION
7(e), and SECTION 14, at any time after the Close of Business on the
Distribution Date, and at or prior to the Expiration Date, any Rights
Certificate or Certificates may be transferred, split up, combined, or exchanged
for another Rights Certificate or Rights Certificates, entitling the registered
holder to purchase a like number of Units (or, following a Triggering Event,
Common Stock, other securities, cash, or other property, as the case may be) as
the Rights Certificate or Rights Certificates surrendered then entitle such
holder (or former holder in the case of a transfer) to purchase. Any registered
holder desiring to transfer, split up, combine, or exchange any Rights
Certificate or Rights Certificates will make such request in writing delivered
to the Rights Agent, accompanied by the Rights Certificate or Rights
Certificates to be transferred, split up, combined, or exchanged, at the office
of the Rights Agent designated for such purpose. Neither the Rights Agent nor
the Company will be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered holder
has completed and signed the certificate contained in the form of assignment on
the reverse side of such Rights Certificate and has provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
and Affiliates or Associates thereof as the Company may from time to time and in
good faith request. Thereupon, the Rights Agent will, subject to SECTION 4(b),
SECTION 7(e), and SECTION 14, countersign and deliver to the Person entitled
thereto a Rights Certificate or Rights Certificates, as the case may be, as
requested. The Company may require payment of a sum sufficient to cover any tax
or
governmental charge that may be imposed in connection with any transfer, split
up, combination, or exchange of any Rights Certificate.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction, or
mutilation of a Rights Certificate (and in case of loss, theft, or destruction,
of indemnity or security satisfactory to them) and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed, or
mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE
OF RIGHTS.
(a) Subject to SECTION 7(e), the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided in this Agreement including, without limitation, the
restrictions on exercisability set forth in SECTION 9(c), SECTION 11(a)(iii),
and SECTION 23(a)) in whole or in part at any time after the Distribution Date
upon surrender of the Rights Certificate, with the form of election to purchase
and the certificate on the reverse side of the Rights Certificate duly executed,
to the Rights Agent at the principal office or offices of the Rights Agent
designated for such purpose, together with payment of the aggregate Purchase
Price with respect to the total number of Units (or other securities, cash, or
other property, as the case may be) as to which such surrendered Rights are then
exercisable, at or prior to the earlier of (i) the Close of Business on June 14,
2009, (the "FINAL EXPIRATION DATE"), or (ii) the time at which the Rights are
redeemed as provided in SECTION 23 (the earlier of the times referred to in
CLAUSES (i) and (ii) being referred to as the "EXPIRATION DATE")).
(b) The Purchase Price for each Unit pursuant to the
exercise of a Right will initially be $16.00; will be subject to adjustment from
time to time as provided in SECTION 11, and SECTION 13(a); and will be payable
in accordance with SECTION 7(c).
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
duly executed, accompanied by payment, with respect to each Right so exercised,
of the Purchase Price per Unit (or other shares, securities, cash, or other
property, as the case may be) to be purchased as set forth below and an amount
equal to any applicable transfer tax, the Rights Agent will, subject to SECTION
20(k), promptly (i) (A) requisition from any transfer agent of the shares of
Preferred Stock (or make available, if the Rights Agent is the transfer agent
for such shares) certificates for the total number of Units to be purchased,
(the Company hereby irrevocably authorizing its transfer agent to comply with
all such requests), or (B) if the Company has elected to deposit the total
number of shares of Preferred Stock issuable upon exercise of the Rights with a
depository agent, requisition from the
depository agent depository receipts representing such number of Units as are to
be purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts will be deposited by the transfer agent with the
depository agent) and the Company will direct the depository agent to comply
with such request; (ii) requisition from the Company the amount of cash, if any,
to be paid in lieu of fractional shares in accordance with SECTION 14; (iii)
after receipt of such certificates or depository receipts, cause such
certificates or depository receipts to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder; and (iv) after receipt thereof, deliver
such cash, if any, to or upon the order of the registered holder of such Rights
Certificate. The payment of the Purchase Price (as such amount may be reduced
pursuant to SECTION 11(a)(iii)) will be made in cash or by certified bank check
or bank draft payable to the order of the Company. In the event that the Company
is obligated to issue other securities (including Common Stock) of the Company,
pay cash, or distribute other property pursuant to SECTION 11(a), the Company
will make all arrangements necessary so that such other securities, cash, or
other property are available for distribution by the Rights Agent, if and when
appropriate. The Company reserves the right to require prior to the occurrence
of a Triggering Event that, upon any exercise of Rights, a number of Rights be
exercised so that only whole shares of Preferred Stock would be issued.
(d) In case the registered holder of any Rights
Certificate exercises less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
will be issued by the Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, subject to the provisions of SECTION 14.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii) Event, any
Rights beneficially owned by any Person referred to in CLAUSES (i) through (iii)
below will become null and void without any further action, and no holder of
such Rights will have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise: (i) an Acquiring Person or
an Adverse Person or an Associate or Affiliate of an Acquiring Person or an
Adverse Person, (ii) a transferee from an Acquiring Person or an Adverse Person
(or from any Associate or Affiliate of an Acquiring Person or Adverse Person)
that becomes a transferee after the Acquiring Person or an Adverse Person
becomes such, or (iii) a transferee from an Acquiring Person or an Adverse
Person (or of any such Associate or Affiliate) that becomes a transferee prior
to or concurrently with the Acquiring Person or Adverse Person becoming such and
that receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person or the Adverse Person to holders of
equity interests in such Acquiring Person or Adverse Person or to any Person
with whom the Acquiring Person or Adverse Person has any continuing agreement,
arrangement, or understanding regarding the transferred Rights or (B) a transfer
that the Board of Directors of the Company has determined is part of an
agreement, plan, arrangement, or understanding that has as a substantial purpose
or effect the avoidance of this SECTION 7(e). The Company will use its best
efforts to insure that the provisions of this SECTION 7(e) and SECTION 4(b) are
complied with, but will have no liability under this
Agreement to any holder of Rights Certificates or other Person as a result of
its failure to make any determinations with respect to an Acquiring Person, an
Adverse Person, or any of their Affiliates, Associates, or transferees.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company will 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 has (i) completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company requests in good faith.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES.
All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange will, if surrendered to the Company
or any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, will be canceled by it,
and no Rights Certificates will be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company will deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent will
so cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent will deliver
all canceled Rights Certificates to the Company, or will, at the written request
of the Company, destroy such canceled Rights Certificates, and in such case will
deliver a certificate of destruction to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) The Company covenants and agrees that it will cause
to be reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the occurrence of a Triggering Event, out of its
authorized and unissued shares of Common Stock or other securities or out of its
authorized and issued shares held in its treasury), the number of shares of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock or other securities) that (as provided in this Agreement including,
without limitation, SECTION 11(a)(iii)), will be sufficient to permit the
exercise in full of all outstanding Rights.
(b) So long as the shares of Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock or other
securities) issuable and deliverable upon the exercise of the Rights may be
listed on any national securities exchange or automated quotation system, the
Company will use its best efforts to cause, from and after such time as the
Rights become exercisable,all shares reserved for such issuance to be listed on
such exchange or automated quotation system upon official notice of issuance and
such exercise.
(c) The Company, if required by applicable law, will use
its best efforts to (i) file, as soon as practicable following the earliest date
after the first occurrence of a Section 11(a)(ii) Event on which the
consideration to be delivered by the Company upon exercise of the Rights has
been determined in accordance with SECTION 11(a)(iii), a registration statement
under the Securities Act of 1933, as amended (the "ACT"), with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the date of the expiration of the
Rights. The Company will also take such action as may be appropriate under, or
to ensure compliance with, the securities or "blue sky" laws of the various
states in connection with the exercisability of the Rights. The Company may
temporarily suspend, for a period of time not to exceed ninety (90) days after
the date set forth in clause (i) of the first sentence of this SECTION 9(c), the
exercisability of the Rights in order to prepare and file such required
registration statement and permit it to become effective. Upon any such
suspension, the Company will issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. In addition,
if the Company determines that a registration statement is required following
the Distribution Date, the Company may temporarily suspend the exercisability of
the Rights until such time as such registration statement has been declared
effective. Notwithstanding any provision of this Agreement to the contrary, the
Rights will not be exercisable in any jurisdiction if the requisite
qualification in such jurisdiction has not been obtained, the exercise of such
Rights is not permitted under applicable law, or a required registration
statement has not been declared effective.
(d) The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all shares of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock or other
securities) delivered upon exercise of Rights will, at the time of delivery of
the certificates for such shares (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and non-assessable.
(e) The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer taxes and
charges that may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates representing Units (or Common Stock or
other securities, as the case may be) issuable upon the exercise of Rights. The
Company will not, however, be required to pay any transfer tax that may be
payable in respect of any transfer or delivery of Rights Certificates to a
Person other than, or the issuance or delivery of a number of Units (or Common
Stock or other securities, as the case may be) in respect of a name other than
that of the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for a number of
Units (or Common Stock or other securities, as the case may be) in a name other
than that of the registered holder upon the exercise of any Rights until such
tax has been paid (any such tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
SECTION 10. PREFERRED STOCK RECORD DATE.
Each Person in whose name any certificate for a number of Units (or
Common Stock or other securities, as the case may be) is issued upon the
exercise of Rights will for all purposes be deemed to have become the holder of
record of such fractional shares of Preferred Stock (or Common Stock or other
securities, as the case may be) represented thereby on, and such certificate
will be dated the date upon which the Rights Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and all applicable
transfer taxes) was made; provided, however, that if the date of such surrender
and payment is a date upon which the Preferred Stock (or Common Stock or other
securities, as the case may be) transfer books of the Company are closed, such
Person will be deemed to have become the record holder of such shares
(fractional or otherwise) on, and such certificate will be dated, the next
succeeding Business Day on which the Preferred Stock (or Common Stock or other
securities, as the case may be) transfer books of the Company are open. Prior to
the exercise of the Rights evidenced thereby, the holder of a Rights Certificate
will not be entitled to any rights of a stockholder of the Company with respect
to shares for which the Rights are exercisable, including, without limitation,
the right to vote, to receive dividends or other distributions or to exercise
any preemptive rights, and will not be entitled to receive any notice of any
proceedings of the Company except as provided in this Agreement.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF
SHARES, OR NUMBER OF RIGHTS.
The Purchase Price, the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this SECTION 11.
