EXHIBIT 1
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MICROTUNE, INC.
AND
COMPUTERSHARE INVESTOR SERVICES, LLC
Rights Agent
RIGHTS AGREEMENT
Dated as of March 4, 2002
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RIGHTS AGREEMENT
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This Rights Agreement ("Rights Agreement"), is dated as of March 4,
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2002, between Microtune, Inc., a Delaware corporation (the "Company"), and
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Computershare Investor Services, LLC, a Delaware limited liability company (the
"Rights Agent").
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W I T N E S S E T H:
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WHEREAS, the Board of Directors of the Company on March 4, 2002 (i)
authorized the issuance of and declared a dividend of one right (a "Right") for
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each share of the common stock, par value $0.001 per share, of the Company (the
"Common Stock") outstanding as of the Close of Business (as such term is
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hereinafter defined) on March 16, 2002 (the "Record Date"), each Right
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representing the right to purchase one one-thousandth of a share of the Series A
Preferred Stock, par value $0.001 per share, of the Company (the "Series A
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Preferred Stock") having the rights, powers and preferences as set forth in the
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form of Certificate of Designation attached hereto as Exhibit A, upon the terms
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and subject to the conditions hereinafter set forth, and (ii) further authorized
the issuance of one Right with respect to each share of Common Stock of the
Company that shall become outstanding between March 16, 2002 , and the
Distribution Date (as such term is hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties agree as follows:
1. Certain Definitions. For purposes of this Agreement the
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following terms shall have the meanings indicated:
(a) "Acquiring Person shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term
is hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter
defined) of fifteen percent (15%) or more of the outstanding Common Stock,
without the prior approval of the Board of Directors; provided, however, that
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in no event shall a Person who or which, together with all Affiliates and
Associates of such Person, is the Beneficial Owner of less than fifteen percent
(15%) of the Company's outstanding shares of Common Stock, become an Acquiring
Person solely as a result of a reduction of the number of shares of outstanding
Common Stock, including repurchases of outstanding shares of Common Stock by
the Company, which reduction increases the percentage of outstanding shares of
Common Stock beneficially owned by such Person, provided, however, that if a
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Person shall become the Beneficial Owner of fifteen percent (15%)or more of the
Company's outstanding shares of Common Stock then outstanding solely by reason
of a reduction of the number of shares of outstanding Common Stock, and shall
thereafter become the Beneficial Owner of any additional shares of Common Stock
of the Company, then such Person shall be deemed to be an "Acquiring Person"
unless upon the consummation of the acquisition of such additional shares of
Common Stock such person does not own fifteen percent (15%) or more of the
shares of Common Stock then outstanding, and provided further, that an
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Acquiring Person shall not include an Exempt Person (as such term is
hereinafter defined). Notwithstanding the foregoing, if the Board of Directors
of the Company determines in good faith that a Person who would otherwise be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
paragraph (a), has become such inadvertently (including, without limitation,
because (i) such Person was unaware that it beneficially owned a percentage of
Common Stock that would otherwise cause such Person to be an "Acquiring Person"
or (ii) such Person was aware of the extent of its Beneficial Ownership but had
no actual knowledge of the consequences of such Beneficial Ownership under this
Agreement) and without any intention of changing or influencing control of the
Company, and
such Person divests as promptly as practicable a sufficient number of shares of
Common Stock so that such Person would no longer be an "Acquiring Person," as
defined pursuant to the foregoing provisions of this paragraph (a), then such
Person shall not be deemed to be or to have become an "Acquiring Person" for any
purposes of this Agreement.
(b) "Affiliate" and "Associate shall have the respective
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meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of any
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securities
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has (A) the right to acquire
(whether such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities), whether or not in
writing, or upon the exercise of conversion rights, exchange rights, rights
(other than the Rights), warrants or options, or otherwise; provided, however,
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that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," securities tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange; or (B) the right to
vote 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, or any
comparable or successor rule), including pursuant to any agreement, arrangement
or understanding (whether or not in writing); provided, however, that a Person
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shall not be deemed the "Beneficial Owner" of, or to "beneficially own," any
securities if the agreement, arrangement or understanding to vote such security
(1) 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 rules and regulations of the Exchange Act and (2) is not also
then reportable by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person 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 as described in the proviso to clause (B) of subparagraph (ii) of this
Section 1(c) or disposing of any securities of the Company; provided, however,
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that no Person who is an officer, director or employee of an Exempt Person
shall be deemed, solely by reason of such Person's status or authority as such,
to be the "Beneficial Owner" of, to have "Beneficial Ownership" of or to
"beneficially own" any securities that are "beneficially owned" (as defined in
this Section 1(c)), including, without limitation, in a fiduciary capacity, by
an Exempt Person or by any other such officer, director or employee of an
Exempt Person.
For all purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act as in effect on the date hereof.
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(d) "Business Day" shall mean any day other than a Saturday,
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Sunday, or a day on which the New York Stock Exchange or banking institutions
in the State of California or Illinois are authorized or obligated by law or
executive order to close.
(e) "Close of Business" on any given date shall mean 5:00
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P.M., Dallas, Texas time, on such date; provided, however, that if such date is
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not a Business Day it shall mean 5:00 P.M., Dallas, Texas time, on the next
succeeding Business Day.
(f) "Common Stock" when used with reference to the Company
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shall mean the common stock, par value $0.001 per share, of the Company.
"Common Stock" when used with reference to any Person other than the Company
which shall be organized in corporate form shall mean the capital stock or
other equity security with the greatest per share voting power of such Person
or, if such Person is a Subsidiary of or is controlled by another Person, the
Person which ultimately controls such first-mentioned Person. "Common Stock"
when used with reference to any Person other than the Company which shall not
be organized in corporate form shall mean units of beneficial interest which
shall represent the right to participate in profits, losses, deductions and
credits of such Person and which shall be entitled to exercise the greatest
voting power per unit of such Person.
(g) "Common Stock Equivalents" shall have the meaning set
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forth in Section 11(a)(iii) hereof.
(h) "Company" shall have the meaning set forth in the
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preamble hereto.
(i) "Current Market Price" shall have the meaning set forth
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in Section 11(d) hereof.
(j) "Current Value" shall have the meaning set forth in
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Section 11(a)(iii) hereof.
(k) "Distribution Date" shall have the meaning set forth in
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Section 3(a) hereof.
(l) "Exchange Act" shall have the meaning set forth in
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Section 1 hereof.
(m) "Exempt Person" shall mean the Company or any Subsidiary
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of the Company, including, without limitation, in its fiduciary capacity, any
employee benefit plan or employee or director stock plan of the Company or of
any Subsidiary of the Company, or any Person, organized, appointed, established
or holding Common Stock for or pursuant to the terms of any such plan or any
Person funding other employee benefits for employees of the Company or any
Subsidiary of the Company.
(n) "Final Expiration Date" shall have the meaning set forth
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in Section 7(a) hereof.
(o) "Flip-In Event" shall mean any event described in
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Section 11(a)(ii)(A), 11(a)(ii)(B) or 11(a)(ii)(C) hereof.
(p) "Flip-In Exercise Payment" shall have the meaning set
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forth in Section 11(a)(ii) hereof.
(q) "Flip-In Trigger Date" shall have the meaning set forth
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in Section 11(a)(iii) hereof.
(r) "Flip-Over Event" shall mean any event described in
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clause (x), (y) or (z) of Section 13(a) hereof.
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(s) "Flip-Over Exercise Payment" shall have the meaning set
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forth in Section 13(a) hereof.
(t) "Indemnified Parties" shall have the meaning set forth in
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Section 18(a) hereof.
(u) "NASDAQ" shall have the meaning set forth in Section
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9(b) hereof.
(v) "Person" shall mean any individual, firm, corporation,
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partnership, trust or other entity.
(w) "Preferred Stock" shall mean the Series A Preferred Stock
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having the rights, powers and preferences set forth in Exhibit A hereto, and,
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to the extent that there is not a sufficient number of shares of Series A
Preferred Stock authorized to permit the full exercise of the Rights, any other
series of Preferred Stock, par value $0.001 per share, of the Company
designated for such purpose containing terms substantially similar to the terms
of the Series A Preferred Stock.
(x) "Preferred Stock Equivalent" shall have the meaning set
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forth in Section 11(b) hereof.
(y) "Principal Party" shall have the meaning set forth in
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Section 13(b) hereof.
(z) "Purchase Price" shall have the meaning set forth in
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Section 4(a) hereof.
(aa) "Record Date" shall have the meaning set forth in the
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Recitals within this Agreement.
(bb) "Redemption Date" shall have the meaning set forth in
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Section 7(a) hereof.
(cc) "Redemption Price" shall have the meaning set forth in
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Section 23(a) hereof.
(dd) "Right Certificate" shall have the meaning set forth in
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Section 3(a) hereof.
(ee) "Securities Act" shall mean the Securities Act of 1933,
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as amended.
(ff) "Stock Acquisition Date" shall mean the first date of
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public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such or such earlier date as a majority of the directors
shall become aware of the existence of an Acquiring Person.
(gg) "Substitution Period" shall have the meaning set forth in
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Section 11(a)(iii) hereof.
(hh) "Subsidiary" of a Person shall mean any corporation or
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other entity of which securities or other ownership interests having ordinary
voting power sufficient to elect a majority of the board of directors or other
persons performing similar functions are beneficially owned, directly or
indirectly, by such Person and any corporation or other entity that is
otherwise controlled by such Person.
(ii) "Summary of Rights" shall have the meaning set forth in
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Section 3(b) hereof.
(jj) "Trading Day" shall have the meaning set forth in Section
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11(d) hereof.
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(kk) "Triggering Event" shall mean any event described in
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Section 11(a)(ii)(A), 11(a)(ii)(B) or 11(a)(ii)(C) or Section 13 hereof.
(ll) "Voting Power" shall mean the voting power of all
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securities of the Company then outstanding and generally entitled to vote for
the election of directors of the Company.
Any determination required by the definitions contained in this Section
1 shall be made by the Board of Directors of the Company in its good faith
judgment, which determination shall be binding on the Rights Agent and the
holders of the Rights.
2. Appointment of Rights Agent. The Company hereby appoints the
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Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable upon ten (10) days' prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise and shall in no event
be liable for the acts or omissions of any such Co-Rights Agent(s). In the
event the Company appoints one or more Co-Rights Agents, the respective duties
of the Rights Agents and any Co-Rights Agents shall be as the Company shall
determine.
3. Issuance of Right Certificates.
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(a) Until the earlier of (i) the Stock Acquisition Date (or,
if the Stock Acquisition Date occurs before the Record Date, the Close of
Business on the Record Date) or (ii) the tenth business day (or such later date
as may be determined by action of the Board of Directors prior to such time as
any Person becomes an Acquiring Person) after the date of the commencement by
any Person (other than an Exempt Person) of, or of the first public
announcement of the intent of any Person (other than an Exempt Person) to
commence (which intention to commence remains in effect for five (5) business
days after such announcement), a tender or exchange offer upon the successful
consummation of which such Person, together with its Affiliates and Associates,
would be the Beneficial Owner of fifteen percent (15%) or more of the
outstanding Common Stock (irrespective of whether any shares are actually
purchased pursuant to any such offer) (including any such date which is after
the date of this Agreement and prior to the issuance of the Rights; the earlier
of such dates being herein referred to as the "Distribution Date"), (x) the
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Rights will be evidenced (subject to the provisions of Section 3(c) hereof) by
the certificates for the Common Stock registered in the names of the holders of
the Common Stock and not by separate Right Certificates, and (y) each Right
will be transferable only in connection with the transfer of a share (subject
to adjustment as hereinafter provided) of Common Stock. As soon as practicable
after the Distribution Date, the Rights Agent will mail, by first-class,
postage prepaid mail, to each record holder of the Common Stock as of the Close
of Business on the Distribution Date, as shown by the records of the Company,
to the address of such holder shown on such records, a Right certificate in
substantially the form of Exhibit B hereto (a "Right Certificate") evidencing
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one Right for each share of Common Stock so held. As of and after the
Distribution Date the Rights will be evidenced solely by such Right
Certificates.
