EXHIBIT 10.23
RIGHTS AGREEMENT
dated as of February 18, 1998
by and between
COMPUTER SCIENCES CORPORATION
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,
as Rights Agent
TABLE OF CONTENTS
Page
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Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 7
Section 3. Issuance of Right Certificates 7
Section 4. Form of Right Certificates 9
Section 5. Countersignature and Registration 9
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates 10
Section 7. Exercise of Rights 11
Section 8. Cancellation and Destruction of Right Certificates 13
Section 9. Reservation and Availability of Capital Stock 13
Section 10. Securities Record Date 14
Section 11. Adjustment of Exercise Price, Number of Shares Issuable
Upon Exercise of Rights or Number of Rights 14
Section 12. Certificate of Adjusted Exercise Price or Number of
Shares Issuable Upon Exercise of Rights 20
Section 13. Consolidation, Merger, or Sale or Transfer of Assets
or Earning Power 20
Section 14. Fractional Rights and Fractional Shares 23
Section 15. Rights of Action 24
Section 16. Agreement of Right Holders 24
Section 17. Right Holder and Right Certificate Holder Not Deemed
a Stockholder 25
Section 18. Concerning the Rights Agent 25
Section 19. Merger or Consolidation or Change of Name of Rights Agent 26
Section 20. Duties of Rights Agent 26
Section 21. Change of Rights Agent 28
Section 22. Issuance of New Right Certificates 29
Page
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Section 23. Redemption of Rights 29
Section 24. Exchange of Rights 30
Section 25. Notice of Certain Events 31
Section 26. Notices 32
Section 27. Supplements and Amendments 32
Section 28. Certain Covenants 33
Section 29. Successors 33
Section 30. Benefits of this Agreement 33
Section 31. Severability 33
Section 32. Governing Law 34
Section 33. Counterparts 34
Section 34. Descriptive Headings 34
Exhibit A - Form of Right Certificate A-1
ii
RIGHTS AGREEMENT
This Rights Agreement ("Agreement") is made and entered into as of the
18th day of February, 1998 by and between Computer Sciences Corporation, a
Nevada corporation (the "Company"), and ChaseMellon Shareholder Services,
L.L.C. (the "Rights Agent").
WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend of one preferred stock purchase right (a "Right") for each
Common Share (as hereinafter defined) of the Company, which dividend is
payable on February 27, 1998 (the "Record Date") to the holders of record of
Common Shares as of the Close of Business (as hereinafter defined) on such
date;
WHEREAS, the Board of Directors of the Company has further authorized and
directed the issuance of one (subject to adjustment of such number as provided
in this Agreement) Right for (A) each Common Share that shall be issued by the
Company at any time after the Record Date and prior to the earliest of the
date of the first Section 11(a)(ii) Event, the date of the first Section 13(a)
Event, the Redemption Date or the Expiration Date (as such terms are
hereinafter defined), and (B) each Common Share that shall be issued by the
Company at any time on or after the earlier of the date of the first Section
11(a)(ii) Event or the date of the first Section 13(a) Event and prior to the
earlier of the Redemption Date or the Expiration Date pursuant to the exercise
of conversion rights, exchange rights, rights (other than Rights), warrants or
options that shall have been issued or granted prior to the earlier of the
date of the first Section 11(a)(ii) Event or the date of the first Section
13(a) Event, unless the Board of Directors shall provide otherwise at the time
of the issuance or grant of such conversion rights, exchange rights, rights
(other than Rights), warrants or options; and
WHEREAS, in connection with the matters referred to herein, the Company
desires to appoint the Rights Agent to act on behalf of the Company for the
benefit of the holders of Rights, and the Rights Agent is willing so to act;
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
agreements set forth herein, and for the benefit of the holders of Rights, the
parties hereto hereby agree as follows:
Section 1. Certain Definitions.
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For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act, as in
effect on the date hereof.
(b) A Person shall be deemed the "Beneficial Owner" of and shall
be deemed to "Beneficially Own":
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(i) any securities that such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly, for
purposes of Section 13(d) of the Exchange Act and Rule 13d-3 promulgated
under the Exchange Act, in each case as in effect on the date hereof;
(ii) any securities that such Person or any of such Person's
Affiliates or Associates has the right to acquire (whether such right is
exercisable immediately, or only after the passage of time, compliance
with regulatory requirements, the fulfillment of a condition, or
otherwise) pursuant to any agreement, arrangement or understanding, or
upon the exercise of conversion rights, exchange rights, rights (other
than the Rights), warrants or options, or otherwise, provided that a
Person shall not be deemed the Beneficial Owner of, or to Beneficially
Own, securities tendered pursuant to a tender offer or exchange offer
made by or on behalf of such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for purchase
or exchange;
(iii) any securities that such Person or any of such Person's
Affiliates or Associates has the right to vote, alone or in concert with
others, pursuant to any agreement, arrangement or understanding,
provided that a Person shall not be deemed the Beneficial Owner of, or
to Beneficially Own, any security if the agreement, arrangement or
understanding to vote such security (A) arises solely from a revocable
proxy given to such Person or any of such Person's Affiliates or
Associates in response to a public proxy solicitation made pursuant to
and in accordance with the applicable rules and regulations of the
Exchange Act, and (B) is not also then reportable on Schedule 13D under
the Exchange Act (or any comparable or successor report);
(iv) any securities that 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 for the purpose of acquiring, holding, voting (other than
voting pursuant to a revocable proxy as described in the proviso to
Section 1(b)(iii) hereof) or disposing of any securities of the Company;
and
(v) on any day on or after the Distribution Date, all
Rights that prior to such date were represented by certificates for
Common Shares that such Person Beneficially Owns on such day.
Notwithstanding anything to the contrary in this Section 1(b), a Person
engaged in business as an underwriter of securities shall not be deemed to be
the Beneficial Owner of, or to Beneficially Own, any securities acquired
through such Person's participation in good faith in a firm commitment
underwriting until the expiration of 40 days after the date of such
acquisition.
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(c) "Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in the States of New York or
California are authorized or obligated by law or executive order to close.
(d) "Close of Business" on any given date shall mean 5:00 o'clock
p.m., California time, on such date; provided, however, that if such date is
not a Business Day, it shall mean 5:00 o'clock p.m., California time, on the
next succeeding Business Day.
(e) "Closing Price" of a stock or other security on any day shall
be the last sale price, regular way, per share of such stock or unit of such
other security on such day 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 such stock or other security is not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which such stock or other
security is listed or admitted to trading or, if such stock or other security
is 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 the National
Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ")
or such other system then in use or, if on any such date such stock or other
security is not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker that makes a
market in such stock or other security and that is selected by the Board of
Directors of the Company.
(f) "Common Share" shall mean one share of the common stock, par
value $1.00 per share, of the Company, unless used with reference to a Person
other than the Company, in which case it shall mean one share of the class of
capital stock (or equity interest) of such other Person having the greatest
voting power per share or, if such Person is a Subsidiary of another Person,
of the Person that ultimately controls such Person.
(g) "Common Share Equivalent" shall have the meaning ascribed to
it in Section 11(a)(iii) hereof.
(h) "Current Market Price" per share of a stock or unit of any
other security on any date shall mean the average of the daily Closing Prices
of such stock or other security for the 30 consecutive Trading Days through
and including the Trading Day immediately preceding the date in question;
provided, however, that if any event shall have caused the Closing Price on
any Trading Day during such 30-day period not to be fully comparable with the
Closing Price on the date in question (or, if no Closing Price is available on
the date in question, on the Trading Day immediately preceding the date in
question), then each such noncomparable Closing Price so used shall be
appropriately adjusted by the Board of Directors of the Company in order to
make the Closing Price on each Trading Day during the period used for the
determination of the Current Market Price fully comparable with the
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Closing Price on such date in question (or, if applicable, the immediately
preceding Trading Day). "Current Market Price" per share of any stock or unit
of such other security that is not publicly held or so listed or traded, and
"Current Market Price" of any other property, shall mean the fair value per
share of such stock or unit of such other security, or the fair value of such
other property, respectively, as determined in good faith by the Board of
Directors of the Company based upon such appraisals or valuation reports of
such independent experts as the Board of Directors shall in good faith
determine appropriate, which determination shall be described in a statement
filed by the Company with the Rights Agent. Notwithstanding the foregoing,
for purposes of Section 11 hereof "Current Market Price Per Share" as to
Preferred Shares shall be determined as set forth in Section 11(d).
(i) "Distribution Date" shall have the meaning ascribed to it in
Section 3 hereof.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(k) "Exchange Ratio" shall have the meaning ascribed to it in
Section 24(a) hereof.
(l) "Exempt Person" shall mean the Company, any wholly-owned
Subsidiary of the Company, any employee benefit plan of the Company or of a
Subsidiary of the Company, and any Person holding Voting Shares for or
pursuant to the terms of any such employee benefit plan.
(m) "Exercise Price" shall have the meaning ascribed to it in
Section 7(c) hereof.
(n) "Expiration Date" shall mean February 18, 2008.
(o) "Person" shall mean any individual, firm, partnership,
corporation, association, group (as such term is used in Rule 13d-5
promulgated under the Exchange Act as in effect on the date hereof) or other
entity, and shall include any successor (by merger or otherwise) of such
entity.
