EXHIBIT 1
RIGHTS AGREEMENT
by and between
GEOWORKS CORPORATION
and
Mellon Investor Services, LLC
as Rights Agent
Dated as of
March 9, 2001
Table of Contents
Page
Section 1. Certain Definitions................................................1
Section 2. Appointment of Rights Agent........................................5
Section 3. Issuance of Rights Certificates....................................5
Section 4. Form of Rights Certificates........................................7
Section 5. Countersignature and Registration..................................7
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.......................................................8
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights......8
Section 8. Cancellation and Destruction of Rights Certificates ..............10
Section 9. Reservation and Availability of Shares of Preferred Stock ........11
Section 10. Preferred Stock Record Date......................................12
Section 11. Adjustment of Exercise Price or Number of Shares ................12
Section 12. Certification of Adjusted Exercise Price or Number of Shares ....15
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power ...................................................15
Section 14. Fractional Rights and Fractional Shares..........................19
Section 15. Rights of Action.................................................19
Section 16. Agreement of Right Holders.......................................19
Section 17. Rights Certificate Holder Not Deemed a Stockholder ..............20
Section 18. Concerning the Rights Agent......................................20
Section 19. Merger or Consolidation of, or Change in Name of, the
Rights Agent ....................................................21
Section 20. Duties of Rights Agent...........................................21
Section 21. Change of Rights Agent...........................................23
Section 22. Issuance of New Rights Certificates..............................24
Section 23. Redemption.......................................................24
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Table of Contents
(continued)
Page
Section 24. Notice of Proposed Actions.......................................25
Section 25. Notices..........................................................26
Section 26. Supplements and Amendments.......................................26
Section 27. Exchange.........................................................27
Section 28. Successors.......................................................27
Section 29. Benefits of this Rights Agreement................................27
Section 30. Delaware Contract................................................28
Section 31. Counterparts.....................................................28
Section 32. Descriptive Headings.............................................28
Section 33. Severability.....................................................28
Section 34. Determinations and Actions by the Board of Directors, Etc. ......28
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RIGHTS AGREEMENT
Agreement, dated effective as of March 9, 2001, by and between Geoworks
Corporation, a Delaware corporation (the "Company"), and Mellon Investor
Services, LLC, as Rights Agent (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, on March 1, 2001, the Board of Directors of the Company authorized
the issuance of, and declared a dividend payable in, one right (a "Right") for
each share of Common Stock, $.001 par value per share, of the Company
outstanding as of the close of business on March 9, 2001 (the "Record Date"),
each such Right representing the right to purchase one one-thousandth of a share
of Series A Junior Participating Preferred Stock of the Company (the "Preferred
Stock") having the rights and preferences set forth in the Certificate of
Designations attached hereto as Exhibit C, containing the resolutions adopted by
the Board of Directors on March 1, 2001, upon the terms and subject to the
conditions hereinafter set forth; and
WHEREAS, the Board of Directors of the Company further authorized the
issuance of one Right (subject to adjustment) with respect to each share of
Common Stock which may be issued between the Record Date and the earlier to
occur of the Distribution Date or the Expiration Date (as such terms are
hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is hereinafter
defined) who or which, together with all Affiliates (as such term is hereinafter
defined) and Associates (as such term is hereinafter defined) of such Person, is
the Beneficial Owner (as such term is hereinafter defined) of 15% or more of the
Voting Stock (as such term is hereinafter defined) of the Company then
outstanding; provided, that, an Acquiring Person shall not include (i) an Exempt
Person (as such term is hereinafter defined) or (ii) any Person, together with
all Affiliates and Associates of such Person, who or which would be an Acquiring
Person solely by reason of (A) being the Beneficial Owner of shares of Voting
Stock of the Company, the Beneficial Ownership of which was acquired by such
Person (or his or its predecessor through merger, consolidation, amalgamation or
other similar legal succession) pursuant to any action or transaction or series
of related actions or transactions approved by the Board of Directors before
such Person otherwise became an Acquiring Person or (B) a reduction in the
number of outstanding shares of Voting Stock of the Company pursuant to a
transaction or a series of related transactions approved by the Board of
Directors of the Company; provided, further, that in the event such Person
described in this clause (ii) does not become an Acquiring Person by reason of
subclause (A) or (B) of this clause (ii), such Person nonetheless shall become
an Acquiring Person in the event such Person thereafter acquires Beneficial
Ownership of an additional 1% or more of the Voting Stock of the Company then
outstanding, unless the acquisition of such additional Voting Stock would not
result in such Person becoming an
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Acquiring Person by reason of subclause (A) or (B) of this clause (ii).
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person" became the Beneficial Owner of a number of shares of Common Stock such
that the Person would otherwise qualify as an "Acquiring Person" inadvertently
(including, without limitation, because (A) such Person was unaware that it
Beneficially Owned a percentage of Common Stock that would otherwise cause such
Person to be an "Acquiring Person" or (B) such Person was aware of the extent of
its Beneficial Ownership of Common Stock but had no actual knowledge of the
consequences of such Beneficial Ownership under this Rights Agreement) and
without any intention of changing or influencing control of the Company, then
such Person shall not be deemed to be or to have become an "Acquiring Person"
for any purposes of this Rights Agreement unless and until such Person shall
have failed to divest itself, as soon as practicable (as determined, in good
faith, by the Board of Directors of the Company), of Beneficial Ownership of a
sufficient number of shares of Common Stock so that such Person would no longer
otherwise qualify as an "Acquiring Person."
(b) "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations under the Securities Exchange Act of 1934,
as amended ("Exchange Act"), as in effect on the date of this Rights Agreement.
(c) "Associate" of a Person (as such term is hereinafter defined) shall
mean (i) with respect to a corporation, any officer or director thereof or of
any Subsidiary (as such term is hereinafter defined) thereof, or any Beneficial
Owner (as such term is hereinafter defined) of 10% or more of any class of
equity security thereof, (ii) with respect to an association, joint venture or
other unincorporated organization, any officer or director thereof or of a
Subsidiary thereof or any Beneficial Owner of 10% or more ownership interest
therein, (iii) with respect to a partnership, any general partner thereof or any
limited partner thereof who is, directly or indirectly, the Beneficial Owner of
a 10% or greater ownership interest therein, (iv) with respect to a limited
liability company, any officer, director or manager thereof or of a Subsidiary
thereof or any member thereof who is, directly or indirectly, the Beneficial
Owner of a 10% or greater ownership interest therein, (v) with respect to a
business trust, any officer or trustee thereof or of any Subsidiary thereof,
(vi) with respect to any other trust or an estate, any trustee, executor or
similar fiduciary or any Person who has a 10% or greater interest as a
beneficiary in the income from or principal of such trust or estate, (vii) with
respect to a natural person, any relative or spouse of such person, or any
relative of such spouse, who has the same home as such person, and (viii) any
Affiliate of such Person.
(d) A person shall be deemed the "Beneficial Owner" of, or to "Beneficially
Own," any securities (and correlative terms shall have correlative meanings):
(i) which 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 Regulations 13D and 13G thereunder, in each case as in effect
on the date hereof; or
(ii) which such Person or any of such Person's Affiliates or Associates
has (A) the right to acquire (whether such right is exercisable immediately or
only after the passage of time or the fulfillment of a condition or both)
pursuant to any agreement, arrangement or understanding (whether or not in
writing), or upon the exercise of conversion rights, exchange
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rights, other rights (other than these Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "Beneficially Own," securities tendered pursuant to a tender or
exchange offer made by 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 or (B) the right to vote, alone or in concert with others,
pursuant to any agreement, arrangement or understanding (whether or not in
writing); provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "Beneficially Own," any securities if the agreement,
arrangement or understanding to vote such security (1) arises solely from a
revocable proxy or consent given in response to a proxy or consent solicitation
made pursuant to, and in accordance with, the applicable rules and regulations
under the Exchange Act and (2) is not at that time reportable by such Person on
a Schedule 13D report under the Exchange Act (or any comparable or successor
report), other than by reference to a proxy or consent solicitation being
conducted by such Person; or
(iii) which are Beneficially Owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting (except as described in
the proviso in clause (B) of subparagraph (ii) of this paragraph (d)) or
disposing of any securities of the Company; provided, however, that for purposes
of determining Beneficial Ownership of securities under this Rights Agreement,
officers and directors of the Company solely by reason of their status as such
shall not constitute a group (notwithstanding that they may be Associates of one
another or may be deemed to constitute a group for purposes of Section 13(d) of
the Exchange Act) and shall not be deemed to own shares owned by another officer
or director of the Company.
Notwithstanding anything in this paragraph (d) to the contrary, a Person
engaged in the business of underwriting securities shall not be deemed the
"Beneficial Owner" of, or to "Beneficially Own," any securities acquired in good
faith in a firm commitment underwriting, until the expiration of forty days
after the date of such acquisition.
(e) "Book-Entry" shall mean an uncertificated book-entry for the Company's
Common Stock.
(f) "Business Day" shall mean any day other than a Saturday, Sunday, or day
on which banking institutions in the State of California or the state in which
the office of the Rights Agent is located are authorized or obligated by law or
executive order to close.
(g) "Close of Business" on any given date shall mean 5:00 p.m., California
time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 p.m., California time, on the next succeeding Business Day.
(h) "Common Stock," when used with reference to the Company, shall mean the
common stock, presently $.001 par value, of the Company. "Common Stock," when
used with reference to any Person other than the Company which shall be
organized in corporate form, shall mean the capital stock or other equity
security with the greatest voting power of such Person or, if such other Person
is a subsidiary of another Person, the Person or Persons which ultimately
control such first-mentioned Person. "Common Stock," when used with reference to
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any Person other than the Company which shall not be organized in corporate
form, shall mean units of beneficial interest which shall represent the right to
participate in profits, losses, deductions and credits of such Person and which
shall be entitled to exercise the greatest voting power of such Person.
(i) "Distribution Date" shall have the meaning set forth in Section 3(b)
hereof.
(j) "Exchange Act" shall have the meaning set forth in Section 1(b) hereof.
(k) "Exempt Person" shall mean (i) the Company, (ii) any Subsidiary of the
Company or (iii) any employee benefit plan or employee stock plan of the Company
or any Subsidiary of the Company, or any trust or other entity organized,
appointed, established or holding Common Stock for or pursuant to the terms of
any such plan.
(l) "Exercise Price" shall have the meaning set forth in Section 4 and as
may be adjusted pursuant to Section 7(b) hereof.
(m) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(n) "Fair Market Value" of any property shall mean the fair market value of
such property as determined in accordance with Section 11(b) hereof.
(o) "NASDAQ" shall mean the National Association of Securities Dealers,
Inc. Automated Quotation System or any successor thereto or other comparable
quotation system.
(p) "Person" shall mean any individual, firm, corporation, limited
liability company or other entity.
(q) "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
(r) "Record Date" shall have the meaning set forth in the first Recital.
(s) "Redemption Price" shall have the meaning set forth in Section 23(a)
hereof.
(t) "Rights Certificate" shall have the meaning set forth in Section 3(d)
hereof.
(u) "Stock Acquisition Date" shall mean the first date on which there shall
be a public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the Exchange
Act) or such earlier date as a majority of the Board of Directors shall become
aware of the existence of an Acquiring Person.
(v) "Subsidiary" of a Person shall mean any company or other entity of
which securities or other ownership interests having voting power sufficient to
elect a majority of the Board of Directors or other persons performing similar
functions are Beneficially Owned, directly or indirectly, by such Person or by
any company or other entity that is otherwise controlled by such Person.
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(w) "Summary of Rights" shall have the meaning set forth in Section 3(a)
hereof.
(x) "Trading Day" shall have the meaning set forth in Section 11(b) hereof.
(y) "Transfer Tax" shall mean any tax or charge, including any documentary
stamp tax, imposed or collected by any governmental or regulatory authority in
respect of any transfer of any security, instrument or right, including Rights,
shares of Common Stock and shares of Preferred Stock.
(z) "Voting Stock" shall mean (i) the Common Stock of the Company and (ii)
any other shares of capital stock of the Company entitled to vote generally in
the election of directors or entitled to vote together with the Common Stock in
respect of any merger, consolidation, sale of all or substantially all of the
Company's assets, liquidation, dissolution or winding up. For purposes of this
Agreement, Voting Stock shall include securities of the type referred to in
clauses (i) and (ii) above that trade on a "when issued" basis on a national
securities exchange or on the NASDAQ. For purposes of this Agreement, a stated
percentage of the Voting Stock shall mean a number of shares of the Voting Stock
as shall equal in voting power that stated percentage of the total voting power
of the then outstanding shares of Voting Stock in the election of a majority of
the Board of Directors or in respect of any merger, consolidation, sale of all
or substantially all of the Company's assets, liquidation, dissolution or
winding up.
