Exhibit 4.1
-----------
--------------------------------------------------------------------------------
ENTERASYS NETWORKS, INC.
and
EQUISERVE TRUST COMPANY, N.A.,
as Rights Agent
------------------------
Rights Agreement
Dated as of May 28, 2002
--------------------------------------------------------------------------------
Table of Contents
Section Page
------- ----
Section 1. Certain Definitions ............................................ 1
Section 2. Appointment of Rights Agent .................................... 6
Section 3. Issue of Rights Certificates ................................... 7
Section 4. Form of Rights Certificates .................................... 8
Section 5. Countersignature and Registration .............................. 9
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates ................................................... 10
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights .. 11
Section 8. Cancellation and Destruction of Rights Certificates ............ 13
Section 9. Reservation and Availability of Shares of Preferred Stock;
Other Covenants ................................................ 13
Section 10. Preferred Stock Record Date; Etc ............................... 15
Section 11. Antidilution Adjustments ....................................... 15
Section 12. Certificate of Adjustments ..................................... 25
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power .................................................. 25
Section 14. Fractional Rights and Fractional Shares ........................ 27
Section 15. Rights of Action ............................................... 28
Section 16. Agreement of Rights Holders .................................... 29
Section 17. Rights Certificate Holder Not Deemed a Stockholder ............. 29
Section 18. Concerning the Rights Agent .................................... 30
Section 19. Merger or Consolidation or Change of Name of Rights Agent ...... 30
Section 20. Rights and Duties of Rights Agent .............................. 31
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 Proposed Actions ..................................... 37
Section 26. Notices ........................................................ 38
Section 27. Supplements and Amendments ..................................... 39
Section 28. Successors ..................................................... 39
Section 29. Determinations and Actions by the Board; etc ................... 40
Section 30. Benefits of this Agreement ..................................... 40
Section 31. Severability ................................................... 40
Section 32. Governing Law .................................................. 40
Section 33. Counterparts ................................................... 41
Section 34. Descriptive Headings ........................................... 41
A-i
RIGHTS AGREEMENT
This Rights Agreement dated as of May 28, 2002 (the "Agreement") is between
Enterasys Networks, Inc., a Delaware corporation (the "Company"), and Equiserve
Trust Company, N.A., a national banking association, as rights agent (the
"Rights Agent").
WITNESSETH:
WHEREAS, on April 26, 2002 the Board of Directors of the Company (the
"Board") authorized the issuance of rights (collectively, the "Rights," and
individually a "Right"), each Right being a right to purchase, on the terms and
subject to the provisions of this Agreement, one one-thousandth of a share of
the Company's Preferred Stock (as hereinafter defined); and
WHEREAS, on April 26, 2002 (the "Declaration Date") the Board (a)
authorized and declared a dividend distribution of one Right for every share of
Common Stock, $.01 par value per share, of the Company outstanding at the Close
of Business (as hereinafter defined) on June 11, 2002 (the "Dividend Record
Date"), and (b) authorized the issuance of, and agreed to issue, one Right (as
such number may be adjusted in accordance with Section 11(i) or 11(p) hereof)
for every share of Common Stock of the Company issued between the Dividend
Record Date and the earliest of (x) the Distribution Date (as hereinafter
defined), (y) the Expiration Date (as hereinafter defined) and (z) the
redemption of the Rights.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto 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 with
all Affiliates of such Person, shall be the Beneficial Owner of 15.0%
or more of the shares of Common Stock then outstanding, but shall not
include (i) the Company, (ii) any Subsidiary of the Company, (iii) any
employee benefit plan of the Company or of any Subsidiary of the
Company, (iv) any Person organized, appointed, or established by the
Company or a Subsidiary of the Company pursuant to the terms of any
plan described in clause (iii) above, or (v) any Person who (A) has
reported or is required to report such ownership on Schedule 13G under
the Exchange Act (or any comparable or successor report) or on
Schedule 13D under the Exchange Act (or any comparable or successor
report) which Schedule 13D does not state any intention to or reserve
the right to control or influence the management or policies of the
Company or engage in any of the actions specified in Item 4 of such
Schedule (other than the disposition of the
-1-
Common Stock), (B) within 10 Business Days of being requested by the
Company to advise it regarding the same, certifies to the Company that
such Person acquired shares of Common Stock in excess of 14.9%
inadvertently or without knowledge of the terms of the Rights;
provided, however, that if the Person requested to so certify fails to
do so within 10 -------- ------- Business Days, then such Person shall
become an Acquiring Person immediately after such 10 Business Day
period, (C) together with all of such Person's Affiliates, thereafter
does not acquire additional shares of Common Stock while the
Beneficial Owner of 15.0% or more of the shares of Common Stock then
outstanding, and (D) if requested to do so by the Company, within a
specified number of Business Days (to be specified by the Company, but
in no case fewer than 10 Business Days) following such request from
the Company to such Person, reduces its Beneficial Ownership of Common
Shares to below 15.0% of the Common Shares then outstanding; provided,
however, that if the Person requested -------- ------- to so reduce
its Beneficial Ownership fails to do so within such specified number
of Business Days, then such Person shall become an Acquiring Person
immediately after such specified number of Business Days.
(b) "Act" shall mean the Securities Act of 1933 (or any successor act), as
amended and as may from time to time be in effect.
(c) "Affiliate," with respect to any Person, shall mean any other Person
who is, or who would be deemed to be, an "affiliate" or an "associate"
of such Person within the respective meanings ascribed to such terms
in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act, as such Rule is in effect on the Declaration Date.
(d) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own" or have "Beneficial Ownership" of, any
securities:
(i) which such Person or any of such Person's Affiliates has
"beneficial ownership" of within the meaning of Rule 13d-3 of the
General Rules and Regulations under the Exchange Act, as such
Rule is in effect on the Declaration Date;
(ii) which such Person or any of such Person's Affiliates has,
directly or indirectly, the right to acquire (whether such right
is exercisable immediately or after the passage of time) pursuant
to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion, exchange or other
rights, warrants or options, or otherwise;
(iii) which such Person or any of such Person's Affiliates has,
directly or indirectly, the right to vote or dispose of,
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
-2-
"beneficially own," any security for purposes of this Section
1(d)(iii) 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 proxy
solicitation rules and regulations promulgated under the Exchange
Act or (B) is made in connection with, or is to otherwise
participate in, a proxy or consent solicitation made, or to be
made, pursuant to, and in accordance with, the applicable proxy
solicitation rules and regulations promulgated under the Exchange
Act, in either case described in clause (A) or (B) above, whether
or not such agreement, arrangement or understanding is also then
reportable by such Person on Schedule 13D under the Exchange Act
(or any comparable or successor report); or
(iv) which are beneficially owned, directly or indirectly, by any
other Person or any Affiliate thereof with which such Person or
any of such Person's Affiliates has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy
or in connection with a proxy or consent solicitation described
in clause (A) or (B) of the proviso to Section 1(d)(iii) hereof)
or disposing of any securities of the Company;
provided, however, that for purposes of this Section 1(d) a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by such Person or any of
such Person's Affiliates until such tendered securities are accepted for
purchase or exchange, (B) securities issuable upon exercise of Rights at any
time prior to the occurrence of a Common Stock Event, or (C) securities issuable
upon exercise of Rights which were held by a Person or its Affiliates prior to
the Distribution Date as long as such Person is not responsible for the
occurrence of the Common Stock Event giving rise to the Distribution Date; and
provided, further, however, that nothing in this Section 1(d) shall cause a
Person engaged in business as an underwriter of securities to be the "Beneficial
Owner" of, or to "beneficially own," any securities acquired through such
Person's participation in good faith in a firm commitment underwriting until the
expiration of 40 days after the date of such acquisition.
(e) "Board" shall have the meaning set forth in the preamble to this
Agreement.
(f) "Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the State of New Hampshire or the
city in which the principal office of the Rights Agent is located are
authorized or obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean 5:00 p.m.,
Portsmouth, New Hampshire time, on such date; provided, however, that
if such date is not a
-3-
Business Day it shall mean 5:00 p.m., Portsmouth, New Hampshire time,
on the next succeeding Business Day.
(h) "Closing Price" shall have the meaning set forth in Section 11(d)
hereof.
(i) "Common Stock" shall mean the Common Stock, $.01 par value per share,
of the Company, except that "Common Stock" when used with respect to
any Person other than the Company shall mean either (i) the common
stock (or other capital stock or shares of beneficial interest) of
such Person with the greatest voting power, or (ii) the equity
securities or other equity interests having power to control or direct
the management and affairs of such Person, or if such Person is a
Subsidiary of another Person, the Person (A) who ultimately controls
such Person that is the Subsidiary and (B) which has outstanding such
common stock (or such other capital stock, equity securities or
interests).
(j) "Common Stock Equivalents" shall have the meaning set forth in Section
11(a)(iii) hereof.
(k) "Common Stock Event" shall mean the occurrence of any event described
in (i) Section 11(a)(ii) hereof or (ii) clause (a), (b) or (c) of the
first sentence of Section 13 hereof.
(l) "Company" shall have the meaning set forth in the preamble to this
Agreement.
(m) "Current Market Price" shall have the meaning set forth in Section
11(d) hereof.
(n) "Current Value" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(o) "Declaration Date" shall have the meaning set forth in the preamble to
this Agreement.
(p) "Directors" shall mean the members of the Board.
(q) "Disqualified Transferee" shall mean any Person who is a direct or
indirect transferee of any Right from an Acquiring Person or an
Affiliate of an Acquiring Person and became such a transferee (x)
after the occurrence of a Common Stock Event or (y) prior to or
concurrently with the Acquiring Person becoming such and received such
Right pursuant to a transfer (whether or not for value) (A) from the
Acquiring Person to holders of its Common Stock or other equity
securities or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement, or understanding (whether or not in
writing) regarding the transferred Right, or (B) which a majority of
the Board reasonably determines is part of a plan, arrangement, or
understanding (whether or not in writing) which has as a primary
purpose or effect, the avoidance of Section 7(e) hereof.
-4-
(r) "Distribution Date" shall mean the date which is the later of (A) the
earlier of (x) the 10th Business Day following the Stock Acquisition
Date or (y) the 10th Business Day following the Offer Commencement
Date or (B) such specified or unspecified date thereafter which is on
or after the Dividend Record Date, as may be determined by a majority
of the Board.
(s) "Dividend Record Date" shall have the meaning set forth in the
preamble to this Agreement.
(t) "Equivalent Preferred Stock" shall have the meaning set forth in
Section 11(b) hereof.
(u) "Excess Amount" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(v) "Exchange Act" shall mean the Securities Exchange Act of 1934 (or any
successor act), as in effect on the Declaration Date.
(w) "Exchange Ratio" shall have the meaning set forth in Section 24(a)
hereof.
(x) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(y) "Offer Commencement Date" shall mean the date of the commencement by
any Person, other than (i) the Company, (ii) a Subsidiary of the
Company, (iii) any employee benefit plan of the Company or of any
Subsidiary of the Company or (iv) any Person organized, appointed, or
established by the Company or such Subsidiary pursuant to the terms of
any such plan, of a tender or exchange offer (including when such
offer 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 and Affiliates thereof would
be the Beneficial Owner of 15.0% or more of the then outstanding
shares of Common Stock (including any such date which is after the
date of this Agreement and prior to the issuance of the Rights on the
Dividend Record Date or thereafter).
(z) "Officers' Certificate" has the meaning set forth in Section 20(b)
hereof.
(aa) "Other Consideration" has the meaning set forth in Section 6(a)
hereof.
(bb) "Person" shall mean a company, corporation, association, partnership,
joint venture, limited liability company, trust, estate, organization,
business, entity or individual, and shall include any successor (by
merger or otherwise) of any such entity.
(cc) "Preferred Stock" shall mean the Series F Preferred Stock, $1.00 par
value per share, of the Company, having the rights and preferences set
forth in the form of Certificate of Designation attached hereto as
Exhibit A.
-5-
(dd) "Purchase Price" shall have the meaning set forth in Section 7(b)
hereof.
(ee) "Redemption Price" shall have the meaning set forth in Section 23
hereof.
(ff) "Rights" shall have the meaning set forth in the preamble to this
Agreement.