(p) "Preferred Share" shall mean one share of the Series A Junior
Participating Preferred Stock, par value $1.00 per share, of the Company,
which has the rights and preferences set forth in the Certificate of
Designations filed with the Secretary of State of the State of Nevada on
January 13, 1989, as amended and, to the extent that there is not a sufficient
number of shares of Series A Junior Participating Preferred Stock authorized
to permit the full exercise of the Rights, any other series of preferred
stock, $1.00 par value of the Company, designated for such purpose containing
terms substantially similar to the terms of the Series A Junior Participating
Preferred Stock.
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(q) "Preferred Share Equivalents" shall have the meaning ascribed
to it in Section 11(b) hereof.
(r) "Record Date" shall have the meaning ascribed to it in the
recitals hereto.
(s) "Redemption Date" shall mean the date of the action of the
Board of Directors of the Company authorizing and directing the redemption of
the Rights pursuant to Section 23(a) hereof or the exchange of the Rights
pursuant to Section 24(a) hereof.
(t) "Redemption Price" shall have the meaning ascribed to it in
Section 23(a) hereof.
(u) "Right" shall have the meaning ascribed to it in the recitals
hereto.
(v) "Rights Agent" shall have the meaning ascribed to it in the
recitals hereto.
(w) "Section 11(a)(ii) Event" shall have the meaning ascribed to
it in Section 11(a)(ii) hereof.
(x) "Section 13(a) Event" shall have the meaning ascribed to it in
Section 13(a) hereof.
(y) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(z) "Subsidiary" of any Person shall mean any corporation or other
Person of which equity securities or equity interests representing a majority
of the voting power are owned, directly or indirectly, or which is effectively
controlled, by such Person.
(aa) "Surviving Person" shall have the meaning ascribed to it in
Section 13(a) hereof.
(bb) "Trading Day" shall mean, as to any stock or other security, a
day on which the principal national securities exchange on which such stock or
other security is listed or admitted to trading is open for the transaction of
business or, if such stock or other security is not listed or admitted to
trading on any national securities exchange, a Business Day.
(cc) "Unavailable Adjustment Shares" has the meaning ascribed to it
in Section 11(a)(iii) hereof.
(dd) "Voting Share" shall mean (i) a Common Share of the Company
and (ii) any other share of capital stock of the Company entitled to vote
generally in the election of directors or entitled to vote together with the
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Common Shares in respect of any merger, consolidation, sale of all or
substantially all of the Company's assets, liquidation, dissolution or winding
up. References in this Agreement to a percentage or portion of the
outstanding Voting Shares shall be deemed a reference to the percentage or
portion of the total votes entitled to be cast by the holders of the
outstanding Voting Shares.
(ee) "10% Ownership Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by
the Company or a 10% Stockholder containing the facts by virtue of which a
Person has become a 10% Stockholder or such earlier date as a majority of the
directors shall become aware of the existence of a 10% Stockholder.
(ff) "10% Stockholder" shall mean any Person that, together with
all Affiliates and Associates of such Person, hereafter becomes the Beneficial
Owner of such number of Voting Shares of the Company as constitutes a
percentage of the then outstanding Voting Shares that is equal to or greater
than 10%; provided, however, that the term "10% Stockholder" shall not
include: (i) an Exempt Person; (ii) any Person if such Person would not
otherwise be a 10% Stockholder but for a reduction in the number of
outstanding Voting Shares resulting from a stock repurchase program or other
similar plan of the Company or from a self-tender offer of the Company, which
plan or tender offer commenced on or after the date hereof, provided, however,
that the term "10% Stockholder" shall include such Person from and after the
first date upon which (A) such Person, since the date of the commencement of
such plan or tender offer, shall have acquired Beneficial Ownership of, in the
aggregate, a number of Voting Shares of the Company equal to 1% or more of the
Voting Shares of the Company then outstanding and (B) such Person, together
with all Affiliates and Associates of such Person, shall Beneficially Own 10%
or more of the Voting Shares of the Company then outstanding; or (iii) any
Person if such Person is the Beneficial Owner of 10% or more of the
outstanding Voting Shares of the Company as of the date of this Agreement,
provided, however, that the term "10% Stockholder" shall include such Person
from and after the first date upon which (A) such Person, since the date of
this Agreement, shall have acquired, without the prior approval of the Board
of Directors of the Company, Beneficial Ownership of, in the aggregate, a
number of Voting Shares of the Company equal to 1% or more of the Voting
Shares of the Company then outstanding and (B) such Person, together with all
Affiliates and Associates of such Person, shall Beneficially Own 10% or more
of the Voting Shares of the Company then outstanding. In calculating the
percentage of the outstanding Voting Shares that are Beneficially Owned by a
Person for purposes of this subsection (ff), Voting Shares that are
Beneficially Owned by such Person shall be deemed outstanding, and Voting
Shares that are not Beneficially Owned by such Person and that are subject to
issuance upon the exercise or conversion of outstanding conversion rights,
exchange rights, rights (other than Rights), warrants or options shall not be
deemed outstanding. Notwithstanding the foregoing, if the Board of Directors
of the Company determines that a Person that would otherwise be a 10%
Stockholder pursuant to the foregoing provisions of this Section 1(ff) and
Section 1(b) hereof has become such inadvertently, and such Person (i)
promptly notifies the Board of Directors of such status and (ii) as promptly
6
as practicable thereafter, either divests a sufficient number of Voting Shares
so that such Person would no longer be a 10% Stockholder, or causes any other
circumstance, such as the existence of an agreement respecting Voting Shares,
to be eliminated such that such Person would no longer be a 10% Stockholder as
defined pursuant to this Section 1(ff) and 1(b), then such Person shall not be
deemed to be a 10% Stockholder for any purposes of this Agreement. Any
determination made by the Board of Directors of the Company as to whether any
Person is or is not a 10% Stockholder shall be conclusive and binding upon all
holders of Rights.
Section 2. Appointment of Rights Agent.
---------------------------
The Company hereby appoints the Rights Agent to act as agent for the Company,
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 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.
Section 3. Issuance of Right Certificates.
------------------------------
(a) "Distribution Date" shall mean the date, after the date
hereof, that is the earliest of (i) the tenth Business Day (or such later day
as shall be designated by the Board of Directors of the Company) following the
date of the commencement of, or the first public announcement of the intent of
any Person, other than an Exempt Person, to commence a tender offer or
exchange offer, the consummation of which would cause any Person to become a
10% Stockholder, (ii) the date of the first Section 11(a)(ii) Event or (iii)
the date of the first Section 13(a) Event; provided, however, that,
notwithstanding anything in this Section 3(a) to the contrary, clause (i) of
this Section 3(a) shall not apply with respect to the commencement of a tender
offer by CAI Computer Services Corp. on February 17, 1998.
(b) Until the Distribution Date, (i) the Rights shall be
represented by certificates for Common Shares (all of which certificates for
Common Shares shall be deemed to be Right Certificates) and not by separate
Right Certificates, (ii) the record holder of the Common Shares represented by
each of such certificates shall be the record holder of the Rights represented
thereby and (iii) the Rights shall be transferable only in connection with the
transfer of Common Shares. Until the earliest of the Distribution Date, the
Redemption Date or the Expiration Date, the surrender for transfer of such
certificates for Common Shares shall also constitute the surrender for
transfer of the Rights represented thereby.
(c) As soon as practicable after the Distribution Date, and after
notification by the Company, the Rights Agent shall send, at the Company's
expense, by first-class, postage-prepaid mail to each record holder of Common
Shares, as of the Close of Business on the Distribution Date, at the address
of such holder shown on the records of the Company, a Right Certificate
substantially in the form of Exhibit A hereto representing one Right for each
Common Share so held. From and after the Distribution Date, the Rights shall
7
be represented solely by such Right Certificates and may only be transferred
by the transfer of such Right Certificates, and the holders of such Right
Certificates, as listed in the records of the Company or any transfer agent or
registrar for such Rights, shall be the record holders of such Rights.
(d) Certificates for Common Shares issued at any time after the
Record Date and prior to the earliest of the Distribution Date, the Redemption
Date or the Expiration Date, shall have impressed on, printed on, written on
or otherwise affixed to them the following legend:
"This certificate also represents Rights that entitle the holder
hereof to certain rights as set forth in a Rights Agreement dated as of
February 18, 1998 by and between the Corporation and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent (as it may be amended from
time to time, the "Rights Agreement"), the terms and conditions of which
are hereby incorporated herein by reference and a copy of which is on
file at the principal executive offices of the Corporation.
Under certain circumstances specified in the Rights Agreement, such
Rights will be represented by separate certificates and will no longer be
represented by this certificate. Under certain circumstances specified
in the Rights Agreement, Rights beneficially owned by certain persons may
become null and void. The Corporation will mail to the record holder of
this certificate a copy of the Rights Agreement without charge promptly
following receipt of a written request therefor."
(e) Certificates for Common Shares issued at any time on or after
the Distribution Date and prior to the earlier of the Redemption Date or the
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
"This certificate does not represent any Right issued pursuant to
the terms of a Rights Agreement dated as of February 18, 1998 by and
between the Corporation and ChaseMellon Shareholder Services, L.L.C., as
Rights Agent."
