Exhibit 2.1
NOVA CORPORATION
AND
FIRST UNION NATIONAL BANK,
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF JULY 9, 1999
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TABLE OF CONTENTS
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 8
Section 3. Issue of Rights Certificates 8
Section 4. Form of Rights Certificates 10
Section 5. Countersignature and Registration 11
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates 12
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Right 13
Section 8. Cancellation and Destruction of Rights Certificates 15
Section 9. Reservation and Availability of Capital Stock 16
Section 10. Common Stock Record Date 17
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights 18
Section 12. Certificate of Adjusted Number of Shares 24
Section 13. Consolidation, Merger, Share Exchange or Sale or Transfer of Assets
or Earning Power 25
Section 14. Fractional Rights and Fractional Shares 28
Section 15. Rights of Action 29
Section 16. Agreement of Rights Holders 29
Section 17. Rights Certificate Holder Not Deemed a Stockholder 30
Section 18. Concerning the Rights Agent 31
Section 19. Merger or Consolidation or Change of Name of Rights Agent 31
Section 20. Duties of Rights Agent 32
Section 21. Change of Rights Agent 34
Section 22. Issuance of New Rights Certificates 35
Section 23. Redemption and Termination 35
Section 24. Exchange 36
Section 25. Notice of Certain Events 37
Section 26. Notices 38
Section 27. Supplements and Amendments 39
Section 28. Successors 40
Section 29. Determinations and Actions by the Board of Directors, etc 40
Section 30. Benefits of this Agreement 40
Section 31. Severability 41
Section 32. Governing Law 41
Section 33. Counterparts 41
Section 34. Descriptive Headings 42
Exhibits:
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Exhibit A Form of Rights Certificate
Exhibit B Summary of Rights to Purchase Common Stock
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THIS RIGHTS AGREEMENT, dated as of July 9, 1999 (this "Agreement"), between NOVA
CORPORATION, a Georgia corporation (the "Company"), and FIRST UNION NATIONAL
BANK, a national banking association, (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, on June 8, 1999 ("the Rights Dividend Declaration Date"), the Board of
Directors of the Company authorized and declared a dividend distribution of one
Right for each share of Common Stock, (as hereinafter defined) of the Company
outstanding at the Close of Business on June 8, 1999 (the "Record Date"), and
has authorized the issuance of one Right (as such number may hereinafter be
adjusted pursuant to the provisions of Section 11(m) hereof) for each share of
Common Stock of the Company issued between the Record Date (whether originally
issued or delivered from the Company's treasury) and the Distribution Date (as
hereinafter defined), each right initially representing the right to purchase
ten shares of Common Stock of the Company upon the terms and subject to the
conditions hereinafter set forth (the "Rights");
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 have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
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with all Affiliates and Associates of such Person, shall, after the Rights
Dividend Declaration Date, become the Beneficial Owner of 10% or more of the
shares of Common Stock then outstanding, but shall not include the Company, any
Subsidiary of the Company, or any Person who or which, together with all
Affiliates and Associates of such Person, is the Beneficial Owner of 10% or more
of the shares of Common Stock of the Company as of the date of the Company's
public announcement of the existence of this Agreement (July 9, 1999), any
employee benefit plan of the Company or of any Subsidiary of the Company, or any
Person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan; provided, however, any Person who or
which, together with all Affiliates and Associates of such Person, is the
Beneficial Owner of 10% or more of the shares of Common Stock as of the date of
the Company's public announcement of the existence of this Agreement (July 9,
1999) and who or which, together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of an additional 5% or more of the shares
of Common Stock then outstanding shall be deemed an Acquiring Person.
Notwithstanding the foregoing, no Person shall become an Acquiring Person as the
result of an acquisition of shares of Common Stock by the Company or a
recapitalization which, by reducing the number of shares of Common Stock
outstanding, increases the proportionate number of shares Beneficially Owned by
such Person to 10% or more of the shares of Common Stock of the Company then
outstanding; provided, however, that if a Person shall become the Beneficial
Owner of 10% or more of the shares of Common Stock of the Company by reason of
share purchases or a recapitalization by the Company and shall, after such share
purchases or recapitalization by the
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Company, become the Beneficial Owner of any additional shares of Common Stock of
the Company (other than as a result of a subsequent occurrence of a Triggering
Event, a stock dividend or a subdivision of the Company Stock into a larger
number of shares or a similar transaction), then such Person shall be deemed to
be an Acquiring Person; and, further provided, that if a Person who or which was
the Beneficial Owner of 10% or more of the shares of Common Stock of the Company
as of the Record Date becomes the Beneficial Owner of any additional shares of
Common Stock of the Company (other than as a result of a subsequent occurrence
of a Triggering Event, a stock dividend or a subdivision of the Company Stock
into a larger number of shares or a similar transaction) then such Person shall
be deemed to be an Acquiring Person.
Notwithstanding the foregoing, if a majority of the Continuing Directors
(as defined below) or, if there are then no Continuing Directors, a majority of
the Board of Directors of the Company determines in good faith that a Person who
would otherwise be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this Section 1(a), has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of Common Stock so that
such Person would no longer be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this Section 1(a), then such Person shall not be deemed
to be an "Acquiring Person" for any purposes of this Agreement. The
determination of whether such Person's becoming an Acquiring Person shall have
been inadvertent and the determination of whether the divestment of sufficient
shares shall have been made as promptly as practicable shall be made by a
majority of the Continuing Directors or, if there are then no Continuing
Directors, a majority of the Board of Directors of the Company.
(b) "Act" shall mean the Securities Act of 1933, as amended.
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(c) "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
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of the General Rules and Regulations under the Exchange Act in effect on the
date of this Agreement.
(d) "Associate" shall mean:
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(i) any corporation or organization, or parent or subsidiary of such
corporation or organization, of which a Person is an officer, director or
partner or is, directly or indirectly, the Beneficial Owner of 10% or more
of any class of equity securities;
(ii) any trust or other estate in which a Person has a beneficial
interest of 10% or more or as to which such Person serves as trustee or in
a similar fiduciary capacity; and
(iii) any parent, brother or sister (whether by whole or half blood),
ancestor, lineal descendant or spouse of a Person, or any such relative of
such spouse.
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(e) A Person shall be deemed the "Beneficial Owner" of, and shall be
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deemed to "Beneficially Own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right or obligation to acquire
(whether such right or obligation is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "Beneficially Own":
(A) securities acquired by participation in good faith in a
firm commitment underwriting by a Person engaged in business as an
underwriter of securities until the expiration of 40 days after the
date of such acquisition; or
(B) securities tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or exchange;
or
(C) securities issuable upon exercise of Rights at any time
prior to the time a Person becomes an Acquiring Person (as defined in
this section); or
(D) securities issuable upon exercise of Rights from and after
the time a Person becomes an Acquiring Person which Rights were
acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date (as hereinafter defined in
Section 3(a)) or pursuant to Section 3(a) or Section 22 hereof (the
"Original Rights") or pursuant to Section 11(f) hereof in connection
with an adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or
has direct or indirect "beneficial ownership" of (as determined pursuant to
Rule 13d-3 of the General Rules and Regulations under the Exchange Act),
including pursuant to any agreement, arrangement or understanding, whether
or not in writing; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "Beneficially Own," any security under this
subparagraph (ii) as a result of an agreement, arrangement or understanding
to vote such security if such agreement, arrangement or understanding:
(A) arises solely from a revocable proxy given in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and
Regulations under the Exchange Act, and
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(B) is not also then reportable by such Person on Schedule 13D
under the Exchange Act (or any comparable or successor report); or
(iii) which are Beneficially Owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person
(or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing), for the purpose
of acquiring, holding, voting (except pursuant to a revocable proxy as
described in the proviso to subparagraph (ii) of this paragraph (e)) or
disposing of any voting securities of the Company.
(f) "Business Day" shall mean any day other than a Saturday, Sunday or a
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day on which banking institutions in the State of Georgia 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., Atlanta
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time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 p.m., Atlanta time, on the next succeeding Business Day.
(h) "Common Stock" shall mean the common stock, par value $.01 per share,
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of the Company, except that "Common Stock" when used with reference to any
Person other than the Company shall mean the capital stock of such Person with
the greatest voting power, or the equity securities or other equity interest
having power to control or direct the management, of such Person.
(i) "Common Stock Equivalents" shall have the meaning set forth in Section
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11(b)(ii)(C) hereof.
(j) "Continuing Director" means (i) any member of the Board of Directors
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of the Company, while such Person is a member of the Board of Directors of the
Company, who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person or a representative, designee or nominee of an Acquiring Person
or of any such Affiliate or Associate, and who was a member of the Board of
Directors of the Company on the date of this Agreement, and (ii) any Person who
becomes a member of the Board of Directors of the Company after the date of this
Agreement, while such Person is a member of the Board of Directors of the
Company, who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative, designee or nominee of an Acquiring
Person or of any such Affiliate or Associate, if such Person's nomination for
election, or election, to the Board of Directors of the Company is recommended
or approved by a majority of the Continuing Directors.