(gg) "Rights Agent" shall have the meaning set forth in the preamble of
this Agreement subject to the appointment of a successor Rights Agent
pursuant to Section 21 hereof.
(hh) "Rights Certificates" shall have the meaning set forth in Section 3(a)
hereof.
(ii) "Stock Acquisition Date" shall mean the later of (i) the date of the
first public announcement by an Acquiring Person or the Company that
an Acquiring Person has become such (including the first date on which
any filing with any governmental authority disclosing that an
Acquiring Person has become such becomes available to the public), or
(ii) the date on which a majority of the Directors have actual
knowledge that an Acquiring Person has become such.
(jj) "Subsidiary" shall mean, as of any date, any Person of which the
Company (or other specified Person) owns directly, or indirectly
through a Subsidiary or Subsidiaries, at least a majority of the
outstanding capital stock (or other shares of beneficial interest)
entitled to vote generally, or holds directly, or indirectly through a
Subsidiary or Subsidiaries, at least a majority of partnership or
similar interests, or is a general partner, or of which the Company
(or other specified Person) owns voting securities sufficient to elect
at least a majority of the directors of such Person.
(kk) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
(ll) "Summary of Rights" shall have the meaning set forth in Section 3(b)
hereof.
(mm) "Trading Day" shall mean a day on which the principal national
securities exchange or automated quotation system on which such
security is listed or admitted to trading is open for the transaction
of business or, if such security is not listed or admitted to trading
on any national securities exchange or automated quotation system, a
day which is a Business Day.
Section 2. Appointment of Rights Agent.
The Company hereby appoints the Rights Agent to act as agent for the
Company in accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. The Company may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable, upon ten (10) days'
prior written notice to the Rights Agent. The Rights Agent shall have no duty to
supervise, and in no event be liable for, the acts or omissions of any such
Co-Rights Agent.
-6-
Section 3. Issue of Rights Certificates
(a) Until the Distribution Date, (i) the Rights will be evidenced (subject
to the provisions of Section 3(b) hereof) by the certificates
representing shares of Common Stock registered in the names of the
holders of the Common Stock (which certificates shall be deemed also
to be certificates for the associated Rights) and not by separate
rights certificates, and (ii) the Rights will be transferable only in
connection with the transfer of the associated shares of Common Stock.
As soon as practicable after the Company has notified the Rights Agent
of the occurrence of the Distribution Date and provided the Rights
Agent with all necessary information (and if the Rights Agent is not
also the transfer agent and registrar of Common Stock, provided the
Rights Agent with the names and addresses of all record holders of
Common Stock), 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 stock transfer records of the Company, one or more
rights certificates, in substantially the form of Exhibit B hereto
(the "Rights Certificates"), evidencing in the aggregate that number
of Rights to which such holder is entitled in accordance with the
provisions of this Agreement. As of and after the Distribution Date,
the Rights will be evidenced solely by such Rights Certificates. The
Rights are exercisable only in accordance with the provisions of
Section 7 hereof and are redeemable only in accordance with Section 23
hereof.
(b) As soon as practicable after the Dividend Record Date, the Company
will cause a copy of a Summary of Rights, in substantially the form
attached hereto as Exhibit C (the "Summary of Rights"), to be sent by
first-class, postage prepaid mail, to each record holder of the Common
Stock as of the Close of Business on the Dividend Record Date, at the
address of such holder shown on the stock transfer records of the
Company. With respect to certificates for the Common Stock outstanding
as of the Dividend Record Date, until the Distribution Date, the
Rights associated with the shares of Common Stock represented by such
certificates 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 Distribution
Date (or the earlier redemption, expiration or termination of the
Rights), the surrender for transfer of any of the certificates
representing shares of the Common Stock outstanding on the Dividend
Record Date, with or without a copy of the Summary of Rights, shall
also constitute the transfer of the Rights associated with the Common
Stock represented by such certificate.
(c) Rights shall be issued in respect of all shares of Common Stock issued
(whether originally issued or delivered from the Company's treasury)
after the Dividend Record Date but prior to the earliest of (i) the
Distribution Date, (ii) the Expiration Date, or (iii) the redemption
of the Rights. Certificates representing such shares of Common Stock
and certificates issued on transfer of such shares of
-7-
Common Stock, with or without a copy of the Summary of Rights, prior
to the Distribution Date (or earlier expiration or redemption of the
Rights) shall be deemed also to be certificates for the associated
Rights, and commencing as soon as reasonably practicable following the
Dividend Record Date shall bear the following legend (or a legend
substantially in the form thereof):
This certificate also evidences and entitles the holder to Rights set forth
in a Rights Agreement between the issuer and Equiserve Trust Company, N.A.,
as Rights Agent (the "Rights Agent"), dated as of May 28, 2002 (the "Rights
Agreement"), the terms of which are incorporated herein by reference and a
copy of which is on file at the principal offices of both the issuer and
the Rights Agent. The Rights Agent will mail to the registered holder of
this certificate a copy of the Rights Agreement, as in effect on the date
of mailing, without charge upon written request. Under certain
circumstances set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by this
certificate. Under certain circumstances set forth in the Rights Agreement,
Rights issued to, or held by any Person who is, was or becomes, or acquires
shares from, an Acquiring Person or any Affiliate of an Acquiring Person
(as each such term is defined in the Rights Agreement and generally
relating to the ownership or purchase of large shareholdings), whether
currently held by or on behalf of such Person or Affiliate or by certain
subsequent holders, may become null and void.
Until the Distribution Date or the earlier redemption, expiration or
termination of the Rights, the Rights associated with the Common Stock
shall be evidenced by the Common Stock certificates alone and the
registered holders of Common Stock shall also be the registered holders of
the associated Rights, and the surrender for transfer of any of such
certificates shall also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the form of assignment and the form of
exercise notice and certificate to be printed on the reverse thereof)
shall each be substantially in the form set forth in Exhibit B hereto
and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may
deem appropriate (but which do not affect the duties or
responsibilities of the Rights Agent) 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 traded, or to conform to
usage. Subject to the provisions of Sections 11 and 22 hereof, the
Rights Certificates, whenever distributed, shall be dated as of the
Dividend Record Date (or, if the shares pursuant to which the Rights
are attached are issued thereafter, such date of issuance), shall
include the date of countersignature and on their face shall entitle
the holders thereof to purchase such number of one one-thousandths of
a share of Preferred Stock as
-8-
shall be set forth therein at the Purchase Price (as hereinafter
defined), but the amount and type of securities issuable upon the
exercise of each Right and the Purchase Price shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or 22 hereof
that represents Rights beneficially owned by (i) any Acquiring Person
or any Affiliate of an Acquiring Person, or (ii) any Disqualified
Transferee, and any other Rights Certificate issued pursuant to
Section 6 or 11 hereof upon the transfer, exchange, replacement, or
adjustment of any such Rights Certificate, shall contain (to the
extent feasible) the following legend:
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
(which includes both affiliates and associates) of an Acquiring Person (as
each such term is defined in the Rights Agreement between the issuer and
Equiserve Trust Company, N.A., as Rights Agent, dated as of May 28, 2002
(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 the Rights Agreement. The Rights Agent will
mail to the registered holder of this certificate a copy of the Rights
Agreement, as in effect on the date of such mailing, without charge upon
written request.
Section 5. Countersignature and Registration.
The Rights Certificates shall be executed on behalf of the Company by its
Chairman of the Board, President, or any Vice President, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal or
facsimile thereof which shall be attested by the Treasurer or an Assistant
Treasurer of the Company, either manually or by facsimile signature. The Rights
Certificates shall be countersigned, either manually or by facsimile signature,
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, issued, and delivered with the same force and effect as though the person
who signed such Rights Certificates had not ceased to be such officer of the
Company. Any Rights Certificate may be signed on behalf of the Company by any
person who, 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 Agreement any such person was not
such an officer.
Following the Distribution Date, the Rights Agent shall keep or cause to be
kept, at the office of the Rights Agent designated for such purpose, 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 countersignature thereof by the Rights Agent.
-9-
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e), and 14 hereof, at
any time after the Close of Business on the Distribution Date, and at
or prior to the earlier of the Close of Business on the Expiration
Date or the redemption of the Rights, any Rights Certificate may be
transferred, split up, combined or exchanged for another Rights
Certificate or Rights Certificates, entitling the registered holder to
purchase a like number of one one-thousandths of a share of Preferred
Stock (or, following a Common Stock Event, Common Stock and/or such
other securities, cash, or other assets as shall be issuable in
respect of the Rights in accordance with the terms of this Agreement
(such other securities, cash or other assets being referred to herein
as "Other Consideration")) as the Rights Certificate 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 shall make such request in
writing delivered to the Rights Agent, and shall surrender the Rights
Certificate to be transferred, split up, combined, or exchanged at the
office of the Rights Agent designated for such purpose, accompanied by
a signature guarantee and such other documentation as the Rights Agent
may reasonably request. 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 properly 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 from whom the Rights
evidenced by such Rights Certificate are to be transferred (or the
Beneficial Owner to whom such Rights are to be transferred) or
Affiliates thereof as the Company or the Rights Agent shall reasonably
request. Thereupon, subject to Sections 4(b), 7(e) and 14 hereof, the
Company shall execute and the Rights Agent shall countersign and
deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may
require payment by the holders of Rights of a sum sufficient to cover
any tax or charge that may be imposed in connection with any transfer,
split up, combination or exchange of Rights Certificates which the
Company is not required to pay in accordance with Section 9(d) hereof.
The Rights Agent shall have no duty or obligation under this Section
unless and until it is satisfied that all such taxes and/or charges
have been paid.
(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, the receipt of indemnity or security satisfactory to
them, and upon 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,
accompanied by a signature guarantee and such other documentation as
the Rights
-10-
Agent may reasonably request, the Company will execute and deliver a
new Rights Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the
Rights Certificate so lost, stolen, destroyed, or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Except as otherwise provided herein, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby in whole
or in part at any time from and after the Distribution Date and at or
prior to the Close of Business on June 11, 2012 (the "Expiration
Date") or the earlier redemption of the Rights. Immediately after the
Close of Business on the Expiration Date (or the earlier redemption of
the Rights), all Rights shall be extinguished and all Rights
Certificates shall become null and void. To exercise Rights, the
registered holder of the Rights Certificate evidencing such Rights
shall surrender such Rights Certificate, with the form of election to
purchase on the reverse side thereof and the certificate contained
therein duly executed, to the Rights Agent at the office of the Rights
Agent designated for such purpose, accompanied by a signature
guarantee and such other documentation as the Rights Agent may
reasonably request, together with payment in cash, only if by
electronic or wire transfer, or by certified check or bank check, of
the Purchase Price with respect to the total number of one
one-thousandths of a share of Preferred Stock (or, after a Common
Stock Event, shares and/or similar units of Common Stock or Other
Consideration) as to which the Rights are exercised (which payment
shall include any additional amount payable by such Person in
accordance with Section 9(d) hereof). The Rights Agent shall promptly
deliver to the Company all payments of the Purchase Price received in
respect of Rights Certificates accepted for exercise.
(b) The purchase price for each one one-thousandth of a share of Preferred
Stock issuable pursuant to the exercise of a Right (the "Purchase
Price") shall initially be $20.00, shall be subject to adjustment as
provided in Section 11 hereof, and shall be payable in lawful money of
the United States of America.
(c) Upon receipt of a Rights Certificate representing the Rights, with the
form of election to purchase set forth on the reverse side thereof and
the certificate contained therein duly executed, accompanied by
payment of the Purchase Price, with respect to each Right so
exercised, the Rights Agent, subject to Sections 7(e), 11(a)(iii) and
20(k) hereof, shall thereupon promptly (i) requisition from any
transfer agent of the Preferred Stock (or Common Stock, as the case
may be) (or from the Company if there shall be no such transfer agent,
or make available if the Rights Agent is such transfer agent)
certificates for the total number of one one-thousandths of a share of
Preferred Stock (or Common Stock, as the case may be) to be purchased
and the Company hereby irrevocably authorizes such transfer agent to
comply with any such request, (ii) after receipt of such certificates,
cause the same to be delivered to or upon the order of the registered
holder of such
-11-
Rights Certificate, registered in such name or names as may be
designated in writing by such holder, and (iii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of
issuance of a fractional share in accordance with Section 14 hereof
and after receipt promptly deliver such cash to or upon the order of
the registered holder of such Rights Certificate. After the occurrence
of a Common Stock Event, the Company shall make all necessary
arrangements so that any Other Consideration then deliverable in
respect of the Rights is available for distribution by the Rights
Agent. For purposes of this Section 7, the Rights Agent shall be
entitled to rely, and shall be protected in relying, on an Officers'
Certificate from the Company to the effect that the Distribution Date
has occurred.