(a) (i) In the event the Company at any time after
the date of this Agreement (A) declares a dividend on the Preferred
Stock payable in shares of Preferred Stock, (B) subdivides the
outstanding Preferred Stock, (C) combines the outstanding Preferred
Stock into a smaller number of shares, or (D) issues any shares of its
capital stock in a reclassification of the Preferred Stock (including,
without limitation, any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this SECTION
11(a) and SECTION 7(e), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such
subdivision, combination, or reclassification, and the number and kind
of shares of Preferred Stock or capital stock, as the case may be,
issuable on such date, will be proportionately adjusted so that the
holder of any Right exercised after such time will be entitled to
receive, upon payment of the Purchase Price then in effect, the
aggregate number and kind of shares of Preferred Stock or capital
stock, as the case may be, that, if such Right had been exercised
immediately prior to such date and at a time when the Preferred Stock
transfer books of the Company
were open, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision,
combination, or reclassification. If an event occurs that would require
an adjustment under both this SECTION 11(a)(i) and SECTION 11(a)(ii),
the adjustment provided for in this SECTION 11(a)(i) will be in
addition to, and will be made prior to, any adjustment required
pursuant to SECTION 11(a)(ii).
(ii) In the event that:
(A) Any Acquiring Person or Adverse
Person or any Associate or Affiliate of any Acquiring Person
or Adverse Person, at any time after the Stock Acquisition
Date, directly or indirectly, (1) merges with or into the
Company or otherwise combines with the Company and the Company
is the continuing or surviving Person of such merger or
combination and the Common Stock of the Company or other
equity securities of the Company remain outstanding, (2) in
one transaction or a series of transactions, transfers any
assets to the Company or to any of the Company's Subsidiaries
in exchange (in whole or in part) for Common Stock, for shares
of other equity securities of the Company, or for securities
exercisable for or convertible into shares of equity
securities of the Company (Common Stock or otherwise) or
otherwise obtains from the Company, with or without
consideration, any additional shares of such equity securities
or securities exercisable for or convertible into shares of
such equity securities (other than pursuant to a pro rata
distribution to all holders of Common Stock), (3) sells,
purchases, leases, exchanges, mortgages, pledges, transfers,
or otherwise acquires or disposes of assets in one transaction
or a series of transactions, to, from, or with (as the case
may be) the Company or any of the Company's Subsidiaries, on
terms or conditions less favorable in any respect than the
Company or such Subsidiary would be able to obtain in
arm's-length negotiation with an unaffiliated third party,
other than pursuant to a Section 13 Event, (4) sells,
purchases, leases, exchanges, mortgages, pledges, transfers,
or otherwise acquires or disposes of assets having an
aggregate fair market value of more than $3,000,000 in one
transaction or a series of transactions to, from, or with (as
the case may be) the Company or any of the Company's
Subsidiaries (other than incidental to the lines of business,
if any, engaged in as of the date of this Agreement between
the Company or such Subsidiary, on the one hand, and such
Acquiring Person or Adverse Person or such Associate or
Affiliate, on the other), other than pursuant to a Section 13
Event, (5) receives any compensation from the Company or any
of the Company's Subsidiaries other than compensation for
full-time employment as a regular employee or fees as a
director, in either case, at rates in accordance with the
Company's (or any such Subsidiary's) past practices, or (6)
receives the benefits, directly or indirectly (except
proportionately as a stockholder and as a result of any
requirement of law or governmental regulation), of any loans,
advances, guarantees, pledges, or other financial
assistance or any tax credits or other tax advantage provided
by the Company or any of the Company's Subsidiaries;
(B) any Person, alone or together with
its Affiliates or Associates, at any time after the Rights
Declaration Date, becomes an Acquiring Person, unless the
event causing such Person to become an Acquiring Person is a
Section 13 Event, or is an acquisition of shares of Common
Stock pursuant to a tender offer or an exchange offer for all
outstanding shares of Common Stock at a price and on terms
determined by a Requisite Majority, after receiving advice
from one or more nationally recognized investment banking
firms selected by such Requisite Majority, to be (1) fair to
all stockholders, after taking into consideration all factors
that such Requisite Majority deems relevant, including,
without limitation, the long-term prospects and value of the
Company and the prices and terms that such Requisite Majority
believes, in good faith, could reasonably be achieved if the
Company or its assets were sold on an orderly basis designed
to realize maximum value; and (2) otherwise in the best
interests of the Company and its stockholders;
(C) during such time as there is an
Acquiring Person or Adverse Person, there is any
reclassification of securities (including any reverse stock
split), recapitalization of the Company, or any merger or
consolidation of the Company into or with any of its
Subsidiaries or any other transaction or series of
transactions involving the Company or any of its Subsidiaries,
other than a Section 13 Event, or series of such events
(whether or not with or into or otherwise involving any
Acquiring Person or Adverse Person) that has the effect,
directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of
equity securities (or securities convertible into such equity
securities) of the Company or any of its Subsidiaries that is
directly or indirectly beneficially owned by an Acquiring
Person or Adverse Person or any Associate or Affiliate of any
Acquiring Person or Adverse Person; or
(D) the Board of Directors of the
Company declares any Person to be an Adverse Person;
then, promptly following the first occurrence of a Section 11(a)(ii)
Event, proper provision will be made so that each holder of a Right
(except as provided below in this SECTION 11(a)(ii) and in SECTION
7(e)) will thereafter have the right to receive, upon exercise of such
Right at the then current Purchase Price in accordance with the terms
of this Agreement, in lieu of a number of Units, such number of shares
of Common Stock of the Company as equals the result obtained by (x)
multiplying the then current Purchase Price by the then number of Units
for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event, and (y) dividing that product
(which, following such first occurrence, will thereafter constitute the
"PURCHASE PRICE" for each Right within the meaning of SECTIONS 4(a) and
7(b) and for all other purposes of
this Agreement) by 50% of the Current Market Price (determined pursuant
to SECTION 11(d)) per share of Common Stock on the date of such first
occurrence (such number of shares, the "ADJUSTMENT SHARES").
(iii) In the event that the number of
shares of Common Stock that are authorized by the Company's articles of
incorporation but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights is not sufficient to permit the
exercise in full of the Rights in accordance with SECTION 11(a)(ii),
the Company will (A) determine the value of the Adjustment Shares
issuable upon the exercise of a Right (the "CURRENT VALUE"), and (B)
with respect to each Right (subject to SECTION 7(e)), make adequate
provision to substitute for the Adjustment Shares, upon the exercise of
a Right and payment of the applicable Purchase Price, (1) cash, (2) a
reduction in the Purchase Price, (3) Common Stock or other equity
securities of the Company (including, without limitation, shares, or
units of shares, of preferred stock, such as the Preferred Stock, that
a Requisite Majority has deemed to have essentially the same value or
economic rights as shares of Common Stock (such securities being
referred to as "COMMON STOCK EQUIVALENTS")), (4) debt securities of the
Company, (5) other assets or property, or (6) any combination of the
foregoing having an aggregate value equal to the Current Value (less
the amount of any reduction in the Purchase Price), where such
aggregate value has been conclusively determined by a Requisite
Majority based upon the advice of a nationally recognized investment
banking firm selected by a Requisite Majority; provided, however, that
if the Company has not made adequate provision to deliver value
pursuant to CLAUSE (B) above within thirty (30) days following the
later of (x) the first occurrence of a Section 11(a)(ii) Event and (y)
the date on which the Company's right of redemption pursuant to SECTION
23(a) expires (the later of (x) and (y) being referred to as the
"SECTION 11(a)(ii) TRIGGER DATE"), then the Company will be obligated
to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock (to the
extent available) and then, if necessary, cash, which shares or cash
have an aggregate value equal to the Spread. For purposes of the
preceding sentence, the term "SPREAD" means the excess of (i) the
Current Value over (ii) the Purchase Price. If the Board determines in
good faith that it is likely that sufficient additional shares of
Common Stock could be authorized for issuance upon exercise in full of
the Rights, the thirty (30) day period set forth above may be extended
to the extent necessary, but not more than ninety (90) days after the
Section 11(a)(ii) Trigger Date, in order that the Company may seek
shareholder approval for the authorization of such additional shares
(such thirty (30) day period, as it may be extended, being the
"SUBSTITUTION PERIOD"). To the extent that action is to be taken
pursuant to the first or third sentences of this SECTION 11(a)(iii),
the Company (1) will provide, subject to SECTION 7(e), that such action
will apply uniformly to all outstanding Rights, and (2) may suspend the
exercisability of the Rights until the expiration of the Substitution
Period in order to seek such shareholder approval for such
authorization of additional shares or to determine the appropriate form
of distribution to be made pursuant to such first sentence and to
determine the value of such distribution. In
the event of any such suspension, the Company will issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time
asthe suspension is no longer in effect. For purposes of this SECTION
11(a)(iii), the value of each Adjustment Share will be the Current
Market Price per share of the Common Stock on the Section 11(a)(ii)
Trigger Date and the per share or per unit value of any Common Stock
Equivalent will be deemed to equal the Current Market Price per share
of the Common Stock on such date.
(b) In case the Company fixes a record date for the
issuance of rights (other than the Rights), options, or warrants to all holders
of Preferred Stock entitling them to subscribe for or purchase (for a period
expiring within forty-five (45) calendar days after such record date) Preferred
Stock (or securities having the same rights, privileges, and preferences as the
shares of Preferred Stock ("EQUIVALENT PREFERRED STOCK")) or securities
convertible into Preferred Stock or Equivalent Preferred Stock at a price per
share of Preferred Stock or per share of Equivalent Preferred Stock (or having a
conversion price per share, if a security convertible into Preferred Stock or
Equivalent Preferred Stock) less than the Current Market Price (as determined
pursuant to SECTION 11(d)) per share of Preferred Stock on such record date, the
Purchase Price to be in effect after such record date will be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which is the number of shares of Preferred Stock
outstanding on such record date, plus the number of shares of Preferred Stock
that the aggregate offering price of the total number of shares of Preferred
Stock or Equivalent Preferred Stock so to be offered (or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such Current Market Price, and the denominator of which is the number of
shares of Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock or Equivalent Preferred Stock to be offered
for subscription or purchase (or into the maximum number of shares into which
the convertible securities so to be offered are initially convertible). In the
event that the number of shares of Preferred Stock or Equivalent Preferred Stock
issuable under the terms of a convertible security, or the conversion or
exercise price of such convertible security, changes after the initial issuance
of such convertible security, an adjustment will be made to the Purchase Price
that conforms with the adjustment set forth in this SECTION 11(b). In case such
subscription price may be paid by delivery of consideration part or all of which
may be in a form other than cash, the value of such consideration will be as
conclusively determined in good faith by a Requisite Majority, whose
determination will be described in a statement filed with the Rights Agent and
will be binding on the Rights Agent and the holders of the Rights. Shares of
Preferred Stock owned by or held for the account of the Company will be deemed
not to be outstanding for the purpose of any such computation. Such adjustment
will 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
will be adjusted to be the Purchase Price that would then be in effect if such
record date had not been fixed.