(b) On the Record Date, or as soon as practicable
thereafter, the Company will send a copy of a Summary of Rights to Purchase
Preferred Stock, substantially in the form attached hereto as Exhibit C (a
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"Summary of Rights"), by first-class, postage prepaid mail, to each record
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holder of Common Stock as of the Close of Business on the Record Date, at the
address of such holder shown on the records of the Company.
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(c) Rights shall be issued in respect of all shares of Common
Stock that are issued (either as an original issuance or from the Company's
treasury) after the Record Date prior to the earlier of the Distribution Date
or the Expiration Date. With respect to certificates representing such shares
of Common Stock, the Rights will be evidenced by such certificates for Common
Stock registered in the names of the holders thereof together with the Summary
of Rights. Until the Distribution Date (or, if earlier, the Expiration Date),
the surrender for transfer of any certificate for Common Stock outstanding on
the Record Date (with or without a copy of the Summary of Rights attached
thereto), shall also constitute the surrender for transfer of the Rights
associated with the Common Stock represented thereby.
(d) Certificates issued for Common Stock (including, without
limitation, certificates issued upon transfer or exchange of Common Stock)
after the Record Date but prior to the earlier of the Distribution Date or the
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between Microtune,
Inc., ("Microtune") and ComputerShare Investor Services, LLC as Rights
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Agent, dated as of March 4, 2002, as the same may be amended from time
to time (the "Rights Agreement"), the terms of which are incorporated
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herein by reference and a copy of which is on file at the principal
executive office of Microtune. 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. Microtune will mail to the holder of this certificate a
copy of the Rights Agreement without charge after receipt by it of a
written request therefor. Under certain circumstances as provided in
the Rights Agreement, Rights issued to, beneficially owned by or
transferred to any person who is or becomes an Acquiring Person (as
defined in the Rights Agreement) or an Associate or Affiliate (as
defined in the Rights Agreement) thereof and certain transferees
thereof will be null and void and will no longer be transferable.
With respect to such certificates containing the foregoing legend, the Rights
associated with the Common Stock represented by such certificates shall, until
the Distribution Date, be evidenced by such certificates alone, and registered
holders of Common Stock shall also be the registered holders of the associated
Rights, and the surrender for transfer of any such certificate shall also
constitute the surrender for transfer of the Rights associated with the Common
Stock represented thereby. In the event that the Company purchases or acquires
any shares of Common Stock after the Record Date but prior to the earlier of the
Distribution Date, the Redemption Date or the Expiration Date, any Rights
associated with such shares of Common Stock shall be deemed canceled and retired
so that the Company shall not be entitled to exercise any Rights associated with
the shares of Common Stock no longer outstanding.
Notwithstanding this paragraph (d), the omission of a legend shall not
affect the enforceability of any part of this Agreement or the rights of any
holder of the Rights.
4. Form of Right Certificates.
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(a) The Right Certificates (and the forms of election to
purchase shares and of assignment to be printed on the reverse thereof), when,
as and if issued, shall be substantially in the form set forth in Exhibit B
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hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Rights
Agreement, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of
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Sections 11, 13 and 22 hereof, the Right Certificates evidencing the Rights
issued on the Record Date whenever such certificates are issued, shall be dated
as of the Record Date and the Right Certificates evidencing Rights to holders of
record of Common Stock issued after the Record Date shall be dated as of the
Record Date but shall also be dated to reflect the date of issuance of such
Right Certificate. On their face, Right Certificates shall entitle the holders
thereof to purchase, for each Right, one one-thousandth of a share of Preferred
Stock, or other securities or property as provided herein, as the same may from
time to time be adjusted as provided herein, at the price per one one-thousandth
of a share of Preferred Stock of $115.00 as the same may from time to time be
adjusted as provided herein (the "Purchase Price").
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(b) Notwithstanding any other provision of this Rights
Agreement, any Right Certificate that represents Rights that are or were at any
time on or after the earlier of the Stock Acquisition Date or the Distribution
Date beneficially owned by an Acquiring Person or any Affiliate or Associate
thereof (or any transferee of such Rights) shall have impressed on, printed on,
written on or otherwise affixed to it (if the Company or the Rights Agent has
knowledge that such Person is an Acquiring Person or an Associate or Affiliate
thereof or transferee of such Persons or a nominee of any of the foregoing) the
following legend:
The beneficial owner of the Rights represented by this Right
Certificate is an Acquiring Person or an Affiliate or Associate (as
defined in the Rights Agreement) of an Acquiring Person or a subsequent
holder of such Right Certificates beneficially owned by such Persons.
Accordingly, this Right Certificate and the Rights represented hereby
are null and void and will no longer be transferable as provided in the
Rights Agreement.
The provisions of Section 11(a)(ii) and Section 24 of this Rights Agreement
shall be operative whether or not the foregoing legend is contained on any such
Right Certificates.
5. Countersignature and Registration.
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(a) The Right Certificates shall be executed on behalf of the
Company by its Chief Executive Officer, its President or any Vice President,
either manually or by facsimile signature, and have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile
signature. The Right Certificates shall be countersigned, either manually or by
facsimile, by the Rights Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of
the Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights
Agent, issued and delivered with the same force and effect as though the person
who signed such Right Certificates had not ceased to be such officer of the
Company; and any Right Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Right Certificate,
shall be a proper officer of the Company to sign such Right Certificate,
although at the date of the execution of this Rights Agreement any such person
was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at one of its offices designated for such purposes,
records for registration and transfer of the Right Certificates issued
hereunder. Such records shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights evidenced on its face
by each of the Right Certificates, the date of each of the Right Certificates
and the certificate numbers for each of the Right Certificates.
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6. Transfer, Split Up, Combination and Exchange of Right
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Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
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(a) Subject to the provisions of Sections 7(e), 11(a)(ii) and
14 hereof, at any time after the Close of Business on the Distribution Date and
at or prior to the Close of Business on the Expiration Date, any Right
Certificate or Certificates (other than Right Certificates representing Rights
that have become void pursuant to Section 11(a)(ii) hereof or that have been
exchanged pursuant to Section 24 hereof) may be (i) transferred or (ii) split
up, combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of shares of
Preferred Stock or other securities as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer any Right Certificate shall surrender the Right
Certificate at the office of the Rights Agent designated for such purposes with
the form of assignment on the reverse side thereof duly endorsed (or enclose
with such Right Certificate a written instrument of transfer in form
satisfactory to the Company and the Rights Agent), duly executed by the
registered holder thereof or his attorney duly authorized in writing, and with
such signature guaranteed by a member of a securities approved medallion
program. Any registered holder desiring to split up, combine or exchange any
Right Certificate shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
split up, combined or exchanged at the principal office of the Rights Agent.
Thereupon the Rights Agent shall, subject to Sections 4(b), 7(e), 11 and 14
hereof, countersign (by manual or facsimile signature) and deliver to the
person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
(b) Subject to the provisions of Section 11(a)(ii) hereof,
upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, if requested by the Company,
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will execute and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
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(a) Subject to Section 11(a)(ii) hereof, the Rights shall
become exercisable, and may be exercised to purchase Preferred Stock, except as
otherwise provided herein, in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed (with such
signature duly guaranteed), to the Rights Agent at 0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000, Attn: Xxxx Xxxxxx, together with payment of the Purchase
Price with respect to each Right exercised, subject to adjustment as
hereinafter provided, at or prior to the Close of Business on the earlier of
(i) March 3, 2012 (the "Final Expiration Date"), (ii) the time at which the
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Rights are redeemed as provided in Section 23 hereof (such date being herein
referred to as the "Redemption Date") or (iii) the time at which all such
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Rights are exchanged as provided in Section 24 hereof (the earliest of (i),
(ii) and (iii) being herein referred to as the "Expiration Date").
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(b) The Purchase Price and the number of shares of Preferred
Stock or other securities or consideration to be acquired upon exercise of a
Right shall be subject to adjustment from
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time to time as provided in Sections 11 and 13 hereof. The Purchase Price shall
be payable in lawful money of the United States of America, in accordance with
Section 7(c) hereof.
(c) Except as provided in Section 11(a)(ii) hereof, upon
receipt of a Right Certificate with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price (as such amount may be
reduced pursuant to Section 11(a)(iii) hereof) or so much thereof as is
necessary for the shares to be purchased and an amount equal to any applicable
transfer tax, by cash, certified check or official bank check payable to the
order of the Company or the Rights Agent, the Rights Agent shall, subject to
Section 20(k), thereupon promptly (i) requisition from any transfer agent of
the Preferred Stock (or make available if the Rights Agent is the transfer
agent) certificates for the number of shares of Preferred Stock so elected to
be purchased and the Company will comply and hereby authorizes and directs such
transfer agent to comply with all such requests, (ii) requisition from the
Company the amount of cash to be paid in lieu of issuance of fractional shares
in accordance with Section 14(b) hereof, and (iii) promptly after receipt of
such Preferred Stock certificates cause the same to be delivered to or upon the
order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder, and, when appropriate, after
receipt of the cash requisitioned from the Company, promptly deliver such cash
to or upon the order of the registered holder of such Right Certificate. In the
event of a purchase of securities, other than Preferred Stock, pursuant to
Section 11(a) or Section 13 hereof, the Rights Agent shall promptly take the
appropriate actions corresponding to the foregoing clauses (i) through (iii).
In the event that the Company is obligated to issue other securities of the
Company, pay cash and/or distribute other property pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate.
(d) Except as otherwise provided herein, in case the
registered holder of any Right Certificate shall exercise less than all the
Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent
to the Rights remaining unexercised shall be issued by the Rights Agent to the
registered holder of such Right Certificate or to his duly authorized assigns,
subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the
form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall reasonably request.
8. Cancellation and Destruction of Right Certificates. All Right
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Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
9
9. Reservation and Availability of Shares of Preferred Stock.
---------------------------------------------------------
(a) The Company covenants and agrees that at all times it
will cause to be reserved and kept available, out of and to the extent of its
authorized and unissued shares of Preferred Stock not reserved for another
purpose (and, following the occurrence of a Triggering Event, other securities)
or held in its treasury, the number of shares of Preferred Stock (and,
following the occurrence of a Triggering Event, other securities) that, as
provided in this Agreement, including Section 11(a)(iii) hereof, will be
sufficient to permit the exercise in full of all outstanding Rights, provided,
--------
however, that the Company shall not be required to reserve and keep available
-------
shares of Preferred Stock or other securities sufficient to permit the exercise
in full of all outstanding Rights pursuant to the adjustments set forth in
Section 11(a)(ii), Section 11(a)(iii) or Section 13 hereof unless, and only to
the extent that, the Rights become exercisable pursuant to such adjustments.