(d) Subject to Sections 4(b), 7(e) and 14 hereof, 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 executed and
delivered by the Company to the Rights Agent and countersigned and
delivered by the Rights Agent to the registered holder of such Rights
Certificate or to such holder's duly authorized assigns.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Common Stock Event, any Rights
beneficially owned by (i) an Acquiring Person or an Affiliate of an
Acquiring Person, or (ii) a Disqualified Transferee 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 ensure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but the
Company shall have no liability to any holder of Rights Certificates
or other Person and none of the terms of this Agreement or the Rights
shall be deemed to be waived with respect to such holder or other
Person as a result of any failure by the Company to make any
determinations with respect to an Acquiring Person or any Affiliate of
an Acquiring Person or Disqualified Transferees hereunder or any
failure to have a legend placed on any Rights Certificate in
accordance with Section 4(b) hereof or on any Common Stock certificate
in accordance with Section 3(c) hereof.
(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 holder of any Rights Certificate upon the
occurrence of any purported exercise thereof unless such holder shall
have (i) properly 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 from
whom the Rights evidenced by such Rights Certificate are to be
transferred (or the Beneficial Owner to whom such Rights are to be
transferred) or Affiliates thereof as the Company or the Rights Agent
shall reasonably request.
-12-
Section 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of and accepted for
exercise, or surrendered for the purpose of redemption, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents (other than the Rights Agent), 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 Certificates
purchased or retired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all canceled Rights Certificates to the Company,
or may, at the written request of the Company, but shall not be required to,
destroy such canceled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares of Preferred Stock; Other
Covenants.
(a) The Company covenants and agrees that on and after the Distribution
Date, it shall use reasonable efforts to cause to be reserved and kept
available out of its authorized and unissued shares of Preferred Stock
(or, following the occurrence of a Common Stock Event, out of its
authorized and unissued shares of Common Stock and/or Other
Consideration, or out of its authorized and issued shares held in its
treasury), the number of shares of Preferred Stock (or, following a
Common Stock Event, shares of Common Stock and/or Other Consideration)
that, except as provided in Section 11(a)(iii) hereof, would then be
sufficient to permit the exercise in full of all outstanding Rights;
provided, however, that the reservation of such shares shall be
subject and subordinate to any other reservation of such shares made
by the Company at any time for any lawful purpose; provided, further,
however, that in no event shall such failure to so reserve shares
affect the rights of any holder of Rights hereunder.
(b) The Company covenants and agrees that on and after the Distribution
Date so long as the Preferred Stock (or, following a Common Stock
Event, shares and/or similar units of Common Stock and/or Other
Consideration) issuable upon the exercise of Rights may be listed on
any national securities exchange or quoted on the Nasdaq National
Market or comparable system, the Company shall use its best efforts to
cause all shares (or similar units) reserved for such issuance to be
listed on such exchange or quoted on the Nasdaq National Market or
comparable system upon official notice of issuance upon such exercise.
(c) The Company covenants and agrees that it shall take all such action as
may be necessary to ensure that each one one-thousandth of a share of
Preferred Stock (or, following a Common Stock Event, each share and/or
similar unit of Common Stock or Other Consideration) delivered upon
exercise of Rights shall, at the time of delivery of the certificates
for such shares (or units), subject to payment in full
-13-
of the Purchase Price, be duly and validly authorized and issued and
fully paid and nonassessable.
(d) The Company covenants and agrees that it shall pay when due and
payable any and all taxes and charges which may be payable in respect
of the issuance or delivery of the Rights Certificates or of any
shares of Preferred Stock (or, following the occurrence of a Common
Stock Event, each share and/or similar unit of Common Stock or Other
Consideration) upon the exercise of Rights; provided, however, that
the Company shall not be required to pay any tax or charge which may
be payable in respect of any transfer involved in the transfer or
delivery of Rights Certificates or in the issuance or delivery of
certificates for any shares of Preferred Stock (or, following the
occurrence of a Common Stock Event, each share and/or similar unit of
Common Stock or Other Consideration) in a name other than that of the
registered holder of the Rights Certificate evidencing Rights
surrendered for exercise or to issue or deliver any certificates for
any shares of Preferred Stock (and, following the occurrence of a
Common Stock Event, any shares and/or similar units of Common Stock or
Other Consideration) upon the exercise of any Rights until any such
tax or charge shall have been paid (any such tax or charge being
payable by the holder of such Rights Certificate at the time of
surrender thereof) or until it has been established to the Company's
satisfaction that no such tax or charge is due.
(e) The Company shall use its best efforts (i) to file, as soon as
practicable following the earliest date after the first occurrence of
a Common Stock Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance
with this Agreement, 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 issuable upon exercise of the
Rights on an appropriate form, (ii) to cause such registration
statement to become effective as soon as practicable after such
filing, and (iii) to 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, or (B) the Expiration Date
or earlier redemption 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 of the United
States in connection with the exercisability of the Rights. The
Company may temporarily suspend, for a period of time not to exceed
ninety (90) days after the date set forth in clause (i) of the first
sentence of this Section 9(e), the exercisability of the Rights in
order to prepare and file such registration statement or to permit it
to become effective. Upon any such suspension, the Company shall issue
a public announcement stating that the exercisability of the Rights
has been temporarily suspended. The Company shall thereafter issue a
public announcement at such time as the suspension is no longer in
effect. The Company shall notify the Rights Agent whenever it makes a
public announcement pursuant to this Section 9(e) and give the Rights
Agent a copy of
-14-
such announcement. 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.
Section 10. Preferred Stock Record Date; Etc.
Each Person in whose name any certificate for any shares of Preferred Stock
(or, following the occurrence of a Common Stock Event, shares and/or similar
units of Common Stock or Other Consideration) is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
such shares of Preferred Stock (or such shares and similar units of Common Stock
and/or Other Consideration, as the case may be) represented thereby, and such
certificate shall be dated the date which is the later of (i) the date upon
which the Rights Certificate evidencing such Rights was duly surrendered, or
(ii) the date upon which payment of the Purchase Price (and any applicable taxes
or charges) in respect thereof was made; provided, however, that if such date is
a date upon which the relevant transfer books of the Company are closed, such
Person shall be deemed to have become the record holder of such shares (or Other
Consideration) on, and such certificate shall be dated, the next succeeding
Business Day on which such transfer books of the Company are open; provided,
further, that the Company covenants and agrees that it shall not close such
transfer books for a period exceeding ten consecutive days. Prior to the
exercise of the Rights evidenced thereby (which shall be deemed to have occurred
on the date such certificate for shares and/or similar units of Preferred Stock,
Common Stock or Other Consideration shall be dated in accordance with this
Section 10), the holder of a Rights Certificate, as such, shall not be entitled
to any rights of a security holder of the Company with respect to the shares of
Preferred Stock or Common Stock (and/or such shares or similar units of Common
Stock or Other Consideration) for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions, or to exercise any preemptive rights, and shall not be entitled
to receive any notice of any proceedings of the Company, except as expressly
provided herein.
Section 11. Antidilution Adjustments.
The Purchase Price and the number and kind of securities 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 the Company shall at any time after the
Declaration Date (A) declare and pay a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding
Preferred Stock, (C) combine the outstanding Preferred Stock into a
smaller number of shares, or (D) issue, change, or alter any of its
shares of capital stock in a reclassification or recapitalization
(including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving Person), except as otherwise provided in this Section 11(a)
and Section 7(e) hereof, then, and in each such case, the Purchase
Price in effect at the time of the record date for such dividend or
the effective time of such subdivision, combination, reclassification
or
-15-
recapitalization, and the number and kind of shares of capital stock
issuable upon exercise of the Rights at such time, shall be
proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the aggregate number and
kind of shares of Preferred Stock or other capital stock which, if
such Right had been exercised immediately prior to such time at the
Purchase Price then in effect and at a time when the transfer books
for the Preferred Stock (or other capital stock) of the Company were
open, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision,
combination, reclassification or recapitalization. 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 in this Section
11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event
(A) any Person shall at any time after the Declaration Date
become an Acquiring Person; or
(B) any Acquiring Person or any Affiliate of any Acquiring
Person, at any time after the Declaration Date, directly or
indirectly, shall (1) merge into the Company or otherwise combine with
the Company, and the Company shall be the continuing or surviving
corporation of such merger or combination and the Common Stock of the
Company shall remain outstanding and no shares thereof shall be
changed or otherwise transformed into stock or other securities of any
other Person or the Company or cash or any other property, (2) in one
or more transactions, transfer any assets to the Company in exchange
(in whole or in part) for shares of any class of its equity securities
or for securities exercisable for or convertible into shares of any
such class or otherwise obtain from the Company, with or without
consideration, any additional shares of any such class or securities
exercisable for or convertible into shares of any such class (other
than as part of a pro rata distribution to all holders of such class),
(3) sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise dispose (in one transaction or a series of transactions) to,
from or with the Company or any of the Company's Subsidiaries, assets
with an aggregate fair market value in excess of 25% of the assets of
the Company and its Subsidiaries determined on a consolidated basis on
terms and conditions less favorable to the Company than the Company
would be able to obtain through arm's-length negotiation with an
unaffiliated third party, (4) receive any compensation from the
Company or any of the Company's Subsidiaries other than compensation
as a director of the Company or for full-time employment as a regular
employee at rates in accordance with the Company's (or such
Subsidiary's) past practices, (5) receive the benefit (except
proportionately as a stockholder), of any loans,
-16-
advances, guarantees, pledges or other financial assistance provided
by the Company or any of its Subsidiaries on terms and conditions less
favorable to the Company (or such Subsidiary) than the Company would
be able to obtain through arm's-length negotiation with an
unaffiliated third party or (6) commence a tender or exchange offer
for securities of the Company; or
(C) during such time as there is an Acquiring Person at any time
after the Declaration Date, there shall be any reclassification of
securities (including any combination thereof), or recapitalization of
the Company, or any merger or consolidation of the Company with any of
its Subsidiaries (whether or not with or into or otherwise involving
an Acquiring Person or any Affiliate of an Acquiring Person), or any
repurchase by the Company or any of its Subsidiaries of shares of the
Common Stock of the Company, or any other class or series of
securities issued by the Company, which reclassification,
recapitalization, merger, consolidation or repurchase is effected at a
time when a majority of the Board consists of persons who are the
Acquiring Person or its Affiliates, or nominees or designees of any
thereof, which has the effect, directly or indirectly, of increasing
by more than 1% the proportionate share of the outstanding shares of
any class of equity securities or securities exercisable for or
convertible into any class of equity securities of the Company or any
of its Subsidiaries which is directly or indirectly owned by an
Acquiring Person or any Affiliate of an Acquiring Person
then, in each such case, upon the Close of Business 10 Business Days after the
occurrence of such event, proper provision shall be made so that each holder of
a Right, except as provided in Section 7(e) hereof, shall thereafter have the
right to receive, upon exercise thereof at the Purchase Price in effect at the
time of exercise in accordance with the terms of this Agreement, in lieu of a
number of one one-thousandths of a share of Preferred Stock, such number of
shares of Common Stock of the Company as shall equal the result obtained by (x)
multiplying an amount equal to the then current Purchase Price by an amount
equal to the number of one one-thousandths of a share of Preferred Stock for
which a Right was or would have been exercisable immediately prior to the first
occurrence of any such event whether or not such Right was then exercisable, and
(y) dividing that product by 50% of the Current Market Price per share of the
Common Stock of the Company (as defined in Section 11(d) hereof) determined as
of the date of such first occurrence.