(c) In case the Company fixes a record date for a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash
(other than a regular quarterly cash dividend out of the earnings or retained
earnings of the Company), assets (other than a dividend payable in Preferred
Stock, but including any dividend payable in stock other than Preferred Stock)
or subscription rights or warrants (excluding those referred to in SECTION
11(b)), the Purchase Price to be in effect after such record date will be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which is the Current Market Price
(as determined pursuant to SECTION 11(d)) per share of Preferred Stock on such
record date, less the fair market value (as conclusively determined in good
faith by a Requisite Majority, whose determination will be described in a
statement filed with the Rights Agent) of the portion of the cash, assets, or
evidences of indebtedness so to be distributed or of such subscription rights or
warrants applicable to a share of Preferred Stock and the denominator of which
is such Current Market Price (as determined pursuant to SECTION 11(d)) per share
of Preferred Stock). Such adjustments will be made successively whenever such a
record date is fixed, and in the event that such distribution is not so made,
the Purchase Price will be adjusted to be the Purchase Price that would have
been in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation under this
Agreement, other than computations made pursuant to SECTION 11(a)(iii),
the "CURRENT MARKET PRICE" per share of Common Stock on any date will
be deemed to be the average of the daily closing prices per share of
such Common Stock for the thirty (30) consecutive Trading Days (as
defined below) immediately prior to such date, and for purposes of
computations made pursuant to SECTION 11(a)(iii), the "CURRENT MARKET
PRICE" per share of Common Stock on any date will be deemed to be the
average of the daily closing prices per share of such Common Stock for
the ten (10) consecutive Trading Days immediately following such date;
provided, however, that in the event that the Current Market Price per
share of the Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (A) a dividend or
distribution on such Common Stock payable in shares of such Common
Stock or securities convertible into shares of such Common Stock (other
than the Rights), or (B) any subdivision, combination, or
reclassification of such Common Stock, and the ex-dividend date for
such dividend or distribution, or the record date for such subdivision,
combination, or reclassification has not occurred prior to the
commencement of the requisite thirty (30) Trading Day or ten (10)
Trading Day period, as set forth above, then, and in each such case,
the Current Market Price will be properly adjusted to take into account
ex-dividend trading. The closing price for each day will be the last
sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common
Stock are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the shares of Common Stock are
listed or admitted to trading or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange,
the last quoted price or, if not so quoted, the average of the high bid
and low asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use, or, if on any such date the
shares of Common Stock are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock selected
by a Requisite Majority. If on any such date no market maker is making
a market in the Common Stock, the fair value of such shares on such
date as determined in good faith by a Requisite Majority will be used.
The term "TRADING DAY" means a day on which the principal national
securities exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if the
shares of Common Stock are not listed or admitted to trading on any
national securities exchange, a Business Day. If the Common Stock is
not publicly held or not so listed or traded, Current Market Price per
share will mean the fair value per share as determined in good faith by
a Requisite Majority, the determination of which will be described in a
statement filed with the Rights Agent and will be conclusive for all
purposes.
(ii) For the purpose of any computation under
this Agreement, the "CURRENT MARKET PRICE" per share of Preferred Stock
will be determined in the same manner as set forth above for the Common
Stock in SECTION 11(d)(i) (other than the last sentence thereof). If
the Current Market Price per share of Preferred Stock cannot be
determined in the manner provided above or if the Preferred Stock is
not publicly held or listed or traded in a manner described in SECTION
11(d)(i), the Current Market Price per share of Preferred Stock will be
conclusively deemed to be an amount equal to one thousand (1,000) (as
such number may be appropriately adjusted for such events as stock
splits, stock dividends, and recapitalizations with respect to the
Common Stock occurring after the date of this Agreement) multiplied by
the Current Market Price per share of the Common Stock. If neither the
Common Stock nor the Preferred Stock is publicly held or so listed or
traded, Current Market Price per share of the Preferred Stock will mean
the fair value per share as determined in good faith by a Requisite
Majority, whose determination will be described in a statement filed
with the Rights Agent and will be conclusive for all purposes. For all
purposes of this Agreement, the Current Market Price of a Unit will be
equal to the Current Market Price of one share of Preferred Stock
divided by one thousand (1,000).
(e) Anything in this Agreement to the contrary
notwithstanding, no adjustment in the Purchase Price will be required unless
such adjustment would require an increase or decrease of at least one percent
(1%) in the Purchase Price; provided, however, that any adjustments that by
reason of this SECTION 11(e) are not required to be made will be carried forward
and taken into account in any subsequent adjustment. All calculations under this
SECTION 11 will be made to the nearest cent or to the nearest ten-thousandth of
a share of Common Stock or other share or one- millionth of a share of Preferred
Stock, as the case may be. Notwithstanding the first sentence of this SECTION
11(e), any adjustment required by this SECTION 11 will be made no later than the
earlier of (i) three (3) years from the date of the
transaction that mandates such adjustment or (ii) the Expiration Date.
(f) If, as a result of an adjustment made pursuant to
SECTION 11(a)(ii) or SECTION 13(a), the holder of any Right thereafter exercised
becomes entitled to receive any shares ofcapital stock other than Preferred
Stock, then the number of such other shares so receivable upon exercise of any
Right and the Purchase Price will be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Stock contained in SECTIONS 11(a), (b), (c), (e), (g),
(h), (i), (j), (k), (m), and (q) and the provisions of SECTIONS 7, 9, 10, 13,
and 14 with respect to the Preferred Stock will 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 under this Agreement
will evidence the right to purchase, at the adjusted Purchase Price, the number
of Units purchasable from time to time under this Agreement upon exercise of the
Rights, all subject to further adjustment as provided in this Agreement.
(h) Unless the Company has 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 will thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
Units (calculated to the nearest one-millionth) obtained by (i) multiplying (x)
the number of Units covered by a Right immediately prior to this adjustment, by
(y) the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price, and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of Units purchasable upon the exercise of a Right. Each
of the Rights outstanding after such an adjustment in the number of Rights will
be exercisable for the number of Units 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 will become that number of Rights (calculated
to the nearest one ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price. The Company
will make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, will be at least ten (10) days later than the
date of the public announcement. If Rights Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this SECTION 11(i), the
Company will, as promptly as practicable, cause to be distributed to holders of
record of Rights Certificates on such record date Rights Certificates
evidencing, subject to SECTION 14, the additional Rights to which such holders
are entitled as a result of such adjustment, or, at the
option of the Company, will cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
are entitled after such adjustment. Rights Certificates so to be distributed
will be issued, executed, and countersigned in the manner provided for in this
Agreement (and may bear, at the option of the Company, the adjusted Purchase
Price) and will be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of Units issuable upon the exercise of the Rights,
the Rights Certificates theretofore and thereafter issued may continue to
express the Purchase Price per Unit and the number of Units that were expressed
in the initial Rights Certificates issued under this Agreement.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then stated value, if any, of
the number of Units issuable upon exercise of the Rights, the Company will take
any corporate action that may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue such number of fully paid
and non-assessable Units at such adjusted Purchase Price.
(l) In any case in which this SECTION 11 requires that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of Units and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the number of Units 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 tosuch adjustment; provided,
however, that the Company will deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such additional
shares (fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this SECTION 11 to the contrary
notwithstanding, the Company will be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
SECTION 11, as and to the extent that, in its good faith judgment, the Board of
Directors of the Company determines to be advisable in order that any (i)
consolidation or subdivision of the Preferred Stock, (ii) issuance wholly for
cash of any shares of Preferred Stock at less than the current market price,
(iii) issuance wholly for cash of shares of Preferred Stock or securities that
by their terms are convertible into or exchangeable for shares of Preferred
Stock, (iv) stock dividends, or (v) issuance of rights, options, or warrants
referred to in this SECTION 11, hereafter made by the Company to holders of its
Preferred Stock will not be taxable to such stockholders.
(n) The Company covenants and agrees that it will not, at
any time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Company
in a transaction that complies with SECTION 11(o)), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a transaction that
complies with SECTION 11(o)), or (iii) sell ortransfer (or permit any Subsidiary
to sell or transfer), in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company or any of its Subsidiaries in one or more
transactions each of which complies with SECTION 11(o)), if (x) at the time of
or immediately after such consolidation, merger, sale, or transfer, there are
any rights, warrants, or other instruments or securities outstanding or
agreements in effect that could reasonably be expected to substantially diminish
or otherwise eliminate the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with, or immediately after, such consolidation, merger,
sale, or transfer, the stockholders of the Person that constitutes, or would
constitute, the "PRINCIPAL PARTY" for purposes of SECTION 13(a) has received a
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by SECTION 23 or SECTION 26,
take (or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will diminish substantially
or otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company at any time after the Rights
Declaration Date and prior to the Distribution Date (i) declares a dividend on
the outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivides the outstanding shares of Common Stock, or (iii) combines the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, will be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event will equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the numerator of
which is the total number of shares of Common Stock outstanding immediately
prior to the occurrence of the event and the denominator of which is the total
number of shares of Common Stock outstanding immediately following the
occurrence of such event.
(q) In the event that the Rights become exercisable
following a Section 11(a)(ii) Event, the Company, by action of a Requisite
Majority, may permit the Rights, subject to SECTION 7(e), to be exercised for
50% of the shares of Common Stock (or cash or other securities or assets to be
substituted for the Adjustment Shares pursuant to SECTION 11(a)(iii)) that would
otherwise be purchasable under SECTION 11(a) in consideration of the surrender
to the Company of the Rights so exercised and without other payment of the
Purchase Price. Rights exercised under this SECTION 11(q) will be deemed to have
been exercised in full and will be canceled.
(r) The failure by the Board of Directors at any time to
determine a Person to be an Adverse Person following such Person becoming a
Beneficial Owner of 10% or more of the outstanding Common Stock will not create
any implication that such Person is not or may not later be determined to be an
Adverse Person.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES.
Whenever an adjustment is made as provided in SECTION 11 or SECTION 13,
the Company will (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate, and (c) mail a
brief summary thereof to each holder of a Rights Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with SECTION 25. The Rights Agent will be fully
protected in relying on any such certificate and on any adjustment contained in
such certificate.
SECTION 13. CONSOLIDATION, MERGER, OR SALE OR TRANSFER OF ASSETS
OR EARNING POWER.