(f) In the event that at any time on or after the earlier of the
date of the first Section 11(a)(ii) Event or the date of the first Section
13(a) Event and prior to the earlier of the Redemption Date or the Expiration
Date, the Company shall issue any Common Shares pursuant to the exercise of
conversion rights, exchange rights, rights (other than Rights), warrants or
options that shall have been issued or granted prior to the earlier of the
date of the first Section 11(a)(ii) Event or the date of the first Section
13(a) Event, then, unless the Board of Directors of the Company shall have
provided otherwise at the time of the issuance or grant of such conversion
rights, exchange rights, rights (other than Rights), warrants or options, the
Rights Agent shall, as soon as practicable after the date of such event,
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send by first-class, postage-prepaid mail to the record holder of such Common
Shares, at the address of such holder as shown on the records of the Company,
a Right Certificate substantially in the form of Exhibit A hereto representing
one Right for each Common Share so issued.
(g) Notwithstanding the foregoing provisions of this Section 3,
the Rights Agent shall not send any Right Certificate to any 10% Stockholder
or any of its Affiliates or Associates or to any Person if the Rights held by
such Person are Beneficially Owned by a 10% Stockholder or any of its
Affiliates or Associates. Any determination made by the Board of Directors of
the Company as to whether any Common Shares are or were Beneficially Owned at
any time by a 10% Stockholder or an Affiliate or Associate of a 10%
Stockholder shall be conclusive and binding upon all holders of Rights.
Section 4. Form of Right Certificates.
--------------------------
The Right Certificates and the form of assignment, including certificate, and
the form of election to purchase, including certificate, printed on the
reverse thereof, when, as and if issued, shall be substantially the same as
Exhibit A hereto, and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or regulation of any
stock exchange upon which the Rights or the securities of the Company issuable
upon exercise of the Rights may from time to time be listed, or to conform to
usage. Subject to Section 22 hereof, Right Certificates, whenever issued,
that are issued in respect of Common Shares that were issued and outstanding
as of the Close of Business on the Distribution Date, shall be dated as of the
Distribution Date.
Section 5. Countersignature and Registration.
---------------------------------
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or any Vice President,
either manually or by facsimile signature, and may have affixed thereto the
Company's seal or a facsimile thereof attested by its Secretary or any
Assistant Secretary, either manually or by facsimile signature. The Right
Certificates shall be countersigned by an authorized signatory of the Rights
Agent (which need not be the same authorized signatory for all of the Right
Certificates) and shall not be valid for any purpose unless so countersigned.
In case any officer of the 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 may nevertheless be countersigned by an authorized
signatory of the Rights Agent and issued and delivered by the Company with the
same force and effect as though the person who signed such Right Certificates
had not ceased to be such officer of the Company. Any Right Certificate may
be signed on behalf of the Company by any person who at the actual date of
such execution shall be a proper officer of the Company to sign such Right
Certificate, even though such person was not such an officer at the date of
the execution of this Agreement.
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(b) Following the Distribution Date, the Rights Agent shall keep
or cause to be kept at its principal offices in Ridgefield Park, New Jersey,
books for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of Right Certificates, the number of Rights represented on its face by
each Right Certificate and the date of each Right Certificate.
Section 6. Transfer, Split Up, Combination and Exchange of Right
-----------------------------------------------------
Certificates; Mutilated, Destroyed, Lost or Stolen Right
--------------------------------------------------------
Certificates.
------------
(a) Subject to the provisions of Sections 6(c), 7(d) and 14
hereof, at any time after the Close of Business on the Distribution Date, and
so long as the Rights represented thereby remain outstanding, any one or more
Right Certificates may be transferred, split up, combined or exchanged for one
or more Right Certificates representing the same aggregate number of Rights as
the Right Certificates surrendered. Any registered holder desiring to
transfer, split up, combine or exchange one or more Right Certificates shall
make such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent with the form of assignment,
including certificate, on the reverse side thereof completed and duly
executed, with signature guaranteed and such other and further documentation
as the Rights Agent may reasonably request. Thereupon, the Rights Agent shall
countersign and deliver to the person entitled thereto one or more Right
Certificates, 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) 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, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of such Right Certificate, if mutilated, along with signature
guarantees and such other and further documentation as the Rights Agent may
reasonably request, the Company shall issue and deliver to the Rights Agent
for delivery to the record holder of such Right Certificate a new Right
Certificate of like tenor in lieu of such lost, stolen, destroyed or mutilated
Right Certificate.
(c) Notwithstanding anything to the contrary in this Section 6,
the Rights Agent shall not countersign and deliver a Right Certificate to any
Person if such Right Certificate represents, or would represent when held by
such Person, Rights that had become or would become null and void pursuant to
Section 7(d) hereof.
Section 7. Exercise of Rights.
------------------
(a) Until the Distribution Date, no Right may be exercised.
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(b) Subject to Section 7(d) and (g) hereof and the other
provisions of this Agreement, at any time after the Close of Business on the
Distribution Date and prior to the Close of Business on the earlier of the
Redemption Date or the Expiration Date, the registered holder of any Right
Certificate may exercise the Rights represented thereby in whole or in part
upon surrender of such Right Certificate, with the form of election to
purchase, including certificate, on the reverse side thereof completed and
duly executed, to the Rights Agent at the office of the Rights Agent in
Ridgefield Park, New Jersey, along with a signature guarantee and such other
and further documentation as the Rights Agent may reasonably request, together
with payment of the Exercise Price for each Right exercised. Upon the
exercise of an exercisable Right and payment of the Exercise Price in
accordance with the provisions of this Agreement, the holder of such Right
shall be entitled to receive, subject to adjustment as provided herein, one
four-thousandth (1/4000th) of a Preferred Share (or, following the occurrence
of a Section 11(a)(ii) Event or a Section 13(a) Event, Common Shares, other
securities cash and/or other property in accordance with the provisions of
this Agreement).
(c) The Exercise Price for each one four-thousandth (1/4000th) of
a Preferred Share pursuant to the exercise of each Right shall initially be
$500 (Five Hundred Dollars) and shall be payable in lawful money of the United
States of America in accordance with Section 7(f) hereof. The Exercise Price
and the number of Preferred Shares (or, following the occurrence of a Section
11(a)(ii) Event or a Section 13(a) Event, Common Shares, cash and/or other
property in accordance with the provisions of this Agreement) to be acquired
upon exercise of a Right shall be subject to adjustment from time to time as
provided in Sections 7(e), 11 and 13 hereof and the other provisions of this
Agreement.
(d) Notwithstanding anything in this Agreement to the contrary,
from and after the earlier of the date of the first Section 11(a)(ii) Event or
the date of the first Section 13(a) Event, any Rights that are or were
Beneficially Owned by (i) a 10% Stockholder or any Affiliate or Associate of a
10% Stockholder, (ii) a transferee of a 10% Stockholder (or of any such
Associate or Affiliate) who becomes a transferee after the 10% Stockholder
becomes such, or (iii) a transferee of a 10% Stockholder (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
a 10% Stockholder becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the 10% Stockholder to
holders of equity interests in such 10% Stockholder or to any Person with whom
the 10% Stockholder has any continuing agreement, arrangement or understanding
regarding the transferred Rights, or (B) a transfer which the Board of
Directors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(d), at any time on or after the Distribution Date shall be null and
void, and for all purposes of this Agreement such Rights shall thereafter be
deemed not to be outstanding, and any holder of such Rights (whether or not
such holder is a 10% Stockholder or an Affiliate or Associate of a 10%
Stockholder) shall thereafter have no right to exercise such Rights.
11
(e) Prior to the Distribution Date, if the Board of Directors of
the Company shall have determined that such action adequately protects the
interests of the holders of Rights, the Company may, in its discretion,
substitute for all or any portion of the Preferred Shares that would otherwise
be issuable (after the Close of Business on the Distribution Date) upon the
exercise of each Right and payment of the Exercise Price, (i) cash, (ii) other
equity securities of the Company, (iii) debt securities of the Company, (iv)
other property or (v) any combination of the foregoing, in each case having an
aggregate Current Market Price equal to the aggregate Current Market Price of
the Preferred Shares for which substitution is made. Subject to Section 7(d)
hereof, in the event that the Company takes any action pursuant to this
Section 7(e), such action shall apply uniformly to all outstanding Rights.
(f) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase, including certificate,
completed and duly executed, with signature guaranteed, accompanied by payment
of the Exercise Price for each Right to be exercised and an amount equal to
any applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check or
cashier's check payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) requisition from the transfer agent of the Preferred
Shares (or, following the occurrence of a Section 11(a)(ii) Event or a Section
13(a) Event, Common Shares, other securities, cash and/or other property in
accordance with the provisions of this Agreement), certificates for the number
of one four-thousandths (1/4000th) of a Preferred Share (or such other
securities) to be purchased, and the Company hereby irrevocably authorizes
such transfer agent to comply with all such requests, and/or, as provided in
Section 14 hereof, requisition from the depositary agent described therein
depositary receipts representing such number of one four-thousandths
(1/4000th) of a Preferred Share (or such other securities) as are to be
purchased (in which case certificates for the Preferred Shares (or such other
securities) represented by such receipts shall be deposited by the transfer
agent with such depositary agent) and the Company hereby directs such
depositary agent to comply with such request, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional Preferred Shares (or such other securities) in accordance with
Section 14 hereof, (iii) after receipt of such certificates, depositary
receipts or cash, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names
as may be designated by such holder and (iv) when appropriate, after receipt
thereof, deliver such cash to or upon the order of the registered holder of
such Right Certificate.