(iii) In lieu of issuing whole or fractional shares of Preferred Stock (or
Common Stock) in accordance with Section 7(c) hereof, the Company
shall (i) in the event that the number of shares of Preferred Stock
(or Common Stock) which are authorized by the Company's charter 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 7(c) hereof, or (ii) if
a majority of the Board determines that it would be
-17-
appropriate and not contrary to the interests of the holders of Rights
(other than any Acquiring Person or Disqualified Transferee or any
Affiliate of the Acquiring Person or Disqualified Transferee), (A)
determine an amount, if any, (the "Excess Amount") equal to the excess
of (1) the value (the "Current Value") of the whole or fractional
shares of Preferred Stock (or Common Stock) issuable upon the exercise
of a Right in accordance with Section 7(c) hereof, over (2) the
Purchase Price, and (B) with respect to each Right, (subject to
Section 7(e) hereof) make adequate provision to substitute for such
whole or fractional shares of Preferred Stock (or Common Stock), upon
payment of the applicable Purchase Price, (1) cash, (2) a reduction in
the Purchase Price, (3) Common Stock or other equity securities of the
Company (including, without limitation, shares or units of Preferred
Stock or preferred stock which the Board has deemed in good faith to
have the same value as a share of Common Stock (such shares of
preferred stock being referred to herein as "Common Stock
Equivalents")), (4) debt securities of the Company, (5) other assets,
or (6) any combination of the foregoing (which would include the
additional consideration provided to any holder by reducing the
Purchase Price) having an aggregate value equal to the Current Value,
where such aggregate value has been determined by the Board; provided,
however, subject to the provisions of Section 9(e) hereof, that if the
Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within 30 days following the Close of
Business 10 Business Days after the first occurrence of a Common Stock
Event described in Section 11(a)(ii) hereof, then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, whole or fractional
shares of Preferred Stock (or Common Stock) (to the extent available)
and then, if necessary, cash, securities, and/or assets which in the
aggregate are equal to the Excess Amount. If the Board shall determine
in good faith that it is likely that sufficient additional shares of
Common Stock or Common Stock Equivalents 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 following the Close of Business 10 Business Days after the
first occurrence of such a Common Stock Event (such 30 day period as
it may be extended to 90 days, is referred to herein as the
"Substitution Period"). To the extent that the Company determines that
some action is to be taken pursuant to the preceding provisions of
this Section 11(a)(iii), the Company (x) shall provide, subject to
Section 7(e) hereof, that (except as to the form of consideration
which shall be determined as appropriate by a majority of the Board)
such action shall apply uniformly to all outstanding Rights which
shall not have become null and void, 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 provisions and
-18-
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. The
Company shall thereafter issue a public announcement at such time as
the suspension is no longer in effect. The Company shall notify the
Rights Agent whenever it makes a public announcement pursuant to this
Section 11(a)(iii), and give the Rights Agent a copy of such
announcement. For purposes of this Section 11(a)(iii), the value of
the Common Stock issuable upon exercise of a Right in accordance with
Section 7(c) hereof shall be the Current Market Price per share of the
Common Stock (as determined pursuant to Section 11(d) hereof) on the
Close of Business 10 Business Days after the date of the first
occurrence of such a Common Stock Event and the value of any Common
Stock Equivalent shall be deemed to be equal to the Current Market
Price per share of the Common Stock on such date.
(b) In the event the Company shall, after the Dividend Record Date, fix a
record date for the issuance of any options, warrants, or other rights
to all holders of Preferred Stock entitling them (for a period
expiring within 45 calendar days after such record date) to subscribe
for or purchase (i) Preferred Stock or (ii) shares having the same
rights, privileges and preferences as the shares of any number of one
one-thousandths of a share of Preferred Stock ("Equivalent Preferred
Stock") or (iii) securities convertible into Preferred Stock or
Equivalent Preferred Stock at a price per share of Preferred Stock or
Equivalent Preferred Stock (or having a conversion price per share of
Preferred Stock or Equivalent Preferred Stock, if a security is
convertible into Preferred Stock or Equivalent Preferred Stock) less
than the Current Market Price per share of Preferred Stock (determined
in accordance with Section 11(d) hereof) determined as of such record
date, the Purchase Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall
be the number of shares of Preferred Stock outstanding on such record
date plus the number of shares of Preferred Stock and/or Equivalent
Preferred Stock which the aggregate minimum offering price of the
total number of shares of one one-thousandths of a share of Preferred
Stock and/or Equivalent Preferred Stock so to be offered (and/or the
aggregate minimum conversion price of such convertible securities so
to be offered) would purchase at such Current Market Price, and the
denominator of which shall be the number of shares of Preferred Stock
outstanding on such record date plus the maximum number of additional
shares of Preferred Stock and/or Equivalent Preferred Stock to be
offered for subscription or purchase (or the maximum number of shares
into which such convertible securities so to be offered are
convertible). In case such subscription price may be paid by delivery
of consideration part or all of which shall be in a form other than
cash, for purposes of this Section 11(b) the value of such
consideration shall be the fair market value thereof as determined in
good faith by the Board (which determination shall be described in an
Officers' Certificate filed with the Rights Agent). Shares of
-19-
Preferred Stock owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date
is fixed; and in the event that such options, warrants or other rights
are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had
not been fixed (subject, however, to such other adjustments as are
provided herein).
(c) In the event that the Company shall, after the Dividend Record Date,
fix a record date for the making of a distribution to all holders of
Preferred Stock (including any such distribution made in connection
with a consolidation or merger in which the Company is the surviving
or continuing Person) of evidences of indebtedness, cash (other than
cash dividends paid out of the earnings or retained earnings of the
Company and its Subsidiaries determined on a consolidated basis in
accordance with generally accepted accounting principles consistently
applied), other property (other than a dividend payable in a number of
one one-thousandths of a share of Preferred Stock, but including any
dividend payable in capital stock other than Preferred Stock), or
subscription rights or warrants (excluding those referred to in
Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, of which
the numerator shall be (i) the Current Market Price per share of
Preferred Stock (as defined in Section 11(d) hereof) determined as of
such record date, less (ii) the sum of (A) that portion of cash plus
(B) the fair market value, as ---- determined in good faith by the
Board (which determination shall be described in an Officers'
Certificate filed with the Rights Agent) of that portion of such
evidences of indebtedness, such other property, and/or such
subscription rights or warrants applicable to one share of Preferred
Stock and of which the denominator shall be such Current Market Price
per share of the Preferred Stock. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event
such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if
such record date had not been fixed (subject, however, to such other
adjustments as are provided herein).
(d) For purposes of any computation pursuant to Section 11(a)(iii) hereof,
the "Current Market Price" per share (or unit) of any security on any
date shall be deemed to be the average of the daily Closing Prices of
such security for the 10 consecutive Trading Days immediately after
such date, and for the purpose of any other computation hereunder, the
"Current Market Price" per share (or unit) of any security on any date
shall be deemed to be the average of the daily Closing Prices of such
security for the 20 consecutive Trading Days immediately prior to such
date; provided, however, that in the event that the Current Market
Price per share of such security is determined during a period
following the announcement by the issuer of such security of (i) a
dividend or distribution on such security payable in shares (or units)
of such security or securities convertible into shares
-20-
(or units) of such security, or (ii) any subdivision, combination or
reclassification of such security, and prior to the expiration of such
10 Trading Days or 20 Trading Days after (A) the ex-dividend date for
such dividend or distribution, or (B) the record date for such
subdivision, combination or reclassification, as the case may be,
then, and in each such case, the "Current Market Price" shall be the
Closing Price of such security on the last day of such respective 10
Trading Day or 20 Trading Day period. For purposes of this Agreement,
the "Closing Price" of any security on any day shall be the last sale
price, regular way, with respect to shares (or units) of such
security, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, with respect
to such security, in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange; or, if
such security is not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which such security is listed or
admitted to trading; or, if such security is not so listed or admitted
to trading, the last quoted sale price with respect to shares (or
units) of such security, or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market with respect
to shares (or units) of such security, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System or
such other similar system then in use; or, if on any such date such
security is not quoted by any such organization, the average of the
closing bid and asked prices with respect to shares (or units) of such
security, as furnished by a professional market maker making a market
in such security selected by the Board; or, if no such market maker is
available, the fair market value of shares (or units) of such security
as of such day as determined in good faith by the Board (which
determination shall be described in an Officers' Certificate filed
with the Rights Agent); provided, however, that the "Closing Price" of
one one-thousandth of a share of Preferred Stock as of any Trading Day
shall be equal to the Closing Price of a whole share of Preferred
Stock on such Trading Day divided by 1,000; provided, further, that if
the Closing Price of such a share of Preferred Stock as of any Trading
Day cannot be reasonably determined by the foregoing provisions, the
"Closing Price" of one one-thousandth of a share of Preferred Stock on
such Trading Date shall be the Closing Price of a share of Common
Stock on such Trading Day.
(e) No adjustment in the Purchase Price shall be required unless
adjustment would require an increase or decrease of at least 1% in
such price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest cent
or to the nearest (x) ten-thousandth of a share (or similar unit) of
Common Stock or securities other than Preferred Stock or Equivalent
Preferred Stock or (y) ten-millionth of a share of Preferred Stock or
Equivalent Preferred Stock.
-21-
Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which
mandates the adjustment or (ii) the Expiration Date. Anything in this
Section 11 to the contrary notwithstanding, the Company shall be
entitled to make such reductions in the Purchase Price, in addition to
those required by this Section 11, as it in its discretion shall
determine to be advisable in order that any dividends, subdivision of
shares, distribution of rights to purchase shares of beneficial
interest or other stock or securities, or distribution of securities
convertible into or exchangeable for stock hereafter made by the
Company to its stockholders shall not be taxable.
(f) In the event that at any time, as a result of an adjustment made in
respect of a Common Stock Event, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock
of the Company other than shares of Preferred Stock, thereafter the
number of such other shares so receivable upon exercise of any Right
and the Purchase Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to such other shares
contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k),
(m) and (p) hereof, and the provisions of Sections 7, 9, 10, 11(d), 13
and 14 hereof with respect to the shares of Preferred Stock shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of one
one-thousandths of a share of Preferred Stock purchasable from time to
time hereunder upon exercise of the Rights represented thereby, all
subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i) hereof, upon each adjustment of the Purchase Price as a
result of the calculations made pursuant to Sections 11(b) and 11(c)
hereof, each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of one one-thousandths of a share
of Preferred Stock (calculated to the nearest ten-millionth of a
share) obtained by (i) multiplying (x) the number of one
one-thousandths of a share of Preferred Stock covered by a Right
immediately prior to this adjustment, by (y) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price, and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) Assuming that no other adjustment pursuant to this Section 11 has been
made, the Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights in substitution for
any adjustment in the number of one one-thousandths of a share of
Preferred Stock purchasable upon the exercise of a Right. Each of the
Rights outstanding after such adjustment of the number of
-22-
Rights shall be exercisable for the number of one one-thousandths of a
share of Preferred Stock for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to such adjustment of the
Purchase Price by the Purchase Price in effect immediately after such
adjustment of the Purchase Price. The Company shall make a public
announcement (with prompt written notice thereof to the Rights Agent)
of its election to adjust the number of Rights, indicating the record
date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least 10 days later than
the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i) the Company 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 so to be distributed shall be issued, executed,
and countersigned in the manner provided for herein (and may bear, at
the option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of whole or fractional shares of Preferred Stock issuable upon
exercise of such Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the Purchase Price per share
and the number of one one-thousandths of a share of Preferred Stock
which were expressed in the initial Rights Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the number of one
one-thousandths of a share of Preferred Stock 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 such number of fully paid and
nonassessable one one-thousandths of a share of Preferred Stock at
such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a
specified event, the
-23-
Company may elect to defer until the occurrence of such event the
issuing to the holder of any Right exercised after such record date of
the number of one one-thousandths of a share of Preferred Stock or
other capital stock or securities of the Company, if any, issuable
upon such exercise over and above the number of one one-thousandths of
a share of Preferred Stock or other capital stock or securities of the
Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however,
that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such
additional securities upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase
Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it, by means of a resolution of
the Board acting in good faith, shall determine to be advisable in
order that any consolidation or subdivision of the Common Stock,
issuance wholly for cash of any Common Stock at less than the Current
Market Price thereof, issuance wholly for cash of Common Stock (or
other securities which by their terms are convertible into or
exchangeable for Common Stock), dividends payable in shares of Common
Stock or other capital stock or shares of beneficial interest, or
issuance of rights, options, or warrants referred to hereinabove in
this Section 11, hereafter made or declared by the Company to the
holders of its Common Stock, shall not be taxable to such holders.