Any determination required to be made by the Board of Directors of the
Company for purposes of applying the definitions contained in this Section 1
shall be made by the Board of Directors in its good faith judgment, and such
determination shall be binding on the Rights Agent and the holders of the
Rights.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable. The Rights Agent shall have no duty to supervise, and in
no event shall be liable for the acts or omissions of any such Co-Rights Agent.
Section 3. Issuance of Rights Certificates.
(a) On the Record Date (or as soon as practicable thereafter), the Company
or the Rights Agent shall send a copy of a Summary of Rights, in substantially
the form attached hereto as Exhibit A (the "Summary of Rights"), by first class
mail, postage prepaid, to each record holder of the Common Stock as of the Close
of Business on the Record Date, at the address of such holder shown on the
records of the Company.
(b) Until the Close of Business on the day which is the earlier of (i) the
tenth day after the Stock Acquisition Date or such earlier or later date (not
beyond the thirtieth day after the Stock Acquisition Date) as the Board of
Directors may from time to time fix by resolution adopted prior to the
Distribution Date that otherwise would have occurred or (ii) such date, if any,
as may be determined by action of the Board of Directors prior to such time as
any Person becomes an Acquiring Person after the date of the bona fide
commencement by any Person (other than an Exempt Person) of, or the first public
announcement of the intent of any Person
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(other than an Exempt Person) to commence, a tender or exchange offer upon the
successful consummation of which such Person, together with its Affiliates and
Associates, would be the Beneficial Owner of 15% or more of the then outstanding
shares of Voting Stock of the Company (irrespective of whether any shares are
actually purchased pursuant to any such offer and with the Board of Directors in
its good faith judgment determining whether such commencement or announcement is
bona fide) (the earlier of such dates being herein referred to as the
"Distribution Date"), (x) the Rights shall be evidenced by the Book-Entries, or
certificates for, Common Stock registered in the name of the holders of Common
Stock (together with, in the case of Book-Entries representing, or the
certificates for, Common Stock outstanding as of the Record Date, the Summary of
Rights) and not by separate Book-Entries or Rights Certificates and the record
holders of the Common Stock represented by such Book-Entries or certificates
shall be the record holders of the Rights represented thereby and (y) each Right
shall be transferable only simultaneously and together with the transfer of a
share of Common Stock (subject to adjustment as hereinafter provided). Until the
Distribution Date (or, if earlier, the Expiration Date), transfer by a
Book-Entry or the surrender for transfer of any certificate for Common Stock
shall constitute the surrender for transfer of the Right or Rights associated
with the Common Stock evidenced thereby, whether or not accompanied by a copy of
the Summary of Rights.
(c) Rights shall be issued in respect of all shares of Common Stock that
become outstanding after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date and, in certain circumstances provided
in Section 22 hereof, may be issued in respect of shares of Common Stock that
become outstanding after the Distribution Date. Certificates for Common Stock
and confirmations evidencing Book-Entries (including, without limitation,
certificates issued upon original issuance, dispensation from the Company's
treasury or transfer or exchange of Common Stock) after the Record Date but
prior to the earliest of the Distribution Date or the Expiration Date (or, in
certain circumstances as provided in Section 22 hereof, after the Distribution
Date) shall have impressed, printed, written or stamped thereon or otherwise
affixed thereto the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between Geoworks Corporation, a
Delaware corporation (the "Company") and Mellon Investor Services, LLC (the
"Rights Agent"), dated as of March 9, 2001 (the "Rights Agreement"), the
terms of which are hereby incorporated herein by reference and a copy of
which is on file at the principal offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this certificate a copy
of the Rights Agreement, as in effect on the date of mailing, without
charge promptly after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or held
by, any Person who is, was or becomes an Acquiring Person or any Affiliate
or Associates thereof (as such terms are defined in the Rights Agreement),
whether currently held by or on behalf of such Person or by any subsequent
holder, may become null and void.
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(d) As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested and provided
with all necessary information, send), by first class mail, postage prepaid, to
each record holder of the Common Stock as of the Close of Business on the
Distribution Date, as shown by the records of the Company, at the address of
such holder shown on such records, a certificate in the form provided by Section
4 hereof (a "Rights Certificate"), evidencing one Right (subject to adjustment
as provided herein) for each share of Common Stock so held. As of and after the
Distribution Date, the Rights shall be evidenced solely by such Rights
Certificates and may be transferred by the transfer of the Rights Certificate as
permitted hereby, separately and apart from any transfer of one or more shares
of Common Stock.
(e) In addition, in connection with the issuance or sale of shares of
Common Stock following the Distribution Date and prior to the Expiration Date,
the Company (i) shall, with respect to shares of Common Stock so issued or sold
(x) pursuant to the exercise of stock options or under any employee plan or
arrangement or (y) upon the exercise, conversion or exchange of other securities
issued by the Company prior to the Distribution Date and (ii) may, in any other
case, if deemed necessary or appropriate by the Board of Directors of the
Company, issue Rights Certificates representing the appropriate number of Rights
in connection with such issuance or sale; provided that no such Rights
Certificate shall be issued if, and to the extent that, (i) the Company shall be
advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued or (ii) appropriate adjustment shall
otherwise have been made in lieu of the issuance thereof.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase shares,
certificate and assignment to be printed on the reverse thereof), when, as and
if issued, shall be substantially in the form set forth in Exhibit B hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Common Stock or the Rights may from time to
time be listed or as the Company may deem appropriate (but which do not affect
the rights, duties or responsibilities of the Rights Agent) to conform to usage
or otherwise and as are not inconsistent with the provisions of this Rights
Agreement. Subject to the provisions of Section 22 hereof, Rights Certificates
evidencing Rights whenever issued, (i) shall be dated as of the date of issuance
of the Rights they represent and (ii) subject to adjustment from time to time as
provided herein, on their face shall entitle the holders thereof to purchase
such number of shares (including fractional shares which are integral multiples
of one one-thousandth of a share) of Preferred Stock as shall be set forth
therein at the price payable upon exercise of a Right provided by Section 7(b)
hereof as the same may from time to time be adjusted as provided herein (the
"Exercise Price").
(b) Notwithstanding any other provision of this Rights Agreement, any
Rights Certificate that represents Rights Beneficially Owned by an Acquiring
Person or any Affiliate or Associate thereof or any other Person whose Rights
shall become null and void pursuant to
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Section 7(e) shall have impressed on, printed on, written on or otherwise
affixed to it (if the Company and the Rights Agent have knowledge that such
Person is an Acquiring Person or an Associate or Affiliate or a nominee of any
of the foregoing) the following legend:
The Beneficial Owner of the Rights represented by this Rights Certificate
is an Acquiring Person or an Affiliate or an Associate of an Acquiring Person.
Accordingly, this Rights Certificate and the Rights represented hereby shall
become null and void in the circumstances specified in Section 7(e) of the
Rights Agreement.
Section 5. Countersignature and Registration.
(a) Each Rights Certificate shall be executed on behalf of the Company by
its Chairman of the Board, any President or any Senior or Vice President, either
manually or by facsimile signature, and have affixed thereto the Company's seal
or a facsimile thereof which shall be attested to by any Secretary or any
Assistant Secretary of the Company, either manually or by facsimile signature.
Each Rights Certificate shall be countersigned by the Rights Agent either
manually or by facsimile signature and shall not be valid for any purpose unless
so countersigned. In case any officer of the Company who shall have signed any
Rights Certificate shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery of the
certificate by the Company, such Rights Certificate, nevertheless, may be
countersigned by the Rights Agent and issued and delivered with the same force
and effect as though the person who signed such Rights Certificates had not
ceased to be such officer of the Company. Any Rights Certificate may be signed
on behalf of the Company by any person who, on the date of the execution of such
Rights Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(b) Following the Distribution Date, and receipt by the Rights Agent of all
necessary information, the Rights Agent will keep or cause to be kept, at its
principal office or one or more offices designated as the appropriate place for
the surrender of Rights Certificates upon exercise or transfer, and in such
other locations as may be required by law, books for registration and transfer
of the Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each of the Rights Certificates and the date of
each of the Rights Certificates and any Rights Certificates that have a legend
printed thereon pursuant to Section 4(b).
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Sections 7(e), 7(f) and 14(b) hereof, at
any time after the Close of Business on the Distribution Date, and at or prior
to the Close of Business on the Expiration Date, any Rights Certificate, may be
(i) transferred or (ii) split up, combined or exchanged for one or more other
Rights Certificates, entitling the registered holder to purchase a like number
of shares of Preferred Stock as the Rights Certificate or Rights Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer any Rights Certificate shall surrender the Rights
Certificate at the office of the Rights Agent designated for the surrender of
Rights Certificates with the form of certificate and assignment on
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the reverse side thereof duly endorsed (or, enclosed with such Rights
Certificate, a written instrument of transfer in a form satisfactory to the
Company and the Rights Agent), duly executed by the registered holder thereof or
his attorney duly authorized in writing, and with such signature duly
guaranteed. Any registered holder desiring to split up, combine or exchange any
Rights Certificate shall make such request in writing delivered to the Rights
Agent, and shall surrender the Rights Certificate to be split up, combined or
exchanged at the office of the Rights Agent. Thereupon, the Rights Agent shall
countersign and deliver to the person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any Transfer Tax that may be
imposed in connection with any transfer, split up, combination or exchange of
any Rights Certificates. The Rights Agent shall have no duty or obligation under
this Section unless and until it is satisfied that all such Transfer Taxes have
been paid.
(b) Subject to the provisions of Sections 7(e), 7(f) and 14(b) hereof, upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Rights Certificate,
and, in case of loss, theft or destruction, of indemnity or security
satisfactory to them and, if requested by the Company or the Rights Agent,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, or upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company shall issue and deliver a new
Rights Certificate of like tenor to the Rights Agent for delivery to the
registered owner in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights.
(a) The Rights shall not be exercisable until, and shall become exercisable
on, the Distribution Date (unless otherwise provided herein, including, without
limitation, the restrictions on exercisability set forth in Section 7(e) and
23(a) hereof). Except as otherwise provided herein, the Rights may be exercised,
in whole or in part, at any time commencing with the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
certificate on the reverse side thereof duly and properly executed (with
signatures duly guaranteed), to the Rights Agent at the office of the Rights
Agent designated for such purpose, together with payment of the Exercise Price
for each Right exercised, subject to adjustment as hereinafter provided, at or
prior to the Close of Business on the earlier of (i) March 9, 2011 (or if the
Distribution Date shall have occurred before March 9, 2011, at the Close of
Business on the 90th day following the Distribution Date), (ii) the date on
which the Rights are redeemed as provided in Section 23 hereof or (iii) the date
the Rights are exchanged pursuant to Section 27 hereof (such earlier date being
herein referred to as the "Expiration Date").
(b) The Exercise Price shall initially be $20 for each one one-thousandth
(1/1,000) of a share of Preferred Stock issued pursuant to the exercise of a
Right. The Exercise Price and the number of shares of Preferred Stock or other
securities to be acquired upon exercise of a Right shall be subject to
adjustment from time to time as provided in Sections 11 and 13 hereof. The
Exercise Price shall be payable in lawful money of the United States of America,
in accordance with paragraph (c) below.