(g) Notwithstanding the foregoing provisions of this Section 7,
the exercisability of the Rights shall be suspended for such period as shall
reasonably be necessary for the Company to register under the Securities Act
and any applicable securities law of any jurisdiction the Preferred Shares to
be issued pursuant to the exercise of the Rights; provided, however, that
nothing contained in this Section 7 shall relieve the Company of its
obligations under Section 9(c) hereof.
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(h) In case the registered holder of any Right Certificate shall
exercise less than all of the Rights represented thereby, a new Right
Certificate representing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to such holder's duly authorized assigns, subject to the
provisions of Section 14 hereof.
Section 8. Cancellation and Destruction of Right Certificates.
--------------------------------------------------
All Right Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or to
any of its agents, be delivered to the Rights Agent for cancellation or in
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 this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Right Certificates to the Company.
Section 9. Reservation and Availability of Capital Stock.
---------------------------------------------
(a) Subject to Section 7(e) hereof, the Company shall cause to be
reserved and kept available out of its authorized and unissued equity
securities (or out of its authorized and issued equity securities held in its
treasury), the number of such equity securities that will from time to time be
sufficient to permit the exercise in full of all outstanding Rights.
(b) In the event that any securities issuable upon exercise of the
Rights are listed on any national securities exchange, the Company shall use
its best efforts, from and after such time as the Rights become exercisable,
to cause all such securities issued or reserved for such issuance to be listed
on such exchange upon official notice of issuance upon such exercise.
(c) If necessary to permit the issuance of securities upon
exercise of the Rights, the Company shall use its best efforts, from and after
the Distribution Date, to register such securities under the Securities Act
and any applicable state securities laws and to keep such registration
effective until the earlier of the Redemption Date or the Expiration Date.
(d) The Company shall take all such action as may be necessary to
ensure that all securities delivered upon exercise of the Rights shall, at the
time of delivery of the certificates for such securities (subject to payment
of the Exercise Price), be duly and validly authorized and issued and fully
paid and nonassessable securities.
(e) The Company shall pay when due and payable any and all federal
and state transfer taxes and charges that may be payable in respect of the
issuance or delivery of the Right Certificates or of any securities upon the
exercise of Rights. The Company shall not, however, be required to pay any
13
transfer tax that may be payable in respect of any transfer or delivery of a
Right Certificate to a Person other than, or the issuance or delivery of a
certificate for securities in respect of a name other than that of, the
registered holder of the Right Certificate representing Rights surrendered for
exercise, or to issue or deliver any certificate for securities upon the
exercise of any Right 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.
(f) With respect to the Common Shares and/or other securities
issuable pursuant to Section 11(a)(ii) and (iii) hereof, the foregoing
covenants shall be applicable only upon and following the occurrence of a
Section 11(a)(ii) Event.
Section 10. Securities Record Date.
----------------------
Each person in whose name any certificate for securities of the Company is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the securities represented thereby on, and such
certificate shall be dated, the date upon which the Right Certificate
representing such Rights was duly surrendered and payment of the Exercise
Price (and any applicable transfer taxes) was made; provided, however, that if
the date of such surrender and payment is a date upon which the securities
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such securities on, and such certificate shall be
dated, the next succeeding Business Day on which the securities transfer books
of the Company are open.
Section 11. Adjustment of Exercise Price, Number of Shares Issuable
-------------------------------------------------------
Upon Exercise of Rights or Number of Rights.
-------------------------------------------
The Exercise Price, the number and kind of securities that may be purchased
upon exercise of a Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event that the Company shall at any time after
the Close of Business on the Record Date and prior to the Close of
Business on the earlier of the Redemption Date or the Expiration Date
(A) declare or pay any dividend on the Preferred Shares payable in
Preferred Shares or Voting Shares, (B) subdivide the outstanding
Preferred Shares, (C) combine the outstanding Preferred Shares into a
smaller number of Preferred Shares or (D) issue Preferred Shares or
Voting Shares in a reclassification of the Preferred Shares (including
any such reclassification in connection with a consolidation or merger
in which the Company is the continuing or surviving corporation), then,
and upon each such event, the Exercise Price in effect on the date of
such event and the number and kind of Preferred Shares or other
securities issuable upon the exercise of a Right on the date of such
event shall be proportionately adjusted so that the holder of any Right
exercised on or after such date shall be entitled to receive, upon the
exercise thereof and payment of the Exercise Price, the aggregate number
and kind of Preferred Shares or other securities or other property, as
the case may be, that, if such Right had been exercised immediately prior
to such date and at a time when such Right was exercisable and the
14
transfer books of the Company were open, such holder would have owned
upon such exercise and would have been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification. If an event
occurs that would require an adjustment under both this Section 11(a)(i)
and Section 11(a)(ii) hereof, the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event (a "Section 11(a)(ii) Event") that a 10%
Ownership Date shall have occurred and neither the Redemption Date nor
the Expiration Date shall have occurred, then, effective as of the 10%
Ownership Date, proper provision shall be made so that except as provided
in Section 7(d) hereof, each holder of a Right shall thereafter have the
right to receive, upon the exercise thereof in accordance with the terms
of this Agreement and payment of the then-current Exercise Price, in lieu
of the securities or other property otherwise purchasable upon such
exercise, such number of Common Shares of the Company as shall equal the
result obtained by multiplying the then current Exercise Price by the
then number of one four-thousandths (1/4000th) of a Preferred Share for
which a Right was exercisable (or, if the Distribution Date shall not
have occurred prior to the date of such Section 11(a)(ii) Event, the
number of one four-thousandths (1/4000th) of a Preferred Share for which
a Right would have been exercisable if the Distribution Date had occurred
on the Business Day immediately preceding the date of such Section
11(a)(ii) Event) immediately prior to such Section 11(a)(ii) Event, and
dividing that product by 50% of the Current Market Price (determined
pursuant to Section 11(d) hereof) of a Common Share on the date of
occurrence of the relevant Section 11(a)(ii) Event (such number of shares
being hereinafter referred to as the "Adjustment Shares"). Successive
adjustments shall be made pursuant to this paragraph each time a Section
11(a)(ii) Event occurs.
(iii) In the event that on the date of a Section 11(a)(ii)
Event the aggregate number of Common Shares that are authorized by the
Company's restated articles of incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights
is less than the aggregate number of Adjustment Shares thereafter
issuable upon the exercise in full of the Rights in accordance with
Section 11(a)(ii) hereof (the excess of such number of Adjustment Shares
over and above such number of Common Shares being hereinafter referred to
as the "Unavailable Adjustment Shares"), then, and upon each such event,
the Company shall substitute for the pro rata portion of the Unavailable
Adjustment Shares that would otherwise be issuable thereafter upon the
exercise of each Right and payment of the Exercise Price, (A) cash, (B)
other equity securities of the Company (including, without limitation,
shares of preferred stock of the Company or units of such shares having
the same Current Market Price as one Common Share (a "Common Share
Equivalent")), (C) debt securities of the Company, (D) other property or
(E) any combination of the foregoing, in each case having an aggregate
Current Market Price equal to the aggregate Current Market Price of the
15
Unavailable Adjustment Shares for which substitution is made. Subject
to Section 7(d) hereof, in the event that the Company takes any action
pursuant to this Section 11(a)(iii), such action shall apply uniformly
to all outstanding Rights.
(b) In the event that the Company shall, at any time after the
Close of Business on the Record Date and prior to the Close of Business on the
earlier of the Redemption Date or the Expiration Date, fix a record date prior
to the earlier of the Redemption Date or the Expiration Date for the issuance
of rights, options or warrants to all holders of Preferred Shares entitling
them initially to subscribe for or purchase Preferred Shares (or shares having
the same rights, privileges and preferences as the Preferred Shares
("Preferred Share Equivalents")) or securities convertible into Preferred
Shares or Preferred Share Equivalents, at a price per Preferred Share or
Preferred Share Equivalent (or having a conversion price per share, if a
security convertible into Preferred Shares or Preferred Share Equivalents)
less than the Current Market Price per Preferred Share on such record date,
then, and upon each such event, the Exercise Price to be in effect after such
record date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be equal to the sum of the number of Preferred Shares outstanding on
such record date plus the number of Preferred Shares that the aggregate
offering price of the total number of Preferred Shares and/or Preferred Share
Equivalents to be so offered (and/or the aggregate initial conversion price of
the convertible securities to be so offered) would purchase at such Current
Market Price, and the denominator of which shall be equal to the number of
Preferred Shares outstanding on such record date plus the number of additional
Preferred Shares and/or Preferred Share Equivalents to be offered for
subscription or purchase (or into which the convertible securities to be so
offered are initially convertible); provided, however, that if such rights,
options or warrants are not exercisable immediately upon issuance but become
exercisable only upon the occurrence of a specified event or the passage of a
specified period of time, then the adjustment to the Exercise Price shall be
made and become effective only upon the occurrence of such event or such
passage of time, and such adjustment shall be made as if the record date for
the issuance of such rights, options or warrants had been the Business Day
immediately preceding the date upon which such rights, options or warrants
became exercisable. Preferred Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment to the Exercise Price 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 Exercise Price shall be adjusted to be the
Exercise Price that would then be in effect if such record date had not been
fixed.