(n) The Company covenants and agrees that it shall not, at any time after
the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction that complies with
Section 11(o) hereof), (ii) merge with or into any other Person (other
than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction or a series of
related transactions, more than 25% of (A) the assets (taken at net
asset value as stated on the books of the Company and determined on a
consolidated basis in accordance with generally accepted accounting
principles consistently applied) or (B) the earning power of the
Company and its Subsidiaries (determined on a consolidated basis in
accordance with generally accepted accounting principles consistently
applied) to any other Person or Persons (other than the Company or any
of its Subsidiaries in one or more transactions each of which complies
with Section 11(o) hereof), if (x) at the time of or immediately after
such consolidation, merger or sale, there are any rights, warrants or
other instruments or securities outstanding or agreements (whether or
not in writing) in effect that would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights
or (y) prior to, simultaneously with or immediately after such
consolidation, merger or sale, the stockholders of such other Person
shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates.
-24-
(o) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Section 23 or 27 hereof, take (or
permit any Subsidiary to take) any action if at the time such action
is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be
afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Declaration Date
and prior to the Distribution Date (i) declare or pay a dividend on
the outstanding shares of Common Stock payable in shares of Common
Stock, or (ii) effect a subdivision, combination or consolidation of
the outstanding Common Stock (by reclassification or otherwise than by
payment of dividends in shares of Common Stock) into a greater or
smaller number of shares, then in any such case, (i) the number of one
one-thousandths of a share of Preferred Stock purchasable after such
event upon proper exercise of each Right shall be determined by
multiplying the number of one one-thousandths of a share of Preferred
Stock so purchasable immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common
Stock outstanding immediately following the occurrence of such event;
and (ii) each share of Common Stock outstanding immediately after such
event shall have issued with respect to it that number of Rights which
each share of Common Stock outstanding immediately prior to such event
had issued with respect to it. The adjustments provided for in this
Section 11(p) shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation
is effected.
Section 12. Certificate of Adjustments.
Whenever an adjustment (including without limitation, an event which causes
Rights to become null and void) is made as provided in Section 11 or 13 hereof,
the Company shall (a) promptly prepare an Officers' Certificate setting forth
such adjustment, including any adjustment in Purchase Price, the number of
shares or Other Consideration payable, and a brief statement of the facts,
computation and methodology accounting for such adjustment, (b) promptly file
with the Rights Agent and with each transfer agent for the Preferred Stock and
Common Stock a copy of such Officers' Certificate, and (c) mail a brief summary
thereof to each registered holder of a Rights Certificate in accordance with
Section 26 hereof. The Rights Agent shall be fully protected in relying on any
such Officers' Certificate and on any adjustment therein contained, and shall
not be deemed to have knowledge of any such adjustment unless and until it shall
have received such an Officers' Certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
In the event that, following the Stock Acquisition Date, directly or
indirectly, (a) the Company shall consolidate with, or merge with and into, any
other Person (other than a
-25-
Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof) and the Company shall not be the continuing or surviving Person of such
consolidation or merger, (b) any Person (other than a Subsidiary of the Company
in a transaction that complies with Section 11(o) hereof) shall consolidate
with, or merge with and into, the Company, the Company shall be the continuing
or surviving Person of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the Common Stock of the Company shall be
changed or otherwise transformed into other stock or other securities of any
other Person or the Company or cash or any other property, or (c) 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,
more than 25% of (A) the assets (taken at net asset value as stated on the books
of the Company and determined on a consolidated basis in accordance with
generally accepted accounting principles consistently applied) or (B) the
earning power of the Company and its Subsidiaries (determined on a consolidated
basis in accordance with generally accepted accounting principles consistently
applied) to any Person (other than the Company or any Subsidiary of the Company
in one or more transactions each of which complies with Section 11(o) hereof)
then, from and after such event, proper provision shall be made so that (i) 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 Purchase Price in
effect at the time of such exercise in accordance with the terms of this
Agreement, such number of whole or fractional shares of validly authorized and
issued, fully paid, non-assessable, and freely tradeable Common Stock of such
other Person (or in the case of a transaction or series of transactions
described in clause (c) above, the Person receiving the greatest amount of the
assets or earning power of the Company, or if the Common Stock of such other
Person is not and has not been continuously registered under Section 12 of the
Exchange Act for the preceding 12-month period and such Person is a direct or
indirect Subsidiary of another Person, that other Person, or if such other
Person is a direct or indirect Subsidiary of more than one other Person, the
Common Stock of two or more of which are and have been so registered, such other
Person whose outstanding Common Stock has the greatest aggregate value), free
and clear of any liens, encumbrances, rights of first refusal, or other adverse
claims, as shall be equal to the result obtained by (x) multiplying the Purchase
Price in effect immediately prior to the first occurrence of any Common Stock
Event described in this Section 13 by the number of one one-thousandths of a
share of Preferred Stock for which a Right is exercisable immediately prior to
such first occurrence (and without taking into account any prior adjustment made
pursuant to 11(a)(ii)) and (y) dividing that product by 50% of the Current
Market Price per share (as defined in Section 11(d) hereof) of the Common Stock
of such other Person determined as of the date of consummation of such
consolidation, merger, sale, or transfer; (ii) the issuer of such Common Stock
shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale, or transfer, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term "Company" shall thereafter be
deemed, for all purposes of this Agreement, to refer to such issuer, it being
specifically intended that the provisions of Section 11 hereof (other than
Section 11(a)(ii) hereof) shall apply only to such issuer following the first
occurrence of a Common Stock Event described in this Section 13; (iv) such
issuer shall take such steps (including, but not limited to, the reservation of
a sufficient number of shares of its Common Stock) in connection with such
consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as
-26-
reasonably may be, in relation to the whole or fractional shares of its Common
Stock thereafter deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) hereof shall be of no effect following the first
occurrence of any Common Stock Event described in clauses (a), (b) or (c) of
this Section 13. The Company shall not consummate any such consolidation,
merger, sale or transfer unless (i) such issuer shall have a sufficient number
of authorized shares of its Common Stock which have not been issued or reserved
for issuance as will permit the exercise in full of the Rights in accordance
with this Section 13, and (ii) prior thereto the Company and such issuer shall
have executed and delivered to the Rights Agent a supplemental agreement so
providing and further providing that as soon as practicable after the date of
any Common Stock Event described above in this Section 13 such issuer shall (A)
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 (I) become effective as soon as practicable after such filing and
(II) remain effective (with a prospectus at all times meeting the requirements
of the Act) until the Expiration Date, and (B) will deliver to holders of the
Rights historical financial statements of such issuer and each of its Affiliates
which comply in all respects with the requirements for registration on Form 10
under the Exchange Act. Furthermore, in case the Person which is to be party to
a transaction referred to in this Section 13 has any provision in any of its
authorized securities or in its charter or by-laws or other agreement or
instrument governing its affairs, which provision would have the effect of
causing such Person to issue, in connection with, or as a consequence of, the
consummation of a Common Stock Event described in clauses (a), (b), or (c) of
this Section 13, whole or fractional shares of Common Stock of such Person at
less than the then Current Market Price per share thereof (as defined in Section
11(d) hereof), or to issue securities exercisable for, or convertible into,
Common Stock of such Person at less than such then Current Market Price, then,
in such event, the Company hereby agrees with each holder of the Rights that it
shall not consummate any such transaction unless prior thereto the Company and
such Person shall have executed and delivered to the Rights Agent a supplemental
agreement providing that such provision in question shall have been canceled,
waived, or amended so that it will have no effect in connection with, or as a
consequence of, the consummation of the proposed transaction. The provisions of
this Section 13 shall similarly apply to successive mergers or consolidations or
sales or other transfers. In the event that a Common Stock Event described in
this Section 13 shall occur at any time after the occurrence of a Common Stock
Event described in Section 11(a)(ii) hereof, the Rights which have not
theretofore been exercised shall thereafter become exercisable, except as
provided in Section 7(e) hereof, in the manner described in this Section 13.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to
distribute fractions of Rights, except prior to the Distribution Date
as provided in Section 11(i) hereof, or to distribute Rights
Certificates which evidence fractional Rights. In lieu of issuing such
fractional Rights, at the election of the Company, there shall be paid
to the registered holders of the Rights 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
the purposes of
-27-
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.
(b) The Company shall not be required to issue fractions of shares of its
capital stock upon exercise of the Rights or to distribute
certificates which evidence fractional shares (other than, in each
case with respect to Preferred Stock or Equivalent Preferred Stock,
fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock or Equivalent Preferred Stock, as the case
may be). Fractions of shares of Preferred Stock or Equivalent
Preferred Stock, as the case may be, in integral multiples of one
one-thousandth of a share of Preferred Stock or Equivalent Preferred
Stock may, at the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and
a depository selected by it, provided that such agreement shall
provide that the holders of such depositary receipts shall have all
the rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Stock or the Equivalent Preferred
Stock represented by such depositary receipts. In lieu of fractional
shares, at the election of the Company, there shall be paid to the
registered holders of Rights at the time such Rights are exercised as
herein provided an amount in cash equal to the same fraction of the
current market value of a share of such capital stock. For purposes of
this Section 14(b), the current market value of a share of such
capital stock shall be the Closing Price of such capital stock for the
Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right, by the acceptance of the Right, expressly
waives such holder's right to receive any fractional Rights or (except
as provided in Section 14(b) hereof) any fractional share upon
exercise of a Right. The Rights Agent shall have no duty or obligation
with respect to this Section 14 and Section 24 below unless and until
it has received specific instructions (and sufficient cash, if
required) from the Company with respect to its duties or obligations
under such Sections.
Section 15. Rights of Action.
Excepting the rights of action given the Rights Agent under Section 18
hereof and except as set forth in Section 20(l) hereof, all rights of action in
respect of this Agreement are vested in the registered holder of each Right; and
any registered holder of any Right, without the consent of the Rights Agent or
of the holder of any other Right, may, in its own behalf and for its own
benefit, enforce, and may institute and maintain any suit, action, or proceeding
against the Company to enforce, or otherwise act in respect of, such registered
holder's right to exercise the rights evidenced by such Right in the manner
provided in such Rights Certificate and in this Agreement, and the Company
hereby agrees to reimburse such registered holder for all expenses (including
reasonable attorneys' fees) incurred by such registered holder in connection
therewith. Without limiting the foregoing or any remedies available to the
holders of Rights, it is
-28-
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of the obligations hereunder, and shall be entitled
to injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement.
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) from and after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of
transfer with a form of assignment and certificate set forth on the
reverse side thereof duly executed, accompanied by a signature
guarantee and such other documentation as the Rights Agent may
reasonably request;
(c) subject to Sections 6(a) and 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 Certificate or, prior to the Distribution
Date, the associated Common Stock certificate, made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent shall be affected by any
notice to the contrary; 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 agrees
to 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 otherwise be deemed for any purpose the holder of any
securities of the Company which may be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein
-29-
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 in the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
action by the Company, or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 25 hereof), or to receive
dividends or preemptive rights, or otherwise, until the time specified in
Section 10 hereof.
Section 18. Concerning the Rights Agent.
The Company agrees to pay to the Rights Agent such reasonable compensation
as shall be agreed to in writing between the Company and the Rights Agent 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 preparation, delivery, amendment,
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any and all loss, liability, damages,
judgments, fines, penalties, claims, demands, settlements, costs or expenses
(including, without limitation, the reasonable fees and expenses of legal
counsel), incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent (which gross negligence, bad faith or willful
misconduct must be determined by a final, non-appealable order, judgment, decree
or ruling of a court of competent jurisdiction), for any action taken, suffered
or omitted by the Rights Agent in connection with the acceptance,
administration, exercise and performance of this Agreement, including the costs
and expenses of defending against any claim of liability for any of the
foregoing. The costs and expenses incurred in enforcing this right of
indemnification shall be paid by the Company. The provisions of this Section 18
and 20 below shall survive the termination of this Agreement, the exercise or
expiration of the Rights and the resignation or removal of the Rights Agent.