(k) "Current Market Price" per share of Common Stock on any date shall
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mean the average of the daily closing prices per share of such Common Stock for
the 30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date, and for purposes of computations made pursuant
to Section 11(a) hereof, the Current Market Price per
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share of Common Stock on any date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the ten consecutive Trading
Days immediately following such date; provided, however, that in the event that
the Current Market Price per share of the Common Stock is determined during a
period following the announcement by the issuer of such Common Stock of:
(i) a dividend or distribution on such Common Stock payable in
shares of such Common Stock or securities convertible into shares of such
Common Stock (other than the Rights); or
(ii) any subdivision, combination or reclassification of such Common
Stock,
and prior to the expiration of the requisite 30 Trading Day or ten Trading Day
period, as set forth above, after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the Current Market Price shall be
properly adjusted to take into account ex-dividend trading. The closing price
for each day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common Stock are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange, the
last quoted 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 of Common
Stock are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Common Stock selected by the Board of Directors of the Company. If on any
such date no market maker is making a market in the Common Stock, the fair value
of such shares on such date as determined in good faith by the Board of
Directors of the Company shall be used. The term "Trading Day" shall mean a day
on which the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or admitted to trading
on any national securities exchange, a Business Day. If the Common Stock is not
publicly held or not so listed or traded, Current Market Price per share shall
mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
(l) "Distribution Date" shall have the meaning set forth in Section 3(a)
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hereof.
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(m) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
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amended.
(n) "Exempt Person" shall mean the Company, any Subsidiary (as such term
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is hereinafter defined) of the Company, any employee benefit plan of the Company
or of any Subsidiary of the Company, or any entity or trustee holding Common
Stock for or pursuant to the terms of any such plan or for the purpose of
funding any such plan or funding other employee benefits for employees of the
Company or of any Subsidiary of the Company.
(o) "Expiration Date" shall mean the earlier of the time at which the
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Rights are redeemed as provided in Section 23 hereof or the "Final Expiration
Date" (as hereinafter defined in this section).
(p) "Final Expiration Date" shall mean the Close of Business on July 9,
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2009.
(q) "Person" shall mean any individual, firm, corporation, partnership,
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limited partnership, joint venture, trust, limited liability company, or other
entity, organization or association, and shall include any "group" as that term
is used in Rule 13d-5(b) under the Exchange Act.
(r) "Preferred Stock" shall mean the presently authorized but unissued
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preferred shares of the Company, having the rights and preferences to be
determined by the Board of Directors, as set forth in Article IV of the Articles
of Incorporation of the Company.
(s) "Principal Party" shall mean
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(i) in the case of any transaction described in clauses (i) or (ii)
of Section 13(a), the Person that is the issuer of any securities into
which shares of Common Stock of the Company are converted in such merger,
consolidation, or share exchange and if no securities are so issued, the
Person that is the other party to such merger, consolidation, or share
exchange, or, if there is more than one such Person, the Person the shares
of Common Stock of which have the greatest aggregate market value of shares
outstanding, or if the Person that is the other party to the merger does
not survive the merger, the Person that does survive the merger (including
the Company if it survives) or the Person resulting from the consolidation;
and
(ii) in the case of any transaction described in clause (iii) of
Section 13(a), the Person that is the party receiving the greatest portion
of the assets or earning power transferred pursuant to such transaction or
transactions, or if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power so
transferred or if the Person receiving the greatest portion of the assets
or earning power cannot be determined, whichever of such persons that is
the issuer of Common Stock having the greatest aggregate market value of
shares outstanding; provided, however, that in any such case,
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(A) 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, "Principal Party" shall refer to
such other Person; and
(B) in case such Person is a Subsidiary, directly or indirectly,
of more than one Person, the Common Stocks of two or more of which are
and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common Stock having the
greatest aggregate market value of shares outstanding; and
(C) if such Person is owned, directly or indirectly, by a joint
venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in clauses (A) and
(B) above shall apply to each of the owners having an interest in the
venture as if the Person owned by the joint venture was a subsidiary
of both or all of such joint venturers, and the Principal Party in
each case shall bear the obligation set forth in Section 13 in the
same ratio as its interest in such Person bears to the total of such
interests.
(t) "Purchase Price" shall have the meaning set forth in Section 11(a)(ii)
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hereof.
(u) "Redemption Price" shall have the meaning set forth in Section 23(a)
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hereof.
(v) "Rights Certificates" shall have the meaning set forth in Section 3(a)
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hereof.
(w) "Section 11(a)(ii) Event" shall be deemed to have occurred upon any
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Person becoming an Acquiring Person.
(x) "Section 13 Event" shall mean any event described in clauses (i), (ii)
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or (iii) of Section 13(a) hereof,
(y) "Spread" shall have the meaning set forth in Section 11(b)(i) hereof.
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(z) "Stock Acquisition Date" shall mean the earlier of the first date of
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public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) under the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has become
such.
(aa) "Subsidiary" shall mean, with reference to any Person, any
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corporation of which an amount of voting securities sufficient to elect at least
a majority of the directors of such
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corporation is Beneficially Owned, directly or indirectly, by such Person, or
otherwise controlled by such Person.
(bb) "Summary of Rights" shall have the meaning set forth in Section 3(b)
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hereof.
(cc) "Substitution Period" shall have the meaning set forth in Section
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11(b) hereof.
(dd) "Trading Day" shall have the meaning set forth in Section 1(k)
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hereof.
(ee) "Triggering Event" shall mean any Section 11(a)(ii) Event, or any
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Section 13 Event.
Section 2. Appointment of Rights Agent.
The Company hereby appoints the Rights Agent to act as agent for the Company and
the holders of the Rights (who, in accordance with Section 3 hereof, shall prior
to the Distribution Date also be the holders of the Common Stock) 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.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of:
(i) the Close of Business on the tenth day after the Stock
Acquisition Date (or, if the tenth day after the Stock Acquisition Date
occurs before the Record Date, the Close of Business on the Record Date),
or
(ii) the Close of Business on the tenth Business Day after the date
that a tender or exchange offer by any Person (other than an Exempt Person)
is first published or sent or given within the meaning of Rule 14d-2(a) of
the General Rules and Regulations under the Exchange Act, if upon
consummation thereof, such Person would be the Beneficial Owner of 10% or
more of the shares of Common Stock then outstanding (the earliest of (i)
and (ii) being herein referred to as the "Distribution Date"),
(A) the Rights will be evidenced (subject to the provisions of
paragraph (b) of this Section 3) by the certificates for the Common
Stock registered in the names of the holders of the Common Stock
(which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and
(B) the Rights will be transferable only in connection with
the transfer of the underlying shares of Common Stock (including a
transfer to the Company).
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A majority of the Continuing Directors or, if there are then no Continuing
Directors, a majority of the Board of Directors of the Company may defer the
date set forth in clause (ii) of the preceding sentence to a specified later
date or to an unspecified later date to be determined by a subsequent action or
event. As soon as practicable after the Distribution Date, the Rights Agent will
send by first-class, insured, postage prepaid mail, to each record holder of the
Common Stock as of the Close of Business on the Distribution Date, at the
address of such holder shown on the records of the Company, one or more rights
certificates, in substantially the form of Exhibit A hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in the
number of Rights per share of Common Stock has been made pursuant to Section
11(f) hereof, at the time of distribution of the Rights Certificates, the
Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing
only whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) As promptly as practicable following the Record Date, the Company will
send a copy of a Summary of Rights, in substantially the form attached hereto as
Exhibit B (the "Summary of Rights"), by first-class, postage prepaid mail, to
each record holder of the Common Stock as of the Close of Business on the Record
Date, at the address of such holder shown on the records of the Company. With
respect to certificates for the Common Stock outstanding as of the Record Date,
until the Distribution Date, the Rights will be evidenced by such certificates
for the Common Stock and the registered holders of the Common Stock shall also
be the registered holders of the associated Rights. Until the earlier of the
Distribution Date or the Expiration Date (as such term is defined in Section
1(o) hereof), the transfer of any certificates representing shares of Common
Stock in respect of which Rights have been issued shall also constitute the
transfer of the Rights associated with such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of Common Stock which
are issued after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date. Certificates representing such shares of Common
Stock shall also be deemed to be certificates for Rights, and shall bear the
following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between NOVA Corporation (the
"Company") and First Union National Bank (the "Rights Agent") dated as of
July 9, 1999 (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
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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 Associate
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.