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(c) Except as otherwise provided herein, upon receipt of a Rights
Certificate representing exercisable Rights with the form of election to
purchase duly and properly, executed, accompanied by payment by certified check,
cashier's check, bank draft or money order payable to the Company or the Rights
Agent of the Exercise Price for the shares to be purchased and an amount equal
to any applicable Transfer Tax required to be paid by the holder of the Rights
Certificate in accordance with Section 9(e) hereof, the Rights Agent shall
thereupon promptly (i) requisition from any registrar or transfer agent (as may
be appropriate) of the Preferred Stock of the Company one or more certificates
representing the number of shares of Preferred Stock to be so purchased, and the
Company hereby authorizes and directs such registrar or transfer agent (as may
be appropriate) to comply with all such requests, (ii) as provided in Section
14(b), at the election of the Company, cause depositary receipts to be issued in
lieu of fractional shares of Preferred Stock, (iii) if the election provided for
in the immediately preceding clause (ii) has not been made, requisition from the
Company the amount of cash to be paid in lieu of the issuance of fractional
shares in accordance with Section 14(b) hereof, (iv) after receipt of such
Preferred Stock certificates and, if applicable, depositary receipts, cause the
same to be delivered to or upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be designated by
such holder and (v) when appropriate, after receipt, promptly deliver such cash
to or upon the order of the registered holder of such Rights Certificate;
provided, however, that in the case of a purchase of securities, other than
Preferred Stock, pursuant to Section 13 hereof, the Rights Agent shall promptly
take the appropriate actions corresponding in such case to that referred to in
the foregoing clauses (i) through (v) of this Section 7(c). Notwithstanding the
foregoing provisions of this Section 7(c), the Company may suspend the issuance
of shares of Preferred Stock upon exercise of a Right for a reasonable period
with prompt notice of such to the Rights Agent, not in excess of 120 days,
during which the Company seeks to register under the Securities Act of 1933, as
amended (the "Act"), and any applicable securities law of any other
jurisdiction, the shares of Preferred Stock to be issued pursuant to the Rights;
provided, however, that nothing contained in this Section 7(c) shall relieve the
Company of its obligations under Section 9(c) hereof.
(d) In case the registered holder of any Rights Certificate shall exercise
less than all the Rights evidenced thereby, a new Rights Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Rights Certificate or his
assignee, subject to the provisions of Section 14(b) hereof.
(e) Notwithstanding any provision of this Rights Agreement to the contrary,
from and after the time (the "Invalidation Time") when any Person first becomes
an Acquiring Person, any Rights that are Beneficially Owned by (x) such Person
(or any Associate or Affiliate of such Person), (y) a transferee of such Person
(or any such Associate or Affiliate) who becomes a transferee after the
Invalidation Time or (z) a transferee of such Person (or any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the
Invalidation Time pursuant to either (I) a transfer from such Person to holders
of its equity securities or to any other Person with whom it has any continuing
agreement, arrangement or understanding regarding the transferred Rights or (II)
a transfer which the Board of Directors has determined is part of a plan,
arrangement or understanding which has the purpose or effect of avoiding the
provisions of this Section 7(e), and subsequent transferees of the Persons
referred to in either clause (y) or (z) above, shall be null and void without
any further action and any holder of such Rights shall thereafter have no rights
whatsoever with respect to such Rights under any provision of this
10
Rights Agreement. The Company shall use all reasonable efforts to ensure that
the provisions of this Section 7(e) are complied with, but neither the Company
nor the Rights Agent shall have any liability to any holder of a Rights
Certificate or any other Person as a result of the Company's failure to make any
determination with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder. No Rights Certificate shall be issued pursuant to
Section 3 hereof that represents Rights Beneficially Owned by an Acquiring
Person or any other Person whose Rights would be null and void pursuant to the
provisions of this Section 7(e) or any Associate, Affiliate or nominee thereof;
no Rights Certificate shall be issued at any time upon the transfer of any
Rights to an Acquiring Person or any other Person whose Rights would be null and
void pursuant to the provisions of this Section 7(e) or any Associate, Affiliate
or nominee thereof; and any Rights Certificate delivered to the Rights Agent for
transfer to an Acquiring Person whose Rights would be null and void pursuant to
the provisions of this Section 7(e) shall be canceled.
(f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate following the form of election to purchase
set forth on the reverse side of the Rights Certificate surrendered for such
exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof or a Person referred to in clause (y) or (z) of Section 7(e) and such
other information as the Company or the Rights Agent shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All Rights
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or 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 Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall cancel
and retire, any Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares of Preferred Stock.
(a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued shares of Preferred Stock or
out of authorized and issued shares of Preferred Stock held in its treasury,
such number of shares of Preferred Stock as will from time to time be sufficient
to permit the exercise in full of all outstanding Rights. The Company shall take
such action as may be required for it to comply with the foregoing sentence of
this Section 9(a).
(b) The Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all shares of Preferred Stock issued or
reserved for issuance in
11
accordance with this Rights Agreement to be listed, upon official notice of
issuance, upon the principal national securities exchange, if any, upon which
the Common Stock is listed or, if the principal market for the Common Stock is
not on any national securities exchange, to be eligible for quotation on NASDAQ
or any successor thereto or other comparable quotation system.
(c) The Company covenants and agrees that it will take all such actions as
may be necessary to insure that all shares of Preferred Stock delivered upon
exercise of Rights shall, at the time of delivery of the certificates, for such
shares (subject to payment of the Exercise Price in respect thereof), be duly
and validly authorized and issued and fully paid and nonassessable shares.
(d) The Company shall use its best efforts to (i) file, as soon as
practicable following the occurrence of the event described in Section
11(a)(ii), or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Act, with respect to the
shares of Preferred Stock purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become effective as
soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for Preferred Stock, or (B) the Expiration
Date. The Company may temporarily suspend, for a period of time not to exceed
120 days, the issuance of shares of Preferred Stock upon exercise of a Right in
order to prepare and file a registration statement under the Act and permit it
to become effective. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or "Blue Sky"
laws of the various states in connection with the exercisability of the Rights.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained and until a registration statement
under the Act (if required) shall have been declared effective.
(e) The Company covenants and agrees that it will pay when due and payable
any and all Transfer Taxes which may be payable in respect of the issuance or
delivery of the Rights Certificates or of any shares of Preferred Stock issued
or delivered upon the exercise of Rights. The Company shall not, however, be
required to pay any Transfer Tax which may be payable in respect of any transfer
or delivery of a Rights Certificate to a Person other than, or the issuance or
delivery of certificates for Preferred Stock upon exercise of Rights in a name
other than that of, the registered holder of the Rights Certificate, and the
Company shall not be required to or issue or deliver a Rights Certificate or
certificate for Preferred Stock to a Person other than such registered holder
until any such Transfer Tax shall have been paid (any such Transfer Tax being
payable by the holder of such Rights Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such
Transfer Tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for shares of Preferred Stock is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Preferred Stock represented thereby on, and such certificate shall be dated as
of, the date upon which the Rights Certificate evidencing 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 Preferred Stock transfer books of the Company
are closed, such Person shall be deemed to
12
have become the record holder of such shares on, and such certificate shall be
dated as of, the next succeeding Business Day on which the Preferred Stock
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate, as such, shall not be
entitled to any rights of a stockholder of the Company with respect to shares
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Exercise Price or Number of Shares. The Exercise
Price and the number of shares of Preferred Stock which 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 the Company shall at any time after the date of this
Rights Agreement (A) declare or pay any dividend on Common Stock payable in
shares of Common Stock, (B) subdivide or split the outstanding shares of Common
Stock into a greater number of shares or (C) combine or consolidate the
outstanding shares of Common Stock into a smaller number of shares or effect a
reverse split of the outstanding shares of Common Stock, then and in each such
event the number of shares of Preferred Stock issuable upon the exercise of a
Right after the record date for such event (if one shall have been established
or, if not, after the date of such event) shall be the number of shares of
Preferred Stock issuable immediately prior to such event multiplied by a
fraction the numerator of which is the number of Rights outstanding immediately
prior to such event and the denominator of which is the number of Rights
outstanding immediately after such event and the Exercise Price after such event
shall be the Exercise Price in effect immediately prior to such event multiplied
by such fraction. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 27 of this Agreement, in the event that any
Person (other than an Exempt Person), alone or together with its Affiliates and
Associates, shall become an Acquiring Person, then, subject to the last sentence
of Section 23(a) and except as otherwise provided in this Section 11, each
holder of a Right, except as provided in Section 7(e) hereof, shall thereafter
have the right to receive upon exercise of such Right in accordance with the
terms of this Rights Agreement and payment of the Exercise Price, the greater of
(1) the number of one one-thousandths of a share of Preferred Stock for which
such Right was exercisable immediately prior to the first occurrence of the
event described in this Section 11(a)(ii) (whether or not the Rights are then
exercisable) or (2) such number of one one-thousandths of a share of Preferred
Stock as shall equal the result obtained by dividing the Exercise Price by 50%
of the Fair Market Value of one one-thousandth of a share of Preferred Stock
(determined pursuant to Section 11(b) hereof) on the date of such first
occurrence; provided, however, that if the transaction that would otherwise give
rise to the foregoing adjustment is also subject to the provisions of Section 13
hereof, then only the provisions of Section 13 hereof shall apply and no
adjustment shall be made pursuant to this Section 11(a)(ii).
(iii) In the event that the Company does not have available sufficient
authorized but unissued Preferred Stock to permit the adjustments required
pursuant to the
13
foregoing subparagraph (i) or the exercise in full of the Rights in accordance
with the foregoing subparagraph (ii), the Company shall take all such actions as
may be necessary to authorize and reserve for issuance such number of additional
shares of Preferred Stock as may from time to time be required to be issued upon
the exercise in full of all Rights from time to time outstanding and, if
necessary, shall use its best efforts to obtain stockholder approval thereof. In
lieu of issuing shares of Preferred Stock in accordance with the foregoing
subparagraphs (i) and (ii), the Company may, if the Board of Directors
determines that such action is necessary or appropriate and not contrary to the
interests of holders of Rights, elect to issue or pay, upon the exercise of the
Rights, (A) cash, (B) other equity securities of the Company, (C) debt
securities of the Company, (D) other assets or (E) any combination of the
foregoing, in each case, having an aggregate Fair Market Value equal to the Fair
Market Value of the shares of Preferred Stock which otherwise would have been
issuable pursuant to Section 11(a)(ii), which Fair Market Value shall be
determined by an investment banking firm selected by the Board of Directors. For
purposes of the preceding sentence, the Fair Market Value of the Preferred Stock
shall be as determined pursuant to Section 11(b). Subject to Section 23 hereof,
any such election by the Board of Directors of the Company must be made and
publicly announced within thirty (30) days after the date on which the event
described in Section 11(a)(ii) occurs.
(b) For the purpose of this Rights Agreement, the "Fair Market Value" of
any share of Preferred Stock, Common Stock or any other stock or any Right or
other security or any other property on any date shall be determined as provided
in this Section 11(b). In the case of a publicly-traded stock or other security,
the Fair Market Value on any date shall be deemed to be the average of the daily
closing prices per share of such stock or per unit of such other security for
the 30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to but not including such date; provided, however, that in the
event that the Fair Market Value per share of any share of Common Stock is
determined during a period which includes any date that is within 30 Trading
Days after (i) the ex-dividend date for a dividend or distribution on such stock
payable in shares of Common Stock or securities convertible into shares of
Common Stock, or (ii) the effective date of any subdivision, split, combination,
consolidation, reverse stock split or reclassification of such stock, then, and
in each such case, the Fair Market Value shall be appropriately adjusted by the
Board of Directors of the Company to take into account ex-dividend or
post-effective date trading. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way (in either case, as
reported in the applicable transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange), or, if
the securities are not listed or admitted to trading on the New York Stock
Exchange, as reported in the applicable transaction reporting system with
respect to securities listed on the principal national securities exchange on
which such security is listed or admitted to trading; or, if not listed or
admitted to trading on any national securities exchange, the last quoted price
(or, if not so quoted, the average of the high bid and low asked prices) in the
over-the-counter market, as reported by NASDAQ or such other system then in use;
or, if no bids for such security are quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in such security selected by the Board of Directors
of the Company. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which such security is listed or admitted to
trading is open for the transaction of business or, if such security is not
listed or admitted to trading on any national securities exchange, a Business
Day. If a security is not publicly held or not so listed or traded,
14
"Fair Market Value" shall mean the fair value per share of stock or per other
unit of such other security, as determined by an independent investment banking
firm experienced in the valuation of securities selected in good faith by the
Board of Directors of the Company, or, if no such investment banking firm is, in
the good faith judgment of the Board of Directors, available to make such
determination, in good faith by the Board of Directors of the Company; provided,
however, that for purposes of making the adjustment provided for by Section
11(a)(ii) hereof, the Fair Market Value of a share of Preferred Stock shall not
be less than 100% of the product of the Fair Market Value of a share of Common
Stock multiplied by the higher of the then Dividend Multiple or Vote Multiple
applicable to the Preferred Stock (as defined in the provisions of the
Certificate of Designations relating to the Preferred Stock) and shall not
exceed 105% of the product of the then Fair Market Value of a share of Common
Stock multiplied by the higher of the then Dividend Multiple or Vote Multiple
applicable to the Preferred Stock. In the case of property other than
securities, the "Fair Market Value" thereof shall be 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 of the Company
shall in good faith determine to be appropriate in accordance with good business
practices and the interests of the holders of Rights. Any such determination of
Fair Market Value shall be described in a statement filed with the Rights Agent
and shall be binding upon the Rights Agent.