(a) In the event that, on or following the Stock
Acquisition Date, directly or indirectly, (x) the Company consolidates with, or
merges with or into, any other Person (other than a Subsidiary of the Company in
a transaction that complies with SECTION 11(o)), and the Company is not the
continuing or surviving Person of such consolidation or merger; (y) any Person
(other than aSubsidiary of the Company in a transaction that complies with
SECTION 11(o)) consolidates with, or merges with or into, the Company, and the
Company is the continuing or surviving corporation of such consolidation or
merger and, in connection with such consolidation or merger, all or part of the
outstanding shares of Common Stock of the Company changed into or exchanged for
stock or other securities of any other Person or cash or any other property; or
(z) the Company sells or otherwise transfers (or one or more of its Subsidiaries
sells or otherwise transfers), in one transaction ora series of related
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
Person or Persons (other than the Company or any Subsidiary of the Company in
one or more transactions each of which complies with SECTION 11(o)), then, and
in each such case (except as contemplated by SECTION 13(d)), proper provision
will be made so that (i) each holder of a Right, except as provided in SECTION
7(e) or SECTION 13(e), will thereafter have the right to receive, upon the
exercise of such Right at the then current Purchase Price in accordance with the
terms of this Agreement, such number of validly authorized and issued, fully
paid, non-assessable, and freely tradable shares of Common Stock of the
Principal Party (as defined below), not subject to any liens, encumbrances,
preemptive rights, rights of first refusal, or other adverse claims, as are
equal to the result obtained by (1) multiplying the then current Purchase Price
by the number of Units for which a Right is exercisable immediately prior to the
first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has
occurred prior to the first occurrence of a Section 13 Event, multiplying the
number of such Units for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and dividing that product (which,
following the first occurrence of a Section 13 Event, will be referred to as the
"PURCHASE PRICE" for each Right and for all purposes of this Agreement) by (2)
50% of the Current Market Price (determined pursuant to SECTION 11(d)(i)) per
share of the Common Stock of such Principal Party on the date of consummation of
such Section 13 Event; (ii) such Principal Party will thereafter be liable for,
and will assume, by virtue of such Section 13 Event, all the obligations and
duties of the Company pursuant to this Agreement; (iii) the term "COMPANY" will
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of SECTION 11 will apply only to such Principal
Party following the first occurrence of a Section 13 Event; (iv) such Principal
Party will take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary to assure that the
provisions of thisAgreement will thereafter be applicable, as nearly as may be,
in relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of SECTION 11(a)(ii) will be of
no effect following the first occurrence of any Section 13 Event.
(b) "PRINCIPAL PARTY" means
(i) in the case of any transaction described in
CLAUSE (x) or (y) of the first sentence of SECTION 13(a), the Person
that is the issuer of any securities into which shares of Common Stock
of the Company are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to such
merger or consolidation (including, if applicable, the Company if it is
the surviving corporation); and
(ii) in the case of any transaction described in
CLAUSE (z) of the first sentence of SECTION 13(a), the Person that is
the party receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions; provided,
however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding
twelve (12) month period registered under Section 12 of the Exchange
Act, and such Person is a direct or indirect Subsidiary of another
Person the Common Stock of which is and has been so registered,
"PRINCIPAL PARTY" will refer to such other Person; and (2) in case such
Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stocks of two or more of which are and have been so
registered, "PRINCIPAL PARTY" will refer to whichever of such Persons
is the issuer of the Common Stock having the greatest aggregate market
value.
(c) The Company will not consummate any such
consolidation, merger, sale, or transfer unless the Principal Party has a
sufficient number of authorized shares of its Common Stock that have not been
issued or reserved for issuance to permit the exercise in full of the Rights in
accordance with this SECTION 13 and unless prior thereto the Company and such
Principal Party have executed and delivered to the Rights Agent a supplemental
agreement providing for the Principal Party to assume and perform the terms set
forth in SECTIONS 13(a) and (b) and further providing that, as soon as
practicable after the date of any consolidation, merger, or transfer mentioned
in SECTION 13(a), the Principal Party will
(i) prepare and file a registration statement
under the Act with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, and will cause such
registration statement to (A) become effective as soon as practicable
after such filing and (B) remain effective (with a prospectus at all
times meeting the requirements of the Act) until the Expiration Date;
(ii) use its best efforts to qualify or register
the Rights and the securities purchasable upon exercise of the Rights
under the blue sky laws of such jurisdictions as may be necessary or
appropriate; and
(iii) will deliver to holders of the Rights
historical financial statements for the Principal Party and each of its
Affiliates that comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
The provisions of this SECTION 13 will similarly apply to
successive mergers, consolidations, and sales or other transfers. In the event
that a Section 13 Event occurs at any time after the occurrence of a Section
11(a)(ii) Event, the Rights that have not theretofore been exercised will
thereafter become exercisable in the manner described in SECTION 13(a).
(d) Notwithstanding anything in this Agreement to the
contrary, SECTION 13 will not be applicable to a transaction described in CLAUSE
(x) and (y) of the first sentence of SECTION 13(a) if (i) such transaction is
consummated with a Person or Persons that acquired shares of Common Stock of the
Company pursuant to a tender offer or exchange offer for all outstanding shares
of Common Stock that complies with the provisions of SECTION 11(a)(ii)(b) (or a
wholly owned subsidiary of any such Person or Persons), (ii) the price per share
of Common Stock offered in such transaction is not less than the price per share
of Common Stock paid to all holders of shares of Common Stock whose shares were
purchased pursuant to such tender offer or exchange offer, and (iii) the form of
consideration being offered to the remaining holders of shares of Common Stock
pursuant to such transaction is the same as the form of consideration paid
pursuant to such tender offer or exchange offer. Upon consummation of any such
transaction contemplated by this SECTION 13(D), all Rights under this Agreement
will expire.
(e) In the event that the Rights become exercisable under
SECTION 13(a), the Company, by action of a Requisite Majority, may agree with
the Principal Party that the Principal Party may permit the Rights to be
exercised for 50% of the shares of Common Stock of the Principal Party that
would otherwise be purchasable under SECTION 13(a) in consideration of the
surrender to the Principal Party, as the successor to the Company under SECTION
13(a)(ii), of the Rights so exercised and without other payment of the Purchase
Price. Rights
exercised under this SECTION 13(e) will be deemed to have been exercised in full
and canceled.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company will not be required to issue fractions
of Rights, except prior to the Distribution Date as provided in SECTION 11(p),
or to distribute Rights Certificates that evidence fractional Rights. In lieu of
such fractional Rights, there will be paid to the registered holders of the
Rights Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this SECTION 14(a), the current market
value of a whole Right will be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price of the Rights for any day will 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 a Requisite
Majority. 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 conclusively determined in
good faith by a Requisite Majority will be used.
(b) The Company will not be required to issue fractions
of shares of Preferred Stock (other than Units) upon exercise of the Rights or
to distribute certificates that evidence fractional shares of Preferred Stock
(other than Units). In lieu of fractional shares of Preferred Stock that are not
one Unit or an integral multiple of one Unit, the Company may pay to the
registered holders of Rights Certificates at the time such Rights are exercised
as provided in this Agreement an amount in cash equal to the same fraction of
the current market value of one Unit. For purposes of this SECTION 14(b), the
current market value of a Unit will be the closing price of one one-thousandth
of a share of Preferred Stock (as determined pursuant to SECTION 11(d)(ii)) for
the Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the
Company will not be required to issue fractions of shares of Common Stock upon
exercise of the Rights or to distribute certificates that evidence fractional
shares of Common Stock. In lieu of fractional shares of Common Stock, the
Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as provided in this Agreement an amount in cash equal
to the same fraction of the current market value of one share of Common Stock.
For purposes of this SECTION 14(c), the current market value of one share of
Common Stock will be the Current
Market Value of one share of Common Stock (as determined pursuant to SECTION
11(d)(i)) for the Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right, by the acceptance of the
Rights, expressly waives the right to receive any fractional Rights or any
fractional shares upon exercise of a Right, except as permitted by this SECTION
14.
SECTION 15. RIGHTS OF ACTION.
All rights of action in respect of this Agreement are vested in the
respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock); and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
of the Common Stock), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in its own behalf and for its own benefit, enforce, and may
institute and maintain any suit, action, or proceeding against the Company to
enforce, or otherwise act in respect of, its right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under this Agreement and injunctive relief against actual or
threatened violations of the obligations under this Agreement of any Person
subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHTS HOLDERS.
Every holder of a Right by accepting the Rights consents and agrees
with the Company and the Rights Agent and with every other holder of a Right
that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates
are transferable only on the registry books of the Rights Agent if surrendered
at the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer, and
with the appropriate forms and certificates fully executed;
(c) subject to SECTION 6(a) and SECTION 7(f), the Company
and the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Stock certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to the last sentence of SECTION 7(e),
will be required to be affected by
any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent will have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree, or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory, or administrative
agency or commission, or any statute, rule, regulation, or executive order
promulgated or enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; provided, however, the Company will
use its reasonable best efforts to have any such order, decree, or ruling lifted
or otherwise overturned as soon as possible.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.
No holder, as such, of any Rights Certificate will be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Stock or any other securities of the Company that may at any time be issuable on
the exercise of the Rights represented thereby, nor will anything contained in
this Agreement or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote forthe election of directors or upon any matter
submitted to stockholders, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting stockholders
(except as provided in SECTION 24), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by such Rights
Certificate have been exercised in accordance with the provisions of this
Agreement.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it under this Agreement
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties under this Agreement. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith, or willful misconduct on the
part of the Rights Agent, for anything done or omitted to be done by the Rights
Agent in connection with the acceptance and administration of this Agreement,
including, without limitation, the costs and expenses of defending against any
claim of liability.
(b) The Rights Agent will be protected and will incur no
liability for or in respect of any action taken, suffered, or omitted by it in
connection with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document
believed by it to be genuine and to be signed, executed, and, where necessary,
verified or acknowledged, by the proper Person or Persons.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT.
(a) Any Person into or with 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 is a party, or any corporation succeeding to the
corporate trust or securityholder services business of the Rights Agent or any
successor Rights Agent, will 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 to this Agreement; provided, however, that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of SECTION 21. In case at the time such successor Rights Agent
succeeds to the agency created by this Agreement, any of the Rights Certificates
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates have not been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates will have the full force provided in the Rights Certificates and in
this Agreement.
(b) In case at any time the name of the Rights Agent is
changed and at such time any of the Rights Certificates have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates have not been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name, and in all such cases such Rights Certificates will have the
full force provided in the Rights Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT.
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Rights Certificates, by their acceptance of such Rights
Certificates, will be bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such counsel will be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent deems it necessary or desirable that any fact or
matter (including, without
limitation, the identity of any Acquiring Person or Adverse Person and the
determination of Current Market Price) be proved or established by the Company
prior to taking or suffering any action under this Agreement, such fact or
matter (unless other evidence in respect of such fact or matter is specifically
prescribed in this Agreement) may be deemed to be conclusively proved and
established by a certificate delivered to the Rights Agent signed by any one of
the Chairman of the Board, the Chief Executive Officer, the Chief Operating
Officer, the President, any Vice President, the Treasurer or the Secretary of
the Company, or by any other officer of the Company certified to the Rights
Agent by any one of the foregoing officers of the Company; and such certificate
will be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent will be liable under this Agreement
only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason
of any of the statements of fact or recitals contained in this Agreement or in
the Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and will be deemed to have been made by the Company only.