(b) The Company shall (i) use its best efforts to cause, from
and after such time as the Rights become exercisable, the Rights and all shares
of Preferred Stock (and following the occurrence of a Triggering Event, other
securities) issued or reserved for issuance upon exercise thereof to be
reported by the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ") or such other system then in use, and if the
------
Preferred Stock shall become listed on any national securities exchange, to
cause, from and after such time as the Rights become exercisable, the Rights
and all shares of Preferred Stock (and, following the occurrence of a
Triggering Event, other securities) issued or reserved for issuance upon
exercise thereof to be listed on such exchange upon official notice of issuance
upon such exercise and (ii) if then necessary, to permit the offer and issuance
of such shares of Preferred Stock (and, following the occurrence of a
Triggering Event, other securities), register and qualify such shares of
Preferred Stock (and, following the occurrence of a Triggering Event, other
securities) under the Securities Act and any applicable state securities or
"blue sky" laws (to the extent exemptions therefrom are not available), cause
such registration statement and qualifications to become effective as soon as
possible after such filing and keep such registration and qualifications
effective until the Expiration Date of the Rights. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days, the
exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained and until a registration
statement under the Securities Act (if required) shall have been declared
effective.
(c) 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, other securities)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price in
respect thereof), be duly and validly authorized and issued and fully paid and
nonassessable shares in accordance with applicable law.
(d) The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer taxes which may
be payable in respect of the issuance or delivery of the Right Certificates or
of any shares of Preferred Stock (or other securities, as the case may be) upon
the exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Right Certificates to a Person other than, or the issuance or delivery of
certificates for Preferred Stock (or other securities, as the case may be) upon
exercise of Rights in a name other than that of, the registered holder of the
Right Certificate, and
10
the Company shall not be required to issue or deliver a Right Certificate or
certificate for Preferred Stock (or other securities, as the case may be) to a
person other than such registered holder until any such tax shall have been
paid (any such tax being payable by the holder of such Right Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
10. Preferred Stock Record Date. Each Person in whose name any
---------------------------
certificate for shares of Preferred Stock (or other securities, as the case may
be) is issued upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of the shares of Preferred Stock (or other
securities, as the case may be) represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate, as such, shall not be
entitled to any rights of a stockholder of the Company with respect to the
shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or
to exercise any preemptive rights, if any, and shall not be entitled to receive
any notice of any proceedings of the Company, except as provided herein.
11. Adjustments to Number and Kind of Shares, Number of Rights or
-------------------------------------------------------------
Purchase Price. The number and kind of shares subject to purchase upon the
--------------
exercise of each Right, the number of Rights outstanding and the Purchase Price
are subject to adjustment from time to time as follows:
(a) (i) In the event the Company shall at any time after
the date of this Rights Agreement (A) declare or pay any dividend on Preferred
Stock payable in shares of Preferred Stock, (B) subdivide or split the
outstanding shares of Preferred Stock into a greater number of shares, (C)
combine or consolidate the outstanding shares of Preferred Stock into a smaller
number of shares or effect a reverse split of the outstanding shares of
Preferred Stock, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in this
Section 11(a), the Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of Preferred Stock or
capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive, upon payment of the Purchase Price then in
effect, the aggregate number and kind of shares of capital stock or other
securities, which, if such Right had been exercised immediately prior to such
date, the holder thereof would have owned upon such exercise and been entitled
to receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and shall be
made prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 24, in the event
(A) any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after the date of this
Agreement, directly or indirectly, (1) shall consolidate with or merge with and
into the Company or any of its Subsidiaries or otherwise combine with the
Company or any of its Subsidiaries and the Company or such Subsidiary shall be
the continuing or surviving corporation of such consolidation, merger or
combination and the Common Stock of the Company shall remain outstanding and no
shares thereof shall be changed into or exchanged for stock or other securities
of the Company or of any other Person or cash or any other property, or (2)
shall, in one or more transactions, other than in connection with the exercise
of a Right or Rights and other than in connection with the exercise or
conversion of securities exercisable for or convertible into securities of
11
the Company or of any Subsidiary of the Company, transfer any assets or
property to the Company or any of its Subsidiaries in exchange (in whole or in
part) for any shares of any class of capital stock of the Company or any of its
Subsidiaries or any securities exercisable for or convertible into shares of
any class of capital stock of the Company or any of its Subsidiaries, or
otherwise obtain from the Company or any of its Subsidiaries, with or without
consideration, any additional shares of any class of capital stock of the
Company or any of its Subsidiaries or any securities exercisable for or
convertible into shares of any class of capital stock of the Company or any of
its Subsidiaries (other than as part of a pro rata offer or distribution by the
Company or such Subsidiary to all holders of such shares), or (3) shall sell,
purchase, lease, exchange, mortgage, pledge, transfer or otherwise acquire
(other than as a pro rata dividend) or dispose, to, from or with, as the case
may be, in one transaction or a series of transactions, the Company or any of
its Subsidiaries, assets (including securities) on terms and conditions less
favorable to the Company or such Subsidiary than the Company or such Subsidiary
would be able to obtain in arm's-length negotiation with an unaffiliated third
party, or (4) shall receive any compensation from the Company or any of its
Subsidiaries for services other than compensation for employment as a regular
or part-time employee, or fees for serving as a director, at rates in
accordance with the Company's (or its Subsidiary's) past practices, or (5)
shall receive the benefit, directly or indirectly (except proportionately as a
stockholder), of any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or tax advantage provided by the Company or any
of its Subsidiaries, or (6) shall engage in any transaction with the Company
(or any of its Subsidiaries) involving the sale, license, transfer or grant of
any right in, or disclosure of, any patents, copyrights, trade secrets,
trademarks, know-how or any other intellectual or industrial property rights
recognized under any country's intellectual property laws which the Company
(including its Subsidiaries) owns or has the right to use on terms and
conditions not approved by the Board; or
(B) any Person, alone or together with its
Affiliates and Associates, shall become an Acquiring Person; or
(C) during such time as there is an Acquiring
Person, there shall be any reclassification of securities (including any
reverse stock split), or any recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or any other
transaction or series of transactions involving the Company or any of its
Subsidiaries (whether or not with or into or otherwise involving an Acquiring
Person or any Affiliate or Associate of such Acquiring Person) which has the
effect, directly or indirectly, of increasing by more than one percent (1%) the
proportionate share of the outstanding shares of any class of equity securities
of the Company or any of its Subsidiaries, or securities exercisable for or
convertible into equity securities of the Company or any of its Subsidiaries,
which is directly or indirectly beneficially owned by any Acquiring Person or
any Affiliate or Associate of any Acquiring Person (any of (A), (B) or (C)
being referred to herein as a "Flip-In Event").
-------------
Then upon the first occurrence of such Flip-In Event (i) the Purchase
Price shall be adjusted to be the Purchase Price in effect immediately prior to
the Flip-In Event multiplied by the number of one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to such
Flip-In Event, whether or not such Right was then exercisable, and (ii) each
holder of a Right, except as otherwise provided in this Section 11(a)(ii) and
Section 11(a)(iii) hereof, shall thereafter have the right to receive, upon
exercise thereof at a price equal to the Purchase Price (as so adjusted), in
accordance with the terms of this Agreement and in lieu of shares of Preferred
Stock, such number of shares of Common Stock as shall equal the result obtained
by dividing the Purchase Price (as so adjusted) by fifty percent (50%) of the
Current Market Price per share of the Common Stock (determined pursuant to
Section 11(d) hereof) on the date of such Flip-In Event; provided, however, that
-------- -------
the Purchase Price (as so adjusted) and the number of shares of Common Stock so
receivable upon the exercise of a Right shall, following the
12
Flip-In Event, be subject to further adjustment as appropriate in accordance
with Section 11(f) hereof. Notwithstanding anything in this Agreement to the
contrary, however, from and after the Flip-In Event, any Rights that are
beneficially owned by (x) any Acquiring Person (or any Affiliate or Associate
of any Acquiring Person), (y) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who becomes a transferee after the Flip-In Event or (z)
a transferee of any Acquiring Person (or any such Affiliate or Associate) who
became a transferee prior to or concurrently with the Flip-In Event pursuant to
either (I) a transfer from the Acquiring Person to holders of its equity
securities or to any Person with whom it has any continuing agreement,
arrangement or understanding, whether written or otherwise, regarding the
transferred Rights or (II) a transfer which the Board of Directors has
determined is part of a plan, arrangement or understanding, whether written or
otherwise, which has the purpose or effect of avoiding the provisions of this
paragraph, and subsequent transferees of such Persons, shall be void without
any further action and any holder of such Rights shall thereafter have no
rights whatsoever with respect to such Rights under any provision of this
Agreement. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 11(a)(ii) are complied with, but shall have no
liability to any holder of Right Certificates or other Person as a result of
its failure to make any determinations with respect to an Acquiring Person or
its Affiliates, Associates or transferees hereunder. From and after the Flip-In
Event, no Right Certificate shall be issued pursuant to Section 3 or Section 6
hereof that represents Rights that are or have become void pursuant to the
provisions of this paragraph, and any Right Certificate delivered to the Rights
Agent that represents Rights that are or have become void pursuant to the
provisions of this paragraph shall be canceled.
(iii) The Company may at its option substitute for a
share of Common Stock issuable upon the exercise of Rights in accordance with
the foregoing subparagraph (ii) such number or fractions of shares of Preferred
Stock having an aggregate current market value equal to the Current Market
Price of a share of Common Stock. In the event that there shall not be
sufficient shares of Common Stock issued but not outstanding or authorized but
unissued to permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii), the Board of Directors shall, to the extent
permitted by applicable law and any material agreements then in effect to which
the Company is a party (A) determine the excess (the "Spread") of (1) the value
------
of the shares of Common Stock issuable upon the exercise of a Right in
accordance with the foregoing subparagraph (ii) (the "Current Value") over (2)
-------------
the Purchase Price (as adjusted in accordance with the foregoing subparagraph
(ii)), and (B) with respect to each Right (other than Rights which have become
void pursuant to the foregoing subparagraph (ii)), make adequate provision to
substitute for the shares of Common Stock issuable in accordance with the
foregoing paragraph (ii) upon exercise of the Right and payment of the Purchase
Price (as adjusted in accordance therewith), (1) cash, (2) a reduction in such
Purchase Price, (3) shares of Preferred Stock or other equity securities of the
Company, including, without limitation, shares or fractions of shares of
preferred stock which, by virtue of having dividend, voting and liquidation
rights substantially comparable to those of the shares of Common Stock, are
deemed in good faith by the Board of Directors to have substantially the same
value as the shares of Common Stock (such shares of Preferred Stock and shares
or fractions of shares of preferred stock being hereinafter referred to as
"Common Stock Equivalents"), (4) debt securities of the Company, (5) other
------------------------
assets, or (6) any combination of the foregoing, having a value which, when
added to the value of the shares of Common Stock actually issued upon exercise
of such Right, shall have an aggregate value equal to the Current Value (less
the amount of any reduction in such Purchase Price), where such aggregate value
has been determined by the Board of Directors upon the advice of a nationally
recognized investment banking firm selected in good faith by the Board of
Directors; provided, however, that if the Company shall not make adequate
-------- -------
provision to deliver value pursuant to clause (B) above within thirty (30) days
following the date of the Flip-In Event (the "Flip-in Trigger Date"), then the
--------------------
Company shall be obligated to deliver, to the extent permitted by applicable
law and any material agreements then in effect to which the Company is a party,
upon the surrender for exercise of a Right and without requiring payment of
such Purchase Price, shares of
13
Common Stock (to the extent available), and then, if necessary, such number or
fractions of shares of Preferred Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to the
Spread. If the Board of Directors of the Company shall determine in good faith
that it is likely that sufficient additional shares of Common Stock and/or
Common Stock Equivalents 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 Flip-In
Trigger Date, in order that the Company may seek stockholder approval for the
authorization of such additional shares of Common Stock or Common Stock
Equivalents (such thirty (30) day period, as it may be extended, being
hereinafter referred to as the "Substitution Period"). To the extent that the
-------------------
Company determines that some action need be taken pursuant to the second and/or
third sentence of this Section 11(a)(iii), the Company (x) shall provide,
subject to the last sentence of Section 11(a)(ii) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in
order to seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to the first sentence of
Section 11(a)(iii) and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iii), the value of the Common Stock shall be the
Current Market Price per share of the Common Stock on the Flip-In Trigger Date
and the per share or per unit value of any Common Stock Equivalent shall be
deemed to equal the Current Market Price per share of the Common Stock on such
date. The Board of Directors may, but shall not be required to, establish
procedures to allocate the right to receive Common Stock upon the exercise of
the Rights among holders of Rights pursuant to this Section 11(a)(iii).