(c) All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one one-thousandth of a share, as the case may be.
(d) Irrespective of any adjustment or change in the Exercise Price or the
number of shares of Preferred Stock issuable upon the exercise of the Rights,
the Rights Certificates theretofore and thereafter issued may continue to
express the Exercise Price and the number of shares to be issued upon exercise
of the Rights as in the initial Rights Certificates issued hereunder but,
nevertheless, shall represent the Rights as so adjusted.
(e) Before taking any action that would cause an adjustment reducing the
purchase price per whole share of Preferred Stock upon exercise of the Rights
below the then par value, if any, of the shares of Preferred Stock, the Company
shall use its best efforts to take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and non-assessable shares of such Preferred Stock at
such adjusted purchase price per share.
(f) Anything in this Section 11 to the contrary notwithstanding, in the
event of any reclassification of stock of the Company or any recapitalization,
reorganization or partial liquidation of the Company or similar transaction, the
Company shall be entitled to make such further adjustments in the number of
shares of Preferred Stock which may be acquired upon exercise of the Rights, and
such adjustments in the Exercise Price therefor, in addition to those
adjustments expressly required by the other paragraphs of this Section 11, as
the Board of Directors of the Company shall determine to be necessary or
appropriate in order for the holders of the Rights in such event to be treated
equitably and in accordance with the purpose and intent of this Rights Agreement
or in order that any such event shall not, but for such adjustment, in the
opinion of counsel to the Company, result in the stockholders of the Company
being subject to any United States federal income tax liability by reason
thereof.
15
(g) In the event the Company shall at any time after the Record Date make
any distribution on the shares of Common Stock of the Company, whether by way of
a dividend or a reclassification of stock, a recapitalization, reorganization or
partial liquidation of the Company or otherwise, in cash or any debt security,
debt instrument, real or personal property or any other property (other than any
shares of Common Stock or other capital stock of the Company and other than any
right or warrant to acquire any such shares, including any debt security
convertible into or exchangeable for any such share, at less than the Fair
Market Value of such shares) and the amount of such cash dividend or the Fair
Market Value of such debt security, debt instrument or property exceeds 150% of
the aggregate amount of the cash dividends declared or paid on the Common Stock
of the Company in the 15-month period immediately preceding such distribution,
then and in each such event, unless such distribution is part of or is made in
connection with a transaction to which Section 11(a)(ii) or Section 13 hereof
applies, the Exercise Price shall be reduced by an amount equal to the cash or
the Fair Market Value of such distribution, as the case may be, per share of
Common Stock of the Company. For purposes hereof, the Fair Market Value of any
property distributed to the holders of shares of Common Stock of the Company
shall be the Fair Market Value of such property as determined by an independent
investment banking firm experienced in the valuation of securities or the other
property so distributed, as the case may be, selected in good faith by the Board
of Directors of the Company, or, if no such investment banking firm is in the
good faith judgment of the Board of Directors available to make such
determination, in good faith by the Board of Directors of the Company, whose
determination shall be final and binding on the Company, the Rights Agent and
the holders of Rights.
Section 12. Certification of Adjusted Exercise Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11, 13 or 23(c), the
Company shall (a) promptly prepare a certificate setting forth such adjustment,
and a brief statement of the facts and computations giving rise to such
adjustment, (b) promptly file with the Rights Agent and with each transfer agent
for the Preferred Stock a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Rights Certificate in accordance with Section 25.
Notwithstanding the foregoing sentence, the failure of the Company to make such
certification or give such notice shall not affect the validity of or the force
or effect of the requirement for such adjustment. Any adjustment to be made
pursuant to Section 11, 13 or 23(c) of this Rights Agreement 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 have no duty with respect to and shall
not be deemed to have knowledge of any adjustment unless and until it shall have
received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, at any time after the time that any Person becomes
an Acquiring Person, (x) the Company shall, directly or indirectly, consolidate
with, or merge with and into, any other Person or Persons (other than an Exempt
Person or Persons) and the Company shall not be the surviving or continuing
company of such consolidation or merger, or (y) any Person or Persons (other
than an Exempt Person) shall, directly or indirectly, consolidate with, or merge
with and into, the Company, and the Company shall be the continuing or surviving
company of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Common Stock
shall be changed into or exchanged for stock or other
16
securities of any other Person (other than an Exempt Person) or of the Company
or cash or any other property, or (z) the Company or one or more of its
Subsidiaries shall, directly or indirectly, sell or otherwise transfer to any
other Person or any Affiliate or Associate of such Person, in one or more
transactions, or the Company or one or more of its Subsidiaries shall sell or
otherwise transfer to any Persons in one or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole), then, on the first
occurrence of any such event, proper provision shall be made so that (i) each
holder of record of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise thereof and payment of
the Exercise Price in accordance with the terms of this Rights Agreement, such
number of shares of validly issued, fully paid, non-assessable and freely
tradable Common Stock of the Principal Party (as defined herein), not subject to
any liens, encumbrances, rights of first refusal or other adverse claims, as
shall equal the result obtained by dividing the Exercise Price by 50% of the
Fair Market Value of the Common Stock of the Principal Party on the date of the
consummation of such consolidation, merger, sale or transfer; (ii) such
Principal Party 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 Rights Agreement; (iii) the term "Company" for all
purposes of this Rights Agreement shall thereafter be deemed to refer to such
Principal Party; (iv) such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of shares of its Common
Stock in accordance with the provisions of Section 9 hereof applicable to the
reservation of Preferred Stock) in connection with such consummation as may be
necessary to insure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; provided, however, that,
upon the subsequent occurrence of any merger, consolidation, sale of all or
substantially all of the assets, recapitalization, reclassification of shares,
reorganization or other extraordinary transaction in respect of such Principal
Party, each holder of a Right shall thereupon be entitled to receive, upon
exercise of a Right and payment of the Exercise Price, such cash, shares,
rights, warrants and other property which such holder would have been entitled
to receive had it, at the time of such transaction, owned the shares of Common
Stock of the Principal Party purchasable upon the exercise of a Right, and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property; and (v) the provisions of Section
11(a)(ii) hereof shall be of no effect following the occurrence of any event
described in clause (x), (y) or (z) above of this Section 13(a).
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in (x) or (y) of the first
sentence of Section 13(a) hereof: (A) the Person that is the issuer of the
securities into which shares of Common Stock of the Company are changed or
otherwise exchanged or converted in such merger or consolidation, or, if there
is more than one such issuer, the issuer of the Common Stock of which has the
greatest market value or (B) if no securities are so issued, (x) the Person that
is the other party to the merger or consolidation and that survives such merger
or consolidation, or, if there is more than one such Person, the Person the
Common Stock of which has the greatest market value or (y) if the Person that is
the other party to the merger or
17
consolidation does not survive the merger or consolidation, the Person that does
survive the merger or consolidation (including the Company if it survives); and
(ii) in the case of any transaction described in (z) of the first
sentence in Section 13(a), the Person that is the party receiving the greatest
portion of the assets or earning power transferred pursuant to such transaction
or transactions, or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power so
transferred or if the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such Persons as is the issuer
of Common Stock having the greatest market value of shares outstanding;
provided, however, that in any such case, if the Common Stock of such Person is
not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person the Common Stock of which is and
has been so registered, the term "Principal Party" shall refer to such other
Person, or if such Person is a Subsidiary, directly or indirectly, of more than
one Person, the Common Stocks of all of which are and have been so registered,
the term "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest market value of shares
outstanding.
(c) The Company shall not consummate any consolidation, merger or sale or
transfer of assets or earning power referred to in Section 13(a) unless the
Principal Party shall have a sufficient number of authorized shares of its
Common Stock that have not been issued or reserved for issuance to permit
exercise in full of all Rights in accordance with this Section 13 and unless
prior thereto the Company and the Principal Party involved therein shall have
executed and delivered to the Rights Agent an agreement confirming that the
Principal Party shall, upon consummation of such consolidation, merger or sale
or transfer of assets or earning power, assume this Rights Agreement in
accordance with Section 13(a) hereof and that all rights of first refusal or
preemptive rights in respect of the issuance of shares of Common Stock of the
Principal Party upon exercise of outstanding Rights have been waived and that
such transaction shall not result in a default by the Principal Party under this
Rights Agreement, and further providing that, as soon as practicable after the
date of any consolidation, merger or sale or transfer of assets or earning power
referred to in Section 13(a) hereof, the Principal Party will:
(i) prepare and file a registration statement under the Act with
respect to the Rights and the securities purchasable upon exercise of the Rights
on an appropriate form, use its best efforts to cause such registration
statement to become effective as soon as practicable after such filing and use
its best efforts to cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Act) until the date of
expiration of the Rights, and similarly comply with applicable state securities
laws;
(ii) use its best efforts to list (or continue the listing of) the
Rights and the securities purchasable upon exercise of the Rights on a national
securities exchange or to meet the eligibility requirements for quotation on
NASDAQ; and
(iii) deliver to holders of the Rights historical financial statements
for the Principal Party which comply in all respects with the requirements for
registration on Form 10 (or any successor form) under the Exchange Act. In the
event that any of the transactions described in Section 13(a) hereof shall occur
at any time after the occurrence of a transaction
18
described in Section 11(a)(ii) hereof, the Rights which have not theretofore
been exercised shall, subject to the provisions of Section 7(e) hereof,
thereafter be exercisable in the manner described in Section 13(a).
(d) In case the Principal Party which is to be a party to a transaction
referred to in this Section 13 has a provision in any of its authorized
securities or in its Certificate of Incorporation or By-Laws or other instrument
governing its corporate affairs, which provision would have the effect of (i)
causing such Principal Party to issue, in connection with, or as a consequence
of, the consummation of a transaction referred to in this Section 13, shares of
Common Stock of such Principal Party at less than the then Fair Market Value per
share (determined pursuant to Section 11(b) hereof) or securities exercisable
for, or convertible into, Common Stock of such Principal Party at less than such
then Fair Market Value (other than to holders of Rights pursuant to this Section
13) or (ii) providing for any special tax or similar payment in connection with
the issuance to any holder of a Right of Common Stock of such Principal Party
pursuant to the provisions of this Section 13, then, in such event, the Company
shall not consummate any such transaction unless prior thereto the Company and
such Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Rights Certificates which evidence fractional Rights (i.e., Rights to
acquire less than one one-thousandth of a share of Preferred Stock), unless such
fractional Rights result from a transaction referred to in Section 11(a)(i)
hereof. If the Company shall determine not to issue such fractional Rights,
then, in lieu of such fractional Rights, there shall be paid to the holders of
record of the Rights Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of the
Fair Market Value of a whole Right.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of
one-thousandth of a share) upon exercise of the Rights or to distribute
certificates which evidence fractional shares (other than fractions which are
integral multiples of one-thousandth of a share). In lieu of issuing fractions
of shares of Preferred Stock, the Company may, at its election, issue depositary
receipts evidencing fractions of shares 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 of the rights, privileges and preferences to which they would be entitled as
owners of the Preferred Stock. With respect to fractional shares that are not
integral multiples of one-thousandth of a share, if the Company does not issue
such fractional shares or depositary receipts in lieu thereof, there shall be
paid to the holders of record of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
Fair Market Value of a share of Preferred Stock.
19
(c) The holder of a Right by the acceptance of a Right expressly waives his
right to receive any fractional Right or any fractional shares of Preferred
Stock (other than fractions which are integral multiples of one one-thousandth
of a share) upon exercise of a Right.
(d) Whenever a payment for fractional Rights or fractional shares is to be
made by the Rights Agent, the Company shall (i) promptly prepare and deliver to
the Rights Agent a certificate setting forth in reasonable detail the facts
related to such payment and the prices and/or formulas utilized in calculating
such payments, and (ii) provide sufficient monies to the Rights Agent in the
form of fully collected funds to make such payments. The Rights Agent shall be
fully protected in relying upon such a certificate and shall have no duty with
respect to, and shall not be deemed to have knowledge of any payment for
fractional Rights or fractional shares under any Section of this Agreement
relating to the payment of fractional Rights or fractional shares unless and
until the Rights Agent shall have received such a certificate and sufficient
monies.