The Rights Agent shall be fully protected and shall incur no liability for
or in respect of any action taken, suffered, or omitted by it in connection with
its acceptance and administration of this Agreement and the exercise and
performance of its duties hereunder in reliance upon any Rights Certificate or
certificate for any number of one one-thousandths of a share of Preferred Stock,
or for shares of Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, instruction, direction, consent, certificate, statement, or other paper
or document believed by it to be genuine and to be signed and executed by the
proper Person or Persons, and verified or acknowledged as required by this
Agreement, or otherwise upon the advice of counsel as set forth in Section 20
hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any Person into which the Rights Agent may be merged or with which it may
be consolidated, or any Person resulting from any merger or consolidation to
which the Rights Agent shall be a party, or any Person succeeding to the
shareholder services business of the 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;
-30-
provided, however, that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement and any of the Rights Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
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 such 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. Rights and Duties of Rights Agent.
The Rights Agent undertakes to perform only the duties and obligations
expressly imposed upon it by this Agreement and no implied duties or obligations
shall be read into this Agreement against the Rights Agent. The Rights Agent
shall perform its duties and obligations hereunder upon the following terms and
conditions:
(a) The Rights Agent may consult with legal counsel of its selection (who
may be legal counsel to the Company or legal counsel to the Rights
Agent), and the advice or opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent and the
Rights Agent shall incur no liability for or in respect to any action
taken, suffered 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) be proved or established by the Company prior to taking,
suffering or omitting to take 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 (an "Officers' Certificate") signed by a
person believed by the Rights Agent to be the Chairman of the Board,
the President or any Vice President and by the Treasurer or any
Assistant Treasurer or the Secretary or any Assistant Secretary of the
Company and delivered to the Rights Agent; and such Officers'
Certificate shall be full and complete authorization and protection to
the Rights Agent and the Rights Agent shall incur no liability for or
in respect to any action
-31-
taken, suffered or omitted in good faith by it under the provisions of
this Agreement in reliance upon such Officers' Certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith, or willful misconduct (which gross negligence,
bad faith, or willful misconduct must be determined by a final,
non-appealable order, judgment, decree or ruling of a court of
competent jurisdiction). Anything to the contrary notwithstanding, in
no event shall the Rights Agent be liable for special, punitive,
indirect, consequential or incidental loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the
Rights Agent has been advised of the likelihood of such loss or
damage. Any liability of the Rights Agent under this Agreement will be
limited to the amount of fees paid by the Company to the Rights Agent.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
Rights Certificates (except its countersignature on such Rights
Certificate) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by
the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach
by the Company of any covenant or condition contained in this
Agreement or in any Rights Certificate; nor shall it be responsible
for any adjustment required under the provisions of Sections 11 or 13
hereof or be responsible for the manner, method or amount of any such
adjustment or procedures or the ascertaining of the existence of facts
that would require any such adjustment or procedure (except with
respect to the exercise of Rights evidenced by Rights Certificates
after receipt of a certificate delivered pursuant to Section 12
hereof, describing any such adjustment or procedures); nor shall it by
any act hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any Preferred Stock, Common
Stock or other securities to be issued pursuant to this Agreement or
any Rights Certificate or as to whether any shares of Common Stock, or
any shares or similar units of other securities, will, when issued, be
validly authorized and issued, fully paid, and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver, or cause to be performed, executed, acknowledged and
delivered, all such further and other acts, instruments and assurances
as may reasonably be required by the Rights Agent for the carrying out
or performing by the Rights Agent of the provisions of this Agreement.
-32-
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder
from any person believed by the Rights Agent to be the Chairman of the
Board, the President or any Vice President or the Secretary or any
Assistant Secretary or the Treasurer or any Assistant Treasurer of the
Company, and to apply to such officers for advice or instructions in
connection with its duties, and such instruction shall be full and
complete authorization and protection to the Rights Agent and it shall
not be liable for or in respect to any action taken, suffered or
omitted to be taken by it in good faith in accordance with
instructions of any such officer. Any application by the Rights Agent
for written instructions from the Company may, at the option of the
Rights Agent, set forth in writing any action proposed to be taken,
suffered or omitted by the Rights Agent with respect to its duties or
obligations under this Agreement and the date on and/or after which
such action shall be taken, suffered or omitted and the Rights Agent
shall not be liable for or in respect to any action taken, suffered or
omitted in accordance with a proposal included in any such application
on or after the date specified therein (which date shall not be less
than three Business Days after the date any such officer actually
receives such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking,
suffering or omitting any such action, the Rights Agent has received
written instructions from the Company in response to such application
specifying the action to be taken, suffered or omitted.
(h) The Rights Agent and any stockholder, director, officer, Affiliate or
employee of the Rights Agent may buy, sell, or deal in any of the
Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent or any
stockholder, director, Affiliate, officer, or employee from acting in
any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct
of any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct absent
gross negligence, bad faith, or willful misconduct in the selection
and continued employment thereof (which gross negligence, bad faith,
or willful misconduct must be determined by a final, non-appealable
order, judgment, decree or ruling of a court of competent
jurisdiction).
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights if there shall be reasonable
-33-
grounds for believing that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certification appearing on the
reverse side thereof following the form of election to purchase has
either not been properly completed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent shall not take
any further action with respect to such requested exercise of transfer
without first consulting with the Company.
(l) The provisions of this Section 20 are solely for the benefit of the
Rights Agent or the Company and any failure or omission under this
Section 20 shall not affect the rights of the Company under this
Agreement and neither the Rights Agent nor the Company shall have any
liability to any holder of Rights or other Person on account of such
failure or omission.
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, subsequent to the Distribution Date, to the holders of the
Rights Certificates by first-class mail. In the event the Transfer Agency and
Services Agreement terminates, the Rights Agent will be deemed to resign
automatically on the effective date of such termination; and any required notice
will be sent by the Company. The Company may remove the Rights Agent or any
successor Rights Agent upon 30 days' notice in writing, mailed to the Rights
Agent, to each transfer agent of the Common Stock by registered or certified
mail, and, subsequent to 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 such holder's Rights Certificate for
inspection by the Company), then the 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 Person organized and doing business under the laws
of the United States, the State of New York or the State of New Hampshire (or of
any other State of the United States so long as such Person is authorized to do
business as a banking institution in the State of New York or the State of New
Hampshire), in good standing, having an office designated for such purpose in
the State of New York or the State of New Hampshire, which is authorized under
such laws to exercise stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000, or (b) an Affiliate of a Person described in clause (a) of this
sentence. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities
-34-
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; and, except as the context herein otherwise requires, such successor
Rights Agent shall be deemed to be the "Rights Agent" for all purposes of this
Agreement. Not later than the effective date of any such appointment the Company
shall file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock, and mail a notice thereof in writing to the
registered holders of the 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 the Board to reflect any
adjustment or change in the Purchase Price per share and the number or kind or
class of shares of stock or other securities or property purchasable under the
Rights Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale by the Company of shares of
Common Stock following the Distribution Date and prior to the redemption or
expiration of the Rights, the Company (a) shall, with respect to shares of
Common Stock so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by the Board, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights evidenced by a
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 would be issued, and (ii) no such Rights Certificate shall be issued if,
and to the extent that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof.
Section 23. Redemption and Termination.
The Board, by majority vote, may, at its option, at any time prior to the
earlier of (i) the Distribution Date or (ii) the Close of Business on the
Expiration Date, redeem all (but not less than all) of the then outstanding
Rights at a redemption price of $.01 per Right, appropriately adjusted to
reflect any stock split, stock dividend, combination of shares, or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"). Immediately upon the taking
of such action ordering the redemption of all of the Rights, 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 so redeemed will terminate
and the only right thereafter of the holders of such Rights so redeemed shall be
to receive the Redemption Price (without the payment of any interest thereon).
The Company may, at its
-35-
option, pay the Redemption Price in cash, shares of Common Stock (based on the
Current Market Price of the Common Stock at the time of redemption) or any other
form of consideration deemed appropriate by the Board. Within 10 days after such
action ordering the redemption of all of the Rights, the Company shall give
notice of such redemption to the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Stock. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of redemption shall state
the method by which the payment of the Redemption Price shall be made.
Section 24. Exchange.
(a) The Board, by majority vote, may, at its option, at any time after any
Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights for shares of Common Stock at an
exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio, as
the same may be so adjusted from time to time, being hereinafter
referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board shall not be empowered to effect such exchange at any time
after any Person (other than (i) the Company, (ii) any Subsidiary of
the Company, (iii) any employee benefit plan of the Company or of any
such Subsidiary, or (iv) any entity holding Common Stock for or
pursuant to the terms of any such plan), together with all Affiliates
of such Person, becomes the Beneficial Owner of 50% or more of the
Common Stock then outstanding.
(b) Immediately upon the action of the Board ordering the exchange of any
Rights pursuant to subsection (a) of this Section 24 and without any
further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of
such Rights shall be to receive that number of shares of Common Stock
equal to the number of such Rights held by such holder multiplied by
the Exchange Ratio. The Company shall promptly give public notice of
any such exchange; provided, however, that the failure to give, or any
defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to the
Rights Agent and to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such
notice of exchange shall state the method by which the exchange of the
Common Stock for Rights shall 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.
-36-
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute shares of Preferred Stock (or shares of
Equivalent Preferred Stock) for shares of Common Stock exchangeable
for Rights, at the initial rate of one one-thousandth of a share of
Preferred Stock (or share of Equivalent Preferred Stock) for each
share of Common Stock, as appropriately adjusted to reflect
adjustments in the voting rights of shares of Preferred Stock pursuant
to the terms thereof, so that the fraction of a share of Preferred
Stock delivered in lieu of each share of Common Stock shall have the
same voting rights as one share of Common Stock.
(d) In the event that there shall not be sufficient shares of Common Stock
or Preferred Stock authorized but unissued or issued but not
outstanding to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all such
action as may be necessary to authorize additional Common Stock or
Preferred Stock for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common
Stock, the Company shall pay to each registered holder of a Rights
Certificate with regard to which a fractional share 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 (e), 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 Section 11(d) hereof) for the
Trading Day immediately prior to the date of exchange pursuant to this
Section 24.
Section 25. Notice of Proposed Actions.
In case the Company shall after the Distribution Date propose (a) to pay
any dividend payable in stock of any class to the holders of its Preferred Stock
or to make any other distribution to the holders of its Preferred Stock (other
than a cash dividend out of earnings or the retained earnings of the Company),
or (b) to offer to the holders of its Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of Preferred Stock, Common
Stock or shares of stock of any other class or any other securities, rights, or
options, or (c) to effect any reclassification of the Preferred Stock (other
than a reclassification involving only the subdivision of outstanding shares of
Preferred Stock), or (d) to effect any consolidation or merger into or with, or
to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one transaction or a
series of related transactions, of more than 25% of (i) the assets of the
Company and its Subsidiaries (taken at net asset value as stated on the books of
the Company and determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied) or (ii) the earning power
of the Company and its Subsidiaries (determined on a consolidated basis in
accordance with generally accepted accounting principles consistently applied)
to any other Person or Persons, or (e) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
the Rights Agent and each holder of a Right, in accordance
-37-
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, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of Preferred Stock, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (a) or (b) above at least 20 days prior to the record date for
determining holders of the Preferred Stock for purposes of such action, and in
the case of any such other action, at least 20 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of Common Stock whichever shall be the earlier. The failure to give
notice required by this Section 25 or any defect therein shall not affect the
legality or validity of the action taken by the Company or the vote upon any
such action.
In case any Common Stock Event described in Section 11(a)(ii) hereof shall
occur, then, in any such case, the Company shall as soon as practicable
thereafter give to the Rights Agent and each holder of a Rights Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such Common
Stock Event, which shall specify such event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof.
Notwithstanding anything in this Agreement to the contrary, prior to the
Distribution Date a filing by the Company with the Securities and Exchange
Commission shall constitute sufficient notice to the holders of securities of
the Company, including the Rights, for purposes of this Agreement and no other
notice need be given.
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 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:
Enterasys Networks, Inc.
00 Xxxxxxxxxx Xxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Copy to: Xxxxx X. Fine, Esq.
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Subject to the provisions of Sections 19 and 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
-38-
mail, postage prepaid, addressed (until another address is filed in writing with
the Company) as follows:
EquiServe Trust Company, N.A.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Client Administration
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 shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments.