(b) In case the Company shall fix a record date for the
issuance of rights (other than the Rights), options or warrants to all holders
of Preferred Stock entitling them to subscribe for or purchase Preferred Stock
(for a period expiring within forty-five (45) calendar days after such record
date), shares having the same rights, privileges and preferences as the
Preferred Stock (a "Preferred Stock Equivalent") or securities convertible into
--------------------------
Preferred Stock or a Preferred Stock Equivalent at a price per share of
Preferred Stock or a Preferred Stock Equivalent (or having a conversion price
per share, if a security convertible into Preferred Stock or a Preferred Stock
Equivalent) less than the Current Market Price per share of Preferred Stock on
such record date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of shares of Preferred Stock outstanding on such record date, plus the
number of shares of Preferred Stock which the aggregate offering price of the
total number of shares of Preferred Stock and/or a Preferred Stock Equivalent
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such Current Market Price, and the denominator
of which shall be the number of shares of Preferred Stock outstanding on such
record date, plus the number of additional shares of Preferred Stock and/or
equivalent preferred stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible).
In case such subscription price may be paid by delivery of consideration part
or all of which is in a form other than cash, the value of such non-cash
consideration shall be as determined in good faith by the Board of Directors,
whose determination shall be described in a statement filed with the Rights
Agent. Shares of Preferred Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed, and in the event that such rights or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
14
(c) In case the Company shall fix 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, 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) hereof), the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the Current Market Price per share of Preferred Stock on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the cash, assets or
evidences of indebtedness to be distributed or of such subscription rights or
warrants applicable to a share of Preferred Stock and the denominator of which
shall be such Current Market Price per share of Preferred Stock. Such
adjustments shall be made successively whenever such a record date is fixed,
and in the event that such distribution is not so made, the Purchase Price
shall be adjusted to be the Purchase Price which would have been in effect if
such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder,
other than computations made pursuant to Section 11(a)(iii) hereof, the
"Current Market Price" per share of Common Stock on any date shall be deemed to
--------------------
be the average of the daily closing prices per share of the Common Stock for
the thirty (30) consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date, and for purpose of computations made pursuant
to Section 11(a)(iii) hereof, the "Current Market Price" per share of the
--------------------
Common Stock on any date shall be deemed to be the average of the daily closing
prices per share of the 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 the Common Stock of (i) any
dividend or distribution on the Common Stock (other than a regular quarterly
cash dividend and other than the Rights), (ii) any subdivision, combination or
reclassification of the Common Stock, and prior to the expiration of the
requisite thirty (30) Trading Day or ten (10) Trading Day period, as set forth
above, after the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification occurs, then,
and in each such case, the Current Market Price shall be properly adjusted to
take into account ex-dividend trading. The closing price for each day shall be
the last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York Stock
Exchange 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 sale 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 the Board of Directors. 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 the Board of Directors shall be used
and shall be binding on the Rights Agent. The term "Trading Day" shall mean 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 shall mean the fair value per share as determined in good faith by
the Board of Directors, whose
15
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the
"Current Market Price" per share (or one one-thousandth of a share) of
--------------------
Preferred Stock shall be determined in the same manner as set forth above for
the Common Stock in clause (i) of this Section 11(d) (other than the last
sentence thereof). If the Current Market Price per share (or one one-thousandth
of a share) of Preferred Stock cannot be determined in the manner provided
above or if the Preferred Stock is not publicly held or listed or traded in a
manner described in clause (i) of this Section 11(d), the "Current Market
--------------
Price" per share of Preferred Stock shall be conclusively deemed to be an
-----
amount equal to one hundred (100) (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, and the
"Current Market Price" per one one-thousandth of a share of Preferred Stock
--------------------
shall be equal to the Current Market Price per share of the Common Stock (as
appropriately adjusted). If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, "Current Market Price" per shall mean the
--------------------
fair value per share as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
-------- -------
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest ten-thousandth of a share
of Common Stock or other share or one-hundred-thousandth of a share of
Preferred Stock, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no
later than the earlier of (i) three (3) years from the date of the transaction
which 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) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of any Right and the Purchase Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares of Preferred Stock
contained in Section 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m)
hereof, and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect
to the Preferred Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Preferred
Stock purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one-thousandths of a share of Preferred Stock (calculated to the nearest
one-hundred-thousandth) obtained by (i) multiplying (x) the number of
one-thousandths of a share of Preferred Stock covered by a Right immediately
prior to this adjustment, by (y) the Purchase Price in effect immediately prior
to such
16
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 or any adjustment to the number of shares of
Preferred Stock for which a Right may be exercised made pursuant to Sections
11(a)(i), 11(b) or 11(c), to adjust the number of Rights in lieu of any
adjustment in the number of shares of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of shares of Preferred
Stock for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest one
hundred-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least ten (10) days later than the
date of the public announcement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders
of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of shares of Preferred Stock issuable upon the exercise of
the Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price per share and the number of shares which
were expressed in the initial Right Certificate issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the shares of
Common Stock, Preferred Stock or other capital stock issuable upon exercise of
the Rights, the Company shall take any corporate action, including using its
best efforts to obtain any required stockholder approvals, which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock, Preferred
Stock or other capital stock at such adjusted Purchase Price. If upon any
exercise of the Rights, a holder is to receive a combination of Common Stock
and Common Stock Equivalents, a portion of the consideration paid upon such
exercise, equal to at least the then par value of a share of Common Stock of
the Company, shall be allocated as the payment for each share of Common Stock
of the Company so received.
(l) In any case in which this Section 11 shall require that
an adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the shares of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the shares of
Preferred Stock and other capital stock or
17
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
-------- -------
the Company shall deliver to such holder a due xxxx or other appropriate
instrument evidencing such holder's right to receive such additional shares of
Preferred Stock and other capital stock or securities upon the occurrence of the
event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly permitted or
required by this Section 11, as and to the extent that in their good faith
judgment the Board of Directors of the Company shall determine to be advisable
in order that any (i) consolidation or subdivision of the Preferred Stock, (ii)
issuance for cash of any shares of Preferred Stock at less than the Current
Market Price, (iii) issuance for cash of shares of Preferred Stock or
securities which by their terms are convertible into or exchangeable for shares
of Preferred Stock, (iv) stock dividends or (v) issuance of rights, options or
warrants referred to in this Section 11, hereafter made by the Company to
holders of its Preferred Stock shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at
any time after the Distribution Date, (i) consolidate with any other Person,
(ii) merge with or into any other Person, or (iii) sell or transfer (or permit
any Subsidiary to sell or transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than fifty percent (50%)
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person or Persons, if (x) at the time of or immediately
after such consolidation, merger or sale there are any charter or by-law
provisions or any rights, warrants or other instruments or securities
outstanding or agreements in effect which substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale,
the stockholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof shall have received a
---------------
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates. The Company shall not consummate any such consolidation, merger
or sale unless prior thereto the Company and such other Person shall have
executed and delivered to the Rights Agent a supplemental agreement evidencing
compliance with this subsection.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23, Section 24
or Section 27 hereof, take (or permit any Subsidiary to take) any action if at
the time such action is taken it is reasonably foreseeable that such action
will diminish substantially or eliminate the benefits intended to be afforded
by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after the
Record Date and prior to the Distribution Date (i) declare or pay any dividend
on the outstanding shares of Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock then outstanding, or
issued or delivered thereafter, shall be proportionately adjusted so that the
number of Rights thereafter associated with each share of Common Stock
following any such event equals 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 or which shall be the number of shares of
Common Stock outstanding immediately prior to the occurrence of such event and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately following the occurrence of such event.
12. Certification of Adjustments. Whenever an adjustment is made
----------------------------
as provided in Sections 11 and 13 hereof, the Company shall (a) promptly
prepare a certificate signed by its Chief Executive Officer, its President or
any Vice President and by the Treasurer or any Assistant Treasurer or
18
the Secretary or any Assistant Secretary of the Company setting forth such
adjustment and a brief statement of the facts giving rise to 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 Right Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 26 hereof. Notwithstanding the
foregoing sentence, the failure of the Company to give such notice shall not
affect the validity of or the force or effect of or the requirement for such
adjustment. The Rights Agent shall be fully protected in relying on any
certificate prepared by the Company pursuant to Sections 11 and 13 and on any
adjustment therein contained and shall not be deemed to have knowledge of any
such adjustment unless and until it shall have received such certificate. Any
adjustment to be made pursuant to Sections 11 and 13 of this Rights Agreement
shall be effective as of the date of the event giving rise to such adjustment.
13. Consolidation, Merger or Sale or Transfer of Assets or
------------------------------------------------------
Earning Power.
-------------
(a) In the event that following the first occurrence of a
Flip-In Event, directly or indirectly, (x) the Company shall consolidate with,
or merge with and into, any other Person or Persons and the Company, as the
case maybe, shall not be the surviving or continuing corporation of such
consolidation or merger, or (y) any Person or Persons shall consolidate with,
or merge with and into, the Company, and the Company shall be the continuing or
surviving corporation of such consolidation or merger and, in connection with
such consolidation or merger, all or part of the outstanding shares of Common
Stock shall be changed into or exchanged for stock or other securities of any
other Person or of the Company or cash or any other property, other than, in
the case of the transactions described in subparagraphs (x) or (y), a merger or
consolidation which would result in all of the Voting Power represented by the
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
securities of the surviving entity) all of the Voting Power represented by the
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation and the holders of such securities not
having changed as a result of such transactions, or (z) the Company or one or
more of its Subsidiaries shall sell, mortgage or otherwise transfer to any
other Person or any Affiliate or Associate of such Person, in one transaction,
or a series of related transactions, assets or earning power aggregating more
than fifty percent (50%) of the assets or earning power of the Company and its
Subsidiaries (taken as a whole), then, on the first occurrence of any such
event (a "Flip-Over Event"), proper provision shall be made so that (i) each
---------------
holder of a Right (other than Rights which have become void pursuant to Section
11(a)(ii) hereof) shall thereafter have the right to receive, upon the exercise
thereof at the Purchase Price (as theretofore adjusted in accordance with
Section 11(a)(ii) hereof), in accordance with the terms of this Agreement and
in lieu of shares of Preferred Stock or Common Stock of the Company, such
number of validly authorized and issued, fully paid, non-assessable and freely
tradeable shares of Common Stock of the Principal Party (as such term is
hereinafter defined), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall equal the result obtained by dividing
the Purchase Price (as theretofore adjusted in accordance with Section
11(a)(ii) hereof) by fifty percent (50%) of the Current Market Price per share
of the Common Stock of such Principal Party (determined pursuant to Section
11(d) hereof) on the date of consummation of such consolidation, merger, sale
or transfer; provided, however, that the Purchase Price (as theretofore
-------- -------
adjusted in accordance with Section 11(a)(ii) hereof) and the number of shares
of Common Stock of such Principal Party so receivable upon exercise of a Right
shall be subject to further adjustment as appropriate in accordance with
Section 11(f) hereof to reflect any events occurring in respect of the Common
Stock of such Principal Party after the occurrence of such consolidation,
merger, sale or transfer; (ii) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such Flip-Over Event, all the obligations
and duties of the Company pursuant to this Rights Agreement; (iii) the term
"Company" for all purposes of this Rights Agreement shall thereafter be
-------
19
deemed to refer to such Principal Party, it being specifically intended that
the provisions of Section 11 hereof shall only apply to such Principal Party
following the first occurrence of a Flip-Over Event; and (iv) such Principal
Party shall take such steps (including, but not limited to, the reservation of
a sufficient number of shares of its Common Stock in accordance with Section 9
hereof) in connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; provided, however,
-------- -------
that, upon the subsequent occurrence of any merger, consolidation, sale of all
or substantially all assets, recapitalization, reclassification of shares,
reorganization or other extraordinary transaction in respect of such Principal
Party, each holder of a Right shall thereupon be entitled to receive, upon
exercise of a Right, such cash, shares, rights, warrants and other property
which such holder would have been entitled to receive had he, at the time of
such transaction, owned the shares of Common Stock of the Principal Party
purchasable upon the exercise of a Right, and such Principal Party shall take
such steps (including, but not limited to, reservation of shares of stock) as
may necessary to permit the subsequent exercise of the Rights in accordance
with the terms hereof for such cash, shares, rights, warrants and other
property.