With respect to such certificates containing the foregoing legend, until the
earlier of:
(i) the Distribution Date or
(ii) the Expiration Date,
the Rights associated with the Common Stock represented by such certificates
shall be evidenced by such certificates alone and registered holders of Common
Stock shall also be the registered holders of the associated Rights, and the
transfer of any of such certificates shall also constitute the transfer of the
Rights associated with the Common Stock represented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase and
of assignment to be printed on the reverse thereof) shall each be substantially
in the form set forth in Exhibit A hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or of Nasdaq or other system then in use, or to conform to
usage. Subject to the provisions of Section 11 and Section 22 hereof, the Rights
Certificates, whenever distributed, shall be dated as of the Record Date and on
their face shall entitle the holders thereof to purchase such number of shares
of Common Stock as shall be set forth therein at the price determined in
accordance with Section 11(a)(ii) hereof (the "Purchase Price"), but the amount
and type of securities purchasable upon the exercise of each Right and the
Purchase Price thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights Beneficially Owned by any Person known to be:
(i) an Acquiring Person or any Associate or Affiliate of an
Acquiring Person;
(ii) a transferee of an Acquiring Person (or of any such Associate
or Affiliate) who becomes a transferee after the Acquiring Person becomes
such; or
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(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either:
(A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the
transferred Rights; or
(B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has
as a primary purpose or effect avoidance of Section 7(e) hereof,
and any Rights Certificate issued pursuant to Section 6 or Section 11 hereof
upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the extent feasible)
the following legend, modified as applicable to such Person:
The Rights represented by this Rights Certificate are or were Beneficially
Owned by a Person who was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the Rights represented
hereby may become null and void in the circumstances specified in Section
7(e) of such Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its President or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the Company's
seal or a facsimile thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile signature.
The Rights Certificates shall be manually countersigned by the Rights Agent and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Company who shall have signed any of the Rights Certificates shall cease
to be such officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, such Rights Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the Person who signed
such Rights Certificates had not ceased to be such officer of the Company; and
any Rights Certificates may be signed on behalf of the Company by any Person
who, at the actual 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.
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(b) Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its principal office or offices designated as the appropriate
place for surrender of Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued 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.
Page 19 of 63
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e) and Section
14 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 or Certificates may be transferred, split up, combined or exchanged
for another Rights Certificate or Certificates, entitling the registered holder
to purchase a like number of shares of Common Stock (or, following a Triggering
Event, other securities, cash or other assets, as the case may be) as the Rights
Certificate or Certificates surrendered then entitled such holder (or former
holder in the case of a transfer) to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Rights Certificate or Certificates
shall make such request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Certificates to be transferred, split up,
combined or exchanged at the principal office or offices of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have completed
and signed the Certificate contained in the form of assignment on the reverse
side of such Rights Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e) and
Section 14 hereof, 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 tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
Page 20 of 63
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(b) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly executed, to the Rights Agent
at the principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with respect to
the total number of shares (or other securities, cash or other assets, as the
case may be) as to which such surrendered Rights are then exercisable, at or
prior to the Expiration Date.
(b) The Purchase Price for each share of Common Stock pursuant to the
exercise of a Right shall be determined in the manner provided in Section
11(a)(ii) and shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable Rights,
with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price per share of Common Stock (or other shares, securities, cash or other
assets, as the case may be) to be purchased as set forth below and an amount
equal to any applicable transfer tax, the Rights Agent shall, subject to Section
20(j) hereof, thereupon promptly
(i) (A) requisition from any transfer agent of the shares
of Common Stock (or make available, if the Rights Agent is
the transfer agent for such shares) certificates for the
total number of shares of Common Stock to be purchased and
the Company hereby irrevocably authorizes its transfer agent
to comply with all such requests, or
(B) if the Company shall have elected to deposit the
total number of shares of Common Stock issuable upon
exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts
representing such number of shares of Common Stock as are to
be purchased (in which case certificates for the shares of
Common Stock represented by such receipts shall be deposited
by the transfer agent with the depositary agent) and the
Company will direct the depositary agent to comply with such
request,
(ii) [Reserved.]
(iii) requisition from the Company the amount of other securities,
cash or assets to be paid in lieu of shares of Common Stock pursuant to an
adjustment required under Section 11(b) hereof,
Page 21 of 63
(iv) after receipt of such certificates, depositary receipts,
other securities, cash or assets, 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) after receipt thereof, deliver such cash, if any, to, or
upon the order of, the registered holder of such Rights Certificate.
The payment of the Purchase Price (as such amount may be reduced pursuant to
Section 11(b) hereof) shall be made in cash or by certified bank check, bank
draft or money order payable to the order of the Company. In the event that the
Company is obligated to issue other securities of the Company, pay cash and/or
distribute other property pursuant to Section 11(b) hereof, the Company will
make all arrangements necessary so that such other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when
appropriate.
(d) 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 and delivered to, or upon the order of, the registered holder of
such Rights Certificate, registered in such name or names as may be designated
by such holder, subject to the provisions of Section 6 and Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Triggering Event, any Rights Beneficially Owned
by:
(i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person;
(ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such; or
(iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant
to either:
(A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the
transferred Rights; or
(B) a transfer which the Board of Directors of the Company
has determined is part of a plan, arrangement or understanding which
has as a primary purpose or effect the avoidance of this Section 7(e),
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shall become null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company shall use all
reasonable efforts to insure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but shall have no liability to any holder
of Rights Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder.
(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 contained in the form
of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise, and
(ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company 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 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 Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other 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.
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Section 9. Reservation and Availability of Capital Stock.
(a) To the extent required by applicable law, the Company covenants and
agrees that it will cause to be reserved and kept available out of its
authorized and unissued shares of Common Stock (and, following the occurrence of
a Triggering Event, out of its other securities or out of its authorized and
issued shares held in its treasury), the number of shares of Common Stock (and,
following the occurrence of a Triggering Event, other securities) that, as
provided in this Agreement including Section 11(b) hereof, will be sufficient to
permit the exercise in full of all outstanding Rights.
(b) So long as the shares of Common Stock (and, following the occurrence
of a Triggering Event, other securities) issuable and deliverable upon the
exercise of the Rights may be listed on any national securities exchange or
Nasdaq or other system then in use, the Company shall use its best efforts to
cause, from and after such time as the Rights become exercisable, all securities
reserved for such issuance to be listed on such exchange or Nasdaq or other
system then in use upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to:
(i) file, as soon as practicable following the earliest date
after the first occurrence of a Section 11(a)(ii) Event on which the
consideration to be delivered by the Company upon exercise of the Rights
has been determined in accordance with Section 11(b) hereof, 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 securities
purchasable upon exercise of the Rights on an appropriate form,
(ii) cause such registration statement to become effective as
soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Act) until the
earlier of:
(A) the date as of which the Rights are no longer
exercisable for such securities, and
(B) the date of the expiration of the Rights.
The Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed 120 days after the date set forth in
clause (i) of the first sentence of this Section 9(c), the exercisability of the
Rights in order to prepare and file such registration statement and permit it to
become effective. Upon any such suspension, the Company shall issue a public
Page 24 of 63
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction shall have been obtained and, if
necessary, until a registration statement has been declared effective.
(d) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all shares of Common Stock (and, following the
occurrence of a Triggering Event, other securities) delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such shares (or
other securities) (subject to payment of the Purchase Price), be duly and
validly authorized and issued.
(e) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Rights Certificates and of
any certificates for a number of shares of Common Stock (or other securities, as
the case may be) upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect of any transfer
or delivery of Rights Certificates to a Person other than, or the issuance or
delivery of a number of shares of Common Stock (or other securities, as the case
may be) in respect of a name other than that of, the registered holder of the
Rights Certificates evidencing Rights surrendered for exercise or to issue or
deliver any certificates for a number of shares of Common Stock (or any other
securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until such tax shall have been paid (any
such tax being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
Section 10. Common Stock Record Date.
Each Person in whose name any certificate for a number of shares of Common Stock
(or other securities, as the case may be) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of such
shares of Common Stock (or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and all applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the Common
Stock (or other securities, as the case may be) transfer books of the Company
are closed, such Person shall be deemed to have become the record holder of such
shares (fractional or otherwise) on, and such certificate shall be dated, the
next succeeding Business Day on which the Common Stock (or other securities, as
the case may be) transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Rights Certificate 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
Page 25 of 63
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number
of Rights.
The Purchase Price, the number and kind of shares covered by each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event that, at any time after the Close of Business
on the Distribution Date and prior to the Close of Business on the
Expiration Date, the Company shall:
(A) declare or pay a dividend on the Common Stock payable
in shares of Common Stock,
(B) subdivide the outstanding shares of Common Stock,
(C) combine the outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
(D) issue any shares of its capital stock in a
reclassification of its Common Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section 7(e) hereof,
then and in such event, the number of shares of Common Stock, the number
and kind of shares of Preferred Stock, other securities or property, as the
case may be, issuable upon the exercise of a Right on such date shall be
proportionately adjusted so that the holder of any Right exercised on or
after such date shall be entitled to receive, upon the exercise thereof and
payment of the Exercise Price, the aggregate number of shares of Common
Stock, the number and kind of shares of Preferred Stock, other securities
or property, as the case may be, that, if such Right had been exercised
immediately prior to such date and at a time when such Right was
exercisable and the transfer books of the Company were open, such holder
would have owned upon such exercise and would have been entitled to receive
by virtue of such dividend, subdivision, combination or reclassification.