Prior to the Distribution Date, the Board, upon the vote of a majority of
the Board, may from time to time supplement or amend this Agreement without the
approval of any holders of the Rights. From and after the Distribution Date, the
Board may, upon the vote of a majority of the Board, from time to time amend
this Agreement without the approval of any holders of the Rights in order (i) to
cure any ambiguity, (ii) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, (iii)
to change any time period governing redemption of the Rights or any other time
period or (iv) to make any other provisions in regard to matters or questions
arising hereunder which the Board, upon the vote of a majority of the Board, may
deem necessary or desirable and which shall not adversely affect the interests
of the holders of the Rights (other than any Acquiring Person or Disqualified
Transferee or any Affiliate of an Acquiring Person or Disqualified Transferee).
Any amendment made pursuant to this Section 27 after a Stock Acquisition Date
shall require the approval of a majority of the Board. Upon the delivery of a
certificate from an appropriate officer of the Company, and, if requested by the
Rights Agent, an opinion of counsel, which states that the proposed supplement
or amendment is in compliance with the terms of this Section 27, the Rights
Agent shall join with the Company in the execution and delivery of any such
supplement or amendment, unless such supplement or amendment affects any of the
rights, duties, or obligations of the Rights Agent hereunder, in which case the
Rights Agent may, but shall not be required to, join in such execution and
delivery.
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.
-39-
Section 29. Determinations and Actions by the Board; etc.
The Board 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 (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below all omissions with respect to the
foregoing) which are done or made by the Board of Directors in good faith and
with the concurrence of a majority of the Board then in office shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties and (y) not subject any Director 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
(and, prior to the Distribution Date, the associated shares of Common Stock) any
legal or equitable right, remedy, or claim under this Agreement or the Rights;
but this Agreement shall be for the sole and exclusive benefit of the Company,
the Rights Agent, and the registered holders of the Rights (and, prior to the
Distribution Date, the associated Common Stock).
Section 31. Severability.
The invalidity or unenforceability of any term or provision hereof shall
not affect the validity or enforceability of any other term or provision hereof.
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 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 of Business on the tenth day following the date of such determination by
the Board.
Section 32. Governing Law.
This Agreement and each Rights Certificate issued hereunder shall be deemed
to be a contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the laws of said
State applicable to contracts to be made and performed entirely within said
State; provided, however, that all provisions regarding the rights, duties and
obligations of the Rights Agent shall be governed by and construed in accordance
-40-
with the laws of the State of New York applicable to contracts 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.
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.
-41-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and set their respective hands and seals, all as of the day and
year first above written.
ENTERASYS NETWORKS, INC.
By: /s/ Xxxxxx Xxxxxxx
------------------------------
Title: Chief Financial Officer
Attest:
By: /s/ Xxxxxx Xxxxxxxx
--------------------------
Title: Assistant Secretary
Equiserve Trust Company, N.A., as Rights
Agent
Attest: By: /s/ Xxxxxxxx X. Xxxxxxxx
------------------------
Title: Managing Director
By: /s/ Xxxxxxx Xxxxxxx
----------------------
Title: Account Manager
-42-
EXHIBIT A
---------
FORM OF CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF PREFERRED STOCK
of
ENTERASYS NETWORKS, INC.
Pursuant to Section 151 of the
Delaware General Corporation Law
Enterasys Networks, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation") DOES HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors (the
"Board of Directors") by the Amended and Restated Certificate of Incorporation
of the Corporation, as amended from time to time, and in accordance with the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, the Board of Directors on April 26, 2002 adopted a resolution
providing for the authorization of a series of Preferred Stock, $1.00 par value
per share (the "Preferred Stock") as follows:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of this Corporation in accordance with the provisions of its Amended and
Restated Certificate of Incorporation, as amended from time to time, a
series of Preferred Stock of the Corporation be and it hereby is created,
and that the designation and amount thereof and the voting powers,
preferences and relative, participating, optional and other special rights
of the shares of such series, and the qualifications, limitations or
restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series F Preferred Stock" (the "Series F Stock"),
shall have a par value per share equal to $1.00 and the number of
shares constituting such series shall be 300,000. The number of
shares of Series F Stock may be increased or decreased by a
resolution duly adopted by the Board of Directors, but may not be
decreased below the number of shares of Series F Stock then
outstanding plus the number of shares reserved for issuance upon
the exercise of outstanding options, rights or warrants or upon
conversion of any outstanding securities convertible into Series F
Stock.
Section 2. Dividends and Distributions.
(a) Subject to the prior and superior rights of the holders of any shares
of any series of Preferred Stock ranking prior and superior to the
shares of Series F Stock with
A-1
respect to dividends, the holders of shares of Series F Stock shall be
entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the last day of March, June, September
and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series F Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $1.00 or (b) subject
to the provision for adjustment set forth in Section 8 hereof, 1,000
times the aggregate per share amount of all cash dividends, and 1,000
times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable in
shares of Common Stock, $.01 par value per share, of the Corporation
(the "Common Stock") or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of
Series F Stock.
(b) The Corporation shall declare a dividend or distribution on the Series
F Stock as provided in paragraph (a) of this Section 2 immediately
after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of or a subdivision with
respect to Common Stock); provided, however, that, in the event no
dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date, a
dividend of $1.00 per share on the Series F Stock shall nevertheless
be payable on such subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series F Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series F Stock, unless
the date of issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of shares
of Series F Stock entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly
Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series F Stock in an amount
less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of
shares of Series F Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than
60 days prior to the date fixed for the payment thereof.
A-2
Section 3. Voting Rights. The holders of shares of Series F Stock shall have the
following voting rights:
(a) Subject to the provision for adjustment set forth in Section 8 hereof,
each share of Series F Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the
Corporation.
(b) Except as otherwise provided herein or required by applicable law, the
holders of shares of Series F Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(c) Except as set forth herein or required by applicable law, holders of
Series F Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Series F Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series F Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series F Stock;
(ii) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series F Stock,
except dividends paid ratably on the Series F Stock and all such
parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series F Stock,
provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock (A) in exchange for
shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the
Series F Stock or (B) in accordance with subparagraph (iv) of this
Section 4(a); or
A-3
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series F Stock, or any shares of stock ranking on a
parity with the Series F Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of the outstanding shares of such stock upon
such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in
good faith will result in fair and equitable treatment among the
respective series or classes.
(b) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of
the Corporation unless the Corporation could, under paragraph (a) of
this Section 4, purchase or otherwise acquire such shares at such time
and in such manner.
Section 5. Reacquired Shares. Any shares of Series F Stock redeemed,
purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and canceled promptly after
the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(a) Upon any liquidation (voluntary or otherwise), dissolution or winding
up of the Corporation, no distribution shall be made to the holders of
shares of Common Stock or any other stock of the Corporation ranking
junior (upon liquidation, dissolution or winding up) to the Series F
Stock unless, prior thereto, the holders of shares of Series F Stock
shall have received $1,000.00 per share plus an amount equal to all
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Series F Liquidation
Preference"). Following the payment of the full amount of the Series F
Liquidation Preference, no additional distributions shall be made to
the holders of shares of Series F Stock unless, prior thereto, the
holders of shares of Common Stock (which term shall include, for the
purposes only of this Section 6, any series of the Corporation's
Preferred Stock ranking on a parity with the Common Stock upon
liquidation, dissolution or winding up) shall have received an amount
per share (the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Series F Liquidation Preference by (ii) 1,000 (as
appropriately adjusted as set forth in Section 8 hereof to reflect
such events as stock splits, stock dividends and recapitalizations
with respect to the Common Stock; such number in this clause (ii), as
the same may be adjusted from time to time, is hereinafter referred to
as the "Adjustment Number"). In the event, however, that there are not
sufficient assets available to permit payment in full of the Common
Adjustment, then any
A-4
remaining assets shall be distributed ratably to the holders of Common
Stock. Following the payment of the full amount of the Series F
Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series F Stock and Common Stock, respectively,
holders of shares of Series F Stock and holders of shares of Common
Stock shall receive their ratable and proportionate share of any
remaining assets to be distributed in the ratio of the Adjustment
Number to one (1) with respect to such Series F Stock and Common
Stock, on a per share basis, respectively.
(b) In the event, however, that there are not sufficient assets available
to permit payment in full of the Series F Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if
any, which rank on a parity with the Series F Stock, then any
remaining assets shall be distributed ratably to the holders of the
Series F Stock and the holders of such parity stock in proportion to
their respective liquidation preferences.
(c) None of the merger or consolidation of the Corporation into or with
any other entity, the sale of all or substantially all of the property
and assets of the Corporation or the distribution to the stockholders
of the Corporation of all or substantially all of the consideration
for such sale, unless such consideration (apart from the assumption of
liabilities) or the net proceeds thereof consists substantially
entirely of cash, shall be deemed to be a liquidation, dissolution or
winding up within the meaning of this Section 6.
(d) Each share of Series F Stock shall stand on a parity with each other
share of Series F Stock or any other series of the same class of
Preferred Stock upon voluntary or involuntary liquidation, dissolution
or distribution of assets or winding up of the Corporation.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other
transaction in which the outstanding shares of Common Stock
are exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case the
outstanding shares of Series F Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject
to the provision for adjustment set forth in Section 8 hereof)
equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of
Common Stock is changed or exchanged.
Section 8. Certain Adjustments. In the event the Corporation shall at
any time declare or pay any dividend on Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
A-5
Stock, then, in each such case, the amounts set forth in Sections
2(a) and (b), 3(a), 6(a) and 7 hereof with respect to the multiple
of (i) cash and non-cash dividends, (ii) votes, (iii) the Series F
Liquidation Preference and (iv) an aggregate amount of stock,
securities, cash and/or other property referred to in Section 7
hereof, shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
Section 9. Ranking. The Series F Stock shall rank pari passu with (or if
determined by the Board of Directors in any vote establishing any
other series of Preferred Stock, either senior and prior in
preference to, or junior and subordinate to, as the case may be)
each other series of Preferred Stock of the Corporation with
respect to dividends and/or preference upon liquidation,
dissolution or winding up, except that the Series F Stock shall
rank junior to the Corporation's Series D Participating Convertible
Preferred Stock and Series E Participating Convertible Preferred
Stock.
Section 10. Redemption. The shares of Series F Stock may be purchased by the
Corporation at such times and on such terms as may be agreed to
between the Corporation and the redeeming stockholder, subject to
any limitations which may be imposed by law or the Amended and
Restated Certificate of Incorporation, as amended from time to
time.
Section 11. Amendment. The Amended and Restated Certificate of
Incorporation of the Corporation, as amended from time to time,
shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series F
Stock so as to affect them adversely without the affirmative vote
of the holders of two-thirds or more of the outstanding shares of
Series F Stock, voting together as a single class.
Section 12. Fractional Shares. Series F Stock may be issued in fractions of
a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of
all other rights of holders of Series F Stock.
A-6
IN WITNESS WHEREOF, this Certificate of Designation was executed on
behalf of the Corporation by its Chief Financial Officer and attested by its
Assistant Secretary on ______________, 2002.
By
----------------------------
Xxxxxx Xxxxxxx
Chief Financial Officer
Attest:
By
----------------------
Xxxxxx Xxxxxxxx
Assistant Secretary
A-7
EXHIBIT B
---------
FORM OF RIGHTS CERTIFICATE
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER JUNE 11, 2012 OR EARLIER IF ORDER OF REDEMPTION IS
GIVEN. 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 OR
AN AFFILIATE (WHICH INCLUDES AFFILIATES AND ASSOCIATES) OF AN ACQUIRING
PERSON (AS EACH SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. THE RIGHTS SHALL
NOT BE EXERCISABLE, AND SHALL BE VOID SO LONG AS HELD, BY A HOLDER IN ANY
JURISDICTION WHERE THE REQUISITE QUALIFICATION TO THE ISSUANCE TO SUCH
HOLDER, OR THE EXERCISE BY SUCH HOLDER, OF THE RIGHTS IN SUCH JURISDICTION
SHALL NOT HAVE BEEN OBTAINED OR BE OBTAINABLE. [THE RIGHTS REPRESENTED BY
THIS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
BECAME AN ACQUIRING PERSON OR AN AFFILIATE (WHICH INCLUDES AFFILIATES AND
ASSOCIATES) OF AN ACQUIRING PERSON (AS EACH SUCH TERM IS 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 THE RIGHTS AGREEMENT. THE RIGHTS AGENT WILL MAIL TO THE
REGISTERED HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT, AS IN
EFFECT ON THE DATE OF SUCH MAILING, WITHOUT CHARGE UPON WRITTEN REQUEST.]*
Rights Certificate
ENTERASYS NETWORKS, INC.