(c) In the event that the Company shall, at any time after the
Close of Business on the Record Date and prior to the Close of Business on the
earlier of the Redemption Date or the Expiration Date, fix a record date for
the making of a distribution to all holders of the Preferred Shares (including
any such distribution made in connection with a consolidation or merger in
which the Company is the surviving corporation) of securities or assets (other
than a distribution of securities for which an adjustment is required under
Section 11(a)(i) or (b) hereof or a regular quarterly cash dividend), then the
16
Exercise Price to be in effect after such record date shall be determined by
multiplying the Exercise Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be equal to the excess of the
Current Market Price per Preferred Share on such record date over and above
the fair market value of the portion of the securities or assets to be so
distributed with respect to one Preferred Share, and the denominator of which
shall be equal to such Current Market Price per Preferred Share. Such
adjustments shall be made successively whenever such a record date is fixed,
and in the event that such a distribution is not so made, the Exercise Price
shall be adjusted to be the Exercise Price that would then be in effect if
such record date had not been fixed.
(d) For the purpose of any computation under this Section 11, if
the Preferred Shares are not publicly held or traded, the "Current Market
Price" per Preferred Share shall be conclusively deemed to be the Current
Market Price per Common Share multiplied by 4,000 (as such number may be
appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Shares occurring after the date
of this Agreement).
(e) No adjustment in the Exercise Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Exercise Price; provided, however, that any adjustments that by reason of this
Section 11(e) are not required to be made shall be cumulated and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one-thousandth of a Common
Share or other share or one forty-millionth of a Preferred Share, as the case
may be.
(f) If, as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any securities of the Company other than Preferred Shares,
the number of such other securities so receivable upon exercise of any Right
and the Exercise 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 Preferred Shares contained in this Section 11, and
the other provisions of this Agreement with respect to Preferred Shares shall
apply on like terms to any such other securities.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall represent the right to
purchase, at the adjusted Exercise Price, the number of one four-thousandths
(1/4000th) of a Preferred Share purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i) below, upon each adjustment of the Exercise Price as
a result of the calculations made in Sections 11(b) and (c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall
thereafter represent the right to purchase, at the adjusted Exercise Price,
17
that number of one four-thousandths (1/4000th) of a Preferred Share
(calculated to the nearest one forty-thousandth (1/40000th) of a Preferred
Share) obtained by multiplying (i) the number of one four-thousandths
(1/4000th) of a Preferred Share purchasable upon the exercise of one Right
immediately prior to such adjustment of the Exercise Price by (ii) the
Exercise Price in effect immediately prior to such adjustment, and dividing
the product so obtained by the Exercise Price in effect immediately after such
adjustment.
(i) The Company may elect, on or after the date of any adjustment
of the Exercise Price, to adjust the number of Rights instead of making any
adjustment in the number of one four-thousandths (1/4000th) of a Preferred
Share purchasable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be exercisable
for the number of one four-thousandths (1/4000th) of a Preferred Share for
which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one four-thousandth
(1/4000th) of a Right) obtained by dividing the Exercise Price in effect
immediately prior to the adjustment of the Exercise Price by the Exercise
Price in effect immediately after such adjustment of the Exercise Price. The
Company shall make a public announcement of its election to adjust the number
of Rights pursuant to this Section 11(i), indicating the record date for the
adjustment and, if known at the time, the amount of the adjustment to be made.
Such record date may be the date on which the Exercise Price is adjusted or
any day thereafter, but, if separate Right Certificates have been issued, it
shall be at least 10 days after the date of such public announcement. If
separate 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 representing, 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,
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 such adjustment, and upon surrender thereof if required by the Company, new
Right Certificates representing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates to be so distributed shall
be issued, executed and countersigned in the manner provided for herein (and
may bear, at the option of the Company, the adjusted Exercise 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 Exercise Price
or the number of one four-thousandths (1/4000th)of a Preferred Share issuable
upon the exercise of one Right, the Right Certificates theretofore and
thereafter issued may continue to express the Exercise Price per one
four-thousandth (1/4000th) of a Preferred Share and the number of one
four-thousandths (1/4000th) of a Preferred Share issuable upon the exercise of
one Right that were expressed in the initial Right Certificates issued
hereunder.
18
(k) Before taking any action that would cause an adjustment
reducing the Exercise Price below one four-thousandth (1/4000th) of the then
par value, if any, of the Preferred Shares issuable upon exercise of the
Rights, the Company shall take any corporate action that may, in the advice or
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable one four-thousandth (1/4000th) of a
Preferred Share at such adjusted Exercise Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, the issuance to the holder of any Right exercised after such record
date of the number of one four-thousandths (1/4000th) of a Preferred Share and
other capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of one four-thousandths (1/4000th) of a
Preferred Share and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Exercise Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
holder a due xxxx or other appropriate instrument representing such holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such further adjustments in the number
of one four-thousandths (1/4000th) of a Preferred Share that may be purchased
upon exercise of one Right, and such further adjustments in the Exercise
Price, in addition to those adjustments expressly required by this Section 11,
as and to the extent that it in its sole discretion shall determine to be
advisable in order that any (i) consolidation or subdivision of the Preferred
Shares, (ii) issuance wholly for cash of any Preferred Shares at less than the
Current Market Price thereof, (iii) issuance wholly for cash of Preferred
Shares or securities that by their terms are convertible into or exchangeable
for Preferred Shares, (iv) dividends on Preferred Shares payable in Preferred
Shares or (v) issuance of rights, options or warrants referred to Section
11(b) hereof, hereafter made by the Company to holders of its Preferred Shares
shall not be taxable to such stockholders.
(n) In the event that the Company shall, at any time after the
Close of Business on the Record Date and prior to the Close of Business on the
earliest of the date of the first Section 11(a)(ii) Event, the date of the
first Section 13(a) Event, the Redemption Date or the Expiration Date, (i) pay
any dividend on the Common Shares payable in Common Shares, (ii) subdivide the
outstanding Common Shares, (iii) combine the outstanding Common Shares into a
smaller number of Common Shares or (iv) issue Common Shares in a
reclassification of the Common Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), then, and upon each such event, the
Exercise Price to be in effect after such event shall be determined by
multiplying the Exercise Price in effect immediately prior to such event by a
fraction, the numerator of which shall be equal to the number of Common Shares
outstanding immediately prior to such event and the denominator of which shall
19
be equal to the number of Common Shares outstanding immediately after such
event. Successive adjustments shall be made pursuant to this Section 11(n)
each time such a dividend is paid or such a subdivision, combination or
reclassification is effected. If an event occurs that would require an
adjustment under both this Section 11(n) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(n) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii)
hereof.
Section 12. Certificate of Adjusted Exercise Price or Number of
---------------------------------------------------
Shares Issuable Upon Exercise of Rights.
---------------------------------------
Whenever an adjustment is made as provided in Section 11 hereof, the Company
shall promptly (a) prepare a certificate setting forth such adjustment and a
brief statement of the facts giving rise to such adjustment, (b) file with the
Rights Agent and with each transfer agent for the securities issuable upon
exercise of the Rights a copy of such certificate and (c) mail a brief summary
thereof to each holder of Rights in accordance with Section 25 hereof.
Notwithstanding the foregoing sentence, the failure of the Company to make
such certification or to give such notice shall not affect the validity or the
force and effect of such adjustment. Any adjustment to be made pursuant to
Sections 11 or 13 hereof shall be effective as of the date of the event giving
rise to such adjustment. The Rights Agent shall be fully protected in relying
on any such certificate and on any adjustment therein contained and shall not
be deemed to have knowledge of such adjustment unless and until it shall have
received such certificate.
Section 13. Consolidation, Merger, or Sale or Transfer of Assets or
-------------------------------------------------------
Earning Power.