If an event occurs 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) hereof.
Page 26 of 63
(ii) In the event that any Person (other than the Company, any
Subsidiary of the Company, any Person who or which, together with all
Affiliates and Associates of such Person, is the Beneficial Owner of 10% or
more of the shares of Common Stock of the Company as of the Rights Dividend
Declaration Date, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan),
alone or together with its Affiliates and Associates, shall, at any time
after the Rights Dividend Declaration Date, become an Acquiring Person,
then, promptly following the occurrence of each such Section 11(a)(ii)
event, proper provision shall be made so that each holder of a Right
(except as provided below and in Section 7(e) hereof) shall thereafter have
the right to receive, upon exercise thereof, a number of shares of Common
Stock equal to ten shares of Common Stock multiplied by a fraction, the
numerator of which is the number of shares of Common Stock outstanding on
the Stock Acquisition Date, and the denominator of which is the number of
Rights outstanding on the Stock Acquisition Date that are not Beneficially
Owned by the Acquiring Person or its Affiliates or Associates. The price
(which following such first occurrence, shall thereafter be referred to as
the "Purchase Price") for the exercise of each Right shall be equal to the
product of (x) 20% of the then Current Market Price per share of the Common
Stock (determined pursuant to Section 1(k) on the Stock Acquisition Date),
multiplied by (y) the number of shares of Common Stock to be received upon
exercise, as set out in this subparagraph.
(b) In the event that the number of shares of Common Stock which are
authorized by the Company's articles of incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit the exercise in full of the Rights in accordance with
Section 11(a)(ii), the Company shall:
(i) determine the excess of
(A) the Current Market Price of the Shares of Common Stock
issuable upon the exercise of a Right over
(B) the Purchase Price (such excess, the "Spread"), and
(ii) with respect to each Right (other than Rights which have
become void pursuant to Section 7(e) hereof), make adequate provision to
substitute for the Shares, upon payment of the applicable Purchase Price,
(A) cash,
(B) a reduction in the Purchase Price,
Page 27 of 63
(C) Preferred Stock or other equity securities of the
Company (including, without limitation, shares, or units of shares, of
preferred stock which the Board of Directors of the Company has deemed
to have substantially the same value as shares of Common Stock (such
shares of preferred stock to be referred to as "Common Stock
Equivalents")),
(D) debt securities of the Company,
(E) other assets, or
(F) any combination of the foregoing,
having an aggregate value, when added to the value of the shares of Common
Stock actually issued upon exercise of such right, equal to the Current
Market Price (less the amount of any reduction in the Purchase Price),
where such aggregate value has been determined by the Board of Directors of
the Company based upon the advice of a recognized investment banking firm
selected by the Board of Directors of the Company; provided, however, if
the Company shall not have made adequate provision to deliver value
pursuant to clause (ii) above within 30 days following the Section
11(a)(ii) Event, then the Company shall be obligated to deliver, to the
extent permitted by applicable law and any material agreements in effect to
which the Company is a party, upon the surrender for exercise of a Right
and without requiring payment of the Purchase Price, shares of Common Stock
(to the extent available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. If the Board of Directors
of the Company shall determine that it is likely that sufficient additional
shares of Common Stock could be authorized for issuance upon exercise in
full of the Rights, the 30 day period set forth above may be extended to
the extent necessary, but not more than 90 days after the Section 11(a)(ii)
Event, in order that the Company may seek stockholder approval for the
authorization of such additional shares (such period, as it may be
extended, the "Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the first and/or
second sentences of this Section 11(b)(ii), the Company (x) shall provide,
subject to Section 7(e) hereof, that such action shall apply uniformly to
all outstanding Rights, and (y) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine
the value thereof. In the event of any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. For purposes of this Section
11(b)(ii), the value of the shares of Common Stock shall be the Current
Market Price (as determined pursuant to Section 1(k) hereof) per share of
the Common Stock on the date of the Section 11(a)(ii) Event and the value
per share or fractional value of any Common Stock Equivalent shall be
deemed to have the same value as the Common Stock
Page 28 of 63
on such date. The Board of Directors of the Company may, but shall not be
required to, establish procedures to allocate the right to receive shares
of Common Stock upon the exercise of the Rights among the holders of the
Rights pursuant to this Section 11(b)(ii).
(c) Anything herein to the contrary notwithstanding, no adjustment in the
number of shares of Common Stock purchasable upon exercise of a Right pursuant
to Section 11(a)(ii) hereof or in the Purchase Price or Spread pursuant to
Section 11(b) hereof shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the aggregate number of
shares or in the Spread or Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(c) are not required to be made
shall be carried forward and taken into account in any subsequent adjustments.
All calculations under this Section 11 shall be made to the nearest cent or to
the nearest one-hundredth of a share of Common Stock. Notwithstanding the first
sentence of this Section 11(c), any adjustment required by this Section 11 shall
be made no later than the earlier of
(i) three (3) years from the date of the transaction which mandates
such adjustment or
(ii) the Expiration Date.
(d) If as a result of an adjustment made pursuant to Section 11(b) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Sections 11(a), (b),
(c), (e), (f), (i) and (j), and the provisions of Sections 7, 9, 10, 13 and 14
hereof with respect to the Common Stock shall apply on like terms to any such
other shares.
(e) All Rights originally issued by the Company subsequent to any
adjustment made to the number of shares of Common Stock purchasable upon
exercise of a Right pursuant to Section 11(a)(ii) hereof shall evidence the
right to purchase the number of shares of Common Stock purchasable from time to
time hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
(f) The Company may elect on or after the date of any adjustment of the
number of shares of Common Stock purchasable upon exercise of a Right pursuant
to Section 11(a)(ii) hereof to adjust the number of Rights, in lieu of any
adjustment in the number of shares of Common Stock purchasable upon the exercise
of a Right. The aggregate of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of shares of Common Stock
for which the aggregate of the Rights was exercisable immediately prior to such
adjustment. Adjustments in Rights shall be calculated to the nearest one-
hundredth of a Right. The Company shall make a public announcement of its
election to adjust the number
Page 29 of 63
of Rights, indicating the record date for the adjustment , and, if known at the
time, the amount of the adjustment to be made. This record date may be the date
on which the number of shares of Common Stock purchasable upon exercise is
adjusted or any day thereafter, but if the Rights Certificates have been issued
the record date shall be at least ten days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(f), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates to be so distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted number of shares of Common Stock purchasable upon
exercise of a Right) and shall be registered in the names of the holders of
record of Rights Certificates on the record date specified in the public
announcement.
(g) Irrespective of any adjustment or change in the number of shares of
Common Stock issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the number of shares
which were expressed in the initial Rights Certificates issued hereunder.
(h) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the Common Stock or other
shares of Common Stock Equivalents issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable shares of Common Stock or Common Stock Equivalents
at such adjusted Purchase Price. In the event that it appears that the issuance
of shares of Common Stock at the Purchase Price called for herein would result
in issuance of shares of Common Stock that were not validly issued fully paid
and nonassessable shares of Common Stock, the Company may issue Common Stock
Equivalents in the manner provided in Section 11(b)(ii)(C) hereof.
(i) In any case in which this Section 11 shall require that an adjustment
in the number of shares of Common Stock or other capital stock or securities of
the Company, if any, issuable upon exercise of the Rights shall be made
effective as of a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuance to the holder of any Right
exercised after such record date the number of shares of Common Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
over and above the number of shares of Common Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the number of shares of Common Stock purchasable upon exercise of a Right in
effect prior to such adjustment; provided,
Page 30 of 63
however, that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such additional
shares (fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(j) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such adjustments in the Purchase Price or
number of shares of Common Stock purchasable upon exercise of a Right, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their judgment the Board of Directors of the Company shall
determine to be advisable in order that any
(i) consolidation or subdivision of the Common Stock,
(ii) issuance wholly for cash of any shares of Common Stock at
less than the Current Market Price,
(iii) issuance wholly for cash of shares of preferred stock or
other securities which by their terms are convertible into or exchangeable
for shares of Common Stock,
(iv) stock dividends or
(v) issuance of rights, options or warrants referred to in this
Section 11,
hereafter made by the Company to holders of its Common Stock shall not be
taxable to such stockholders.