This certifies that _______________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions, and
conditions of the Rights Agreement dated as of May 28, 2002 (the
------------------------
* The portion of the legend in brackets shall be inserted only if applicable.
B-1
"Rights Agreement") between Enterasys Networks, Inc. (the "Company"), and
Equiserve Trust Company, N.A., as Rights Agent (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such
term is defined in the Rights Agreement) and prior to 5:00 p.m.
(Portsmouth, New Hampshire time) on June 11, 2012 (the "Expiration Date")
at the office of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one one-thousandth of a share of the Series F
Preferred Stock, with a par value of $1.00 per share ("Preferred Stock"),
of the Company per each Right represented hereby, at a purchase price of
$[___].00 per one one-thousandth of a share (the "Purchase Price") upon
presentation and surrender of this Rights Certificate with the Form of
Election to Purchase set forth on the reverse side hereof and the
certificate contained therein duly completed and executed, accompanied by a
signature guarantee and such other documentation as the Rights Agent may
reasonably request. The number of Rights evidenced by this Rights
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share set forth above,
are the number and Purchase Price as of [________], [____], based on the
shares of Common Stock of the Company as constituted at such date.
As more fully set forth in the Rights Agreement, upon the occurrence of a
Common Stock Event (as such term is defined in the Rights Agreement), if the
Rights evidenced by this Rights Certificate are beneficially owned by (i) an
Acquiring Person or an Affiliate of an Acquiring Person (as each such term is
defined in the Rights Agreement) or (ii) a Disqualified Transferee (as defined
in the Rights Agreement), such Rights shall automatically become null and void
and no holder hereof shall have any right with respect to such Rights from and
after the occurrence of such Common Stock Event.
The Rights evidenced by this Rights Certificate shall not be exercisable,
and shall be void so long as held, by a holder in any jurisdiction where the
requisite qualification to the issuance to such holder, or the exercise by such
holder, of the Rights in such jurisdiction shall not have been obtained or be
obtainable.
As provided in the Rights Agreement, the Purchase Price and the number of
whole or fractional shares of Preferred Stock which may be purchased upon the
exercise of the Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events.
In the circumstances described in Section 13 of the Rights Agreement, the
securities issuable upon the exercise of the Rights evidenced hereby shall be
the common stock or similar equity securities or equity interests of an entity
other than the Company.
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 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
B-2
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 office of the Rights Agent designated
for such purpose and may be obtained by the holder of any Rights upon written
request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose,
accompanied by a signature guarantee and such other documentation as the Rights
Agent may reasonably request, 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 whole or fractional shares of
Preferred Stock (or other consideration, as the case may be) 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 Rights Certificate may be redeemed by the Company by a majority vote of the
Board (as defined in the Rights Agreement) then in office at any time prior to
the earlier of (i) the Distribution Date or (ii) the Close of Business (as
defined in the Rights Agreement) on the Expiration Date, at a redemption price
of $.01 per Right (which amount is subject to adjustment as provided in the
Rights Agreement).
The Company is not obligated to issue whole or fractional shares of
Preferred Stock (or other securities) upon the exercise of any Right or Rights
evidenced hereby, but in lieu thereof a cash payment may be made at the election
of the Company, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Preferred Stock or
of any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any action by the Company, or to receive notice of meetings
or other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
B-3
WITNESS the facsimile signature of the proper officers and the seal of the
Company. Dated as of _________________, ____.
ENTERASYS NETWORKS, INC.
By
------------------------------
Title:
ATTEST:
--------------------
Title:
Countersigned:
EQUISERVE TRUST COMPANY, N.A., as Rights Agent
By
--------------------
Authorized Signatory
Date of Countersignature:
B-4
[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)
______________________________________________________________________ whose
social security or tax identification number is ______________, the Rights
evidenced by this Rights Certificate, together with all right, title and
interest herein, 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:*
----------------------------
* Signature must be guaranteed by an "Eligible Guarantor Institution" (with
membership in an approved signature guarantee medallion program) pursuant to
Rule 17Ad-15 of the Securities Exchange Act of 1934.
B-5
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate of an Acquiring Person (as each such term is
defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate after
the occurrence of a Common Stock Event from any Person who is, was or
subsequently became an Acquiring Person or an Affiliate of an Acquiring Person.
Dated:____________________ ______________________________
Signature
Signature Guaranteed:*
____________________________
NOTICE
------
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise the Rights Certificate)
To Enterasys Networks, Inc.:
The undersigned hereby irrevocably elects to exercise _________________
Rights represented by this Rights Certificate to purchase the number of one
one-thousandths of a share of Preferred Stock (or other securities) issuable
upon the exercise of such Rights and requests that certificates for such shares
be issued in the name of:
B-6
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 remaining 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
(Signature must conform in
all respects to name of
holder as specified on the
face of this Rights Certificate)
Signature Guaranteed:**
---------------------
** Signature must be guaranteed by an "Eligible Guarantor Institution"
(with membership in an approved signature guarantee medallion program) pursuant
to Rule 17Ad-15 of the Securities Exchange Act of 1934.
B-7
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate of any such Acquiring Person (as each such term is defined in the
Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate after
the occurrence of a Common Stock Event (as such term is defined in the Rights
Agreement) from any Person who is, was, or subsequently became an Acquiring
Person or an Affiliate of an Acquiring Person.
Dated: _________________, ____ _________________________
Signature
Signature Guaranteed:***
--------------------------
***Signature must be guaranteed by an "Eligible Guarantor Institution"
(with membership in an approved signature guarantees medallion program) pursuant
to Rule 17Ad-15 of the Securities Exchange Act of 1934.
B-8
EXHIBIT C
---------
ENTERASYS NETWORKS, INC.
SUMMARY OF PURCHASE RIGHTS
On April 26, 2002, Enterasys Networks, Inc. (the "Company") declared a
dividend distribution of one preferred stock purchase right (collectively, the
"Rights", and individually, a "Right") for each share of its common stock, $.01
par value per share ("Common Stock"). Each Right entitles the registered holder
to purchase from the Company after the Distribution Date (described below) one
one-thousandth of a share of its Series F Preferred Stock, $1.00 par value per
share (the "Preferred Stock"). The exercise price is $20.00 for each
one-thousandth of a share of Preferred Stock. The distribution of Rights is
payable on June 25, 2002 to the record holders of Common Stock at the close of
business on June 11, 2002. One Right will also be issued for each share of
Common Stock issued between June 11, 2002 and the Distribution Date.
Exercisability of the Rights; Distribution Date. The Rights are not
exercisable until the Distribution Date. The Distribution Date would occur, if
ever and unless delayed by the Company's board of directors, ten business days
after either of the following events:
* A public announcement that a person or group other than certain exempt
persons (an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of 15.0% or more of the Company's outstanding Common Stock
(the "Stock Acquisition Date"), or
* The commencement or announcement of an intention to make a tender offer
or exchange offer that would result in a person or group, other than certain
exempt persons, owning 15.0% or more of the Company's outstanding Common Stock.
In the event that:
(1) any person becomes an Acquiring Person; or
(2) the Company is the surviving corporation in a merger with an Acquiring
Person and its Common Stock is not changed or exchanged, or
(3) an Acquiring Person engages in one of a number of self-dealing
transactions specified in the Rights Agreement described below, or
(4) during such time as there is an Acquiring Person any recapitalization,
reorganization or other transaction involving the Company occurs which result in
such Acquiring Person's ownership interest being increased by more than 1%,
C-1
then each holder of a Right would have the right to receive, upon exercise of
the Right, that number of shares of Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a market value of two
times the exercise price of the Right.
Mergers, Asset Sales and Self-Dealing Transactions. If after the Stock
Acquisition Date the Company is acquired in a merger or other business
combination, or 25% or more of its assets or earning power is sold, proper
provision is to be made so that each holder of a Right would have the right to
receive, upon exercise of the Right, that number of shares of common stock of
the acquiring company which at the time has a market value of two times the
exercise price of the Right.
Following the occurrence of any of the events described in this section,
any Rights beneficially owned by any Acquiring Person would immediately become
null and void.
Exchange Option. The Board may, at its option, at any time after any person
becomes an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights for shares of Common Stock at an exchange ratio of one share
of Common Stock per Right. The Board, however, may not effect an exchange at any
time after any person (other than (i) the Company, (ii) any subsidiary of the
Company, or (iii) any employee benefit plan of the Company or any such
subsidiary or any entity holding Common Stock for or pursuant to the terms of
any such plan), together with all affiliates of such person, becomes the
beneficial owner of 50% or more of the Common Stock then outstanding.
Immediately upon the action of the Board ordering the exchange of any Rights and
without any further action and without any notice, the right to exercise such
Rights will terminate and the only right thereafter of a holder of such Rights
will be to receive that number of shares of Common Stock equal to the number of
such Rights held by the holder.
Transferability of Rights. Until the Distribution Date, the Common Stock
certificates will evidence the Rights, and the transfer of the Common Stock
certificates will constitute a transfer of the Rights. After the Distribution
Date, separate certificates evidencing the Rights would be mailed to holders of
record of the Company's Common Stock as of the close of business on the
Distribution Date, and such separate Rights certificates alone would evidence
the Rights.
Redemption. The Board of Directors, by a majority vote, may redeem the
Rights at a redemption price of $.01 per Right at any time before the earlier of
the Distribution Date or the close of business on the Expiration Date described
below. Immediately upon such redemption, the right to exercise the Rights will
terminate, and the Rights holders will become entitled only to receive the
redemption price.
Expiration Date of Rights. If not previously exercised or redeemed, the
Rights will expire on June 11, 2012.
Anti-Dilution Adjustment. The exercise price, the redemption price, the
exchange ratio and the number of shares of the Preferred Stock or other
securities or property issuable upon
C-2
exercise of the Rights are subject to adjustment from time to time to prevent
dilution under the following circumstances:
* in the event of a stock dividend on, or a subdivision, combination or
reclassification of the Preferred Stock, or
* upon the grant to holders of the Preferred Stock of certain rights or
warrants to subscribe for shares of the Preferred Stock or convertible
securities at less than the current market price, or
* upon the distribution to holders of the Preferred Stock of evidences of
indebtedness or assets (excluding regular quarterly cash dividends out of the
earnings or retained earnings of the Company and dividends payable in shares of
Preferred Stock) or of subscription rights or warrants (other than those
referred to above).
With certain exceptions, no adjustment in the exercise price will be
required until cumulative adjustments require an adjustment of at least 1% in
such price. At the Company's option, cash (based on the market price on the last
trading date prior to the date of the exercise) will be paid instead of issuing
fractional shares of any securities (other than fractional shares of Preferred
Stock in integral multiples of one-thousandth of a share).
No Shareholder Rights. A Right holder, as such, has no rights as a
shareholder of the Company, including, without limitation, the right to vote or
receive dividends.
Amendments. Any of the provisions of the Rights Agreement (described below)
may be amended by the Board of Directors prior to the Distribution Date without
the approval of any holders of the Rights. After the Distribution Date, the
Board of Directors may amend the Rights Agreement to cure any ambiguity, to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person) or to shorten or lengthen any
time period under the Rights Agreement. A majority vote of the Board of
Directors is required.
Tax Consequences. Although the Company believes that neither the
distribution of the Rights nor the subsequent separation of the Rights on the
Distribution Date should be taxable to the stockholders or the Company,
stockholders may, depending upon the circumstances, realize taxable income upon
the occurrence of an event described under "Mergers, Asset Sales and
Self-Dealing Transactions."
Rights Agreement. The terms of the Rights are set forth in a Rights
Agreement between the Company and Equiserve Trust Company, N.A., as Rights
Agent. A copy of the Rights Agreement is an Exhibit to Form 8-A filed with the
Securities and Exchange Commission. A copy of the Rights Agreement is available
free of charge from the Rights Agent at the following address:
C-3
Equiserve Trust Company, N.A.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Client Administration
This summary does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is incorporated in this summary by
reference.
C-4