-------------
(a) In the event (a "Section 13(a) Event") that, at any time on or
after the 10% Ownership Date and prior to the earlier of the Redemption Date
or the Expiration Date, (1) the Company shall, directly or indirectly,
consolidate with or merge with and into any other Person and the Company shall
not be the continuing or surviving corporation in such consolidation or
merger, (2) any Person shall, directly or indirectly, consolidate with or
merge with and into the Company and the Company shall be the continuing or
surviving corporation in such consolidation or merger and, in connection with
such consolidation or merger, all or part of the Common Shares shall be
changed into or exchanged for stock or other securities of any Person or cash
or any other property, or (3) the Company and/or any one or more of its
Subsidiaries shall, directly or indirectly, sell or otherwise transfer, in one
or more transactions (other than transactions in the ordinary course of
business), assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
Person or Persons other than the Company or one or more of its wholly owned
Subsidiaries (such Persons, together with the Persons described in clauses (1)
and (2) above shall be collectively referred to in this Section 13 as the
"Surviving Person"), then, and in each such case, proper provision shall be
made so that:
(i) except as provided in Section 7(d) hereof, each holder
of a Right shall thereafter have the right to receive, upon the exercise
thereof in accordance with the terms of this Agreement and payment of the
then-current Exercise Price, in lieu of the securities or other property
20
otherwise purchasable upon such exercise, such number of validly
authorized and issued, fully paid and nonassessable Common Shares of the
Surviving Person as shall be equal to a fraction, the numerator of which
is the product of the then-current Exercise Price multiplied by the
number of one four-thousandths (1/4000th) of a Preferred Share
purchasable upon the exercise of one Right immediately prior to the
first Section 13(a) Event (or, if the Distribution Date shall not have
occurred prior to the date of such Section 13(a) Event, the number of
one four-thousandths (1/4000th) of a Preferred Share that would have
been so purchasable if the Distribution Date had occurred on the Business
Day immediately preceding the date of such Section 13(a) Event, or, if a
Section 11(a)(ii) Event has occurred prior to such Section 13(a) Event,
the product of the number of one four-thousandths (1/4000th) of a
Preferred Share purchasable upon the exercise of a Right (or, if the
Distribution Date shall not have occurred prior to the date of such
Section 11(a)(ii) Event, the number of one four-thousandths (1/4000th)
of a Preferred Share that would have been so purchasable if the
Distribution Date had occurred on the Business Day immediately preceding
the date of such Section 11(a)(ii) Event) immediately prior to such
Section 11(a)(ii) Event, multiplied by the Exercise Price in effect
immediately prior to such Section 11(a)(ii) Event), and the denominator
of which is 50% of the Current Market Price per Common Share of the
Surviving Person on the date of consummation of such Section 13(a) Event;
(ii) the Surviving Person shall thereafter be liable for
and shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to
this Agreement;
(iii) the term, "Company," shall thereafter be deemed to
refer to the Surviving Person; and
(iv) the Surviving Person shall take such steps (including,
but not limited to, the reservation of a sufficient number of its Common
Shares in accordance with Section 9 hereof) in connection with such
consummation as may be necessary to ensure that the provisions hereof
shall thereafter be applicable to its Common Shares thereafter
deliverable upon the exercise of Rights.
(b) Notwithstanding the foregoing, if the Section 13(a) Event is
the sale or transfer in one or more transactions of assets or earning power
aggregating more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole), but less than 100% thereof, then each
Person acquiring all or a portion thereof shall assume the obligations of the
Company as to a fraction of each of the Rights equal to the fraction of the
assets of the Company and its Subsidiaries (taken as a whole) acquired by such
Person, and the obligations of the Company as to the remaining fraction of
each of the Rights shall continue to be the obligations of the Company.
(c) The Company shall not consummate a Section 13(a) Event unless
prior thereto the Company and the Surviving Person shall have executed and
21
delivered to the Rights Agent a supplemental agreement confirming that such
Surviving Person shall, upon consummation of such Section 13(a) Event, assume
this Agreement in accordance with Section 13 hereof, that all rights of first
refusal or preemptive rights in respect of the issuance of Common Shares of
such Surviving Person upon exercise of outstanding Rights have been waived and
that such Section 13(a) Event shall not result in a default by such Surviving
Person under this Agreement, and further providing that, as soon as
practicable after the date of consummation of such Section 13(a) Event, such
Surviving Person shall:
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, use its best efforts
to cause such registration statement to become effective as soon as
practicable after such filing, use its best efforts to cause such
registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Securities Act) until the
Expiration Date, and similarly comply with all applicable state
securities laws;
(ii) use its best efforts to list (or continue the listing
of) the Rights and the Common Shares of the Surviving Person purchasable
upon exercise of the Rights on a national securities exchange, or use its
best efforts to cause the Rights and such Common Shares to meet the
eligibility requirements for quotation on NASDAQ; and
(iii) deliver to holders of the Rights historical financial
statements for such Surviving Person that comply in all respects with
the requirements for registration on Form 10 (or any successor form)
under the Exchange Act.
(d) In the event that at any time after the occurrence of a
Section 11(a)(ii) Event some or all of the Rights shall not have been
exercised pursuant to Section 11 hereof prior to the date of a Section 13(a)
Event, such Rights shall thereafter be exercisable only in the manner
described in Section 13(a) hereof. In the event that a Section 11(a)(ii)
Event occurs on or after the date of a Section 13(a) Event, Rights shall not
be exercisable pursuant to Section 11 hereof but shall instead be exercisable
pursuant to, and only pursuant to, this Section 13.
(e) The provisions of this Section 13 shall apply to each
successive merger, consolidation, sale or other transfer constituting a
Section 13(a) Event.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates that represent fractional Rights. If the
Company shall determine not to issue such fractional Rights, the Company shall
pay to the registered holders of the Right Certificates with respect to which
such fractional Rights would otherwise be issuable, at the time such
fractional Rights would otherwise have been issued as provided herein, an
22
amount in cash equal to the same fraction of the Current Market Price of a
whole Right on the Business Day immediately prior to the date upon which such
fractional Rights would otherwise have been issuable.
(b) The Company shall not be required to issue fractions of Common
Shares or Preferred Shares (other than fractions that are integral multiples
of one four-thousandth (1/4000th) of a Preferred Share) upon exercise of
Rights, or to distribute certificates that represent fractional Common Shares
or Preferred Shares (other than fractions that are integral multiples of one
four-thousandth (1/4000th) of a Preferred Share). Fractions of Preferred
Shares in integral multiples of one four-thousandth (1/4000th) of a Preferred
Share may, at the election of the Company, be represented 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 Preferred
Shares. If the Company shall determine not to issue fractional Common Shares
or Preferred Shares (or depositary receipts in lieu of Preferred Shares), the
Company shall pay to the registered holders of Right Certificates with respect
to which such fractional Common Shares or Preferred Shares would otherwise be
issuable, at the time such Rights are exercised as provided herein, an amount
in cash equal to the same fraction of the Current Market Price of a whole
Common Share or Preferred Share, as the case may be. For purposes of this
Section 14(b), the Current Market Price of a whole Common Share or Preferred
Share shall be the Closing Price per share for the Trading Day immediately
prior to the date of such exercise.
(c) The holder of a Right, by the acceptance of such Right,
expressly waives such holder's right to receive any fractional Rights or any
fractional Common Shares or Preferred Shares upon exercise of such Right,
except as permitted by this Section 14.
Section 15. Rights of Action.
----------------
All rights of action in respect of this Agreement, except the rights of action
given to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates and certificates for
Common Shares representing Rights, and any registered holder of any Right
Certificate or of such certificate for Common Shares, without the consent of
the Rights Agent or of the holder of any other Right Certificate or any other
certificate for Common Shares may, in such holder's own behalf and for such
holder's own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
such holder's right to exercise the Rights represented by such Right
Certificate or by such certificate for Common Shares in the manner provided in
such Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance, and
injunctive relief against actual or threatened violations, of the obligations
of any Person under this Agreement.
23
Section 16. Agreement of Right Holders.
--------------------------
Every holder of a Right, by accepting the same, consents and agrees with the
Company and the Rights Agent and every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be
represented by certificates for Common Shares registered in the name of the
holders of such Common Shares (which certificates for Common Shares shall also
constitute Right Certificates), and each such Right shall be transferable only
in connection with the transfer of such Common Shares;
(b) after the Distribution Date, the Right Certificates shall only
be transferable on the registry books of the Rights Agent if surrendered at
the principal stock transfer office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer along with a signature
guarantee and such other and further documentation as the Rights Agent may
reasonably request;
(c) the Company and the Rights Agent may deem and treat the person
in whose name the Right Certificate is registered as the absolute owner
thereof and of the Rights represented thereby (notwithstanding any notations
of ownership or writing on the Right Certificate by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice 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.
Section 17. Right Holder and Right Certificate Holder Not Deemed a
------------------------------------------------------
Stockholder.
-----------
No holder, as such, of any Right or Right Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of the
securities of the Company that may at any time be issuable upon the exercise
of the Rights represented thereby, nor shall anything contained herein or in
any Right Certificate be construed to confer upon the holder of any Right or
Right Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, to give or withhold consent
to any corporate action, to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 25 hereof), or to
receive dividends or subscription rights, or otherwise, in each case until
such Right or the Rights represented by such Right Certificate shall have been
exercised in accordance with the provisions hereof.
24
Section 18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent,
for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.
Notwithstanding anything in this Agreement to the contrary, in no event shall
the Rights Agent be liable for special, indirect or consequential loss or
damage of any kind whatsoever, even if the Rights Agent has been advised of
the likelihood of such loss or damage and regardless of the form of action.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Rights Certificate or certificate for a Common Share or for other securities
of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
(a) Any 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, however, that
such corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement, any of the
Rights Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of a predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Rights Certificates either in
the name of the predecessor or in the name of the successor Rights Agent; and
in all such cases such Rights Certificates shall have the full force provided
in the Rights Certificates and in this Agreement.
25
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall
not have been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and in all such
cases such Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent.
----------------------
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Rights Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including without limitation, the identity of any 10% Shareholder 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 a certificate signed by
the Chairman of the Board, the President, any Vice President, the Treasurer,
any Assistant Treasurer, the Secretary or any Assistant Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and 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 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 Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any adjustment required under the
provisions of Sections 7, 11, 13 or Section 23 hereof or responsible for the
manner, method or amount of any such adjustment or the ascertaining of the
26
existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Rights Certificates after receipt of
the certificate described in Section 12 hereof setting forth 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 or Preferred Stock to be issued pursuant to this
Agreement or any Rights Certificates or as to whether any Common Shares or
Preferred Shares will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with
its duties, and it shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with instructions of any such officer.