(e) The Rights Agent will not be under any responsibility
in respect of the validity of this Agreement or the execution and delivery of
this Agreement (except the due execution of this Agreement by the Rights Agent)
or in respect of the validity or execution of any Rights Certificate (except its
countersignature); nor will it be responsible for any breach by the Company of
any covenant or condition contained in this Agreement or in any Rights
Certificate; nor will it be responsible for any adjustment required under the
provisions of SECTION 11 or SECTION 13, or responsible for the manner, method,
or amount of any such adjustment or the ascertaining of the existence of facts
that would require any such adjustment (except with respect to the exercise of
Rights evidenced by Rights Certificates after actual notice of any such
adjustment); nor will it by any act under this Agreement be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Common Stock or Preferred Stock to be issued pursuant to this Agreement or
any Rights Certificate or as to whether any shares of Common Stock or Preferred
Stock will, when so issued, be validly authorized or issued, fully paid, or
non-assessable.
(f) The Company agrees that it will perform, execute,
acknowledge, and deliver or cause to be performed, executed, acknowledged, and
delivered all such further and other acts, instruments, and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties under this
Agreement from any officer of the Company designated at SECTION 20(b) above, and
to apply to such officers for advice or instructions in connection with its
duties, and will not be liable for any action taken or suffered to be taken by
it in good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director,
officer, or employee of the Rights Agent may buy, sell, or deal in any of the
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, 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 in this Agreement will preclude the
Rights Agent from acting in any other capacity for the Company or for any other
Person.
(i) The Rights Agent may execute and exercise any of the
rights or powers vested by this Agreement in it or perform any duty under this
Agreement either itself or by or through its attorneys or agents, and the Rights
Agent will 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, however,
reasonable care was exercised in the selection and continued employment of such
Person.
(j) No provision of this Agreement will require the
Rights Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties under this Agreement or in the
exercise of its rights if there are reasonable grounds for believing that
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to purchase, as the case
may be, has either not been completed or indicates an affirmative response to
clause 1 or 2 of such certificate, the Rights Agent will not take any further
action with respect to such requested exercise of transfer without first
consulting with the Company.
SECTION 21. CHANGE OF RIGHTS AGENT.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty (30) days' notice in
writing mailed to the Company, and to each transfer agent of the Common Stock
and Preferred Stock, by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon thirty (30) days' notice in writing, mailed
to the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. If the Rights Agent resigns or is removed or otherwise becomes incapable
of acting, the Company will appoint a successor to the Rights Agent. If the
Company fails to make such appointment within a period of thirty (30) days after
giving notice of such removal or afterit has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Rights Certificate (who will, with such notice, submit such
holder's Rights Certificate for inspection by the Company), then any registered
holder of any Rights Certificate may apply to any court of competent
jurisdiction for
the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, will be a corporation organized and
doing business under the laws of the United States or a State of the United
States, in good standing, that is authorized under such laws to exercise
corporate trust powers and is subject to supervision or examination by federal
or state authority and that has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $100,000,000. After appointment, the
successor Rights Agent will be vested with the same powers, rights, duties, and
responsibilities as if it had been originally named Rights Agent without further
act or deed, except that the predecessor Rights Agent will deliver and transfer
to the successor Rights Agent any property at the time held by it under this
Agreement 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 will file notice of such appointment in writing with
the predecessor Rights Agent and each transfer agent of the Common Stock and the
Preferred Stock, and mail a notice of such appointment in writing to the
registered holders of the Rights Certificates. Failure to give any notice
provided for in this SECTION 21, however, or any defect in such notice, will 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 RIGHTS CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, in its discretion, issue new Rights
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities or property purchasable
under the Rights Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale of shares of
Common Stock following the Distribution Date and prior to the redemption or
expiration of the Rights, the Company (a) will, with respect to shares of Common
Stock so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, granted or awarded as of the Distribution Date, or
upon the exercise, conversion, or exchange of securities issued by the Company,
and (b) may, in any other case if deemed necessary or appropriate by the Board
of Directors of the Company, issue Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided,
however, that (y) no such Rights Certificate will be issued if, and to the
extent that, the Company is advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom any such Rights Certificate would be issued, and (z) no such
Rights Certificate will be issued if, and to the extent that, appropriate
adjustment has otherwise been made in lieu of the issuance of such Rights
Certificate.
SECTION 23. REDEMPTION AND TERMINATION.
(a) The Company may, at its option, by action of its
Board of Directors at any time prior to the earlier of (i) the Close of Business
on the tenth day following the Stock Acquisition Date (or, if the Stock
Acquisition Date has occurred prior to the Record Date, the
Close of Business on the tenth day following the Record Date), or (ii) the Final
Expiration Date, redeem all but not less than all the then outstanding Rights at
a redemption price of $0.01 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend, or similar transaction
occurring after the date of this Agreement (such redemption price being referred
to as the "REDEMPTION PRICE"); provided, however, that if, following the
occurrence of a Stock Acquisition Date and following the expiration of the right
of redemption under this SECTION 23 but prior to any Triggering Event, (x) all
Acquiring Persons and Adverse Persons have transferred or otherwise disposed of
a number of shares of Common Stock in one transaction or series of transactions
not directly or indirectly involving the Company or any of its Subsidiaries that
did not result in the occurrence of a Triggering Event or the Company (with the
approval of the Requisite Majority) has issued additional equity securities, in
either instance such that each Acquiring Person and Adverse Person is thereafter
a Beneficial Owner of less that 10% of the outstanding shares of Common Stock,
and (y) there is no other Acquiring Person or (in the good faith judgment of a
Requisite Majority) Adverse Person immediately following the occurrence of the
event described in CLAUSE (x), then the right of redemption will be reinstated
and thereafter be subject to the provisions of this SECTION 23. Notwithstanding
anything contained in this Agreement to the contrary, the Rights will not be
exercisable after the first occurrence of a Section 11(a)(ii) Event except
during the period that the Company's right of redemption under this Agreement
has expired and not been reinstated. The Company may, at its option, pay the
Redemption Price, in cash, shares of Common Stock (based on the Current Market
Price as defined in SECTION 11(d)(i), of the Common Stock at the time of
redemption) or any other form of consideration deemed appropriate by the Board
of Directors.
(b) In addition, the Board of Directors of the Company
may, at its option, at any time following the occurrence of a Section 11(a)(ii)
Event and the expiration of any period during which the holder of Rights may
exercise the rights under SECTION 11(a)(ii) but prior to any Section 13 Event
redeem all but not less than all of the then outstanding Rights at the
Redemption Price (x) in connection with any merger, consolidation or sale or
other transfer (in one transaction or in a series of related transactions) of
assets or earning power aggregating 50% or more of the earning power of the
Company and its subsidiaries (taken as a whole) in which all holders of Common
Stock are treated alike and not involving (other than as a holder of Common
Stock being treated like all other such holders) an Interested Stockholder or
(y) (aa) if and for so long as the Acquiring Person is not thereafter the
Beneficial Owner of 20% of the Common Stock, and (bb) at the time of redemption
no other Persons are Acquiring Persons.
(c) Immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights under SECTION 23(a),
evidence of which has been filed with the Rights Agent and without any further
action and without any notice, the right to exercise the Rights will terminate
and the only right thereafter of the holders of Rights will be to receive the
Redemption Price for each Right so held. In the case of a redemption permitted
only under SECTION 23(b), evidence of which shall have been filed with the
Rights Agent, the right to exercise the Rights will terminate and represent only
the right to receive the Redemption Price upon the later of ten Business Days
following the giving of such notice or the expiration of any period during which
the rights under SECTION 11(a)(ii) may be exercised. Promptly after the
action of the Board of Directors ordering the redemption of the Rights, the
Company will give notice of such redemption to the Rights Agent and the holders
of the then outstanding Rights by mailing such notice to all such holders at
each holder's last address as it appears upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the transfer
agent for the Common Stock. Any notice that is mailed in the manner in this
Agreement provided will be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made.
SECTION 24. NOTICE OF CERTAIN EVENTS.
(a) In case the Company proposes, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular quarterly cash dividend out of earnings or
retained earnings of the Company); (ii) to offer to the holders of Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights, or options; (iii) to effect any reclassification of the Preferred Stock
(other than a reclassification involving only the subdivision of outstanding
shares of Preferred Stock); (iv) to effect any consolidation or merger into or
with any other Person (other than a Subsidiary of the Company in a transaction
that complies with SECTION 11(o)), 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 transaction or a series of related transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person or Persons (other than the Company or any of its
Subsidiaries in one or more transactions each of which complies with SECTION
11(o)); or (v) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company will give to each holder of a
Rights Certificate, to the extent feasible and in accordance with SECTION 25, a
notice of such proposed action, which will specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the date
on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Preferred Stock, if any
such date is to be fixed, and such notice will be so given in the case of any
action covered by CLAUSE (i) or (ii) above at least twenty (20) days prior to
the record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed action or the
date of participation in such proposed action by the holders of the shares of
Preferred Stock, whichever is the earlier.
(b) In case any of the events set forth in SECTION
11(a)(ii) occurs, then, in any such case, (i) the Company will as soon as
practicable give to each holder of a Rights Certificate, to the extent feasible
and in accordance with SECTION 25, a notice of the occurrence of such event,
which will specify the event and the consequences of the event to holders of
Rights under SECTION 11(a)(ii), and (ii) all references in SECTION 24(a) to
Preferred Stock will be deemed thereafter to refer to Common Stock or, if
appropriate, other securities.
SECTION 25. NOTICES.
Notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the holder of any Rights Certificate to or on the Company
will 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:
Mikohn Gaming Corporation
0000 Xxxxx Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Chief Executive Officer
with a copy to:
Xxxxxxxx Xxxxxxxxxx & Xxxxx LLP
00000 Xxxx Xxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx Xxxxxxxxx, Esq.
Subject to the provisions of SECTION 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Rights Certificate to or on the Rights Agent will 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:
U.S. Stock Transfer Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: ________________
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) will be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
SECTION 26. SUPPLEMENTS AND AMENDMENTS.
Prior to the Distribution Date and subject to the penultimate sentence
of this SECTION 26, the Company and the Rights Agent will, if the Company so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing shares of Common Stock.