(b) "Principal Party" shall mean
---------------
(i) in the case of any transaction described in (x)
or (y) of the first sentence of Section 13(a) hereof, (A) the Person that is
the issuer of the securities into which shares of Common Stock of the Company
are converted in such merger or consolidation, or, if there is more than one
such issuer, the issuer the Common Stock of which has the greatest aggregate
market value or (B) if no securities are so issued, (x) the Person that is the
other party to the merger or consolidation and that survives said merger or
consolidation, or, if there is more than one such Person, the Person the Common
Stock of which has the greatest market value or (y) if the Person that is the
other party to the merger or consolidation does not survive the merger or
consolidation, the Person that does survive the merger or consolidation
(including the Company if it survives); and
(ii) in the case of any transaction described in (z)
of the first sentence in Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions, or, if each Person that is a
party to such transaction or transactions receives the same portion of the
assets or earning power so transferred or if the Person receiving the greatest
portion of the assets or earning power cannot be determined, whichever of such
Persons that is the issuer of Common Stock having the greatest aggregate market
value of shares outstanding; provided, however, that in any such case described
-------- -------
in the foregoing paragraphs (b)(i) or (b)(ii), (1) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect Subsidiary of another Person the Common Stock of
which is and has been so registered, the term "Principal Party" shall refer to
--------- -----
such other Person, or (2) if such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Stocks of all of which are and
have been so registered, the term "Principal Party" shall refer to whichever of
--------- -----
such Persons is the issuer of the Common Stock having the greatest market value
of shares outstanding, or (3) if such Person is owned, directly or indirectly,
by a joint venture formed by two or more Persons that are not owned, directly
or indirectly, by the same Person, the rules set forth in clauses (1) and (2)
above shall apply to each of the owners having an interest in the joint venture
as if the Person owned by the joint venture was a Subsidiary of both or all of
such joint venturers, and the Principal Party in each such case shall bear the
obligations set forth in this Section 13 in the same ratio as its interest in
such Person bears to the total of such interests.
20
(c) The Company shall not consummate any consolidation,
merger, sale or transfer referred to in Section 13(a) unless the Principal
Party shall have 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 the Principal Party involved therein shall have executed and
delivered to the Rights Agent an agreement confirming that the requirements of
Sections 13(a) and (b) hereof shall promptly be performed in accordance with
their terms and that such consolidation, merger, sale or transfer of assets
shall not result in a default by the Principal Party under this Rights
Agreement as the same shall have been assumed by the Principal Party pursuant
to Sections 13(a) and (b) hereof and further providing that, as soon as
practicable after executing such agreement pursuant to this Section 13, the
Principal Party at its own expense shall:
(i) prepare and file a registration statement under
the Securities Act, if necessary, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its best
efforts to cause such registration statement to become effective as soon as
practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the date of expiration of the
Rights, and similarly comply with applicable state securities laws;
(ii) use its best efforts, if the Common Stock of the
Principal Party shall become listed on a national securities exchange, to list
(or continue the listing of) the Rights and the securities purchasable upon
exercise of the Rights on such securities exchange and, if the Common Stock of
the Principal Party shall not be listed on a national securities exchange, to
cause the Rights and the securities purchased upon exercise of the Rights to be
reported by NASDAQ or such other system then in use;
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and
(iv) obtain waivers of any rights of first refusal or
preemptive rights in respect of the shares of Common Stock of the Principal
Party subject to purchase upon exercise of outstanding Rights.
In the event that any of the transactions described in Section 13(a) hereof
shall occur at any time after the occurrence of a transaction described in
Section 11(a)(ii) hereof, the Rights which have not theretofore been exercised
shall thereafter be exercisable in the manner described in Section 13(a).
(d) Furthermore, in case the Principal Party which is to be
a party to a transaction referred to in this Section 13 has a provision in any
of its authorized securities or in its Certificate of Incorporation or Bylaws
or other instrument governing its corporate affairs, which provision would have
the effect of (i) causing such Principal Party to issue, in connection with, or
as a consequence of, the consummation of a transaction referred to in this
Section 13, shares of Common Stock of such Principal Party at less than the
then Current Market Price per share (determined pursuant to Section 11(d)
hereof) or securities exercisable for, or convertible into, Common Stock of
such Principal Party at less than such then current market price (other than to
holders of Rights pursuant to this Section 13) or (ii) providing for any
special payment, tax or similar provisions in connection with the issuance of
the Common Stock of such Principal Party pursuant to the provisions of Section
13; then, in such event, the Company hereby agrees with each holder of Rights
that it shall not consummate any such transaction unless prior thereto the
Company and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing that the provision in question
of such Principal Party shall have been
21
canceled, waived or amended, or that the authorized securities shall be
redeemed, so that the applicable provision will have no effect in connection
with, or as a consequence of, the consummation of the proposed transaction.
14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the holders of record of
the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the then
current market value of a whole Right. For the purposes of this Section 14(a),
the then current market value of a Right shall be determined in the same manner
as the Current Market Price of a share of Common Stock shall be determined
pursuant to Section 11(d) hereof.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock or Preferred Stock Equivalents (other than fractions
which are integral multiples of one one-thousandth of a share of Preferred
Stock) upon exercise of the Rights or to distribute certificates which evidence
fractional shares of Preferred Stock or Preferred Stock Equivalents (other
fractions which are integral multiples of one one-thousandth of a share of
Preferred Stock). Fractions of shares of Preferred Stock in integral multiples
of one one-thousandth of a share of Preferred Stock or Preferred Stock
Equivalents may, at the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it, provided that such agreement shall provide that the
--------
holders of such depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the shares of
Preferred Stock or Preferred Stock Equivalents represented by such depositary
receipts. In lieu of fractional shares of Preferred Stock or Preferred Stock
Equivalents that are not integral multiples of one one-thousandth of a share of
Preferred Stock or a Preferred Stock Equivalent, the Company may pay to the
registered holders of Right Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one one-thousandth of a share of Preferred Stock or a Preferred
Stock Equivalent. For purposes of this Section 14(b), the current market value
of one one-thousandth of a share of Preferred Stock or Preferred Stock
Equivalent shall be the Current Market Price of a share of Common Stock (as
determined pursuant to Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) Following the occurrence of a Flip-In Event, the Company
shall not be required to issue fractions of shares or units of Common Stock or
Common Stock Equivalents or other securities upon exercise of the Rights or to
distribute certificates which evidence fractional shares of such Common Stock
or Common Stock Equivalents or other securities. In lieu of fractional shares
or units of such Common Stock or Common Stock Equivalents or other securities,
the Company may pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the Current Market Value of a share or unit of such Common
Stock or Common Stock Equivalent or other securities. For purposes of this
Section 14(c), the Current Market Value shall be determined in the manner set
forth in Section 11(d) hereof for the Trading Day immediately prior to the date
of such exercise and, if such Common Stock Equivalent is not traded, each such
Common Stock Equivalent shall have the value of one one-thousandth of a share
of Preferred Stock.
(d) The holder of a Right by the acceptance of a Right
expressly waives his right to receive any fractional Right or any fractional
shares upon exercise of a Right.
22
15. Rights of Action. As of the Record Date, all rights of action
----------------
in respect of this Agreement, other than any rights of action vested in the
Rights Agent pursuant to Sections 18 and 20 below, are vested in the respective
holders of record of the Right Certificates (and, prior to the Distribution
Date, the holders of record of the Common Stock); and any holder of record of
any Right Certificate (or, prior to the Distribution Date, of the Common
Stock), without the consent of the Rights Agent or of the holder of any other
Right Certificate (or, prior to the Distribution Date, of the Common Stock),
may, in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company or any other Person
to enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and, accordingly, that they will be entitled to
specific performance of the obligations under, and injunctive relief against
actual or threatened violations of, the obligations of any Person subject to
this Agreement. Holders of Rights shall be entitled to recover the reasonable
costs and expenses, including attorneys' fees, incurred by them in any action
to enforce the provisions of this Agreement.
16. Agreement of Right Holders. Every holder of a Right by
--------------------------
accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will not be
evidenced by a Right Certificate and will be transferable only in connection
with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates will
be transferable only on the registry books of the Rights Agent if surrendered
at the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent or the
transfer agent of the Common Stock) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; provided, however, that the Company
-------- -------
must use its best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
17. Right Certificate Holder Not Deemed a Stockholder. No holder
-------------------------------------------------
of a Right, as such, shall be entitled to vote, receive dividends in respect of
or be deemed for any purpose to be the holder of Common Stock or any other
securities of the Company which may at any time be issuable upon the exercise
of the Rights, nor shall anything contained herein or in any Right Certificate
be construed to confer upon the holder of any Right Certificate, as such, any
of the rights of a stockholder of the Company or any right to vote in the
election of directors or upon any matter submitted to stockholders at
23
any meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stockholders (except
as provided in Section 25 hereof), or to receive dividends or subscription
rights in respect of any such stock or securities, or otherwise, until the
Right or Rights evidenced by such Right Certificate shall have been exercised
in accordance with the provisions hereof.
18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this Rights
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent and its Affiliates and each of their
directors, officers, employees and agents (collectively, the "Indemnified
Parties") for, and to hold them harmless against, any damage, loss, liability,
cost or expense incurred without gross negligence, bad faith or willful
misconduct on the part of the Indemnified Parties for any thing done or omitted
to be done by the Indemnified Parties in connection with the acceptance and
administration of this Rights Agreement, including the cost and expenses of
defending against any claim or demand of liability in the premises. The
indemnity provided herein shall survive the expiration of the Rights and the
termination of this Rights Agreement. Anything in this agreement to the
contrary notwithstanding, in no event shall the Rights Agent be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Indemnified Parties
have been advised of the likelihood of such loss damage and regardless of the
form of action.
(b) The Rights Agent and its Affiliates shall be protected
and shall incur no liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this Rights Agreement in
reliance upon any Right Certificate, certificate for Common Stock or 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, guaranteed, verified or
acknowledged, by the proper Person or Persons.
19. Merger or Consolidation or Changed Name of Rights Agent.
-------------------------------------------------------
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
--------
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and, in case at
that time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
24
(b) In case at any time the name of the Rights Agent shall
be changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such
cases such Right Certificate shall have the full force provided in the Right
Certificates and in this Rights Agreement.