(k) The Company covenants and agrees that it shall not, at any time after
the Distribution Date,
(i) consolidate with any other Person,
(ii) merge with or into any other Person,
(iii) engage in a share exchange with any other Person, or
(iv) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of related transactions, assets
or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person
or Persons, if
(A) at the time of or immediately after such consolidation,
merger, share exchange, sale or transfer, there are any rights,
warrants or other instruments or securities outstanding or agreements
in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or
Page 31 of 63
(B) prior to, simultaneously with or immediately after such
consolidation, merger, share exchange, sale or transfer, the
stockholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof shall have
received a distribution of Rights previously owned by such Person or
any of its Affiliates and Associates.
(l) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Section 23 or Section 27 hereof, take (or
permit any Subsidiary to take) any action if at any time such action is taken it
is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(m) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date
(i) declare or pay any dividend on the outstanding shares of
Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding shares of Common Stock, or
(iii) combine the outstanding shares of Common Stock into a
smaller number of shares,
then in any such case the number of Rights associated with each share of Common
Stock then outstanding, or issued or delivered thereafter but prior to the
Distribution Date, shall remain unchanged, so that the value of the rights
remaining shall represent the same proportion of the value of the Company as
before. Rights associated with shares eliminated by any combination of
outstanding shares of Common Stock shall be canceled by operation of such
combination.
Section 12. Certificate of Adjusted Number of Shares.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall promptly
(a) prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment,
(b) file with the Rights Agent, and with each transfer agent for the
Common Stock, a copy of such certificate, and
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(c) mail a brief summary thereof to each holder of a Rights Certificate
(or, if prior to the Distribution Date, to each holder of a certificate
representing shares of Common Stock) in accordance with Section 26 hereof.
The Rights Agent shall be fully protected in relying on any such certificate and
on any adjustment therein contained and shall not be deemed to have knowledge of
any adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger, Share Exchange or Sale or Transfer of Assets
or Earning Power.
(a) In the event that, following the Stock Acquisition Date, directly or
indirectly,
(i) the Company shall consolidate with, or merge with and
into, any other Person and the Company shall not be the continuing or
surviving corporation of such consolidation or merger,
(ii) any Person shall consolidate with, or merge with or
into, the Company, or engage in a share exchange with the Company, and the
Company shall be the continuing or surviving corporation of such
consolidation, merger or share exchange and, in connection with such
consolidation, merger or share exchange, all or part of the outstanding
shares of Common Stock shall be changed into or exchanged for stock or
other securities of any other Person (or of the Company) or cash or any
other property, or
(iii) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any Person or Persons,
then, and in each such case, promptly following the occurrence of each such
Section 13 Event, proper provision shall be made so that:
(iv) each holder of a Right, except as provided in Section
7(e) hereof, shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price, based on the Current Market
Price of the Common Stock of the Company as of the last Business Day prior
to the first public announcement of such Section 13 Event, in accordance
with the terms of this Agreement, such number of validly authorized and
issued, fully paid, non-assessable and freely tradeable shares of Common
Stock of the Principal Party, not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be equal to the
product of ten times the result obtained by dividing the Current Market
Price of a share of Common Stock by the Current Market Price of a share of
Common Stock of the Principal Party multiplied by a fraction the numerator
of which is the number of shares of Common Stock outstanding on the Stock
Acquisition Date, and the denominator of which is the number of Rights
outstanding on the Stock
Page 33 of 63
Acquisition Date that are not Beneficially Owned by the Acquiring Person or
its Affiliates or Associates, provided, however, that the Purchase price
and the number of shares of Common Stock of such Principal Party issuable
upon the exercise of each Right shall be further adjusted as provided in
Section 11(d) of this Agreement to reflect any events occurring in respect
of such Principal Party after the date of such Section 13 Event;
(v) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Section 13 Event, all the obligations and
duties of the Company pursuant to this Agreement;
(vi) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party following the
first occurrence of a Section 13 Event;
(vii) such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of shares of its
Common Stock in accordance with Section 9 hereof) in connection with the
consummation of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter deliverable
upon the exercise of the Rights, provided that, upon the subsequent
occurrence of any merger, consolidation, share exchange, sale or transfer
of assets 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 Purchase Price as provided in this
Section 13(a), such cash, shares, rights, dividends, warrants and other
property which such holder would have been entitled to receive had such
holder, at the time of such transaction, owned the Common Stock of the
Principal Party receivable upon the exercise of a Right pursuant to this
Section 13(a); and
(viii) the provisions of Section 11(a)(ii) hereof shall be of no
effect following the first occurrence of any Section 13 Event, except as
they apply to determination of the Purchase Price.
(b) The Company shall not consummate any such consolidation, merger, share
exchange, sale or transfer unless prior thereto the Company and the Principal
Party shall have exercised and delivered to the Rights Agent an agreement
confirming that the requirements of Sections 13(a) and (b) hereof shall promptly
be performed in accordance with their terms, that the Principal Party has a
sufficient number of authorized shares of its Common Stock which have not been
issued or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraph (a) of
this Section 13 and further providing that, as soon as
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practicable after the date of any consolidation, merger, share exchange or sale
of assets mentioned in paragraph (a) of this Section 13, the Principal Party
will
(i) prepare and file a registration statement under the Act,
with respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, and will use its best efforts to cause
such registration statement to
(A) become effective as soon as practicable after such
filing and
(B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Final Expiration Date;
(ii) use its best efforts to qualify or register the Rights and
the securities purchasable upon exercise of the Rights under the blue sky
laws of such jurisdictions as may be necessary or appropriate;
(iii) use its best efforts, if the Common Stock of the Principal
Party shall be listed or admitted to trading on any national securities
exchange or Nasdaq, to list or admit to trading (or continue the listing
of) the Rights and the securities purchasable upon exercise of the Rights
on such securities exchange or Nasdaq, of, if the Common Stock of the
Principal Party shall not be listed or admitted to trading on any such
national securities exchange or Nasdaq, to cause the Rights and the
securities receivable upon exercise of the Rights to be reported by such
other system then in use;
(iv) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply
in all respects with the requirements for registration on Form 10 under the
Exchange Act; and
(v) obtain waivers of any rights of first refusal or preemptive
rights in respect of the Common Stock of the Principal Party subject to
purchase upon exercise of outstanding Rights.
(c) The provisions of this Section 13 shall similarly apply to successive
mergers, consolidations, share exchanges or sales or other transfers. In the
event that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights which have not theretofore been exercised
shall thereafter become exercisable in the manner described in Section 13(a).
(d) In case the Principal Party has provision in any of its authorized
securities or in its certificate or articles of incorporation or bylaws or other
instrument governing its corporate affairs, which provision would have the
effect of
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(i) causing such Principal Party to issue (other than to holders of
Rights pursuant to this Section 13), in connection with, or as a
consequence of, the consummation of a transaction referred to in this
Section 13, shares of Common Stock of such Principal Party at less than the
then Current Market Price per share thereof (determined pursuant to Section
1(k) hereof) or securities exercisable for, or convertible into, Common
Stock of such Principal Party at less than such then Current Market Price,
or
(ii) providing for any special payment, tax or similar provision in
connection with the issuance of the Common Stock of such Principal Party
pursuant to the provisions of Section 13,
then, in such event, the Company hereby agrees with each holder of Rights that
it shall not consummate any such transaction unless prior thereto the Company
and such Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been 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.
(e) The Company covenants and agrees that it shall not, at any time after
a Person first becomes an Acquiring Person, enter into any transaction of the
type contemplated by (i) - (iii) of Section 13(a) hereof if (x) at the time of
or immediately after such consolidation, merger, share exchange, sale, transfer
or other transaction there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights, (y) prior to, simultaneously with or immediately after such
consolidation, merger, share exchange, sale, transfer or other transaction, the
stockholders of the Person who constitutes, or would constitute, the Principal
Party for purposes of Section 13(a) hereof shall have received a distribution of
Rights previously owned by such Person or any of its Affiliates or Associates or
(z) the form or nature of organization of the Principal Party would preclude or
limit the exercisability of the Rights.
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. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price of the Rights 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
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reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading, or if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors of
the Company. If on any such date no such market maker is making a market in the
Rights the fair value of the Rights on such date as determined in good faith by
the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of shares of
Common Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of fractional shares of
Common Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one share of
Common Stock. For purposes of this Section 14(b), the current market value of
one share of Common Stock shall be the closing price of one share of Common
Stock (as determined pursuant to Section 1(k) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Rights expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action.
All rights of action in respect of this Agreement, other than rights of action
given to the Rights Agent pursuant to Section 18 hereof, are vested in the
respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock); and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
of the Common Stock), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution Date, of the
Common Stock), in his own behalf and for his own benefit, may 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 (or, prior to the Distribution Date, such
Common Stock) in the manner provided in such Rights Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement.
Page 37 of 63
Section 16. Agreement of Rights Holders.