(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 Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, 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, however, 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 Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase as the case may be, has not been
completed, the Rights Agent shall not take any further action with respect to
such requested exercise of transfer without first consulting with the Company.
27
Section 21. Change of Rights Agent.
----------------------
The Rights Agent or any successor Rights Agent may resign and be discharged
from its duties under this Agreement upon thirty (30) days' notice in writing
mailed to the Company, and to each transfer agent of the Common Shares and
Preferred Shares by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent (with or without cause) upon thirty (30)
days' notice in writing, mailed to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent of the Common Shares and
Preferred Shares, by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights Agent shall resign or
be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of thirty (30) days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of
a Rights Certificate (who shall, with such notice, submit his Rights
Certificate for inspection by the Company), then the incumbent Rights Agent or
any registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) a corporation organized and doing business under the laws of the
United States or of any other state of the United States in good standing,
which is authorized under such laws to exercise corporate trust or stock
transfer powers or (b) an affiliate of 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 Shares and the Preferred Shares, and a mail a notice
thereof in writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation
or removal of the Rights Agent or the appointment of the successor Rights
Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
----------------------------------
Notwithstanding any of the provisions of this Agreement or of the Right
Certificates to the contrary, the Company may, at its option (subject to
Section 4 hereof), issue new Right Certificates in such form as may be
approved by the Board of Directors in order to reflect any adjustment or
change in the Exercise Price and the number or kind or class of shares or
other securities or property purchasable upon exercise of the Rights in
accordance with the provisions of this Agreement.
28
Section 23. Redemption of Rights.
--------------------
(a) Until the earliest of (i) the date of the first Section
11(a)(ii) Event, (ii) the date of the first Section 13(a) Event or (iii) the
Expiration Date, the Board of Directors of the Company may, at its option,
authorize and direct the redemption of all, but not less than all, of the then
outstanding Rights at a redemption price of $.001 per Right, as such
redemption price shall be appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (the
"Redemption Price"), and the Company shall so redeem the Rights; provided,
however, that from and after the date of the first Section 11(a)(ii) Event,
the Rights shall not be redeemable.
(b) Immediately upon the action of the Board of Directors of the
Company authorizing and directing the redemption of the Rights pursuant to
subsection (a) of this Section 23, or at such time and date thereafter as it
may specify, and without any further action and without any notice, the right
to exercise Rights shall terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. Within 10
Business Days after the date of such action, the Company shall give notice of
such redemption to the holders of Rights by mailing such notice to all holders
of Rights at their last addresses as they appear upon the registry books of
the Rights Agent or, if prior to the Distribution Date, on the registry books
of the transfer agent for the Common Shares. Any notice that is mailed in the
manner herein provided shall be deemed given, whether or not the holder
receives such notice, but neither the failure to give any such notice nor any
defect therein shall affect the legality or validity of such redemption. Each
such notice of redemption shall state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates
or Associates may, directly or indirectly, redeem, acquire or purchase for
value any Rights in any manner other than that specifically set forth in
Section 24 hereof or in this Section 23, and other than in connection with the
purchase of Common Shares prior to the earlier of the date of the first
Section 11(a)(ii) Event or the date of the first Section 13(a) Event.
(c) The Company may, at its option, pay the Redemption Price in cash, Common
Shares, Preferred Shares, other equity securities of the Company, debt
securities of the Company, other property or any combination of the foregoing,
in each case having an aggregate Current Market Price on the Redemption Date
equal to the Redemption Price.
Section 24. Exchange of Rights.
------------------
(a) At any time after the 10% Ownership Date and prior to the
first date thereafter upon which a 10% Stockholder, together with all
Affiliates and Associates of such 10% Stockholder, shall be the Beneficial
Owner of 50% or more of the Voting Shares then outstanding, the Board of
Directors of the Company may, at its option, authorize and direct the exchange
of all, but not less than all, of the then outstanding Rights for Common
Shares at an exchange ratio (the "Exchange Ratio") per Right, equal to that
number of Common Shares which, as of the date of the Board of Directors'
action, has a Current Market Price equal to the difference between the
29
Exercise Price and the Current Market Price of the Common Shares that each
holder of a Right would otherwise have the right to receive upon the exercise
of a Right on such date.
(b) Immediately upon the action of the Board of Directors of the
Company authorizing and directing the exchange of the Rights pursuant to
subsection (a) of this Section 24, or at such time and date thereafter as it
may specify, and without any further action and without any notice, the right
to exercise Rights shall terminate and the only right thereafter of the
holders of Rights shall be to receive a number of Common Shares equal to the
Exchange Ratio. Within 10 Business Days after the date of such action, the
Company shall give notice of such exchange to the holders of Rights by mailing
such notice to all holders of Rights at their last addresses as they appear
upon the registry books of the Rights Agent or, if prior to the Distribution
Date, on the registry books of the transfer agent for the Common Shares. Any
notice that is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives such notice, but neither the failure to
give any such notice nor any defect therein shall affect the legality or
validity of such exchange. Each such notice of exchange shall state the
method by which the Rights will be exchanged for Common Shares. Neither the
Company nor any of its Affiliates or Associates may, directly or indirectly,
redeem, acquire or purchase for value any Rights in any manner other than (i)
as specifically set forth in Section 23 hereof, (ii) as specifically set forth
in this Section 24 or (iii) in connection with the purchase of Common Shares
prior to the earlier of the date of the first Section 11(a)(ii) Event or the
date of the first Section 13(a) Event.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute (i) cash, (ii) other equity securities of the
Company (including, but not limited to, Common Share Equivalents), (iii) debt
securities of the Company, (iv) other property or (v) any combination of the
foregoing for the Common Shares exchangeable for Rights, as appropriately
adjusted. Subject to Section 7(d) hereof, in the event that the Company takes
any action pursuant to this Section 24, such action shall apply uniformly to
all outstanding Rights.
Section 25. Notice of Certain Events.
------------------------
(a) In the event that the Company shall propose (i) to declare or
pay any dividend payable on or make any distribution with respect to its
Common Shares or Preferred Shares (other than a regular quarterly cash
dividend), (ii) to offer to the holders of its Common Shares or Preferred
Shares options, rights or warrants to subscribe for or to purchase any
additional shares thereof or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassification of its
Common Shares or Preferred Shares (other than a reclassification involving
only the subdivision of outstanding shares), (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 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
30
Company, then and in each such case, the Company shall give to each holder of
a Right Certificate and to the Rights Agent, in accordance with Section 26
hereof, a notice of such proposed action, that shall specify the record date
for the purpose of such dividend or distribution, or the date upon which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is to take place and the date of participation
therein by the holders of record of the Common Shares or Preferred Shares, if
any such date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least 20 days prior to the
record date for determining holders of the Common Shares or Preferred Shares
for purposes of such action, and in the case of any such other action, at
least 20 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the Common Shares or Preferred
Shares, whichever date shall be the earlier. The failure to give the 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.
(b) Upon the occurrence of each Section 11(a)(ii) Event and each
Section 13(a) Event, the Company shall as soon as practicable thereafter give
to each holder of a Right Certificate and to the Rights Agent, in accordance
with Section 26 hereof, a notice of the occurrence of such event, specifying
the event and the consequences of the event to holders of Rights under
Sections 11 and 13 hereof.
Section 26. Notices.
-------
Notices or demands authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Right Certificate to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
Computer Sciences Corporation
0000 Xxxx Xxxxx Xxxxxx
Xx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) to the
principal stock transfer office of the Rights Agent as follows:
ChaseMellon Shareholder Services, L.L.C.
000 Xxxxx Xxxx Xxxxxx
0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Department Manager
31
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate shall
be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the
registry books of the Company or the transfer agent.
Section 27. Supplements and Amendments.
--------------------------
(a) The Board of Directors of the Company may, from time to time,
before and after the Distribution Date, without the approval of any holders of
Rights, supplement or amend any provision of this Agreement in any manner,
whether or not such supplement or amendment is adverse to any holder of
Rights, and direct the Rights Agent so to supplement or amend such provision,
and the Rights Agent shall so supplement or amend such provision; provided,
however, that from and after the earliest of (i) the date of the first Section
11(a)(ii) Event, (ii) the date of the first Section 13(a) Event, (iii) the
Redemption Date or (iv) the Expiration Date, this Agreement shall not be
supplemented or amended in any manner that would materially and adversely
affect any holder of outstanding Rights other than a 10% Stockholder or a
Surviving Person; and provided further, however, that from and after the date
of the first Section 11(a)(ii) Event, the Agreement shall not be supplemented
or amended in any manner.
(b) From and after the earlier of the date of the first Section
11(a)(ii) Event or the date of the first Section 13(a) Event and prior to the
earlier of the Redemption Date or the Expiration Date, the Company shall not
effect any amendment to the Certificate of Designations for the Preferred
Shares that would materially and adversely affect the rights, privileges or
preferences of the Preferred Shares without the prior approval of the holders
of two-thirds or more of the then outstanding Rights.