From and after the Distribution Date and subject to the penultimate sentence of
this SECTION 26, the Company and the Rights Agent will, if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Rights Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained in this Agreement that may be defective or
inconsistent with any other provision in this
Agreement, (iii) to shorten or lengthen any time period under this Agreement, or
(iv) to change or supplement the provisions under this Agreement in any manner
that the Company may deem necessary or desirable and that will not adversely
affect the interests of the holders of Rights Certificates (other than an
Acquiring Person or an Adverse Person or an Affiliate or Associate of an
Acquiring Person or an Adverse Person); provided, however, this Agreement may
not be supplemented or amended to lengthen, pursuant to CLAUSE (iii) of this
sentence, (A) a time period relating to when the Rights may be redeemed at such
time as the Rights are not then redeemable, or (B) any other time period unless
such lengthening is for the purpose of protecting, enhancing, or clarifying the
rights of, or the benefits to, the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Company that states that the
proposed supplement or amendment is in compliance with the terms of this SECTION
26, the Rights Agent will execute such supplement or amendment. Notwithstanding
anything contained in this Agreement to the contrary after the occurrence of a
Distribution Date, no supplement or amendment will be made that changes the
Redemption Price, the Final Expiration Date, the Purchase Price or the number of
Units for which a Right is exercisable. Prior to the Distribution Date, the
interests of the holders of Rights will be deemed coincident with the interests
of the holders of Common Stock.
SECTION 27. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent will bind and inure to the benefit of
their respective successors and assigns under this Agreement.
SECTION 28. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS,
ETC.
For all purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, will be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act as in effect on the date of this
Agreement. The Board of Directors of the Company will have the exclusive power
and authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (a) interpret the provisions of this
Agreement, and (b) make all determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation, a determination
to redeem or not redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
CLAUSE (y) below, all omissions with respect to the foregoing) that are done or
made by the Board in good faith, will (x) be final, conclusive, and binding on
the Company, the Rights Agent, the holders of the Rights, and all other Persons,
and (y) not subject the Board to any liability to the holders of the Rights.
SECTION 29. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement will be construed to give to any Person other
than the Company, the Rights Agent, and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, registered holders of the
Common Stock) any legal or equitable right, remedy, or claim under this
Agreement; and this Agreement will be for the sole and exclusive benefit of the
Company, the Rights Agent, and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, registered holders of the Common Stock).
SECTION 30. SEVERABILITY.
If any term, provision, covenant, or restriction of this Agreement is
held by a court of competent jurisdiction or other authority having jurisdiction
to be invalid, void, or unenforceable, the remainder of the terms, provisions,
covenants, and restrictions of this Agreement will remain in full force and
effect and will in no way be affected, impaired, or invalidated; provided,
however, that notwithstanding anything in this Agreement to the contrary, if any
such term, provision, covenant, or restriction is held by such court or
authority to be invalid, void, or unenforceable and the Board of Directors of
the Company determines in good faith that severing the invalid language from
this Agreement would adversely affect the purpose or effect of this Agreement or
make it impracticable or impossible to enforce or administer, the right of
redemption set forth in SECTION 23 will be reinstated and will not expire until
the Close of Business on the tenth day following the date of such determination
by the Board of Directors.
SECTION 31. GOVERNING LAW.
This Agreement, each Right, and each Rights Certificate issued under
this Agreement will be deemed to be a contract made under the laws of the State
of Nevada and for all purposes will be governed by and construed in accordance
with the laws of such State applicable to contracts made and to be performed
entirely within such State.
SECTION 32. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and each
of such counterparts will for all purposes be deemed to be an original, and all
such counterparts will together constitute but one and the same instrument.
SECTION 33. INTERPRETATION.
Descriptive headings of the several Sections of this Agreement are
inserted for convenience only and will not control or affect the meaning or
construction of any of the provisions of this Agreement. References in this
Agreement to Sections and Exhibits are references to the Sections of and
Exhibits to this Agreement unless the context requires otherwise. In this
Agreement, the word "or" is not exclusive.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
Attest: MIKOHN GAMING CORPORATION
By: /s/ Xxxxxxx X Xxxxxx, Xx.
-----------------------------
Name: Xxxxxxx X. XxXxxx, Xx.
Title: Executive Vice President
and General Counsel
Attest: U.S. STOCK TRANSFER CORPORATION
By: /s/ Xxxx Xxxx
------------------------------
Name: Xxxx Xxxx
Title: Assistant Vice President
EXHIBIT A TO RIGHTS AGREEMENT
[FORM OF]
CERTIFICATE OF DESIGNATION, PREFERENCES,
AND RIGHTS OF SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK
OF
MIKOHN GAMING CORPORATION
Pursuant to Section 78.155 of the General Corporation Law of the State
of Nevada, the undersigned officers of Mikohn Gaming Corporation (the
"COMPANY"), a corporation organized and existing under the General Corporation
Law of the State of Nevada, in accordance with the provisions of Section 78.195
thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Amended and Restated Articles of Incorporation of the Company, such Board of
Directors on June 9, 1999, adopted the resolutions set forth below creating a
series of 20,000 shares of Preferred Stock designated as "Series A Junior
Participating Preferred Stock," and
That no shares of Series A Junior Participating Preferred Stock have
heretofore been issued.
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Company in accordance with the provisions of its Amended and
Restated Articles of Incorporation (as amended and restated, the "Articles"), a
series of Preferred Stock of the Company be and it hereby is created, and that
the designation and amount thereof and the voting powers, preferences, and
relative, participating, optional, and other special rights of the shares of
such series, and the qualifications, limitations, or restrictions thereof are as
follows:
(1) DESIGNATION AND AMOUNT.
The shares of such series will be designated as "Series A Junior
Participating Preferred Stock," par value $.10 per share, and the number of
shares constituting such series will be 20,000.
(2) DIVIDENDS AND DISTRIBUTIONS.
(a) The holders of shares of Series A Junior
Participating Preferred Stock will 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 last day of March, June,
September, and December in each year (each such date being referred to 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 Junior
Participating Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (i) $0.01 or (ii) subject to the provision for
adjustment set forth below, one thousand times the aggregate per share amount of
all cash dividends, and one thousand times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions other than a
dividend payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on the
Common Stock, par value $.10 per share, of the Company (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 Junior Participating Preferred
Stock. In the event the Company at any time after June 9, 1999 (the "RIGHTS
DECLARATION DATE") (i) declares any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivides the outstanding Common Stock, or (iii) combines
the outstanding Common Stock into a smaller number of shares, then in each such
case the amount to which holders of shares of Series A Junior Participating
Preferred Stock were entitled immediately prior to such event under CLAUSE (ii)
of the preceding sentence will 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 Company will declare a dividend or distribution
on the Series A Junior Participating Preferred Stock as provided in SECTION 2(a)
above immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided that,
in the event no dividend or distribution has been declared on the Common Stock
during the period between any quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $0.01 per share on the
Series A Junior Participating Preferred Stock will nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(c) Dividends will begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares
of Series A Junior Participating Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares will 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 Junior Participating Preferred Stock entitled to receive
a quarterly dividend and before such Quarterly Dividend Payment Date, in either
of which events such dividends will begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends will not bear
interest. Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares will be allocated pro rata on a
share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Junior Participating Preferred Stock entitled
to receive payment of a dividend or distribution declared thereon, which record
date will be no more than 30 days prior to the date fixed for the payment
thereof.
(3) VOTING RIGHTS.
(a) The holders of shares of Series A Junior
Participating Preferred Stock will have the following voting rights:
Subject to the provision for adjustment set forth
below, each share of Series A Junior Participating Preferred Stock will
entitle the holder to a number of votes on all matters submitted to a
vote of the stockholders of the Company equal to one thousand times the
number of votes per share to which shares of Common Stock are entitled.
In the event the Company at any time after the Rights Declaration Date
(i) declares any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivides the outstanding Common Stock, or (iii) combines
the outstanding Common Stock into a smaller number of shares, then in
each such case the number of votes per share to which holders of shares
of Series A Junior Participating Preferred Stock were entitled
immediately prior to such event will 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 in this Certificate of
Designation, Preferences and Rights or by law, the holders of shares of Series A
Junior Participating Preferred Stock and the holders of shares of Common Stock
will vote together as one class on all matters submitted to a vote of
stockholders of the Company.
(c) (i) If at any time dividends on any Series A
Junior Participating Preferred Stock are in arrears in an amount equal
to six (6) quarterly dividends thereon, the occurrence of such
contingency will xxxx the beginning of a period (a "DEFAULT PERIOD")
that will extend until such time when all accrued and unpaid dividends
for all previous quarterly dividend periods and for the current
quarterly dividend period on all shares of Series A Junior
Participating Preferred Stock then outstanding have been declared and
paid or set apart for payment. During each Default Period, all holders
of preferred stock of the Company (the "PREFERRED STOCK") (including
holders of the Series A Junior Participating Preferred Stock) with
dividends in arrears in an amount equal to six (6) quarterly dividends
thereon, voting as a class, irrespective of series, will have the right
to elect two (2) Directors.
(ii) During any Default Period, such voting right
of the holders of voting Preferred Stock may be exercised initially at
a special meeting called pursuant to
SECTION 3(c)(iii) or at any annual meeting of stockholders, and
thereafter at annual meetings of stockholders, provided that such
voting right will not be exercised unless the holders of ten percent
(10%) in number of shares of voting Preferred Stock outstanding are
present in person or by proxy. The absence of a quorum of the holders
of Common Stock will not affect the exercise by the holders of voting
Preferred Stock of such voting right. At any meeting at which the
holders of voting Preferred Stock exercise such voting right initially
during an existing Default Period, they will have the right, voting as
a class, to elect Directors to fill such vacancies, if any, in the
Board of Directors as may then exist up to two (2) Directors or, if
such right is exercised at an annual meeting, to elect two (2)
Directors. If the number that may be so elected at any special meeting
does not amount to the required number, the holders of the voting
Preferred Stock will have the right to make such increase in the number
of Directors as is necessary to permit the election by them of the
required number. After the holders of the voting Preferred Stock have
exercised their right to elect Directors in any default period and
during the continuance of such period, the number of Directors will not
be increased or decreased except by vote of the holders of voting
Preferred Stock as provided herein or pursuant to the rights of any
equity securities ranking senior to or pari passu with the Series A
Junior Participating Preferred Stock.
(iii) Unless the holders of voting Preferred
Stock, during an existing Default Period, have previously exercised
their right to elect Directors, the Board of Directors may order, or
any stockholder or stockholders owning in the aggregate not less than
ten percent (10%) of the total number of shares of Preferred Stock
outstanding, irrespective ofseries, may request, the calling of a
special meeting of the holders of voting Preferred Stock, which meeting
will thereupon be called by the Chief Executive Officer, the Chief
Operating Officer, the President, a Vice-President, or the Secretary of
the Company. Notice of such meeting and of any annual meeting at which
holders of voting Preferred Stock are entitled to vote pursuant to this
SECTION 3(c)(iii) will be given to each holder of record of voting
Preferred Stock by mailing a copy of such notice to such holder at such
holder's last address as it appears on the books of the Company. Such
meeting will be called for a time not earlier than 20 days and not
later than 60 days after such order or request or in default of the
calling of such meeting within 60 days after such order or request,
such meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of
the total number of shares of voting Preferred Stock outstanding.