Section 15. Rights of Action. All rights of action in respect of this
Rights Agreement, except the rights of action given to the Rights Agent under
this Agreement, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the holders of record of the
Common Stock); and any holder of record of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and, in this Rights 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 Rights Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this Rights
Agreement.
Section 16. Agreement of Right Holders. Each holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) Prior to the Distribution Date, the Rights shall be evidenced by the
Book-Entries representing, or the certificates for, Common Stock registered in
the name of the holders of Common Stock (together, as applicable, with the
Summary of Rights), which Book-Entries representing, or the certificates for,
Common Stock shall also constitute certificates for Rights, and not by separate
Rights Certificates, and each Right shall be transferable only simultaneously
and together with the transfer of shares of Common Stock;
(b) After the Distribution Date, the Rights Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the office of
the Rights Agent designated for such purpose, duly endorsed or accompanied by a
proper instrument of transfer;
(c) The Company and the Rights Agent may deem and treat the person in whose
name the Rights Certificate (or, prior to the Distribution Date, the associated
Book-Entry
20
representing, or certificate for, Common Stock) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any notations
of ownership or writing on the Rights Certificates or the associated Common
Stock certificate made by anyone other than the Company or the Rights Agent) for
all purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
(d) Notwithstanding anything in this Agreement to the contrary, neither the
Company nor the Rights Agent shall have any liability to any holder of a Right
or a beneficial interest in 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. The Company
must use its best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
(e) Rights Beneficially Owned by certain persons will under certain
circumstances set forth in this Agreement become null and void pursuant to
Section 7(e) hereof; and
(f) This Agreement may be supplemented or amended from time to time
pursuant to Section 26 hereof.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No holder,
as such, of any Rights Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of Preferred Stock or any other
securities which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof (except as provided in Section 7(f) hereof), or to give or
withhold consent to any corporate action (except as provided in Section 7(f)
hereof), or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
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 other
disbursements incurred in the administration, preparation, delivery, amendment
and execution of this Rights 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, damage, judgment, fine,
penalty, claim, demand, settlement, cost or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent
(each as finally determined by a court of competent jurisdiction), for any
action taken, suffered or omitted by the Rights Agent in connection with the
acceptance and administration of this Rights Agreement, including without
limitation, the costs
21
and expenses of defending against any claim of liability relating directly or
indirectly to the Rights or this Rights Agreement. The indemnity provided herein
shall survive the termination of this Agreement and the termination and the
expiration of the Rights. The costs and expenses incurred in enforcing this
right of indemnification shall be paid by the Company. Anything to the contrary
notwithstanding, in no event shall the Rights Agent be liable for special,
punitive, indirect, consequential or incidental loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Rights Agent
has been advised of the likelihood of such loss or damage. Any liability of the
Rights Agent under this Rights Agreement will be limited to the amount of fees
paid by the Company to the Rights Agent.
(b) The Rights Agent shall be authorized and protected against, and shall
incur no liability for or in respect of, any action taken, suffered or omitted
by it in connection with its administration of this Rights Agreement in reliance
upon any Rights Certificate or certificate for Preferred Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.
Section 19. Merger or Consolidation of, or Change in Name of, the Rights
Agent.
(a) Any Person into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any Person resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any Person succeeding to the shareholder services
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Rights Agreement without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, provided that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Rights Agreement any of the Rights Certificates shall have been countersigned
but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such 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
Rights Agent 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 Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; 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; in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Rights Agreement.
22
Section 20. Duties of Rights Agent. The Rights Agent undertakes only the
duties and obligations expressly imposed by this Rights Agreement (and no
implied duties) 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 advice or 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 and in accordance with such opinion or advice.
(b) Whenever in the performance of its duties under this Rights Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including without limitation, the identity of any Acquiring Person and the
determination of current per share market price) be proved or established by the
Company prior to taking, suffering or omitting any action hereunder, such fact
or matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, any President or any Senior or
Executive Vice President of the Company and delivered to the Rights Agent. Any
such certificate shall be full authorization and protection to the Rights Agent
and the Rights Agent shall incur no liability for or in respect of any action
taken, suffered or omitted by it under the provisions of this Rights Agreement
in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any other
Person only for its own gross negligence, bad faith or willful misconduct (each
as finally determined by a court of competent jurisdiction).
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Rights Agreement or in the
Rights Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any liability or responsibility in
respect of the validity of this Rights Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Rights
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Sections 3, 11, 13, 23 and 27 hereof or responsible for the
manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Rights Certificates after receipt of a
certificate furnished pursuant to Section 12, describing any such adjustment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Preferred Stock
to be issued pursuant to this Rights Agreement or any Rights Certificate or as
to whether any shares of Preferred Stock will, when issued, be validly
authorized and issued, fully paid and nonassessable.
23
(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 the Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, any President or any Senior or Executive Vice President
of the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken,
suffered or omitted by it in accordance with instructions of any such officer or
for any delay in acting while waiting for these instructions. Any application by
the Rights Agent for written instructions from the Company may, at the option of
the Rights Agent, set forth in writing any action proposed to be taken, suffered
or omitted by the Rights Agent under this Agreement and the date on and/or after
which such action shall be taken or suffered or such omission shall be
effective. The Rights Agent shall not be liable for any action taken, suffered
by, or omitted to be taken by, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after the date
any officer of the Company actually receives such application unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application specifying the action to be taken, suffered or omitted.
(h) The Rights Agent and any shareholder, director, affiliate, 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 financially interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Rights Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other Person.
(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, absent gross negligence, bad faith or willful misconduct
(each as finally determined by a court of competent jurisdiction), 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
it believes 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 contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has not been completed to certify the holder is not an
Acquiring Person (or an Affiliate or Associate thereof), the Rights Agent
24
shall not take any further action with respect to such requested exercise or
transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30 days notice in writing mailed to the Company and to each
transfer agent of the Common Stock and the Preferred Stock by registered or
certified mail. The Company may remove the Rights Agent or any successor Rights
Agent (with or without cause) upon 30 days notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Stock and the Preferred Stock by registered or certified
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after 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 the holder of
record 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
Person organized and doing business under the laws of the United States or of
any state thereof or the District of Columbia, in good standing, which is
authorized to do business under such laws and is subject to supervision or
examination by federal or state authorities and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000 or (b) an Affiliate controlled by a Person described in clause (a)
of this sentence. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed, but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and Preferred Stock, and mail a notice thereof in writing to
the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Notwithstanding the foregoing provisions, in the event of resignation, removal
or incapacity of the Rights Agent, the Company shall have the authority to act
as the Rights Agent until a successor Rights Agent shall have assumed the duties
of the Rights Agent hereunder.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Exercise Price per share and the number or kind or class of
shares of stock or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Rights Agreement.
25
Section 23. Redemption.
(a) The Company may, at its option, but only by the vote of a majority of
the Board of Directors, redeem all but not less than all of the then outstanding
Rights, at any time prior to the Close of Business on the earlier of (i) the
tenth day following the Stock Acquisition Date (subject to extension by the
Company as provided in Section 26 hereof) or (ii) the Expiration Date, at a
redemption price of $0.005 per Right, subject to adjustments as provided in
subsection (c) below (the "Redemption Price"). Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall not be exercisable
pursuant to Section 11(a)(ii) prior to the expiration of the Company's right of
redemption hereunder.
(b) Without any further action and without any notice, the right to
exercise the Rights will terminate effective at the time so designated by action
of the Board of Directors ordering the redemption of the Rights and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price. Within 10 days after the effective time of the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give notice
of such redemption to the Rights Agent and to the holders of the then
outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each notice of
redemption will state the method by which the payment of the Redemption Price
will be made. At the option of the Board of Directors, the Redemption Price may
be paid in cash to each Rights holder or by the issuance of shares (and, at the
Company's election pursuant to Section 14(b) hereof, cash or depositary receipts
in lieu of fractions of shares other than fractions which are integral multiples
of one one-thousandth (1/1,000) of a share) of Preferred Stock or Common Stock
having a Fair Market Value equal to such cash payment.
(c) In the event the Company shall at any time after the date of this
Rights Agreement (A) pay any dividend on Common Stock in shares of Common Stock,
(B) subdivide or split the outstanding shares of Common Stock into a greater
number of shares or (C) combine or consolidate the outstanding shares of Common
Stock into a smaller number of shares or effect a reverse split of the
outstanding shares of Common Stock, or (D) combine or consolidate the
outstanding shares of Common Stock into a smaller number of shares of its
capital stock in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving company), then, and in each such event,
the Redemption Price shall be appropriately adjusted to reflect the foregoing.
Section 24. Notice of Proposed Actions.
(a) In case the Company, after the Distribution Date, shall propose (i) to
effect any of the transactions referred to in Section 11(a)(i) or 11(g) or (ii)
to offer to the holders of record of its Common Stock options, warrants, or
other rights to subscribe for or to purchase shares of Common Stock (including
any security convertible into or exchangeable for Common Stock) or shares of
stock of any class or any other securities, options, warrants, convertible or
exchangeable securities or other rights, or (iii) to effect any reclassification
of its Preferred Stock
26
or Common Stock or any recapitalization or reorganization of the Company, or
(iv) to effect any consolidation or merger with or into, or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to, any other Person or Persons, or (v) to effect the liquidation, dissolution
or winding up of the Company, then, in each such case, the Company shall give to
each holder of record of a Rights Certificate and the Rights Agent, in
accordance with Section 25, notice of such proposed action, which shall specify
the record date for the purposes of such transaction referred to in Section
11(a)(i) or such dividend or distribution, or the date on which such
reclassification, recapitalization, reorganization, consolidation, merger, sale
or transfer of assets, liquidation, dissolution, or winding up is to take place
and the record date for determining participation therein by the holders of
record of Common Stock or Preferred Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by clause (i) or
(ii) above at least 10 days prior to the record date for determining holders of
record of the Preferred Stock for purposes of such action, and in the case of
any such other action, at least 10 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of record of
Common Stock or Preferred Stock, whichever shall be the earlier. The failure to
give notice required by this Section 24 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) In case any of the transactions referred to in Section 11(a)(i), 11(g)
or 13 of this Rights Agreement are proposed, then, in any such case, the Company
shall give to each holder of Rights and the Rights Agent, in accordance with
Section 25 hereof, notice of the proposal of such transaction at least 10 days
prior to consummating such transaction, which notice shall specify the proposed
event and the consequences of the event to holders of Rights under Section
11(a)(i), 11(g) or 13 hereof, as the case may be, and, upon consummating such
transaction, shall similarly give notice thereof to each holder of Rights.
Section 25. Notices. Notices or demands authorized by this Rights Agreement
to be given or made by the Rights Agent or by the holder of record of any Rights
Certificate or Right to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Geoworks Corporation: 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000,
Attention: Chief Financial Officer
With a copy to: Xxxxxxx Xxxxx + Xxxxxx LLP, 000 Xxxxxxxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Geoworks Relationship
Manager.
Subject to the provisions of Section 21, any notice or demand authorized by
this Rights Agreement to be given or made by the Company or by the holder of
record of any Rights Certificate or Right to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows: Mellon Investor Services, LLC, 000 Xxxxxxxxxx Xxxxxx, 00xx xxxxx, Xxx
Xxxxxxxxx, XX, 00000 Attention: Geoworks Relationship Manager.
27
With a copy to: Mellon Shareholder Services, LLC, 00 Xxxxxxxxxx Xxxx,
Xxxxxxxxxx Xxxx, XX 00000, Attention: General Counsel.
Notices or demands authorized by this Rights Agreement to be given or made
by the Company or the Rights Agent to the holder of record of any Rights
Certificate or Right shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed to such holder at the address of such holder as
shown on the registry books of the Company.
Section 26. Supplements and Amendments. For as long as the Rights are then
redeemable, the Company may in its sole and absolute discretion, and the Rights
Agent shall if the Company so directs (but subject to the last sentence of this
Section 26), supplement or amend any provision of this Agreement without the
approval of any holders of the Rights. At any time when the Rights are not then
redeemable, the Company may, and the Rights Agent shall if the Company so
directs (but subject to the last sentence of this Section 26), supplement or
amend this Rights Agreement without the approval of any holders of Rights
Certificates (i) to cure any ambiguity, (ii) to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein or (iii) to change or supplement the provisions hereunder in
any manner which the Company may deem necessary or desirable, provided that no
such supplement or amendment pursuant to this clause (iii) shall materially
adversely affect the interest of the holders of Rights Certificates. 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 26, and such supplement or amendment does not change or increase
the Rights Agent's rights, duties, liabilities or obligations, the Rights Agent
shall execute such supplement or amendment.