(c) Upon the delivery of a certificate from an appropriate officer
of the Company which states that the proposed supplement or amendment is in
compliance with the terms of this section, the Rights Agent shall execute such
supplement or amendment. Notwithstanding any other provision hereof, the
Rights Agent's consent must be obtained regarding any amendment or supplement
pursuant to this Section 27 which alters the Rights Agent's rights or duties.
Section 28. Certain Covenants.
-----------------
Subject to Section 27 hereof and the other provisions of this Agreement, from
and after the earlier of the date of the first Section 11(a)(ii) Event or the
date of the first Section 13(a) Event and prior to the earlier of the
Redemption Date or the Expiration Date, the Company shall not (a) issue or
sell, or permit any Subsidiary to issue or sell, to a 10% Stockholder or a
Surviving Person, or any Affiliate or Associate of a 10% Stockholder or a
Surviving Person, or any Person holding Voting Shares of the Company that are
Beneficially Owned by a 10% Stockholder or a Surviving Person, (i) any rights,
options, warrants or convertible securities on terms similar to, or that
materially adversely affect the value of, the Rights or (ii) Preferred Shares,
Common Shares or shares of any other class of capital stock, if such sale is
32
intended to or would materially adversely affect the value of the Rights, or
(b) take any other action that is intended to or would materially adversely
affect the value of the Rights.
Section 29. Successors.
----------
All the covenants and provisions of this Agreement by or for the benefit of
the Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 30. Benefits of this Agreement.
--------------------------
Nothing in this Agreement shall be construed to give to any Person other than
the Company, the Rights Agent, the registered holders of the Right
Certificates (other than those representing Rights that have become null and
void) and the certificates for Common Shares representing Rights (other than
those Rights that have become null and void) any legal or equitable right,
remedy or claim under this Agreement, and this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent, such registered
holders of Right Certificates and such certificates for Common Shares
representing Rights.
Section 31. Severability.
------------
If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
Section 32. Governing Law.
-------------
This Agreement and each Right Certificate issued hereunder shall be deemed to
be a contract made under the laws of the State of Nevada and for all purposes
shall be governed by and construed in accordance with the laws of such state
applicable to contracts made and performed entirely within such state.
Section 33. Counterparts.
------------
This Agreement may be executed in any number of counterparts and each such
counterpart shall for all purposes be deemed to be an original and all such
counterparts shall together constitute but one and the same instrument.
Section 34. Descriptive Headings.
--------------------
Descriptive headings of the several sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
33
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
COMPUTER SCIENCES CORPORATION
By: /s/Xxxxxxx X. Xxxx
-------------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.,
as Rights Agent
By: /s/Xxxxxxx Dziecolowski
-------------------------------
Name: Xxxxxxx Dziecolowski
Title: Assistant Vice President
34
EXHIBIT A
FORM OF
RIGHT CERTIFICATE
Certificate No. R-___________ Rights
NOT EXERCISABLE AFTER FEBRUARY 18, 2008 OR EARLIER IF
REDEEMED OR EXCHANGED. THE RIGHTS ARE SUBJECT TO
EARLIER EXPIRATION, REDEMPTION AND EXCHANGE ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT,
RIGHTS BENEFICIALLY OWNED BY CERTAIN PERSONS OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
Right Certificate
COMPUTER SCIENCES CORPORATION
This certifies that ______________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms and conditions of a Rights
Agreement (the "Rights Agreement") dated as of February 18, 1998 by and
between Computer Sciences Corporation, a Nevada corporation (the "Company"),
and ChaseMellon Shareholder Services, L.L.C. (the "Rights Agent"), to purchase
from the Company at any time prior to the earlier of the Redemption Date (as
such term is defined in the Rights Agreement) or 5:00 o'clock p.m., California
time, on February 18, 1998, at the office or agency of the Rights Agent at
Ridgefield Park, New Jersey, or at the office of its successor as Rights
Agent, one four-thousandth (1/4000th) of a fully paid and nonassessable share
of Series A Junior Participating Preferred Stock, par value $1.00 per share,
of the Company (a "Preferred Share") or, in certain circumstances, other
securities or other property, at a purchase price of $500 (Five Hundred
Dollars) per one four-thousandth (1/4000th) of a Preferred Share (the
"Exercise Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase, including Certificate, on the reverse
side hereof completed and duly executed, with signature guaranteed.
The number of Rights represented by this Right Certificate and the
Exercise Price set forth above are the number of Rights and the Exercise Price
as of February 18, 1998, based upon the Preferred Shares as constituted on
such date. As provided in the Rights Agreement, the Exercise Price and the
number of Preferred Shares or other securities or other property that may be
purchased upon the exercise of the Rights represented by this Right
Certificate are subject to modification and adjustment upon the occurrence of
certain events.
A-1
The Rights Agreement contains a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of Right Certificates. This Right Certificate is
subject to all the terms and conditions of the Rights Agreement, which terms
and conditions are hereby incorporated herein by reference and made a part
hereof. Copies of the Rights Agreement are on file at the principal executive
offices of the Company and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
presentation and surrender at the above-mentioned offices of the Rights Agent,
with the Form of Assignment, including Certificate, on the reverse side hereof
completed and duly executed, with signature guaranteed, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
representing Rights entitling the holder thereof to purchase a like aggregate
number of Preferred Shares or, in certain circumstances, other securities or
other property, as the Rights represented by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive, upon the surrender hereof with the Form of Election to Purchase,
including Certificate, on the reverse side hereof completed and duly executed,
with signature guaranteed, another Right Certificate or Right Certificates for
the number of whole Rights not exercised. Subject to the provisions of the
Rights Agreement, the Rights represented by this Right Certificate may be
redeemed by the Company, at its option, at a redemption price of $.001 per
Right or, upon the occurrence of certain events, the Company, at its option,
may exchange such Rights for fully paid and nonassessable shares of Common
Stock, par value $1.00 per share, of the Company at an exchange ratio, per
Right, of that number of Common Shares (as defined in the Rights Agreement)
which, as of the date of the Board of Directors' action, has a Current Market
Price (as defined in the Rights Agreement) equal to the difference between the
Exercise Price and the Current Market Price of the Common Shares which each
holder of a Right would have a right to receive upon the exercise of a Right
on such date.
No fractional securities shall be issued upon the exercise of any Right
or Rights represented hereby (other than fractions of Preferred Shares that
are integral multiples of one four-thousandth (1/4000th) of a Preferred Share,
that may, at the option of the Company, be represented by depository
receipts), but in lieu thereof, a cash payment shall be made, as provided in
the Rights Agreement.
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 the Preferred
Shares or other securities of the Company that may at any time be issuable on
the exercise hereof, nor shall anything contained herein be construed to
confer upon the holder hereof, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
A-2
Agreement), or to receive dividends or subscription rights, until the Right or
Rights represented by this Right Certificate shall have been exercised as
provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of _______________________, ____.
Attest: COMPUTER SCIENCES CORPORATION
By _________________________ By ________________________
Name: Name:
Title: Title:
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By _________________________ By ________________________
Name: Name:
Title: Title:
A-3
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
Computer Sciences Corporation with full power of substitution.
Dated:________________, ____ _________________________
(Signature)
Signature Guaranteed:
A-4
Certificate
(to be completed, if true)
The undersigned hereby certifies that the Rights represented by this
Right Certificate are not Beneficially Owned by a 10% Stockholder or an
Affiliate or Associate of a 10% Stockholder (as such capitalized terms are
defined in the Rights Agreement).
Dated:________________, ____ _________________________
(Signature)
Signature Guaranteed:
A-5
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 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 of America.
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 a 10% Stockholder or an
Affiliate or Associate of a 10% Stockholder (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.
A-6
Form of Reverse Side of Right Certificate
(continued)
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder desires to
exercise any or all of the Rights represented by this Right Certificate)
To Computer Sciences Corporation:
The undersigned hereby irrevocably elects to exercise
_________________________ (_____________) of the Rights represented by this
Right Certificate to purchase the following:
(Check one of the following boxes)
[ ] the Preferred Shares or other securities or property issuable upon
the exercise of said number of Rights pursuant to Section 7(c) of
the Rights Agreement.
[ ] the shares of the Common Stock, par value $1.00 per share, of the
Company, or other securities or property issuable upon the exercise
of said number of Rights pursuant to Section 11(a)(ii) of the Rights
Agreement.
[ ] the securities issuable upon the exercise of said number of Rights
pursuant to Section 13(a) of the Rights Agreement.
The undersigned hereby requests that any such property and a certificate
for any such securities 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:
A-7
Form of Reverse Side of Right Certificate
(continued)
Certificate
(to be completed, if true)
The undersigned hereby certifies that the Rights represented by this
Right Certificate are not Beneficially Owned by a 10% Stockholder or an
Affiliate or Associate of a 10% Stockholder (as such capitalized terms are
defined in the Rights Agreement).
Dated:________________, ____ _________________________
(Signature)
Signature Guaranteed:
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 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 duly executed, with
signature guaranteed, the Company may deem the Rights represented by this
Right Certificate to be Beneficially Owned by a 10% Stockholder or an
Affiliate or Associate of a 10% Stockholder (as such capitalized terms are
defined in the Rights Agreement), and not issue any property or certificate
for securities upon the exercise of this Right Certificate or issue any new
Right Certificate for any remaining balance of unexercised Rights represented
by this Right Certificate.
A-8