Notwithstanding the provisions of this SECTION 3(c)(iii), no such
special meeting will be called during the period within 60 days
immediately preceding the date fixed for the next annual meeting of the
stockholders.
(iv) In any Default Period, the holders of Common
Stock, and other classes of stock of the Company if applicable, will
continue to be entitled to elect the whole number of Directors until
the holders of voting Preferred Stock have exercised their right to
elect two (2) Directors voting as a class, after the exercise of which
right (x) the Directors so elected by the holders of voting Preferred
Stock will continue in office
until their successors have been elected by such holders or until the
expiration of the Default Period, and (y) any vacancy in the Board of
Directors may (except as provided in SECTION 3(c)(ii)) be filled by
vote of a majority of the remaining Directors theretofore elected by
the holders of the class of stock that elected the Director whose
office has become vacant. References in this SECTION 3(c) to Directors
elected by the holders of a particular class of stock will include
Directors elected by such Directors to fill vacancies as provided in
clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a Default
Period, (x) the right of the holders of voting Preferred Stock as a
class to elect Directors will cease, (y) the term of any Directors
elected by the holders of voting Preferred Stock as a class will
terminate, and (z) the number of Directors will be such number as may
be provided for in the articles of incorporation or by-laws
irrespective of any increase made pursuant to the provisions of SECTION
3(c)(ii) (such number being subject, however, to change thereafter in
any manner provided by law or in the articles of incorporation or
by-laws). Any vacancies in the Board of Directors effected by the
provisions of CLAUSES (y) and (z) in the preceding sentence may be
filled by a majority of the remaining Directors.
Except as set forth herein (or as otherwise required by applicable
law), holders of Series A Junior Participating Preferred Stock will have no
special voting rights and their consent will not be required (except to the
extent they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
(4) CERTAIN RESTRICTIONS.
(a) Whenever any dividends or distributions which the
Company has become obligated to pay on the Series A Junior Participating
Preferred Stock as provided in SECTION 2 are inarrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not declared, on
shares of Series A Junior Participating Preferred Stock outstanding have been
paid in full, the Company will not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution, or winding up) to the
Series A Junior Participating Preferred Stock;
(ii) declare or pay dividends on, or make any
other distributions on, any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution, or winding up) with
the Series A Junior Participating Preferred Stock, except dividends
paid ratably on the Series A Junior Participating Preferred Stock and
all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares
are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution, or
winding up) to the Series A Junior Participating Preferred Stock,
provided that the Company may at any time redeem, purchase, or
otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the Company ranking junior (either as to
dividends or upon dissolution, liquidation, or winding up) to the
Series A Junior Participating Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Junior Participating Preferred
Stock, or any shares of stock ranking on a parity with the Series A
Junior Participating Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, determines in good faith will result in
fair and equitable treatment among the respective series or classes.
(b) The Company will not permit any subsidiary of the
Company to purchase or otherwise acquire for consideration any shares of stock
of the Company unless the Company itself could, under SECTION 4(a), purchase or
otherwise acquire such shares at such time and in such manner.
(5) REACQUIRED SHARES.
Any shares of Series A Junior Participating Preferred Stock purchased
or otherwise acquired by the Company in any manner whatsoever will be retired
and canceled promptly after the acquisition thereof. All such shares will upon
their cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein, in the Articles or as otherwise
required by law.
(6) LIQUIDATION, DISSOLUTION, OR WINDING UP.
(a) Upon any liquidation (voluntary or otherwise),
dissolution, or winding up of the Company, no distribution will be made to the
holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution, or winding up) to the Series A Junior Participating
Preferred Stock unless, prior thereto, the holders of shares of Series A Junior
Participating Preferred Stock have received an amount equal to $16,000.00 per
share, plus an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment (the "SERIES A
LIQUIDATION PREFERENCE"). Following the payment of the full amount of the Series
A Liquidation Preference, no additional distributions will be made to the
holders of shares of Series A Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Common Stock have received an amount per share
(the "COMMON ADJUSTMENT") equal to the quotient obtained by dividing (i) the
Series A Liquidation Preference by (ii) 1,000 (as appropriately adjusted asset
forth in SECTION 6(c) to
reflect such events as stock splits, stock dividends, and recapitalizations with
respect to the Common Stock) (such number in CLAUSE (ii), the "ADJUSTMENT
NUMBER"). Following the payment of the full amount of the Series A Liquidation
Preference and the Common Adjustment in respect of all outstanding shares of
Series A Junior Participating Preferred Stock and Common Stock, respectively,
holders of Series A Junior Participating Preferred Stock and holders of shares
of Common Stock will receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio of the Adjustment Number to 1
with respect to such Preferred Stock and Common Stock, on a per share basis,
respectively.
(b) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other series of preferred
stock, if any, that rank on a parity with the Series A Junior Participating
Preferred Stock, then such remaining assets will be distributed ratably to the
holders of such parity shares in proportion to their respective liquidation
preferences. In the event, however, that there are not sufficient assets
available to permit payment in full of the Common Adjustment, then such
remaining assets will be distributed ratably to the holders of Common Stock.
(c) In the event the Company at any time after June 14,
1999 (i) declares any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivides the outstanding Common Stock, or (iii) combines the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event will be adjusted
by multiplying such Adjustment Number by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(7) CONSOLIDATION, MERGER, ETC.
In case the Company enters into any consolidation, merger, combination,
or other transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash, and/or any other property, then in
any such case the shares of Series A Junior Participating Preferred Stock will
at the same time be similarly exchanged or changed in an amount per share
(subject to the provision for adjustment set forth below) equal to one thousand
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 Company at any time after
June 14, 1999 (i) declares any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivides the outstanding Common Stock, or (iii) combines
the outstanding Common Stock into a smaller number of shares, then in each such
case the amount set forth in the preceding sentence with respect to the exchange
or change of shares of Series A Junior Participating Preferred Stock will 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.
(8) NO REDEMPTION.
The shares of Series A Junior Participating Preferred Stock will not be
redeemable.
(9) RANKING.
The Series A Preferred Stock shall rank junior to all other series of
the Company's preferred stock as to the payment of dividends and the
distribution of assets, unless the terms of any such series shall provide
otherwise.
(10) AMENDMENT.
The Articles will not be further amended in any manner that would
materially alter or change the powers, preferences, or special rights of the
Series A Junior Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of a majority or more of the
outstanding shares of Series A Junior Participating Preferred Stock, voting
separately as a class.
(10) FRACTIONAL SHARES.
Series A Junior Participating Preferred Stock may be issued in
fractions of a share that entitle the holder, in proportion to such holders
fractional shares, to exercise voting rights, receive dividends, participate in
distributions, and to have the benefit of all other rights of holders of Series
A Junior Participating Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this and do affirm
the foregoing as true under the penalties of perjury this __ day of June, 1999.
MIKOHN GAMING CORPORATION
By:
Name:
Title:
By:
Name:
Title:
The foregoing instrument was acknowledged before me by
____________________ and
____________________ on the ___ day of June, 1999, in
the capacities indicated.
(Notary)
EXHIBIT B TO RIGHTS AGREEMENT
FORM OF RIGHTS CERTIFICATE
Certificate No. R-___ _____ Rights
NOT EXERCISABLE AFTER JUNE 14, 2009 OR EARLIER IF REDEEMED BY THE COMPANY. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.01 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN ADVERSE
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON OR ADVERSE PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), AND ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS, MAY BECOME NULL AND VOID. [{TO BE ADDED ONLY UNDER THE
CIRCUMSTANCES SET FORTH IN SECTION 4(b) OF THE RIGHTS AGREEMENT.} THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO IS, WAS, OR BECAME AN ACQUIRING PERSON OR AN ADVERSE PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON OR AN ADVERSE PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE
AND THE RIGHTS REPRESENTED HEREBY MAY BE OR MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SUCH AGREEMENT.]
RIGHTS CERTIFICATE
MIKOHN GAMING CORPORATION
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 June 14, 1999 (as amended from time to time, the
"RIGHTS AGREEMENT"), between Mikohn Gaming Corporation, a Nevada corporation
(the "COMPANY"), and U.S. Stock Transfer Corporation (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. (Las Vegas, Nevada time) on June 14, 2009, unless the Rights evidenced
hereby shall have been previously redeemed by the Company, at the office or
offices of the Rights Agent designated for such purpose, or its successors
asRights Agent, one one-thousandth of a fully paid, non-assessable share of
Series A Junior Participating Preferred Stock (the "PREFERRED STOCK") of the
Company (each such one one-thousandth of a share is a "Unit"), at a purchase
price of $16.00 per Unit (the "PURCHASE PRICE"), upon presentation and surrender
of this Rights Certificate with the Form of Election to Purchase and related
Certificate duly executed. The number of Rights
evidenced by this Rights Certificate (and the number of Units that may be
purchased upon exercise thereof) set forth above, and the Purchase Price per
Unit set forth above, are the number and Purchase Price as of June 14, 1999
based on the Preferred Stock as constituted at such date. The Company reserves
the right to require prior to the occurrence of a Triggering Event (as such term
is defined in the Rights Agreement) that a number of Rights be exercised so that
only whole shares of Preferred Stock will be issued.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Adverse
Person or an Affiliate or Associate of any such Acquiring Person or Adverse
Person (as such terms are defined in the Rights Agreement), (ii) a transferee of
any such Acquiring Person, Adverse Person, Associate, or Affiliate, or (iii)
under certain circumstances specified in the Rights Agreement, a transferee of a
Person who, after such transfer, became an Acquiring Person or an Adverse
Person, or an Affiliate or Associate of an Acquiring Person or an Adverse
Person, such Rights will become null and void and no holder of this certificate
will have any right with respect to such Rights from and after the occurrence of
such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares ofPreferred Stock or other securities, that may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are subject
to modification and adjustment upon the happening of certain events, including
Triggering Events.