Section 27. Exchange.
(a) The Board of Directors of the Company may, at its option, at any time
after any Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become null and void pursuant to the provisions of Section 7(e) hereof) for
shares of Common Stock at an exchange ratio of one share per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than an Exempt Person), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Voting Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to paragraph (a) of this Section 27
and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of the holders of such
Rights shall be to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange with prompt
notice thereof to the Rights Agent; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the
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registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the shares of Common Stock for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become null and void pursuant to the provisions of Section
7(e) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of Common Stock
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 27, the Company shall
take all such action as may be necessary to authorize additional shares of
Common Stock for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares. In
lieu of such fractional shares, the Company shall pay to the registered holders
of the Rights Certificates with regard to which such fractional shares of Common
Stock would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole share of Common Stock. For the purposes
of this paragraph (d), the current market value of a whole share of Common Stock
shall be the closing price of a share of Common Stock for the Trading Day
immediately prior to the date of exchange pursuant to this Section 27.
Section 28. Successors. All of the covenants and provisions of this Rights
Agreement by or for the enefit of the Company or the Rights Agent shall bind and
inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Rights Agreement. Nothing in this Rights
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, the holders of Common Stock in their capacity as
holders of the Rights) any legal or equitable right, remedy or claim under this
Rights Agreement; but this Rights Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the holders of record of the Rights
Certificates (and, prior to the Distribution Date, the holders of Common Stock
in their capacity as holders of the Rights).
Section 30. Delaware Contract. This Rights Agreement and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed and enforced in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state; provided,
however, that all provisions regarding the rights, duties and obligations of the
Rights Agent shall be governed by and construed in accordance with the laws of
the State of New York applicable to contracts made and to be performed entirely
within such State.
Section 31. Counterparts. This Rights Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
29
Section 32. Descriptive Headings. Descriptive headings of the several
Sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
Section 33. Severability. If any term, provision, covenant or restriction
of this Rights Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this rights agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 34. Determinations and Actions by the Board of Directors, Etc.
(a) The Board of Directors of the Company shall have the exclusive power
and authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations and calculations deemed necessary or
advisable for the administration of this Agreement (including a determination to
redeem or not redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done or
made by the Board of Directors in good faith shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other parties, and (y) not subject the Board of Directors to any liability to
the holders of the Rights. The Rights Agent shall always be entitled to assume
that the Company's Board of Directors acted in good faith and shall be fully
protected and incur no liability in reliance thereon.
(b) A committee of the Board of Directors of the Company comprised entirely
of Directors of the Company who are not officers, employees or Affiliates of the
Company (the "Rights Plan Committee") shall review and evaluate this Agreement
in order to consider whether the maintenance of this Agreement continues to be
in the interests of the Company, its stockholders and any other relevant
constituencies of the Company, at least every other year, or sooner if a
majority of the members of the Rights Plan Committee shall deem such review and
evaluation appropriate after giving due regard to all relevant circumstances.
Following each such review, the Rights Plan Committee will communicate its
conclusions to the full Board of Directors, including any recommendation in
light thereof as to whether this Agreement should be modified or the Rights
should be redeemed.
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to
be duly executed as of the day and year first above written.
GEOWORKS CORPORATION
By: /s/ Xxxxxxx Xxxxxx
Name: Xxxxxxx Xxxxxx
Title: Vice President & CFO
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Mellon Investor Services, LLC, as Rights Agent
By: /s/ Xxx Xxxx
Name: Xxx Xxxx
Title: Assistant Vice President
31
EXHIBIT A TO RIGHTS AGREEMENT
SUMMARY OF RIGHTS AGREEMENT
The summary below sets forth certain principal terms of the Rights only and
is qualified in its entirety by reference to the detailed terms of the
Shareholder Rights Plan dated March 9, 2001, between the Company and Mellon
Investor Services, LLC. The Shareholder Rights Plan was filed as an exhibit to
the Company's Registration Statement on Form 8-A12G filed with the Securities
and Exchange Commission on March 12, 2001. The Securities and Exchange
Commission maintains an Internet web site at xxxx://xxx.xxx.xxx where the text
of the Shareholder Rights Plan may be viewed and/or downloaded.
Distribution Date
Holders of record of shares of the Company's Common Stock on March 9, 2001
will receive a distribution of one "Right" for each shares of Common Stock they
hold. Prior to the Distribution Date referred to below, the Rights will trade
with the Common Stock and will not be in separate certificate form. After the
Distribution Date, the Company will mail separate Rights certificates to the
Company's stockholders and the Rights will become transferable apart from the
Common Stock. Generally, the Rights will separate from the Common Stock and
become exercisable on the Distribution Date, which is the date following the
earlier of (a) the public announcement that an Acquiring Person has become such
("Stock Acquisition Date") or (b) a date determined by the Board of Directors
after a person or group announces a bona fide tender or exchange offer, the
consummation of which would result in ownership by a person or group of 15% or
more of the Company's outstanding Common Stock.
Preferred Stock Purchasable Upon Exercise of Rights
After the Distribution Date, each Right will entitle the holder to purchase
for $20 (the "Exercise Price"), a fraction of a share of the Company's Series A
Preferred Stock with economic terms similar to that of one share of the
Company's Common Stock.
Flip-In Events
If an acquiror obtains 15% or more of the Company's Common Stock (an
"Acquiring Person"), then each Right (other than Rights owned by an Acquiring
Person or its affiliates) will entitle the holder thereof to purchase, for the
Exercise Price, a number of shares of the Company's Common Stock having a then
current market value of twice the Exercise Price.
Flip-Over Events
If, after an Acquiring Person obtains 15% or more of the Company's Common
Stock, (a) the Company merges into another entity, (b) an acquiring entity
merges into the Company or (c) the Company sells more than 50% or more of the
Company's assets or earning power, then each Right (other than Rights owned by
an Acquiring Person or its affiliates or associates) will entitle the holder
thereof to purchase, for the Exercise Price, a number of shares of Common
Stock of the Person engaging in the transaction having a then-current market
value of twice the Exercise Price.
Exchange Provision
At any time after the date an Acquiring Person obtains 15% or more of the
Company's Common Stock and prior to the acquisition by the Acquiring Person of
50% of the outstanding Common Stock, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by the Acquiring Person or its
affiliates), in whole or in part, for shares of Common Stock of the Company at
an exchange ratio of one share of Common Stock per Right (subject to
adjustment).
Redemption of the Rights
Rights will be redeemable at the Company's option for $0.005 per Right at
any time on or prior to the earlier to occur of (i) the Shares Acquisition Date,
and (ii) the final expiration of the Rights.
Expiration of the Rights
The Rights expire on the earliest of (a) Xxxxx 0, 0000, (x) exchange or
redemption of the Rights as described above, or (c) consummation of a merger or
consolidation resulting in expiration of the Rights as described above.
Amendment of Terms of Rights
The terms of the Rights and the Rights Agreement may be amended in any
respect without the consent of the Rights holders on or prior to the
Distribution Date; thereafter, the terms of the Rights and the Rights Agreement
may be amended without the consent of the Rights holders in order to cure any
ambiguities or to make changes which do not adversely affect the interests of
Rights holders (other than the Acquiring Person).
Voting Rights
Rights will not have any voting rights.
Anti-Dilution Provisions
Rights will have the benefit of certain customary anti-dilution provisions.
Taxes
The Rights distribution should not be taxable for federal income tax
purposes. However, following an event which renders the Rights exercisable or
upon redemption of the Rights, shareholders may recognize taxable income.
2
Committee Review
A committee of the Company's Directors who are neither officers, employees
nor affiliates of the Company will review the Rights Plan at least every other
year and, if a majority of these Directors deems it appropriate, may recommend a
modification or termination of the Rights Plan.
3
EXHIBIT B TO RIGHTS AGREEMENT
FORM OF RIGHTS CERTIFICATE
Certificate No. R -________ Rights
NOT EXERCISABLE AFTER (I) MARCH 9, 2011, OR (II) IF THE DISTRIBUTION DATE
(AS DEFINED BELOW) SHALL HAVE OCCURRED BEFORE THE DATE SPECIFIED IN CLAUSE (I),
THE DATE WHICH IS NINETY (90) DAYS AFTER MARCH 9, 2011, OR EARLIER IF REDEEMED.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY AND UNDER
CERTAIN OTHER CIRCUMSTANCES, AT $0.005 PER RIGHT (SUBJECT TO ADJUSTMENT), ON THE
TERMS SET FORTH OR REFERRED TO IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES AS PROVIDED IN THE RIGHTS AGREEMENT (AS REFERRED TO BELOW), RIGHTS
ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR AFFILIATES OR
ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS SHALL BE NULL AND VOID AND MAY NOT BE TRANSFERRED TO ANY
PERSON.
Rights Certificate
This certifies that _________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of March 9, 2001 (the "Rights Agreement") between Geoworks
Corporation (the "Company"), and Mellon Investor Services, LLC, as Rights Agent
(the "Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 p.m. (California time) on March 9, 2011 (or if the Distribution Date shall
have occurred before March 9, 2011, at the Close of Business on the 90th day
following the Distribution Date) at the office of the Rights Agent designated in
the Rights Agreement for such purpose, or its successor as Rights Agent, one
one-thousandth (1/1,000) of a fully paid nonassessable share of Series A Junior
Participating Preferred Stock, without par value, of the Company (the "Preferred
Stock") at a purchase price of $20, as the same may from time to time be
adjusted in accordance with the Rights Agreement (the "Exercise Price"), upon
presentation and surrender of this Rights Certificate with the Form of Election
to Purchase attached hereto duly executed.
As provided in the Rights Agreement, the Exercise Price and the number of
shares of Preferred Stock which may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification and adjustment
upon the happening of certain events and, upon the happening of certain events,
securities other than shares of Preferred Stock, or other property, may be
acquired upon exercise of the Rights evidenced by this Rights Certificate, as
provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights
Agent, the Company and the holders of record of Rights Certificates. Copies of
the Rights Agreement are on file at the principal executive office of the
Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated in the Rights Agreement
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder of
record to purchase a like aggregate number of shares of Preferred Stock as the
Rights evidenced by the Rights Certificate or Rights Certificates surrendered
shall have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof, another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option or under certain
other circumstances at a redemption price of $0.005 per Right. No fractional
shares of Preferred Stock (other than fractions which are integral multiples of
one one-thousandth (1/1,000) of a share) are required to be issued upon the
exercise of any Right or Rights evidenced hereby, and in lieu thereof the
Company may cause depositary receipts to be issued and/or a cash payment may be
made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Preferred Stock or
of any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at meeting thereof, or to give or
withhold consent to any corporate action or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or
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otherwise, until the Right or Rights evidenced by this Rights Certificate shall
have been exercised as provided in the Rights Agreement. This Rights Certificate
shall not be valid or obligatory for any purpose until it shall have been
countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of _____________, ____.
ATTEST:
By: _______________________________ By:____________________________________
Title:_____________________________ Title: ________________________________
Countersigned:
Mellon Investor Services, LLC, as Rights Agent
By:________________________________
Title:_____________________________
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[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer
the Rights Certificates.)
FOR VALUE RECEIVED _____________________________________ hereby sells,
assigns and transfers unto _____________________________________________________
__________________________________________________________________ (Please print
name and address of transferee)
_____________________________________________________________________ Rights
evidenced by this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
______________________________ Attorney to transfer the within Rights
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: ________________, ____
___________________________________
Signature
Signature Guaranteed:
4
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned or
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Associate or an Affiliate thereof (as such terms are defined in the Rights
Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement).
Dated: ________________, ____ ________________________________
Signature
NOTICE
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
5
FORM OF ELECTION TO PURCHASE
(To be executed if registered holder desires to exercise the Rights
Certificate.)