Every holder of a Right by accepting the same consents and agrees with the
Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of 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 or
agency of the Rights Agent designated for such purposes, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company and the
Rights Agent may deem and treat the Person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner 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, subject to Section 7(e) hereof, shall be
required to be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of shares of
Common Stock or any other securities of the Company 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, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 25 hereof), or to
receive dividends or subscription rights, or otherwise, until the Rights or
Rights
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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 in a timely manner to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from time
to time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent, its directors,
officers, employees and agents for, and to hold each of them harmless against,
any losses, expenses, claims, damages or liabilities, incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent or
such other indemnified party, for anything done or omitted by the Rights Agent
or such other indemnified party in connection with the acceptance and
administration of this Agreement and performance hereunder, including, without
limitation, the costs and expenses of defending against any claim of liability
arising therefrom, directly or indirectly, and will promptly reimburse the
Rights Agent or such other indemnified party for any legal or other expenses
reasonably incurred in investigating or defending any such loss, expense, claim,
damage or liability.
(b) The Rights Agent shall be protected by the indemnity provided by this
Section 18 and shall incur no liability for or in respect of any action taken,
suffered or omitted by it in connection with its administration of this
Agreement in reliance upon any Rights Certificate or certificate for Common
Stock or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons or otherwise upon the advice of
counsel as set forth in Section 20 of this Agreement.
(c) The indemnity provided in this Section 18 shall survive the expiration
of the Rights and the termination of the Agreement.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided, however, that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Rights
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Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent.
The Rights Agent undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the Company and the
holders of Rights Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the 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 in good faith and in accordance with such advice
or opinion .
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of Current Market Price) be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by any
Person reasonably believed by the Rights Agent to be any one of the Chairman of
the Board, the President, the Chief Executive Officer, any Vice President, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for a loss which is a result of or caused by its own gross
negligence, bad faith or willful misconduct.
Page 40 of 63
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals maintained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity or legality of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or legality 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 Agreement or in any
Rights Certificate; nor shall it be responsible for any adjustment required
under the provisions of Section 11 or Section 13 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 the
certificate described in Section 12 hereof setting forth any such adjustment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Common Stock to
be issued pursuant to this Agreement or any Rights Certificate or as to whether
any shares of Common Stock will, when so issued, be validly authorized and
issued, fully paid and non-assessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
Person reasonably believed by the Rights Agent to be one of the Chairman of the
Board, the President, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer, any Assistant Treasurer or Controller of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable to the Company or the holder of any Rights
Certificate or any stockholder of the Company for any action taken or suffered
to be taken by it in good faith in accordance with instructions of any such
officer or for any delay in acting while waiting for those instructions. Any
application by the Rights Agent for written instructions from the Company may,
at the option of the Rights Agent set forth in writing any action proposed to be
taken or omitted by the Rights Agent under this Agreement and the date on and/or
after which such action shall be taken or such omission shall be effective. The
Rights Agent shall not be liable in accordance with a proposal included in 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 case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to be
taken or omitted.
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(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not the Rights Agent under
this Agreement. Nothing herein shall preclude the Rights Agent from acting in
any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct; provided, however, the Rights Agent was not grossly
negligent in the selection and continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed to certify or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise of transfer without first consulting with the
Company.
(k) The Rights Agent undertakes only the express duties and obligations
imposed on it by this Agreement and no implied duties or obligations shall be
read into this Agreement against the Rights Agent.
(l) Anything in this Agreement to the contrary notwithstanding, in no
event shall the Rights Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits).
(m) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
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Section 21. Change of Rights Agent.
The Rights Agent or any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon 30 days' notice in writing mailed to the
Company, and to each transfer agent of the Common Stock, by registered or
certified mail, and, following the Distribution Date, to the holders of the
Rights Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon 30 days' notice in writing, mailed to the
Rights Agent or successor Rights agent, as the case may be, and to each transfer
agent of the Common Stock, by registered or certified mail, and, following the
Distribution Date, to the holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then any registered holder of
any Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a corporation organized and
doing business under the laws of the United States or of any state, in good
standing, which is authorized under such laws to exercise corporate trust powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000 or (b) an affiliate of a corporation described
in clause (a) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock, and, following the Distribution Date, mail a notice thereof in
writing to the registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this 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 Purchase Price or the number or kind or
class of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In
addition, in
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connection with the issuance or sale of shares of Common Stock following the
Distribution Date and prior to the earlier of the redemption or expiration of
the Rights, the Company:
(a) may, with respect to shares of Common Stock so issued or sold pursuant
to the exercise of stock options or under any employee plan or arrangement, or
upon the exercise, conversion or exchange of securities hereinafter issued by
the Company, or upon a contractual obligation of the Company in each case
existing prior to the Distribution Date, and
(b) may, in any other case, if deemed necessary or appropriate by the
Board of Directors of the Company, issue Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided,
however, that
(i) no such Rights Certificate shall be issued if, and to the extent
that, the Company shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued, and
(ii) no such Rights Certificate shall be issued if, and to the extent
that, appropriate adjustments shall otherwise have been made in lieu of the
issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option, at any time
prior to the time any Person first becomes an Acquiring Person, redeem all but
not less than all of the then outstanding Rights at a redemption price of $.01
per Right (the "Redemption Price"), as such amount may be appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights pursuant to Paragraph (a) of this Section
23 (or at such later time as the Board of Directors may establish for the
effectiveness of such redemption), evidence of which shall have been filed with
the Rights Agent and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for each Right so
held. Promptly after 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 the holders of the then outstanding Rights by mailing such
notice to all such holders at each holder's last address as it appears upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the Transfer Agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made. The failure to give,
or any defect in, any such notice shall not affect the validity of such
redemption.
Page 44 of 63
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at any time
after any person first becomes an Acquiring Person, exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 7(e) hereof) for shares
of Common Stock at an exchange ratio of one share of Common Stock per Right
(such exchange ratio being hereinafter referred to as the "Exchange Ratio"). Not
withstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after (i) any Person (other than an Exempt
Person), together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of shares of Common Stock aggregating 50% or more of the shares
of Common Stock then outstanding or (ii) the occurrence of an event specified in
Section 13(a) hereof.
(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 24
and without any further notice, the right to exercise such Rights shall
terminate and the only right thereafter a holder of such Rights shall have 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; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company shall promptly mail a notice of any such exchange to
all of the holders of the Rights so exchanged at their last addresses as they
appear upon the registry books of the Rights Agent. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method by which
the exchange of the shares of Common Stock for Rights will be effected and, in
the event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of Section
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 24, or that any
regulatory actions or approvals are necessary in connection therewith, the
Company may, in its discretion, take such actions or seek such approvals as may
be necessary to authorize additional shares of Common stock for issuance upon
exchange of the Rights. In the event that the Company shall, after good faith
effort, be unable to take such actions or obtain such approvals as may be
necessary to authorize such additional shares of Common Stock, the Company shall
substitute, to the extent of such insufficiency, for each share of Common Stock
that would otherwise be issuable upon exchange of a Right, a number of units of
Common Stock Equivalents as defined in Section 11(b)(ii) hereof, cash or other
assets of the Company equal to the Current Market Price of one share of Common
Stock (determined pursuant to Section 1(k) hereof) as of the date of issuance of
such Common Stock Equivalents or fractions thereof.
Page 45 of 63
(d) The Company shall not, in connection with any exchange pursuant to
this Section 24, be required to issue fractions of shares of Common Stock or to
distribute certificates which evidence fractional shares of Common Stock. In
lieu of such fractional shares of Common Stock, the Company shall pay to the
registered holders of the 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 (as determined pursuant to the second sentence of Section 1(k) hereof) for
the Trading Day immediately prior to the date of exchange pursuant to this
Section 24 .
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the Distribution
Date,
(i) to pay any dividend payable in stock of any class to the holders
of the Common Stock, or
(ii) to offer to the holders of Common Stock rights or warrants to
subscribe for or to purchase any additional shares of Common Stock or
shares of stock of any class or any other securities, rights or options, or
(iii) to effect any reclassification of its Common Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Common Stock), or
(iv) to effect any liquidation, dissolution or winding up of the
Company,
then, in each such case, the Company shall give to each holder of a Rights
Certificate, to the extent feasible and in accordance with Section 26 hereof, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants,
reclassification or the date on which such liquidation, dissolution or winding
up is to take place and the date of participation therein by the holders of the
shares of Common 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 20 days prior to the record date for determining holders of the shares of
Common Stock for purposes of such action, and in the case of any such other
action, at least twenty (20) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
shares of Common Stock, whichever shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii) or Section 13
hereof shall occur, then, in any such case, the Company shall, as soon as
practicable thereafter, give to each holder of a Rights Certificate (or if
occurring prior to the Distribution Date, the holders of the
Page 46 of 63
Common Stock), to the extent feasible and in accordance with Section 26 hereof,
a notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Sections 11(a)(ii) and 13
hereof.