This Rights Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement, which terms, provisions, and conditions are
hereby incorporated in this Rights Certificate by reference and made a part of
this certificate and to which Rights Agreement reference is hereby made for a
full description of the rights, limitations of rights, obligations, duties, and
immunities hereunder of the Rights Agent, the Company, and the holders of the
Rights Certificates, which limitations of rights include the temporary
suspension of the exercisability of such Rights under certain circumstances set
forth in the Rights Agreement. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and at the above-mentioned office of
the Rights Agent and are also available upon written request to the Rights
Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Units or other securities as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered entitle
such holder to purchase. If this Rights Certificate is exercised in part, the
holder will be entitled to receive upon surrender of this Rights Certificate
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this
Certificate may be redeemed by the Company at its option at a redemption price
of $0.01 per Right at any time prior to the earlier of the Close of Business on
(i) the tenth day following the Stock Acquisition Date (as such time period may
be extended pursuant to the Rights Agreement), and (ii) the Final Expiration
Date. In addition, in certain circumstances the Rights may be exchanged, in
whole or in part, for shares of the Common Stock, or shares of a class or series
of preferred stock of the Company having essentially the same value or economic
rights as such shares. Immediately upon the action of the Board of Directors of
the Company authorizing any such exchange, and without any further action or any
notice, the Rights (other than Rights that are not subject to such exchange)
will terminate and the Rights will only enable holders to receive the shares
issuable upon such exchange.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions that are
integral multiples of Units, which may, at the election of the Company, be
evidenced by depositary receipts), but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Rights Certificate will be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock or of any other securities of the Company that may at any time be issuable
on the exercise hereof, nor will anything contained in the Rights Agreement or
herein be construed to confer upon the holder of this certificate, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action or, to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate have been exercised as provided in the Rights Agreement.
This Rights Certificate will not be valid or obligatory for any purpose
until it has 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: MIKOHN GAMING CORPORATION
By:
Name:
Title:
COUNTERSIGNED:
U.S. STOCK TRANSFER CORPORATION
By:
Authorized Signature
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED, _____________________ hereby sells, assigns, and
transfer unto
(Please print name and address of transferee)
this Rights Certificate, together with all right, title, and interest therein,
and does hereby irrevocably constitute and appoint _________________ attorney,
to transfer the within Rights Certificate on the books of the within-named
Company, with full power of substitution.
Dated:__________________, ____
___________________________________
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned, or transferred by or on behalf of a Person who is or was an Acquiring
Person or an Adverse Person or an Affiliate or Associate of any such Acquiring
Person or Adverse Person (as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was, or subsequently became an Acquiring
Person or an Adverse Person or an Affiliate or Associate of an Acquiring Person
or an Adverse Person.
Dated:_________________, ____ ________________________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such
holder desires to exercise Rights represented by the
Rights Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the shares of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other Person that may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
(Please insert social security or other identifying number)
(Please print name and address)
If such number of Rights are not all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights will 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 Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ]
are not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Adverse Person or an Affiliate or Associate of any such Acquiring
Person or an Adverse Person (as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or
became an Acquiring Person or Adverse Person or an Affiliate or Associate of an
Acquiring Person or an Adverse Person.
Dated: ___________, ____ _______________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or
enlargement or any change whatsoever.
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
EXHIBIT C TO RIGHTS AGREEMENT
SUMMARY OF RIGHTS TO PURCHASE SECURITIES OF
MIKOHN GAMING CORPORATION PURSUANT TO RIGHTS
AGREEMENT DATED AS OF JUNE 14, 1999
On June 9, 1999, the Board of Directors of Mikohn Gaming Corporation
(the "COMPANY") adopted a Stockholder Rights Plan, providing that one right (a
"RIGHT") will be attached to each share of common stock, par value $.10 per
share, of the Company (the "COMMON STOCK") as of June 14, 1999 (the "RECORD
DATE"). Each Right entitles the registered holder to purchase from the Company a
unit (a "UNIT") consisting of one one-thousandth of a share of Series A Junior
Participating Preferred Stock, par value $.10 per share (the "PREFERRED STOCK"),
at a Purchase Price of $16.00 per Unit (the "PURCHASE PRICE"), subject to
adjustment. The description and terms of the Rights are set forth in the Rights
Agreement (the "RIGHTS AGREEMENT"), dated as of June 14, 1999, between the
Company and U.S. Stock Transfer Corporation, as Rights Agent (the "RIGHTS
AGENT").
Initially, the Rights will attach to all Common Stock certificates
representing shares outstanding as of the Record Date, and no separate Rights
Certificate will be distributed. The Rights will separate from the Common Stock
and a Distribution Date will occur upon the earliest of (i) 10 days following a
public announcement that a person or group of affiliated or associated persons
(an "ACQUIRING PERSON") has acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the outstanding shares of Common Stock
(the "STOCK ACQUISITION DATE"), (ii) 10 business days (or such later date as the
Board may determine) following the commencement of a tender offer or exchange
offer the consummation of which would result in a person or group beneficially
owning 20% or more of such outstanding shares of Common Stock or (iii) 10
business days after the Board of Directors of the Company determines that any
Person or Persons have become the Beneficial Owner of an amount of Common Stock
that the Board of Directors determines to be substantial (which amount will in
no event be less than 10% of the shares of Common Stock outstanding) and that
(a) such Person or Persons intend to cause the Company to repurchase the Common
Stock beneficially owned by such Person or Persons or to exert pressure against
the Company to take any action or enter into any transaction or series of
transactions with the intent or the effect of providing such Person or Persons
with short-term gains or profits under circumstances in which the Board of
Directors determines that the long-term interests of the Company and its
stockholders would not be served by taking such action or entering into such
transactions or series of transactions or (b) beneficial ownership by such
Person or Persons is reasonably likely to have a material adverse effect on the
business, competitive position, prospects, or financial condition of the Company
and its subsidiaries (an "ADVERSE PERSON").
Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such Common
Stock certificates, (ii) new Common Stock certificates will contain a notation
incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any certificates for Common
Stock outstanding, even without such notation or a copy of this Summary of
Rights being attached thereto, or any other reference to the Rights Agreement,
will also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, Rights will be issued only in respect of shares of
Common Stock outstanding prior to the Distribution Date.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on June 14, 2009, unless earlier redeemed by the
Company as described below.
In the event that (i) the Company is the surviving corporation in a
merger or combination with any Acquiring Person or any Adverse Person, or any
Associate or Affiliate of any Acquiring Person or Adverse Person, and its Common
Stock remains outstanding, (ii) any Acquiring Person or any Adverse Person, or
any Associate or Affiliate of any Acquiring Person or Adverse Person, engages in
one or more "self-dealing" transactions as set forth in the Rights Agreement,
(iii) an Acquiring Person becomes the beneficial owner of 20% or more of the
then outstanding shares of Common Stock (unless such acquisition is made
pursuant to a tender or exchange offer for all outstanding shares of the Company
at a price determined by the Board of Directors to be fair and otherwise in the
best interest of the Company and its stockholders), (iv) during such time as
there is an Acquiring Person or Adverse Person an event occurs that results in
such Acquiring Person's or Adverse Person's ownership interest being increased
by more than 1% (e.g., a reverse stock split or recapitalization), or (v) the
Board of Directors determines that a person is an Adverse Person, each holder of
a Right will thereafter have the right (the "Flip-In Right") to receive, upon
exercise, Common Stock (or, in certain circumstances, cash, property, or other
securities of the Company) having a value (immediately prior to such triggering
event) equal to two times the Exercise Price of the Right. The Exercise Price is
the Purchase Price times the number of shares of Common Stock associated with
each Right (initially, one). Notwithstanding any of the foregoing, following the
occurrence of any of the events set forth in this paragraph (the "Flip-In
Events"), all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person or any
Adverse Person or an Associate or Affiliate of any Acquiring Person or Adverse
Person, will be null and void. However, Rights are not exercisable following the
occurrence of any of the Flip-In Events set forth above until such time as the
Rights are no longer redeemable by the Company as set forth below.
For example, at an exercise price of $16.00 per Right, each Right not
owned by an Acquiring Person or an Adverse Person (or by certain related
parties) following an event set forth in the preceding paragraph would entitle
its holder to purchase Common Stock with a value of $32.00 (or other
consideration, as noted above) for $16.00. Assuming that the Common Stock had a
per share value of $16.00 at such time, the holder of each valid Right would be
entitled to
purchase two shares of Common Stock for $16.00. Alternatively, the Company could
permit the holder to surrender each Right in exchange for stock or cash
equivalent to one share of Common Stock (with a value of $16.00) without the
payment of any consideration other than the surrender of the Right.
In the event that at any time following the Stock Acquisition Date, (i)
the Company is acquired in a merger, consolidation or other business combination
in which the Company is not the surviving corporation (other than a merger that
follows a tender offer that the Board of Directors has found to be fair to the
stockholders of the Company, as described above) or (ii) 50% or more of the
Company's assets or earning power is sold or transferred, each holder of a Right
(except Rights which have previously been voided as set forth above) will
thereafter have the right (a "Flip-Over Right") to receive, upon exercise of the
Right, common stock of the acquiring company having a value equal to two times
the Exercise Price of the Right. The holder of a Right will continue to have the
Flip-Over Right whether or not such holder exercises or surrenders the Flip-In
Right.
The Purchase Price payable, and the number of shares of Common Stock,
Units representing fractional shares of Preferred Stock or other securities or
property issuable upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) if
holders of the Preferred Stock are granted certain rights or warrants to
subscribe for or purchase Preferred Stock at a price, or securities convertible
into Preferred Stock with a conversion price, less than the current market price
of the Preferred Stock, or (iii) upon the distribution to holders of the
Preferred Stock of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants (other than
those referred to above).
The number of outstanding Rights and the number of Units issuable upon
exercise of each Right are also subject to adjustment in the event of a stock
split of the Common Stock or a stock dividend on the Common Stock payable in
Common Stock or subdivisions, consolidations, or combinations of the Common
Stock occurring, in any such case, prior to the Distribution Date.
With certain exceptions, no adjustments in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an adjustment in
cash will be made based on the market price of the Preferred Stock on the last
trading date prior to the date of exercise.
At any time until 10 days following the Stock Acquisition Date, the
Company may redeem the Rights in whole, but not in part, at a price of $.01 per
Right. The ten day redemption period may be extended by the Board of Directors
so long as the Rights are still redeemable. Immediately upon the action of the
Board of Directors ordering redemption of the Rights, the Rights will terminate
and the only right of the holders of Rights will be to receive the $.01
redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable as set forth above or upon the occurrence of certain events
thereafter.
Any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board of Directors in order to cure any ambiguity, to make changes which do not
adversely affect the interests of holders of Rights (excluding the interest of
any Acquiring Person or any Adverse Person), or, subject to certain limitations,
to shorten or lengthen any time period under the Rights Agreement; provided that
no amendment to adjust the time period governing redemption will be made at such
time as the Rights are not redeemable.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
in certain circumstances. Accordingly, the existence of the Rights may deter
certain acquirors from making takeover proposals or tender offers. However, the
Rights are not intended to prevent a takeover, but rather are designed to
enhance the ability of the Board of Directors to negotiate with an acquiror on
behalf of all of the shareholders to the end that all shareholders are treated
equally in proportion to their respective holdings.
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
July __, 1999. A copy of the Rights Agreement is available free of charge from
the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.
[The Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibit B the Form of
Rights Certificate, is attached as an exhibit and incorporated by reference. The
foregoing description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement.]*
*This paragraph to be included only in the Form 8-A to be filed with
the Commission.