20. Duties of Rights Agent. The Rights Agent undertakes the
----------------------
duties and obligations imposed by this Rights Agreement upon the following
terms and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted to be taken by it in good faith and in accordance with
such opinion.
(b) Whenever in the performance of its duties under this
Rights Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any Acquiring
Person and the determination of "Current Market Price") be proved or
established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and
established by certificate signed by the President or any Vice President and by
the Treasurer or any Assistant Treasurer or the Secretary or any Assistant
Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Rights
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Rights Agreement or
in the Right Certificates (except its countersignature thereof) or be required
to verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility
in respect of the validity of this Rights Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Rights Agreement or in
any Right Certificate; nor shall it be responsible for any adjustment required
under the provisions of Sections 11, 13, 23 or 24 hereof 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 Right Certificates after receipt of a
Certificate furnished pursuant to Section 12 describing any such adjustment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Common Stock
to be issued pursuant to this Rights Agreement or any Right Certificate or as
to whether any shares of Common Stock will, when issued, be validly authorized
and issued, fully paid and nonassessable.
25
(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 Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder
from the Chairman of the Board, the Chief Executive Officer, the President or
any Vice President or the Secretary or any Assistant Secretary or the Treasurer
or any Assistant Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be
liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer. Any application by the Rights
Agent for written instructions from the Company may, at the option of the
Rights Agent, set forth in writing any action proposed to be taken or omitted
by the Rights Agent under this Rights Agreement and the date on and/or after
which such action shall be taken or such omission shall be effective. Subject
to Section 20(c) hereof, the Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five (5) Business Days after the
date any officer of the Company actually receives such application, unless any
such officer shall have consented in writing to an earlier date) unless, prior
to taking any such action (or the effective date in the case of an omission),
the Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
the Rights Agent under this Rights Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any other
entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights Agent shall not
be answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of its rights if there shall be reasonable grounds for believing that repayment
of such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate contained in the
form of assignment or the form of election to purchase set forth on the reverse
thereof, as the case may be, has either not been completed or indicates an
affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not
take any further action with respect to such requested exercise of transfer
without first consulting with the Company.
21. Change of Rights Agent. The Rights Agent or any successor
----------------------
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon thirty (30) days' notice in writing, or such earlier period as
shall be agreed to in writing, mailed to the Company and to each transfer agent
of the Common Stock by registered or certified mail, and to the holders of the
Right Certificates by first-
26
class mail. The Company may remove the Rights Agent or any successor Rights
Agent (with or without cause) upon thirty (30) days' notice in writing, or such
earlier period as shall be agreed to in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. Notwithstanding the foregoing
provisions of this Section 21, in no event shall the resignation or removal of
a Rights Agent be effective until a successor Rights Agent shall have been
appointed and have accepted such appointment. If the Company shall fail to make
such appointment within a period of thirty (30) days after such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by
the Company), then the incumbent Rights Agent or the holder of record of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States or any State
thereof, in good standing, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000 or (b) an Affiliate controlled by a corporation described in clause
(a) of this sentence. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock, and mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
22. Issuance of New Right Certificates. Notwithstanding any of
----------------------------------
the provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price per share and the number or kind or
class of shares of stock or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this Rights
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 shall, 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, or upon the exercise, conversion or exchange of
securities hereinafter issued by the Company, in each case existing prior to
the Distribution Date, issue Right Certificates representing the appropriate
number of Rights in connection with such issuance or sale; provided, however,
-------- -------
that (i) no such Right Certificate shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Right Certificate would be issued, and (ii) no such Right
Certificate shall be issued, if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
23. Redemption.
----------
(a) The Board of Directors of the Company may, at its
option, at any time prior to the earlier of (x) the first occurrence of a
Flip-In Event or (y) the Close of Business on the Expiration
27
Date, redeem all but not less than all the then outstanding Rights at a
redemption price of $0.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price").
----------------
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights (or at such later time as the
Board of Directors may establish for the effectiveness of such redemption), and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. The Company shall promptly give
public notice of any such redemption; provided, however, that the failure to
-------- -------
give, or any defect in, any such notice shall not affect the validity of such
redemption. Within ten (10) days after such action of the Board of Directors
ordering the redemption of the Rights (or such later time as the Board of
Directors may establish for the effectiveness of such redemption), the Company
shall mail a notice of redemption to all the holders of the then outstanding
Rights at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption shall state the method by which the
payment of the Redemption Price will be made. The failure to give notice
required by this Section 23(b) or any defect therein shall not affect the
legality or validity of the action taken by the Company.
(c) In the case of a redemption permitted under Section
23(a), the Company may, at its option, discharge all of its obligations with
respect to the Rights by (i) issuing a press release announcing the manner of
redemption of the Rights and (ii) mailing payment of the Redemption Price to
the registered holders of the Rights at their last addresses as they appear on
the registry books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the transfer agent of the Common Stock, and upon such
action, all outstanding Right Certificates shall be null and void without any
further action by the Company.
24. Exchange of Rights for Common Stock.
-----------------------------------
(a) The Board of Directors of the Company may, at its
option, at any time after the occurrence of a Flip-In Event, exchange all or
part of the then outstanding and exercisable Rights (which (i) shall not
include Rights that have become void pursuant to the provisions of Section
11(a)(ii) and (ii) shall include, without limitation, any Rights issued after
the Distribution Date in accordance with Section 22) for shares of Common Stock
at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof the ("Exchange Ratio"). Notwithstanding the
-------- -----
foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than an Exempt Person), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of shares of Common Stock aggregating fifty percent (50%) or more of the shares
of Common Stock then outstanding. From and after the occurrence of an event
specified in Section 13(a) hereof, any Rights that theretofore have not been
exchanged pursuant to this Section 24(a) shall thereafter be exercisable only
in accordance with Section 13 and may not be exchanged pursuant to this Section
24(a).
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to subsection (a) of
this Section 24 and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter of
a holder of such Rights shall be to receive that number of shares of Common
Stock equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give
28
public notice of any such exchange; provided, however, that the failure to
-------- -------
give, or any defect in, such notice shall not affect the validity of such
exchange. The Company promptly shall mail a notice of any such exchange to all
of the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the shares of Common Stock for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of Section
11(a)(ii) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the
Company, at its option, may substitute, and, in the event that there shall not
be sufficient shares of Common Stock issued but not outstanding or authorized
but unissued to permit any exchange of Rights as contemplated in accordance
with this Section 24, the Company shall substitute to the extent of such
insufficiency, for each share of Common Stock that would otherwise be issuable
upon exchange of a Right, a number of shares of Preferred Stock Equivalents, or
fractions thereof, having an aggregate current per share market price
(determined pursuant to Section 11(d) hereof) equal to the current per share
market price of one share of Common Stock (determined pursuant to Section 11(d)
hereof) as of the date of the Flip-In Event.
(d) In the event that there shall not be sufficient shares
of Common Stock issued but not outstanding or authorized but unissued to permit
any exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock, the
Company shall pay to the registered holders of the Right Certificates with
regard to which such fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of a whole share of Common Stock. For the purposes of this paragraph (d),
the current market value of a whole share of Common Stock shall be the Current
Market Price of a share of Common Stock (as defined in Section 11(d) hereof for
the purposes of computations made other than pursuant to Section 11(a)(iii))
for the Trading Day immediately prior to the date of exchange pursuant to this
Section 24.
25. Notice of Proposed Actions.
--------------------------
(a) In case the Company, after the Distribution Date, shall
propose (i) to effect any of the transactions referred to in Section 11(a)(i)
or to pay any dividend to the holders of record of its Preferred Stock payable
in stock of any class or to make any other distribution to the holders of
record of its Preferred Stock (other than a regular periodic cash dividend), or
(ii) to offer to the holders of record of its Preferred Stock or options,
warrants, or other rights to subscribe for or to purchase shares of Preferred
Stock (including any security convertible into or exchangeable for Preferred
Stock) or shares of stock of any other class or any other securities, options,
warrants, convertible or exchangeable securities or other rights, or (iii) to
effect any reclassification of its Preferred Stock or any recapitalization or
reorganization of the Company, or (iv) to effect any consolidation or merger
with or into, or to effect any sale or other transfer (or to permit one or more
of its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of more than fifty percent (50%) of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to, any other Person or
Persons, or (v) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of
record of a Right Certificate, in accordance with Section 26 hereof, notice of
such proposed
29
action, which shall specify the record date for the purposes of such
transaction referred to in Section 11(a)(i), or such dividend or distribution,
or the date on which such reclassification, recapitalization, reorganization,
consolidation, merger, sale or transfer of assets, liquidation, dissolution or
winding up is to take place and the record date for determining participation
therein by the holders of record of Preferred Stock, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least ten (10) days prior to the record date for
determining holders of record of the Preferred Stock for purposes of such
action, and in the case of any such other action, at least ten (10) days prior
to the date of the taking of such proposed action or the date of participation
therein by the holders of record of Preferred Stock, whichever shall be the
earlier.
(b) In case any of the transactions referred to in Section
11(a)(ii) or Section 13 of this Rights Agreement are proposed, then, in any
such case, the Company shall give to each holder of Rights, in accordance with
Section 26 hereof, notice of the proposal of such transaction at least ten (10)
days prior to consummating such transaction, which notice shall specify the
proposed event and the consequences of the event to holders of Rights under
Section 11(a)(ii) or Section 13 hereof, as the case may be, and, upon
consummating such transaction, shall similarly give notice thereof to each
holder of Rights.
(c) The failure to give notice required by this Section 25
or any defect therein shall not affect the legality or validity of the action
taken by the Company or the vote upon any such action.
26. Notices. Notices or demands authorized by this Rights
-------
Agreement to be given or made by the Rights Agent or by the holder of record of
any Right Certificate or Right to or on behalf of the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent) as
follows:
Microtune, Inc.
0000 00xx Xxxxxx
Xxxxx, Xxxxx 00000
Attn: Xxxxxxx "Buddy" Xxxxxx
Subject to the provisions of Section 20 hereof, any notice or demand authorized
by this Rights Agreement to be given or made by the Company or by the holder of
record of any Right Certificate or Right to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
Computershare Investor Services, LLC
0000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxx
With a copy to:
Computershare Investor Services, LLC
0000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxx
30
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of record of any Right Certificate
or Right shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as it
appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer Agent.
27. Supplements and Amendments. Except as provided in the
--------------------------
penultimate sentence of this Section 27, for so long as the Rights are then
redeemable, the Company may in its sole and absolute discretion, and the Rights
Agent shall if the Company so directs, supplement or amend any provision of
this Agreement in any respect without the approval of any holders of the
Rights. At any time when the Rights are no longer redeemable, except as
provided in the penultimate sentence of this Section 27, the Company may, and
the Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Right Certificates in order to
(i) cure any ambiguity, (ii) correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) shorten or lengthen any time period hereunder, or (iv) change or
supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable; provided that no such supplement or amendment shall
--------
adversely affect the interests of the holders of Rights as such (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person), and no
such amendment may cause the Rights again to become redeemable or cause the
Agreement again to become amendable other than in accordance with this
sentence. Notwithstanding anything contained in this Rights Agreement to the
contrary, no supplement or amendment shall be made which changes the Redemption
Price. Prior to the Distribution Date, the interests of the holders of Rights
shall be deemed coincident with the interests of the holders of Common Stock.