Section 26. Notices.
Notices or demands authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights Certificate to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
NOVA Corporation
Xxx Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
First Union National Bank
0000 Xxxx X.X. Xxxxxx Xxxxxxxxx, 0X0
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Shareholder Services Group
_____________________________________ ____________________
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) 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, in the case of Rights
represented by certificates for Common Stock, and on the registry books of the
Rights Agent, in the case of Rights represented by Rights Certificates.
Section 27. Supplements and Amendments.
Subject to the penultimate sentence of this Section 27, for so long as the
Rights are then redeemable, the Company may in its sole and absolute discretion,
and the Rights Agent shall if the Company so directs, supplement or amend any
provision of this Agreement in any respect without the approval of the holders
of the Rights. At any time when the Rights are no longer redeemable, and subject
to the penultimate sentence of this Section 27, the Company and the
Page 47 of 63
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement without the approval of any holders of Rights Certificates in
order
(a) to cure any ambiguity,
(b) to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein,
(c) to shorten or lengthen any time period hereunder, or
(d) to change or supplement the provisions hereunder in any manner which
the Company may deem necessary or desirable and which shall not adversely affect
the interests of the holders of Rights Certificates (other than an Acquiring
Person, or an Affiliate or Associate of any such Acquiring Person); provided,
this Agreement may not be supplemented or amended to lengthen, pursuant to
clause (c) of this sentence,
(i) a time period relating to when the Rights may be redeemed at such
time as the Rights are not then redeemable, or
(ii) any other time period unless such lengthening is for the purpose
of protecting, enhancing or clarifying the rights of, and/or the benefits
to, the holders of the Rights.
Upon the delivery of a certificate that is signed by an appropriate officer of
the Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment shall be made which
changes the Redemption Price, and no supplement or amendment that changes the
rights and duties of the Rights Agent under this Agreement shall be effective
without the consent of the Rights Agent.
Section 28. Successors.
All the covenants and provisions of this Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General
Page 48 of 63
Rules and Regulations under the Exchange Act. The Board of Directors of the
Company (or, where specifically provided for herein, certain specified members
thereof) shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to
(a) interpret the provisions of this Agreement, and
(b) make all determinations deemed necessary or advisable for the
administration of this Agreement (including, but not limited to, 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 (c) below, all omissions with respect to the foregoing)
which are done or made by the Board (or, where specifically provided for herein,
by certain specified members thereof) in good faith, shall
(c) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and
(d) not subject the Board or such specified members thereof to any
liability to the holders of the Rights.
Section 30. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any Person other than
the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, registered holders of the
Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, registered holders of the Common Stock).
Section 31. Severability.
If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof shall be reinstated and
shall not expire until the Close
Page 49 of 63
of Business of the twentieth day following the date of such determination by the
Board of Directors.
Section 32. Governing Law.
This Agreement, each Right and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Georgia and for all
purposes shall be governed by and construed in accordance with the laws of such
State applicable to contracts to be made and to be performed entirely within
such State.
Section 33. Counterparts.
This Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.
Page 50 of 63
Section 34. Descriptive Headings.
Descriptive headings of the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and their respective corporate seals to be hereunto affixed and
attested, all as of the date and year first above written.
Attest: NOVA CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxx Xxxxxxxxxxx
------------------------------ ------------------------------------
Xxxxxx X. Xxxxxxx Xxxxxx Xxxxxxxxxxx
Senior Vice President, General Chairman of the Board, President and
Counsel and Secretary Chief Executive Officer
Attest: FIRST UNION NATIONAL BANK
By: /s/ Xxxxx Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxx
------------------------------- ------------------------------------
Name: Xxxxx Xxxxxxxx Name: Xxxxxxx X. Xxxxx
----------------------------- ----------------------------------
Title: Corporate Trust Officer Title: Assistant Vice President
---------------------------- ---------------------------------
Page 51 of 63
Exhibit A
[Form of Rights Certificate]
Certificate No. ____ _____ Rights
NOT EXERCISABLE AFTER JULY 9, 2009 OR EARLIER IF REDEEMED BY THE COMPANY. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF SUCH AGREEMENT.]*
Rights Certificate
NOVA Corporation
This certifies that ________________________________, or registered assigns, is
the registered owner of the number of Rights set forth set forth above, each of
which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of July 9, 1999 (the "Rights
Agreement"), between NOVA Corporation, a Georgia corporation (the "Company"),
and First Union National Bank, a national banking association (the "Rights
Agent"), to purchase from the Company at any time prior to 5:00 P.M. (Atlanta,
Georgia time) on July 9, 2009 at the office or offices of the Rights Agent
designated for such purpose, or its successors as Rights Agent, a number of
shares of Common Stock (the "Common Stock") of the Company equal to ten shares
of Common Stock multiplied by a fraction, the numerator of which is the number
of shares of Common Stock outstanding on the Stock Acquisition Date, and the
denominator of which is the number of Rights outstanding on the Stock
Acquisition Date that are not beneficially owned by an Acquiring Person or its
Affiliates or Associates, at a purchase price per share equal to twenty percent
(20%) of the Current Market Price on the Stock Acquisition Date (the "Purchase
Price"), as those terms are defined in Section 1 of the Rights Agreement, upon
presentation and surrender of this Rights Certificate with the Form of Election
to Purchase and related Certificate duly executed. The Purchase Price may be
paid in cash or by certified bank check or money order payable to the Company.
The number of Rights evidenced by this Rights Certificate (and the number of
shares which may be purchased upon exercise thereof) set forth
Page 52 of 63
above, and the Purchase Price per share set forth above, are the number and
Purchase Price as of __________________________, based upon the Common Stock as
constituted at such date.
These rights shall only become exercisable upon the occurrence of a Section
11(a)(ii) Event (as such term is defined in the Rights Agreement), if the Rights
evidenced by this Certificate are beneficially owned by a person other than (i)
an Acquiring Person or an Affiliate or Associate of any such Person (as such
terms are defined in the Rights Agreement), (ii) a transferee of any such
Acquiring Person, Associate or Affiliate, or (iii) under certain circumstances
specified in the Rights agreement, a transferee of a person who, after such
transfer, became an Acquiring Person, an Affiliate or Associate of any such
Person. If the Rights are beneficially owned by any of the Persons specified in
clauses (i), (ii) or (iii) of the preceding sentence, such Rights shall become
null and void and no holder hereof shall have any right with respect to such
Rights from and after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number and kind
of shares of Common Stock or other securities 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, including
Triggering Events (as such term is defined 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
hereby incorporated herein by this reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office or offices of the Rights Agent designated for
such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of shares of Common 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 at a redemption price
of $.01 per Right at any time prior to the earlier of the close of business on
(i) the time any Person first becomes an Acquiring Person, and (ii) the Final
Expiration Date.
Page 53 of 63
above, and the Purchase Price per share set forth above, are the number and
Purchase Price as of __________________________, based upon the Common Stock as
constituted at such date.
These rights shall only become exercisable upon the occurrence of a Section
11(a)(ii) Event (as such term is defined in the Rights Agreement), if the Rights
evidenced by this Certificate are beneficially owned by a person other than (i)
an Acquiring Person or an Affiliate or Associate of any such Person (as such
terms are defined in the Rights Agreement), (ii) a transferee of any such
Acquiring Person, Associate or Affiliate, or (iii) under certain circumstances
specified in the Rights agreement, a transferee of a person who, after such
transfer, became an Acquiring Person, an Affiliate or Associate of any such
Person. If the Rights are beneficially owned by any of the Persons specified in
clauses (i), (ii) or (iii) of the preceding sentence, such Rights shall become
null and void and no holder hereof shall have any right with respect to such
Rights from and after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number and kind
of shares of Common Stock or other securities 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, including
Triggering Events (as such term is defined 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
hereby incorporated herein by this reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office or offices of the Rights Agent designated for
such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of shares of Common 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 at a redemption price
of $.01 per Right at any time prior to the earlier of the close of business on
(i) the time any Person first becomes an Acquiring Person, and (ii) the Final
Expiration Date.
Page 54 of 63
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Rights Certificate)
FOR VALUE RECEIVED, ___________________________________________ hereby sells,
assigns and transfers unto _________________________________________________
(Please print name and address of transferee)
___________________________________________________________ this Rights
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint _________________________ Attorney, to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ______________________
___________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person, an
Affiliate or Associate of any such Person (as such terms are defined pursuant to
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person, an Affiliate or
Associate of any such Person.