TO:_________________
The undersigned hereby irrevocably elects to exercise _________________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of such Rights and requests that
certificates for such share(s) be issued in the following name:
Please insert social security or other identifying number:_________________
Please insert name and address:____________________________________________
________________________________________________________________________________
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
Please insert social security or other identifying number:_________________
________________________________________________________________________________
________________________________________________________________________________
Please insert name and address:_________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Dated: ______________, ______ __________________________________________
Signature
(Signature must conform in all respects to
name of holder as specified on the fact of
this Rights Certificate)
Signature Guaranteed:
6
EXHIBIT C TO RIGHTS AGREEMENT
CERTIFICATE OF DESIGNATIONS
FORM OF CERTIFICATE OF DESIGNATIONS OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF GEOWORKS CORPORATION
Pursuant to Section 151 of the Delaware General Corporation Law
Geoworks Corporation, a company organized and existing under the laws of
the State of Delaware (the "Company"), DOES HEREBY CERTIFY:
1. That by resolution of the Board of Directors of the Company dated March
1, 2001, the Company authorized the issuance of a series of 500,000 shares of
Series A Junior Participating Preferred Stock of the Company (the "Series A
Preferred Stock") and established the voting powers, preferences, and relative,
participating, optional or other special rights of the shares of the Series A
Preferred Stock, and the qualifications, limitations or restrictions thereof
effective upon the redemption of the rights (the "Rights") issued pursuant to
the Rights Agreement between the Company and Mellon Investor Services, LLC, as
Rights Agent, dated March 9, 2001.
RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Company in accordance with the provisions of its Certificate of
Incorporation, a series of Preferred Stock of the Company be, and hereby is,
created and that the designation and amount thereof and the voting powers,
preferences and relative, participating, optional or other special rights of the
shares of such series, and the qualifications, limitations or restrictions
thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting such series shall be
500,000.
Section 2. Dividends and Distributions.
(A) Subject to the provisions for adjustment hereinafter set forth, the
holders of shares of Series A Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, cash dividends in an amount per share (rounded to the
nearest cent) equal to 1,000 times the aggregate per share amount of all cash
dividends declared or paid on the Common Stock, $.001 par value per share, of
the Company (the "Common Stock"). In the event the Company shall, at any time
after the issuance of any share or fraction of a share of Series A Preferred
Stock, make any distribution on the shares of Common Stock of the Company,
whether by way of a dividend or a reclassification of stock, a recapitalization,
reorganization or partial liquidation of the Company or otherwise, which is
payable in cash or any debt security, debt instrument, real or personal property
or any other property (other than cash dividends subject to the immediately
preceding sentence and other than a distribution of shares of Common Stock or
other capital stock of the Company and other than a
5
distribution of rights or warrants to acquire any such share, including any debt
security convertible into or exchangeable for any such share), at a price less
than the Current Market Price of such share, then, and in each such event the
Company shall simultaneously pay on each then outstanding share of Series A
Preferred Stock of the Company a distribution, in like kind, of 1,000 times such
distribution paid on a share of Common Stock (subject to the provisions for
adjustment hereinafter set forth). The dividends and distributions on the Series
A Preferred Stock to which holders thereof are entitled pursuant to the first
sentence of this paragraph and the second sentence of this paragraph are
hereinafter referred to as "Participating Dividends," and the multiple of such
cash and noncash dividends on the Common Stock applicable to the determination
of the Participating Dividends, which shall be 1,000 initially but shall be
adjusted from time to time as hereinafter provided, is hereinafter referred to
as the "Dividend Multiple." In the event the Company shall at any time after
March 9, 2001 (the "Effective Date") declare or pay any dividend or make any
distribution on Common Stock payable in shares of Common Stock, or effect a
subdivision or split or a combination, consolidation or reverse split of the
outstanding shares of Common Stock into a greater or lesser number of shares of
Common Stock, or issue any of its capital stock in a reclassification of the
Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), then in each such case the Dividend Multiple thereafter applicable
to the determination of the amount of Participating Dividends which holders of
shares of Series A Preferred Stock shall be entitled to receive shall be the
Dividend Multiple applicable immediately prior to such event multiplied by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided for or fixed by or pursuant to the
provisions of Article IV of the Certificate of Incorporation of the Company
relating to the rights of holders of any class or series of stock having a
preference over the Common Stock as to dividends, the Company shall declare each
Participating Dividend at the same time it declares any cash or noncash dividend
or distribution on the Common Stock in respect of which a Participating Dividend
is required to be paid. No cash or noncash dividend or distribution on the
Common Stock in respect of which a Participating Dividend is required shall be
paid or set aside for payment on the Common Stock unless a Participating
Dividend in respect of such dividend or distribution on the Common Stock shall
be simultaneously paid or set aside for payment on the Series A Preferred Stock.
Section 3. Voting Rights. The holders of shares of Series A Preferred Stock
shall have the following voting rights:
(A) Subject to the provisions for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the Company. The
number of votes which a holder of Series A Preferred Stock is entitled to cast,
as the same may be adjusted from time to time as hereinafter provided, is
hereinafter referred to as the "Vote Multiple." In the event the Company shall
at any time after the Effective Date declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or split or a
combination, consolidation or reverse split of the outstanding shares of Common
Stock into a greater or lesser number of shares of Common
2
Stock, or issue any of its capital stock in a reclassification of the Common
Stock (including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation, then in
each such case the Vote Multiple thereafter applicable to the determination of
the number of votes per share to which holders of shares of Series A Preferred
Stock shall be entitled after such event shall be the Vote Multiple immediately
prior to such event multiplied by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation, in any resolution or resolutions of the Board of Directors of the
Company providing for the issue of any other series of Preferred Stock or by
law, the holders of shares of Series A Preferred Stock, the holders of shares of
Common Stock and the holders of shares of any other class or series of capital
stock of the Company entitled to vote generally for the election of directors
shall vote together as one class on all matters submitted to a vote of
stockholders of the Company.
(C) Except as otherwise required by law or set forth herein, holders of
Series A Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote as set
forth herein) for the taking of any corporate action.
Section 4. Certain Restrictions.
(A) Whenever Participating Dividends are in arrears or the Company shall be
in default in payment thereof, thereafter and until all accrued and unpaid
Participating Dividends, whether or not declared, on shares of Series A
Preferred Stock outstanding shall have been paid or set aside for payment in
full, and in addition to any and all other rights which any holder of shares of
Series A Preferred Stock may have in such circumstances, the Company shall not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration, any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock;
(ii) or pay dividends or make any other distributions on any shares of
stock ranking on a parity as to dividends with the Series A Preferred Stock,
unless dividends are paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled;
(iii) except as permitted by subparagraph (iv) of this paragraph (A),
redeem or purchase or otherwise acquire for consideration shares of any stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, provided that the Company may at
any time redeem, purchase or otherwise acquire shares of any such parity stock
in exchange for shares of any stock of the Company ranking junior (both as to
dividends and upon liquidation, dissolution or winding up) to the Series A
Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity with the
Series A Preferred Stock
3
(either as to dividends or upon liquidation, dissolution or winding up), except
in accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to purchase
or otherwise acquire for consideration any shares of stock of the Company
ranking junior to the Series A Preferred Stock unless the Company could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such shares at
such time and in such manner.
(C) The Company shall not issue any shares of Series A Preferred Stock
except upon exercise of Rights issued pursuant to that certain Rights Agreement
dated as of March 9, 2001 between the Company and Mellon Investor Services, LLC,
as Rights Agent, a copy of which is on file with the Secretary of the Company at
the principal executive office of the Company and shall be made available to
holders of record of Common Stock or Series A Preferred Stock without charge
upon written request therefor addressed to the Secretary of the Company.
Notwithstanding the foregoing sentence, nothing contained in the provisions
hereof shall prohibit or restrict the Company from issuing for any purpose any
series of Preferred Stock with rights and privileges similar to, different from,
or greater than, those of the Series A Preferred Stock.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such shares
upon their retirement and cancellation shall become authorized but unissued
shares of Preferred Stock, without designation as to series, and such shares may
be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors.
Section 6. Liquidation, Dissolution or Winding Up. Upon any voluntary or
involuntary liquidation, dissolution or winding up of the Company, no
distribution shall be made (i) to the holders of shares of stock ranking junior
to the Series A Preferred Stock (either as to dividends or upon liquidation,
dissolution or winding up) unless the holders of shares of Series A Preferred
Stock shall have received, subject to adjustment as hereinafter provided, the
amount equal to 1,000 times the aggregate amount to be distributed per share to
holders of Common Stock, as the same may be adjusted as hereinafter provided, or
(ii) to the holders of stock ranking on a parity upon liquidation, dissolution
or winding up with the Series A Preferred Stock, unless simultaneously therewith
distributions are made ratably on the Series A Preferred Stock and all other
shares of such parity stock in proportion to the total amounts to which the
holders of shares of Series A Preferred Stock are entitled and to which the
holders of such parity shares are entitled, in each case upon such liquidation,
dissolution or winding up. The amount to which holders of Series A Preferred
Stock shall be entitled upon liquidation, dissolution or winding up of the
Company pursuant to the foregoing sentence is hereinafter referred to as the
"Participating Liquidation Amount," and the multiple of the amount to be
distributed to holders of shares of Common Stock upon the liquidation,
dissolution or winding up of the Company applicable pursuant to said clause to
the determination of the Participating Liquidation Amount, which shall be 1,000
but may be adjusted from time to time as hereinafter provided, is hereinafter
referred to
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as the "Liquidation Multiple." In the event the Company shall at any time after
the Effective Date declare or pay any dividend on Common Stock payable in shares
of Common Stock, or effect a subdivision or split or a combination,
consolidation or reverse split of the outstanding shares of Common Stock into a
greater or lesser number of shares of Common Stock, or issue any of its capital
stock in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), then in each such case the
Liquidation Multiple thereafter applicable to the determination of the
Participating Liquidation Amount to which holders of Series A Preferred Stock
shall be entitled after such event shall be the Liquidation Multiple applicable
immediately prior to such event multiplied by a fraction the numerator of which
is the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Certain Reclassifications and Other Events.
(A) In the event that holders of shares of Common Stock receive after the
Effective Date, in respect of their shares of Common Stock any share of capital
stock of the Company (other than any share of Common Stock of the Company),
whether by way of reclassification, recapitalization, reorganization, dividend
or other distribution or otherwise ("Transaction"), then in each such event the
dividend rights, voting rights and rights upon the liquidation, dissolution or
winding up of the Company of the shares of Series A Preferred Stock shall be
adjusted so that after such event the holders of Series A Preferred Stock shall
be entitled, in respect of each share of Series A Preferred Stock held, in
addition to such rights in respect thereof to which such holder was entitled
immediately prior to such adjustment, to (i) such additional dividends as equal
the Dividend Multiple in effect immediately prior to such Transaction multiplied
by the additional dividends which the holder of a share of Common Stock shall be
entitled to receive by virtue of the receipt in the Transaction of such capital
stock, (ii) such additional voting rights as equal the Vote Multiple in effect
immediately prior to such Transaction multiplied by the additional voting rights
which the holder of a share of Common Stock shall be entitled to receive by
virtue of the receipt in the Transaction of such capital stock and (iii) such
additional distributions upon liquidation, dissolution or winding up of the
Company as equal the Liquidation Multiple in effect immediately prior to such
Transaction multiplied by the additional amount which the holder of a share of
Common Stock shall be entitled to receive upon liquidation, dissolution or
winding up of the Company by virtue of the receipt in the Transaction of such
capital stock, as the case may be, all as provided by the terms of such capital
stock.
(B) In the event that holders of shares of Common Stock receive after the
Effective Date, in respect of their shares of Common Stock any right or warrant
to purchase Common Stock (including as such a right, for all purposes of this
paragraph, any security convertible into or exchangeable for Common Stock) at a
purchase price per share less than the Current Market Price (as hereinafter
defined) of a share of Common Stock on the date of issuance of such right or
warrant, then in each such event the dividend rights, voting rights and rights
upon the liquidation, dissolution or winding up of the Company of the shares of
Series A Preferred Stock shall each be adjusted so that after such event the
Dividend Multiple, the Vote Multiple and the Liquidation Multiple shall each be
the product of the Dividend Multiple, the Vote Multiple and the Liquidation
Multiple, as the case may be, in effect immediately prior to such event
multiplied
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by a fraction the numerator of which shall be the number of shares of Common
Stock outstanding immediately before such issuance of rights or warrants plus
the maximum number of shares of Common Stock which could be acquired upon
exercise in full of all such rights or warrants and the denominator of which
shall be the number of shares of Common Stock outstanding immediately before
such issuance of rights or warrants plus the number of shares of Common Stock
which could be purchased, at the Current Market Price of the Common Stock at the
time of such issuance, by the maximum aggregate consideration payable upon
exercise in full of all such rights or warrants.