28. Successors. All of the covenants and provisions of this
----------
Rights Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
29. Benefits of this Rights Agreement. Nothing in this Rights
---------------------------------
Agreement shall be construed to give to any person or corporation other than
the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Stock) any legal
or equitable right, remedy or claim under this Rights Agreement; but this
Rights Agreement shall be for the sole and exclusive benefit of the Company,
the Rights Agent and the holders of record of the Right Certificates (and,
prior to the Distribution Date, the Common Stock).
30. Governing Law. This Rights Agreement and each Right
-------------
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such state applicable to contracts to
be made solely by residents of such state and performed entirely within such
state.
31. Counterparts. This Rights Agreement may be executed in any
------------
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
32. Descriptive Headings. Descriptive headings of the several
--------------------
sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
33. Severability. If any term, provision, covenant or restriction
------------
of this Rights Agreement is held by a court of competent jurisdiction or other
authority to be invalid, illegal or unenforceable, the
31
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
32
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, and their seals affixed and attested, all as of
the date and year first above written.
[SEAL]
ATTEST: MICROTUNE, INC.
By:_____________________________ By:____________________________
Name: Xxxxx X. Xxxxxxxxxx Name: Xxxxxxx X. Xxxxxxx
Title: Secretary Title: President
[SEAL]
ATTEST: COMPUTERSHARE INVESTOR SERVICES, LLC
By:_____________________________ By:____________________________
Name: Name:
Title: Title:
33
TABLE OF CONTENTS
Page
----
1. Certain Definitions........................................................................1
2. Appointment of Rights Agent................................................................5
3. Issuance of Right Certificates.............................................................5
4. Form of Right Certificates.................................................................6
5. Countersignature and Registration..........................................................7
6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates..................8
7. Exercise of Rights; Purchase Price; Expiration Date of Rights..............................8
8. Cancellation and Destruction of Right Certificates.........................................9
9. Reservation and Availability of Shares of Preferred Stock.................................10
10. Preferred Stock Record Date...............................................................11
11. Adjustments to Number and Kind of Shares, Number of Rights or Purchase Price..............11
12. Certification of Adjustments..............................................................18
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power......................19
14. Fractional Rights and Fractional Shares...................................................22
15. Rights of Action..........................................................................23
16. Agreement of Right Holders................................................................23
17. Right Certificate Holder Not Deemed a Stockholder.........................................23
18. Concerning the Rights Agent...............................................................24
19. Merger or Consolidation or Changed Name of Rights Agent...................................24
20. Duties of Rights Agent....................................................................25
21. Change of Rights Agent....................................................................26
22. Issuance of New Right Certificates........................................................27
23. Redemption................................................................................27
24. Exchange of Rights for Common Stock.......................................................28
-i-
TABLE OF CONTENTS
(continued)
Page
----
25. Notice of Proposed Actions...............................................................29
26. Notices..................................................................................30
27. Supplements and Amendments...............................................................30
28. Successors...............................................................................31
29. Benefits of this Rights Agreement........................................................31
30. Governing Law............................................................................31
31. Counterparts.............................................................................31
32. Descriptive Headings.....................................................................31
33. Severability.............................................................................31
ii
EXHIBIT A
---------
MICROTUNE, INC.
CERTIFICATE
OF DESIGNATION, PREFERENCES AND RIGHTS
OF THE TERMS OF THE
SERIES A PREFERRED STOCK
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware
We, the President and the Secretary, respectively, of Microtune, Inc.,
organized and existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103 thereof, DO HEREBY
CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Certificate of Incorporation of the said Corporation, the said Board of
Directors on March 4, 2002, adopted the following resolution creating a series
of 150,000 shares of Preferred Stock designated as Series A Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Certificate of Incorporation, a series of Preferred Stock of the Corporation be
and it hereby is created, and that the designation and amount thereof and the
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:
Section 1. Designation and Amount. The shares of such
----------------------
series shall be designated as "Series A Preferred Stock" (the "Series
A Preferred Stock"), $0.001 par value per share, and the number of
shares constituting such series shall be 150,000.
Section 2. Dividends and Distributions.
---------------------------
(A) The dividend rate on the shares of Series A Preferred
Stock shall be for each quarterly dividend (hereinafter referred to as a
"quarterly dividend period"), which quarterly dividend periods shall commence
on January 1, April 1, July 1 and October 1 each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date") (or in the case of
original issuance, from the date of original issuance) and shall end on and
include the day next preceding the first date of the next quarterly dividend
period, at a rate per quarterly dividend period (rounded to the nearest cent)
equal to the greater of (a) $2875.00 or (b) subject to the provisions for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount of
all cash dividends, and 1,000 times the aggregate per share amount (payable in
cash, based upon the fair market value at the time the non-cash dividend or
other distribution is declared as determined in good faith by the Board of
Directors) of all non-cash dividends or other
1
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 (but not withdrawn) on the Common Stock, par value $0.001
per share, of the Corporation (the "Common Stock") during the immediately
preceding quarterly dividend period, or, with respect to the first quarterly
dividend period, since the first issuance of any share or fraction of a share
of Series A Preferred Stock. In the event this Company shall at any time after
March 4, 2002 (the "Rights Declaration Date") (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount to which holders of shares
of Series A Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
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 shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of shares of Series A
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be no more than 45 days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights. The holders of shares of Series A
-------------
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to 1,000 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such
case the number of votes per share to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
2
(B) Except as otherwise provided herein, in the Certificate
of Incorporation or Bylaws, the holders of shares of Series A Preferred Stock
and the holders of shares of Common Stock shall vote together as one class on
all matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, in the Certificate of
Incorporation and in the Bylaws, holders of Series A Preferred Stock shall have
no special voting rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section 4. Reacquired Shares. Any shares of Series A Preferred
-----------------
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
Section 5. Liquidation, Dissolution or Winding Up.
--------------------------------------
(A) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the holders of the
Series A Preferred Stock shall be entitled to receive the greater of (a)
$115,000.00 per share, plus accrued dividends to the date of distribution,
whether or not earned or declared, or (b) an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 1,000 times the
aggregate amount to be distributed per share to holders of Common Stock. In the
event the Corporation shall at any time after the Rights Declaration Date (i)
declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount to
which holders of shares of Series A Preferred Stock were entitled immediately
prior to such event pursuant to clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 6. Consolidation, Merger, etc. In case the Corporation
---------------------------
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the Rights Declaration
Date (i) declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such
case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number
3
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. No Redemption. The shares of Series A Preferred Stock
-------------
shall not be redeemable.
Section 8. Fractional Shares. Series A Preferred Stock may be
-----------------
issued in fractions of a share which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and have the benefit of all other rights of
holders of Series A Preferred Stock. All payments made with respect to
fractional shares hereunder shall be rounded to the nearest whole cent.
Section 9. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends 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 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 Preferred Stock, except dividends paid ratably on the Series
A 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 on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such parity
stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock ranking
on a parity with the Series A 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 shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
4
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 9, purchase or otherwise acquire such shares at such time and in
such manner.
Section 10. Ranking. The Series A Preferred Stock shall be junior to
-------
all other Series of the Corporation's preferred stock as to the payment of
dividends and the distribution of assets, unless the terms of any series shall
provide otherwise.
Section 11. Amendment. The Certificate of Incorporation of the
---------
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of two-thirds or more of the outstanding shares of Series A Preferred
Stock voting together as a single class.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this 15th day
of March, 2001.
____________________________________
Xxxxxxx X. Xxxxxxx, President
Attest:
__________________________________
Xxxxx X. Xxxxxxxxxx, Secretary
5
EXHIBIT B
---------
[Form of Right Certificate]
Certificate No. W- Series A Preferred Stock Rights
NOT EXERCISABLE AFTER MARCH 3, 2012, OR EARLIER IF REDEEMED OR
EXCHANGED. AT THE OPTION OF THE COMPANY, THE RIGHTS MAY BE REDEEMED
AT $0.001 PER RIGHT OR EXCHANGED FOR PREFERRED STOCK ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. IN THE EVENT THAT THE RIGHTS
REPRESENTED BY THIS CERTIFICATE ARE ISSUED TO A PERSON WHO IS AN
ACQUIRING PERSON OR CERTAIN TRANSFEREE OF THE RIGHTS PREVIOUSLY OWNED
BY SUCH PERSONS, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY SHALL BE NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
RIGHT CERTIFICATE
MICROTUNE, INC.
This certifies that _______________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement dated as of March 4, 2002 ("Rights Agreement") between
Microtune, Inc., a Delaware corporation ("Company"), and Computershare Investor
Services, LLC, a Delaware limited liability company ("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. (Dallas, Texas time)
on March 3, 2012, at the principal office of the Rights Agent, or its
successors as Rights Agent, designated for such purposes, one one-thousandth of
a fully paid and nonassessable share of Series A Preferred Stock of the Company
("Preferred Stock") at a purchase price of $115.00 per one one-thousandth of a
share, as the same may from time to time be adjusted in accordance with the
Rights Agreement ("Purchase Price"), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase duly executed.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to such terms in the Rights Agreement.
1
As provided in the Rights Agreement, the Purchase Price and the number
of shares of Preferred Stock or other securities which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events and, upon the
happening of certain events, securities other than shares of Preferred Stock, or
other property, may be acquired upon exercise of the Rights evidenced by this
Right Certificate, as provided by the Rights Agreement.
Upon the occurrence of a Flip-In Event, if the Rights evidenced by this
Rights Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person, (ii) a transferee of any
such Acquiring Person, Associate or Affiliate, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of a person who,
after such transfer, became an Acquiring Person, or any Affiliate or Associate
of an Acquiring Person, such Rights shall be null and void and will no longer be
transferable and no holder hereof shall have any right with respect to such
Rights from and after the occurrence of such Flip-In Events.
This Right Certificate is subject to all the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of record of the Right Certificates, which
limitation of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal executive office of
the Company and are available upon written request to the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder of record to purchase a like aggregate
number of shares of Preferred Stock as the Rights evidenced by the Right
2
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof, another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, at any time prior to
the earlier of (i) the occurrence of a Flip-In Event (as such term is defined in
the Rights Agreement) or (ii) the Expiration Date (as such term is defined in
the Rights Agreement), the Rights evidenced by this Certificate may be redeemed
by the Company at its option at a redemption price of $0.001 per Right. Subject
to the provisions of the Rights Agreement, the Company may, at its option, at
any time after a Flip-In Event, exchange all or part of the Rights evidenced by
this Certificate for shares of the Company's Common Stock or for Preferred Stock
(or shares of a class or series of the Company's preferred stock having the same
rights, privileges and preferences as the Preferred Stock).
In the event (i) any person or group becomes an Acquiring Person or
(ii) any of the types of transactions, acquisitions or other events described
above as self-dealing transactions occur, and prior to the acquisition by such
person or group of 50% or more of the outstanding shares of Common Stock, the
Board may require all or any portion of the outstanding Rights (other than
Rights owned by such Acquiring Person which have become void) to be exchanged
for Common Stock on a pro rata basis, at an exchange ratio of one share of
Common Stock or one one-thousandth of a share of Preferred Stock (or of a share
of a class or series of the Company's Preferred Stock having equivalent rights,
preferences and privileges), per Right (subject to adjustment).
No fractional shares of Preferred Stock shall be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock, which
may, at the option of the Company, be evidenced by depositary receipts), and no
fractional shares of Common Stock will be issued upon the exchange of any Right
or Rights evidenced hereby, and in lieu thereof, as provided in the Rights
3
Agreement, fractions of shares of Preferred Stock or Common Stock shall receive
an amount in cash equal to the same fraction of the then Current Market Price
(as such term is defined in the Rights Agreement) of a share of Preferred Stock
or Common Stock, as the case may be.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of Common Stock or
of any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote in 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 (other than certain actions specified in
the Rights Agreement) or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right Certificate shall
have been exercised or exchanged as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
4
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ________ ___, 20__.