Dated: ______________________ ___________________________
Signature
Signature Guaranteed:
Page 55 of 63
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.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights Represented by the Rights
Certificate)
To: NOVA CORPORATION
The undersigned hereby irrevocably elects to exercise _____ Rights
represented by this Rights Certificate to purchase the shares of Common Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other Person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
Please insert social security
or other identifying number: ____________________________
______________________________________________________________
(Please print name and address)
______________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
__________________________
Please insert social security
or other identifying number: ________________________________
______________________________________________________________
(Please print name and address)
______________________________________________________________
Dated: _________________
________________________________
Signature
Page 56 of 63
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person, an Affiliate or Associate of any such Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person, an Affiliate or Associate of any such Person.
Dated: ________________ ___________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
* * The portion of the legend in brackets shall be inserted only if
applicable, shall be modified to apply to an Acquiring Person as
applicable, and shall replace the preceding sentence.
page 57 of 63
Exhibit B
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On June 8, 1999, the Board of Directors of NOVA Corporation (the "Company")
declared a dividend distribution of one Right for each outstanding share of
Company Common Stock (the "Common Stock") to shareholders of record at the close
of business on June 8, 1999. Each Right initially entitles the registered holder
to purchase from the Company a number of shares of Common Stock equal to ten
shares of Common Stock multiplied by a fraction, the numerator of which is the
number of shares of Common Stock outstanding on the Stock Acquisition Date, and
the denominator of which is the number of Rights outstanding on the Stock
Acquisition Date that are not beneficially owned by an Acquiring Person or its
Affiliates or Associates, at a Purchase Price per share of 20% of Current Market
Value, measured as of the date that an announcement is made that a person has
acquired sufficient shares to become an Acquiring Person (10%). The description
and terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and First Union National Bank, as Rights Agent.
Initially, the Rights will be attached to all Common Stock Certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. The Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) 10 days following a public
announcement that a person or a group of affiliated or associated persons has
acquired beneficial ownership of 10% or more of the outstanding shares of Common
Stock of the Company (an "Acquiring Person") or (ii) 10 days following the
commencement of a tender offer or an exchange offer that would result in a
person or group beneficially owning 10% or more of such outstanding shares of
Common Stock. In certain circumstances, the Distribution Date may be deferred by
the Board of Directors. Certain inadvertent acquisitions will not result in a
person becoming an Acquiring Person if the person promptly divests itself of
sufficient Common Stock.
Until the Distribution Date, (i) the Rights will be evidenced by the Common
Stock certificates and will be transferred only with such Common Stock
certificates, (ii) new Common Stock Certificates will contain a notation
incorporating the Rights Agreement by reference and (iii) the surrender for
transfer of any certificates for Common Stock will also constitute the transfer
of the Rights associated with the Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on July 9, 2009, unless earlier redeemed by the Company
as described below.
Page 58 of 63
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
If at any time following the Distribution Date a Person becomes the owner
of more than 10% of the then outstanding shares of Common Stock, each holder of
a Right will thereafter have the right to receive, upon exercise, a number of
shares of Common Stock equal to ten shares of Common Stock multiplied by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding on the Stock Acquisition Date, and the denominator of which is the
number of Rights outstanding on the Stock Acquisition Date that are not
Beneficially Owned by the Acquiring Person or its Affiliates or Associates. The
price for the exercise of each Right shall be equal to the product of (x) 20% of
the then Current Market Price of the Common Stock on the Stock Acquisition Date,
multiplied by (y) the number of shares of Common Stock to be received upon
exercise. For example, if the Current Market Value of a share of Common Stock
were $5.00 at the Stock Acquisition Date, and if the Acquiring Person owned 50%
of the then outstanding Common Stock when the Rights became exercisable, the
exercise price would be $20.00, and the number of shares purchasable with each
right would be 20.
Notwithstanding any of the foregoing, following the occurrence of any of
the events set forth in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void. However, Rights are not exercisable
following the occurrence of the events set forth above until such time as the
Rights are no longer redeemable by the Company as set forth below.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company is acquired in a merger or other business combination in which the
Company is not the surviving corporation, or (ii) all of its shares are acquired
in a share exchange or the Company engages in a merger or consolidation in which
all or part of its outstanding shares of Common Stock are changed into or
exchanged for stock, other securities or assets of any other person or (iii) 50%
or more of the Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights which previously have been voided as set forth
above) shall thereafter have the right to receive, upon exercise, a number of
shares of common stock of the acquiring company equal to the product of ten
times the result obtained by dividing the current market price of the Company's
Common Stock by the current market price of the common stock of the acquiring
corporation or, if such stock is not traded in public markets, of its parent
corporation. The purchase price will be calculated on the same basis as if the
Right holder were exercising a Right to purchase Common Stock of the Company at
that time.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Rights will be issued, and, in lieu thereof, an adjustment
in cash will be made based on the market price of the
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Rights on the last trading date prior to the date of adjustment. No fractional
shares will be issued upon exercise of the Rights, and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Common Stock on
the last trading date prior to the date of exercise.
In general, the Company may redeem the Rights in whole, but not in part, at
a price of $.01 per Right, at any time before a Person becomes an Acquiring
Person. Immediately upon the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and the only right of the
holders of Rights will be to receive the $.01 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or the Company, shareholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.
The provisions of the Rights Agreement may be amended by the Board of
Directors prior to the time a Person becomes an Acquiring Person. After such
date, the provisions of the Rights Agreement may be amended by the Board in
order to cure any ambiguity, to make changes which do not adversely affect the
interests of holders of Rights, or to shorten or lengthen any time period under
the Rights Agreement; provided, however, that no amendment to adjust the time
period governing redemption shall be made at such time as the Rights are not
redeemable.
As of the close of business on _______, 1999 there were _________ shares of
Common Stock of the Company outstanding, and _______ shares of Common Stock of
the Company in the treasury. As of ________, 1999, options to purchase
_________ shares of Common Stock were outstanding.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
in a manner which causes the Rights to become exercisable, unless the terms of
an offer for all shares are first approved by the Board and the Rights Agreement
amended to permit the transaction or the Rights redeemed by the Company. The
Rights, however, should not affect any prospective offeror willing to make an
offer at a fair price and otherwise in the best interests of the Company and its
shareholders, as determined by the Board, or willing to negotiate with the
Board. The Rights should not interfere with any merger or other business
combination approved by the Board since the Board may, at its option, before the
merger or business combination, amend the Rights Agreement to permit the
transaction or redeem all, but not less than all, of the then-outstanding Rights
at the redemption price.
In addition, certain provisions of the Company's Articles of Incorporation,
as amended (the "Articles of Incorporation"), and Bylaws (the "Bylaws") may have
anti-takeover effects. For example, Article Four of the Articles of
Incorporation grants authority to the Board of Directors
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of the Company to issue preferred stock and to fix the designation, powers,
preferences and any special rights of any series of such preferred stock, and
the qualifications, limitations and restrictions of that series. Article II of
the Bylaws provides that shareholders must give timely notice of any matter that
the shareholders intend to raise at any annual or special shareholder meeting.
To be timely, a shareholder's notice must be received by the Company's Secretary
at least 120 calendar days before the first anniversary of the date that the
Company's proxy statement was released to shareholders in connection with the
previous year's annual meeting of shareholders or within 120 calendar days prior
to the date of a special meeting.
Certain provisions of the Georgia Business Corporation Code (the "Georgia
Code"), to which the Company is subject, also may have the effect of preventing
a change in control of the Company or in making changes in management more
difficult. The Fair Price provisions of the Georgia Code (Sections 14-2-1110 to
14-2-1113), for example, are designed to protect shareholders of the Company
against the inequities of certain tactics that have been utilized in a hostile
takeover attempt. In so called "two-tier" transactions, the acquiring party
acquires a majority of the outstanding shares at a premium over the market
price. After acquiring the initial interest in the Company, the acquiring party
would then acquire total ownership of the corporation by effecting a "freeze-
out" merger that forces minority shareholders to receive cash or other
consideration for their common stock in the acquired corporation. The result is
that minority shareholders who do not participate in the initial tender may
receive a lower price or less desirable form of consideration than the
shareholders who tendered in the initial tier of the transaction received. The
Fair Price provisions are designed to discourage this type of transaction by
requiring that the transaction satisfy certain conditions.
Additionally, the Business Combination provisions of the Georgia Code
(Sections 14-2-1131 to 14-2-1133) are designed to encourage any person, before
acquiring 10% of the outstanding voting stock of the Company, to seek approval
of the terms of any contemplated business combination from the Company's Board
of Directors. The provisions would also prohibit any person who acquires 10% or
more of the voting stock of the Company from thereafter engaging in any business
combination with the Company for a period of 5 years from the date that person
acquired a 10% interest, unless that person obtains approval of the transaction.
The Fair Price and Business Combination provisions effectively require any
party attempting to acquire more than a 10% interest in the Company, and thereby
implement a business combination or change of control, to negotiate with the
current Board of Directors. While accomplishing such transactions is still
possible without Director approval, the provisions make doing so considerably
more difficult, and very likely more expensive, for a potential acquirer.
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