(C) In the event that holders of shares of Common Stock receive after the
Effective Date in respect of their shares of Common Stock any right or warrant
to purchase capital stock of the Company (other than shares of Common Stock),
including as such a right, for all purposes of this paragraph, any security
convertible into or exchangeable for capital stock of the Company, (other than
Common Stock), at a purchase price per share less than the Fair Market Value of
such shares of capital stock on the date of issuance of such right or warrant,
then in each such event the dividend rights, voting rights and rights upon
liquidation, dissolution or winding up of the Company of the shares of Series A
Preferred Stock shall each be adjusted so that after such event each holder of a
share of Series A Preferred Stock shall be entitled, in respect of each share of
Series A Preferred Stock held, in addition to such rights in respect thereof to
which such holder was entitled immediately prior to such event, to receive (i)
such additional dividends as equal the Dividend Multiple in effect immediately
prior to such event multiplied, first, by the additional dividends to which the
holder of a share of Common Stock shall be entitled upon exercise of such right
or warrant by virtue of the capital stock which could be acquired upon such
exercise and multiplied again by the Discount Fraction (as hereinafter defined),
(ii) such additional voting rights as equal the Vote Multiple in effect
immediately prior to such event multiplied, first, by the additional voting
rights to which the holder of a share of Common Stock shall be entitled upon
exercise of such right or warrant by virtue of the capital stock which could be
acquired upon such exercise and multiplied again by the Discount Fraction and
(iii) such additional distribution upon liquidation, dissolution or winding up
of the Company as equal the Liquidation Multiple in effect immediately prior to
such event multiplied, first, by the additional amount which the holder of a
share of Common Stock shall be entitled to receive upon liquidation, dissolution
or winding up of the Company upon exercise of such right or warrant by virtue of
the capital stock which could be acquired upon such exercise and multiplied
again by the Discount Fraction. For purposes of this paragraph, the "Discount
Fraction" shall be a fraction the numerator of which shall be the difference
between the Current Market Price of a share of the capital stock subject to a
right or warrant distributed to holders of shares of Common Stock as
contemplated by this paragraph immediately after the distribution thereof and
the purchase price per share for such share of capital stock pursuant to such
right or warrant and the denominator of which shall be the Current Market Price
of a share of such capital stock immediately after the distribution of such
right or warrant.
(D) For purposes of this Certificate of Designations, the "Current Market
Price" of a share of capital stock of the Company (including a share of Common
Stock) on any date shall be deemed to be the average of the daily closing price
per share thereof over the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided, however, that, in
the event that such Current Market Price of any such share of capital stock is
determined during a period which includes any date that is within 30 Trading
Days after (i) the
6
ex-dividend date for a dividend or distribution on stock payable in shares of
such stock or securities convertible into shares of such stock, or (ii) the
effective date of any subdivision, split, combination, consolidation, reverse
stock split or reclassification of such stock, then and in each such event, the
Current Market Price shall be appropriately adjusted by the Board of Directors
to reflect the Current Market Price of such stock to take into account
ex-dividend or post-effective date trading. The closing price for any day shall
be the last sale price, regular way, or, in case, no such sale takes place on
such day, the average of the closing bid and asked prices, regular way (in
either case, as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange), or, if the shares are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the shares are listed or admitted to trading or, if
the shares are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use, or if on any such date the shares
are not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in the
shares selected by the Board of Directors. The term "Trading Day" shall mean a
day on which the principal national securities exchange on which the shares are
listed or admitted to trading is open for the transaction of business or, if the
shares are not listed or admitted to trading on any national securities
exchange, on which the New York Stock Exchange or such other national securities
exchange as may be selected by the Board of Directors is open. If the shares are
not publicly held or not so listed or traded on any day within the period of 30
Trading Days applicable to the determination of Current Market Price thereof as
aforesaid, "Current Market Price" shall mean the fair market value thereof per
share as determined in good faith by the Board of Directors. In either case
referred to in the foregoing sentence, the determination of Current Market Price
shall be described in a statement filed with the Secretary of the Company.
Section 8. Consolidation, Merger, etc. In the event that the Company shall
enter into any consolidation, merger, combination or other transaction in which
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such event each
outstanding share of Series A Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and other property (payable in like kind), as the case may be,
for which or into which each share of Common Stock is changed or exchanged
multiplied by the highest of the Dividend Multiple, the Vote Multiple or the
Liquidation Multiple in effect immediately prior to such event.
Section 9. Effective Time of Adjustments.
(A) Adjustments to the Series A Preferred Stock required by the provisions
hereof shall be effective as of the time at which the event requiring such
adjustments occurs.
(B) The Company shall give prompt written notice to each holder of a share
of Series A Preferred Stock of the effect on any shares of any adjustment to the
dividend rights, voting rights or rights upon liquidation, dissolution or
winding up of the Company required by the provisions hereof. Notwithstanding the
foregoing sentence, the failure of the Company to
7
give such notice shall not affect the validity of or the force or effect of or
the requirement for such adjustment.
Section 10. No Redemption. The shares of Series A Preferred Stock shall not
be redeemable at the option of the Company or any holder thereof.
Notwithstanding the foregoing sentence of this Section, the Company may acquire
shares of Series A Preferred Stock in any other manner permitted by law, the
provisions of the Amended Certificate of Designations setting forth the rights,
powers and preferences of the Series A Preferred Stock and the Certificate of
Incorporation of the Company.
Section 11. Ranking. Unless otherwise provided in the Certificate of
Incorporation or a certificate of designations relating to a subsequent series
of Preferred Stock of the Company, the Series A Preferred Stock shall rank
junior to all other series of the Company's Preferred Stock as to the payment of
dividends and the distribution of assets on liquidation, dissolution or winding
up, and senior to the Common Stock.
Section 12. Amendment. After the Distribution Date (as defined in the
Rights Agreement), the provisions of the Certificate of Designations setting
forth the rights, powers and preferences of the Series A Preferred Stock and the
Certificate of Incorporation shall not be amended in any manner which would
materially affect the rights, privileges or powers of the Series A Preferred
Stock without, in addition to any other vote of stockholders required by law,
the affirmative vote of the holders of 50% of more of the outstanding shares of
Series A Preferred Stock, voting together as a single class.
5. This Amended Certificate of Designations shall become effective at 5:01
p.m. on March 9, 2001.
IN WITNESS WHEREOF, Geoworks Corporation has caused this Certificate of
Designations to be signed and attested this 9th day of March, 2001.
GEOWORKS CORPORATION
By: /s/
Name:__________________________________
Title:_________________________________
ATTEST:
By: /s/
Name:__________________________________
Title:_________________________________
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[GEOWORKS LETTERHEAD APPEARS HERE]
March 12, 2001
To Our Stockholders:
On March 1, 2001, the Board of Directors of Geoworks Corporation (the
"Company") approved the adoption of a Shareholder Rights Plan for the Company,
which is intended to protect stockholder interests in the event of an
unsolicited attempt to acquire the Company on terms that are not in the best
interests of the stockholders. I am enclosing a Summary that provides more
details about the Shareholder Rights Plan.
Shareholder rights plans are commonly adopted to assure that all
stockholders are treated fairly in the event of an attempted takeover of a
company. The adoption of the Shareholder Rights Plan in no way weakens the
financial strength of the Company, does not have a dilutive effect and will not
affect reported earnings per share. Further, the adoption of the Plan does not
affect the way you now trade shares of the Company's stock.
The Plan provides for a dividend of one Right for each share of outstanding
common stock. Each Right entitles the holder, on the occurrence of certain
events, to purchase shares of a newly-created class of the Company's preferred
stock. The Company may redeem each Right, on terms spelled out in the Plan, if
approved by the Board of Directors. To implement the Plan, the Company is
distributing the non-cash Rights dividend to stockholders of record as of the
close of business on March 9, 2001. The Rights automatically attach to all
shares outstanding on March 9, 2001, and no separate certificates will be
issued. Shares issued after March 9, 2001 will also have Rights attached.
I would like to emphasize that the Rights are not being distributed in
response to any effort to acquire control of the Company, nor is the Board aware
of any such attempt. The Shareholder Rights Plan was adopted to ensure the
Board's ability to protect stockholder interests against takeover strategies
that may not provide maximum stockholder value.
Moreover, the Plan is not intended to prevent all takeovers of the Company.
The Rights may be redeemed by the Company under certain circumstances and
therefore should not interfere with any merger or business combination that is
approved by the Board.
On behalf of the Board of Directors,
/s/ Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx,
Chief Financial Officer
SUMMARY OF TERMS OF
THE GEOWORKS CORPORATION
SHAREHOLDER RIGHTS PLAN
The summary below sets forth certain principal terms of the Rights only and
is qualified in its entirety by reference to the detailed terms of the
Shareholder Rights Plan dated March 9, 2001, between the Company and Mellon
Investor Services, LLC. The Shareholder Rights Plan was filed as an exhibit to
the Company's Registration Statement on Form 8-A12G filed with the Securities
and Exchange Commission on March 12, 2001. The Securities and Exchange
Commission maintains an Internet web site at xxxx://xxx.xxx.xxx where the text
of the Shareholder Rights Plan may be viewed and/or downloaded.
Distribution Date
Holders of record of shares of the Company's Common Stock on March 9, 2001
will receive a distribution of one "Right" for each shares of Common Stock they
hold. Prior to the Distribution Date referred to below, the Rights will trade
with the Common Stock and will not be in separate certificate form. After the
Distribution Date, the Company will mail separate Rights certificates to the
Company's stockholders and the Rights will become transferable apart from the
Common Stock. Generally, the Rights will separate from the Common Stock and
become exercisable on the Distribution Date, which is date following the earlier
of (a) the public announcement that an Acquiring Person has become such ("Stock
Acquisition Date") or (b) a date determined by the Board of Directors after a
person or group announces a bona fide tender or exchange offer, the consummation
of which would result in ownership by a person or group of 15% or more of the
Company's outstanding Common Stock.
Preferred Stock Purchasable Upon Exercise of Rights
After the Distribution Date, each Right will entitle the holder to purchase
for $20 (the "Exercise Price"), a fraction of a share of the Company's Series A
Preferred Stock with economic terms similar to that of one share of the
Company's Common Stock.
Flip-In Events
If an acquiror obtains 15% or more of the Company's Common Stock (an
"Acquiring Person"), then each Right (other than Rights owned by an Acquiring
Person or its affiliates) will entitle the holder thereof to purchase, for the
Exercise Price, a number of shares of the Company's Common Stock having a then
current market value of twice the Exercise Price.
Flip-Over Events
If, after an Acquiring Person obtains 15% or more of the Company's Common
Stock, (a) the Company merges into another entity, (b) an acquiring entity
merges into the Company or (c) the Company sells more than 50% or more of the
Company's assets or earning power, then each Right (other than Rights owned by
an Acquiring Person or its affiliates or associates) will
entitle the holder thereof to purchase, for the Exercise Price, a number of
shares of Common Stock of the Person engaging in the transaction having a
then-current market value of twice the Exercise Price.
Exchange Provision
At any time after the date an Acquiring Person obtains 15% or more of the
Company's Common Stock and prior to the acquisition by the Acquiring Person of
50% of the outstanding Common Stock, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by the Acquiring Person or its
affiliates), in whole or in part, for shares of Common Stock of the Company at
an exchange ratio of one share of Common Stock per Right (subject to
adjustment).
Redemption of the Rights
Rights will be redeemable at the Company's option for $0.005 per Right at
any time on or prior to the earlier to occur of (i) the Shares Acquisition Date,
and (ii) the final expiration of the Rights.
Expiration of the Rights
The Rights expire on the earliest of (a) Xxxxx 0, 0000, (x) exchange or
redemption of the Rights as described above, or (c) consummation of a merger or
consolidation resulting in expiration of the Rights as described above.
Amendment of Terms of Rights
The terms of the Rights and the Rights Agreement may be amended in any
respect without the consent of the Rights holders on or prior to Distribution
Date; thereafter, the terms of the Rights and the Rights Agreement may be
amended without the consent of the Rights holders in order to cure any
ambiguities or to make changes which do not adversely affect the interests of
Rights holders (other than the Acquiring Person).
Voting Rights
Rights will not have any voting rights.
Anti-Dilution Provisions
Rights will have the benefit of certain customary anti-dilution provisions.
Taxes
The Rights distribution should not be taxable for federal income tax
purposes. However, following an event which renders the Rights exercisable or
upon redemption of the Rights, shareholders may recognize taxable income.
2
Committee Review
A committee of the Company's Directors who are neither officers, employees
nor affiliates of the Company will review the Rights Plan at least every other
year and, if a majority of these Directors deems it appropriate, may recommend a
modification or termination of the Rights Plan.
3