ATTEST: MICROTUNE, INC.
____________________________________ By:________________________________
Xxxxx X. Xxxxxxxxxx, Secretary Xxxxxxx X. Xxxxxxx, President
COUNTERSIGNED: COMPUTERSHARE INVESTOR
SERVICES, LLC
As Rights Agent
By:________________________________
Authorized Officer
5
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such holder
desires to transfer any or all of the Rights
represented by this Right Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_______________________________________________________________________________
_______________________________________________________________________________
(Name, address and social security or other
identifying number of transferee)
___________________________________ (_______________) of the Rights represented
by this Right Certificate, together with all right, title and interest in and
to said Rights, and hereby irrevocably constitutes and appoints ________________
_________________________ attorney to transfer said Rights 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) the rights evidenced by this Right Certificate [ ] are [ ] are not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person (as such capitalized 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 Right Certificate from
any Person who is or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person or any transferee of such Persons.
Dated:___________________, ______ _____________________________________
(Signature)
Signature Guaranteed:
6
Form of Reverse Side of Right Certificate
(continued)
NOTICE
------
The signatures to the foregoing Assignment and the foregoing
Certificate, if applicable, must correspond to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever, and must be guaranteed by a participant in a
Securities Transfer Association ("STA") recognized signature program.
In the event that the foregoing Certificate is not duly executed, with
signature guaranteed, the Company may deem the Rights represented by this Right
Certificate to be Beneficially Owned by an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such capitalized terms are defined in the
Rights Agreement), and not issue any Right Certificate or Right Certificates in
exchange for this Right Certificate.
7
Form of Reverse of Right Certificate
(continued)
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed by the registered holder if such holder
desires to exercise any or all of the Rights
represented by this Right Certificate)
To Microtune, Inc.
The undersigned hereby irrevocably elects to exercise _________________
(__________) of the Rights represented by this Right Certificate to purchase the
shares of the Common Stock of the Company, or other securities or property
issuable upon the exercise of said number of Rights pursuant to the Rights
Agreement.
The undersigned hereby requests that a certificate for any such
securities and any such property be issued in the name of and delivered to:
________________________________________________________________________________
________________________________________________________________________________
(Name, address and social security or other
identifying number of issuee)
The undersigned hereby further requests that if said number of Rights
shall not be all the Rights represented by this Right Certificate, a new Right
Certificate for the remaining balance of such Rights be issued in the name of
and delivered to:
________________________________________________________________________________
________________________________________________________________________________
(Name, address and social security or other
identifying number of issuee)
Dated:___________________, ______ ________________________
(Signature)
Signature Guaranteed:
8
Form of Reverse Side of Right Certificate
(continued)
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is or was an Acquiring Person or an Affiliate or Associate
of an Acquiring Person or any transferee of such Persons.
Dated:___________________, ______ ________________________________
(Signature)
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Election to Purchase and the foregoing
Certificate, if applicable, must correspond to the name as written upon the face
of the this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever, and 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.
In the event that the foregoing Certificate is not executed, with
signature guaranteed, the Company may deem the Rights represented by this Right
Certificate to be Beneficially Owned by an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such capitalized terms are defined in the
Rights Agreement), and not issue any Right Certificate or Right Certificates in
exchange for this Right Certificate.
9
EXHIBIT C
---------
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED
TO, BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN
ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) OR AN ASSOCIATE OR
AFFILIATE (AS DEFINED IN THE RIGHTS AGREEMENT) THEREOF AND CERTAIN TRANSFEREES
THEREOF WILL BE NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
MICROTUNE, INC.
SUMMARY OF TERMS OF
RIGHTS AGREEMENT
Nature of Right: When exercisable, each Right (a "Right") will initially entitle the holder to purchase one
one-thousandth of a share of Series A Preferred Stock ("Preferred Stock") of Microtune, Inc.
(the "Company").
Means of Distribution: The Rights will be distributed to holders of the Company's outstanding Common Stock as a
dividend of one Right for each share of Common Stock. The Rights will also be attached to
all future issuances of Common Stock prior to the Distribution Date (as defined below).
Exercisability: Rights become exercisable on the earlier of: (i) the tenth day following the date of public
announcement by the Company or by any person or group (an "Acquiring Person") that such
person or group has acquired beneficial ownership of 15% or more of the Company's
outstanding Common Stock, or (ii) the tenth business day (unless extended by the Board of
Directors of the Company (the "Board") prior to the time a person becomes an Acquiring
Person) following the commencement, or announcement of an intention to commence, by any
person or group of a tender or exchange offer which would result in such person owning 15%
or more of the outstanding Common Stock of the Company (the earlier of such dates being
referred to as the "Distribution Date"), provided that an Acquiring Person does not
--------
include an Exempt Person (as such term is defined in the Rights Agreement). Rights will
trade separately from the Common Stock once the Rights become exercisable.
Exercise Price: $115.00 per one one-thousandth of a share of Preferred Stock, which is the amount that in
the judgment of the Board represents the long-term value of the Common Stock over the term
of the Rights Agreement (the "Purchase Price").
Term: The Rights will expire upon the earlier of (i) ten years after the date of issuance or March
3, 2012, or (ii) redemption or exchange by the Company as described below.
Redemption of Rights: Rights are redeemable at a price of $0.001 per Right, by the vote of the Board, at any time
until the occurrence of a Flip-In Event (defined below).
Preferred Stock: The Preferred Stock purchasable upon exercise of the Rights will be nonredeemable and junior
to any other series of preferred stock the
1
Company may issue (unless otherwise provided in the terms of such other series). Each share
of Preferred Stock will have a preferential cumulative quarterly dividend in an amount equal
to the greater of (a) $2,875.00 or (b) 1,000 times the dividend declared on each share of
Common Stock. In the event of liquidation, the holders of Preferred Stock will receive a
preferred liquidation payment equal to the greater of (a) 1,000 times the Exercise Price per
share, plus accrued dividends to the date of distribution whether or not earned or declared,
or (b) an amount per share equal to 1,000 times the aggregate payment to be distributed per
share of Common Stock. Each share of Preferred Stock will have 1,000 votes, voting together
with the shares of Common Stock. In the event of any merger, consolidation or other
transaction in which shares of Common Stock are exchanged for or changed into other
securities, cash and/or other property, each share of Preferred Stock will be entitled to
receive 1,000 times the amount and type of consideration received per share of Common Stock.
The rights of the Preferred Stock as to dividends, liquidation and voting, and in the event
of mergers and consolidations, are protected by customary anti-dilution provisions.
Fractional shares (in integral multiples of one one-thousandth) of Preferred Stock will be
issuable; however, the Company may elect to distribute depositary receipts in lieu of such
fractional shares. In lieu of fractional shares other than fractions that are multiples of
one one-thousandth of a share, 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. Because of
the nature of the Preferred Stock's dividend, liquidation and voting rights, the value of
one one-thousandth of a share of Preferred Stock purchasable upon exercise of each Right
should approximate the value of one share of Common Stock.
Rights in Event of Self-Dealing In the event that an Acquiring Person engages in certain self-dealing transactions or
Transaction or Acquisition of becomes a beneficial owner of 15% or more of the outstanding Common Stock
Substantial Amount of Common Stock: ("Flip-In Events"), a holder of a Right thereafter has the right to purchase, upon payment
of the then current Exercise Price, in lieu of one one-thousandth of a share of Preferred
Stock, such number of shares of Common Stock having a market value at the time of the
transaction equal to the Exercise Price divided by one-half the Current Market Price (as
defined in the Rights Agreement) of the Common Stock. Notwithstanding the foregoing, Rights
held by the Acquiring Person or any associate or affiliate thereof or certain transferees
will be null and void and no longer be transferable.
Self-dealing transactions are defined to include a consolidation, merger or other
combination of an Acquiring Person with the Company in which the Company is the surviving
corporation, the transfer of assets to the Company in exchange for securities of the
Company, the acquisition of securities of the Company (other than in a pro rata distribution
to all stockholders), the sale, purchase, transfer, distribution, lease, mortgage, pledge or
acquisition of assets by the Acquiring Person to, from or with the Company on other than an
arm's length basis, compensation to an Acquiring Person for services (other than for
employment as a regular or part-time employee or director on a basis consistent with the
Company's past practice), a loan or provision of other financial assistance (except
proportionately as a stockholder) to an Acquiring Person or the licensing, sale or other
transfer of proprietary technology or know-how from the Company to the Acquiring Person on
terms not approved by the Board
2
or a reclassification, recapitalization or other transaction with the effect of increasing
by more than 1% the Acquiring Person's proportionate share of any class of securities of the
Company.
Rights in Event of Business If, following the occurrence of a Flip-In Event, the Company is acquired by any person in a
Combination: merger or other business combination transaction in which the Common Stock is exchanged or
converted or in which the Company is not the surviving corporation, or 50% or more of its
assets or earnings power are sold to any person, each holder of a Right (other than an
Acquiring Person, or affiliates or associates thereof) shall thereafter have the right to
purchase, upon payment of the then current Exercise Price, such number of shares of common
stock of the acquiring company having a current market value equal to the Exercise Price
divided by one-half the Current Market Price of such common stock.
Exchange Option: In the event (i) any person or group becomes an Acquiring Person or (ii) any of the types of
transactions, acquisitions or other events described above as self-dealing transactions
occur, and prior to the acquisition by such person or group of 50% or more of the
outstanding shares of Common Stock, the Board may require all or any portion of the
outstanding Rights (other than Rights owned by such Acquiring Person which have become void)
to be exchanged for Common Stock on a pro rata basis, at an exchange ratio of one share of
Common Stock or one one-thousandth of a share of Preferred Stock (or of a share of a class
or series of the Company's Preferred Stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
Fractional Shares: No fractional shares of Common Stock will be issued upon exercise of the Rights and, in lieu
thereof, a payment in cash will be made to the holder of such Rights equal to the same
fraction of the current market value of a share of Common Stock.
Adjustment: The Exercise Price payable, and the number of 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) upon the grant to holders of
the Preferred Stock of certain rights or warrants to subscribe for Preferred Stock or
convertible securities at less than the current market price of the Preferred Stock or (iii)
upon the distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding dividends payable in Preferred Stock) or of subscription rights or
warrants (other than those referred to above). The number of Rights associated with each
share of Common Stock is 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.
Rights as Stockholder: The Rights themselves do not entitle the holder thereof to any rights as a stockholder,
including, without limitation, voting rights or to receive dividends.
Amendment of Rights: Until the Rights become nonredeemable, the Company may, except with
3
respect to the redemption price, amend the Agreement in any manner. After the Rights become
nonredeemable, the Company may amend the Agreement to cure any ambiguity, to correct or
supplement any provision which may be defective or inconsistent with any other provisions,
to shorten or lengthen any time period under the Rights Agreement, or to change or
supplement any provision in any manner the Company may deem necessary or desirable, provided
that no such amendment may adversely affect the interests of the holders of the Rights
(other than the Acquiring Person or its Affiliates or Associates) or cause the Rights to
again be redeemable or the Agreement to again be freely amendable.
A copy of the Rights Agreement is available, free of charge, from the Company,
Microtune, Inc., 0000 00xx Xxxxxx, Xxxxx, XX 00000, Attention: Corporate
Secretary. This summary description of the Rights Agreement does not purport to
be complete and is qualified in its entirety by reference to the Rights
Agreement, as amended from time to time, which is incorporated in this summary
description by reference.
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