EXHIBIT 2.1
==========================================================================
RIGHTS AGREEMENT
Dated as of October 25, 1999
between
ONYX SOFTWARE CORPORATION
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,
as Rights Agent
=========================================================================
CONTENTS
SECTION 1. CERTAIN DEFINITIONS................................................................................ 1
SECTION 2. APPOINTMENT OF RIGHTS AGENT........................................................................ 8
SECTION 3. ISSUANCE OF RIGHTS AND RIGHT CERTIFICATES.......................................................... 8
SECTION 4. FORM OF RIGHT CERTIFICATES......................................................................... 10
SECTION 5. EXECUTION, COUNTERSIGNATURE AND REGISTRATION....................................................... 10
SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES; LOST, STOLEN, DESTROYED OR
MUTILATED RIGHT CERTIFICATES; UNCERTIFICATED RIGHTS................................................ 11
SECTION 7. EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS...................................................... 12
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES................................................. 14
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES................................................... 14
SECTION 10. PREFERRED SHARES RECORD DATE....................................................................... 16
SECTION 11. ADJUSTMENTS IN RIGHTS AFTER THERE IS AN ACQUIRING PERSON; EXCHANGE OF RIGHTS FOR SHARES; BUSINESS
COMBINATIONS....................................................................................... 16
SECTION 12. CERTAIN ADJUSTMENTS................................................................................ 20
SECTION 13. CERTIFICATE OF ADJUSTMENT.......................................................................... 21
SECTION 14. ADDITIONAL COVENANTS............................................................................... 21
SECTION 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES............................................................ 22
SECTION 16. RIGHTS OF ACTION................................................................................... 23
SECTION 17. AGREEMENT OF RIGHT HOLDERS......................................................................... 23
SECTION 18. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.................................................. 24
SECTION 19. CONCERNING THE RIGHTS AGENT........................................................................ 24
SECTION 20. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.......................................... 25
SECTION 21. DUTIES OF RIGHTS AGENT............................................................................. 25
SECTION 22. CHANGE OF RIGHTS AGENT............................................................................. 27
SECTION 23. ISSUANCE OF ADDITIONAL RIGHTS AND RIGHT CERTIFICATES............................................... 28
SECTION 24. REDEMPTION AND TERMINATION......................................................................... 29
SECTION 25. NOTICES............................................................................................ 29
SECTION 26. SUPPLEMENTS AND AMENDMENTS......................................................................... 30
SECTION 27. SUCCESSORS......................................................................................... 31
SECTION 28. BENEFITS OF THIS RIGHTS AGREEMENT; DETERMINATIONS AND ACTIONS BY THE COMPANY'S BOARD OF DIRECTORS.. 31
SECTION 29. SEVERABILITY....................................................................................... 31
SECTION 30. GOVERNING LAW...................................................................................... 32
SECTION 31. COUNTERPARTS; EFFECTIVENESS........................................................................ 32
SECTION 32. DESCRIPTIVE HEADINGS............................................................................... 32
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of October 25, 1999 between Onyx Software
Corporation, a Washington corporation (the "Company"), and CHASEMELLON
SHAREHOLDER SERVICES, L.L.C., a New Jersey limited liability company, as Rights
Agent (the "Rights Agent").
The Board of Directors of the Company (the "Board of Directors") has
authorized and declared a dividend of one Right (as hereinafter defined) for
each share of Common Stock, par value $.01 per share, of the Company (the
"Common Stock") outstanding at the Close of Business (as hereinafter defined) on
November 9, 1999 (the "Record Date"). The Board of Directors has further
authorized the issuance of one Right (as such number may be hereinafter adjusted
pursuant to the provisions of this Rights Agreement) with respect to each share
of Common Stock that shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date and the Expiration Date
(as such terms are hereinafter defined); provided, however, that the Company may
issue Rights with respect to shares of Common Stock that shall become
outstanding after the Distribution Date and prior to the earlier of the
Redemption Date and the Expiration Date in accordance with the provisions of
Section 23. Each Right shall initially represent the right to purchase one one-
hundredth (1/100) of a share of Series A Participating Cumulative Preferred
Stock, par value $.01 per share, of the Company (the "Preferred Shares"), having
the powers, rights and preferences set forth in the Certificate of Designation
(as hereinafter defined) attached as Exhibit A.
Accordingly, in consideration of the premises and the mutual agreements set
forth in this Rights Agreement, the Company and the Rights Agent hereby agree as
follows:
SECTION 1. CERTAIN DEFINITIONS
For purposes of this Rights Agreement, the following terms have the
meanings indicated:
"Acquiring Person" shall mean any Person who or which, alone or together
----------------
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of more than 15% of the Common Shares then outstanding, but shall not include
(a) the Company, any Subsidiary of the Company, any employee benefit or
compensation plan of the Company or of any of its Subsidiaries, or any Person
holding Common Shares for or pursuant to the terms of any such employee benefit
or compensation plan, (b) any Person who has become and is the Beneficial Owner
of more than 15% of the Common Shares outstanding at the time solely as the
result of (i) a change in the aggregate number of Common Shares outstanding
since the last date on which such Person acquired Beneficial Ownership of any
Common Shares, (ii) the acquisition by such Person or one or more of its
Affiliates or Associates of Beneficial Ownership of additional Common Shares if
such acquisition was made in the good faith belief that such acquisition would
not (A) cause the Beneficial Ownership by such Person, together with its
-1-
Affiliates and Associates, to exceed 15% of the Common Shares outstanding at the
time of such acquisition and such good faith belief was based on the good faith
reliance on information contained in publicly filed reports or documents of the
Company that are inaccurate or out-of-date or (B) otherwise cause a Distribution
Date or the adjustment provided for in Section 11(a) to occur or (iii) the
acquisition by such Person or one or more of its Affiliates or Associates of
Beneficial Ownership of additional Common Shares if the Board of Directors of
the Company determines that such acquisition was made in good faith without the
knowledge by such Person or Affiliates or Associates that such Person would
thereby become an Acquiring Person (which determination of the Board of
Directors of the Company shall be conclusive and binding on such Person, the
Rights Agent, the holders of the Rights and all other Persons) or (c) any
Grandfathered Shareholder. Notwithstanding clause (b)(ii) or (b)(iii) of the
prior sentence, if any Person that is not an Acquiring Person due to such clause
(b)(ii) or (b)(iii) does not reduce its percentage of Beneficial Ownership of
Common Shares to 15% or less by the Close of business on the tenth calendar day
after notice from the Company (the date of notice being the first day) that such
Person's Beneficial Ownership of Common Shares would make it an Acquiring
Person, such Person shall, at the end of such ten calendar day period, become an
Acquiring Person (and such clause (b)(ii) or (b)(iii) shall no longer apply to
such Person). For purposes of this definition, the determination whether any
Person acted in "good faith" shall be conclusively determined by the Board of
Directors of the Company.
"Affiliate" and "Associate," when used with reference to any Person, shall
--------- ---------
have the respective meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act (as hereinafter defined), as in
effect on the date of this Rights Agreement.
A Person shall be deemed to be the "Beneficial Owner" of, to "Beneficially
---------------- ------------
Own," and to have "Beneficial Ownership" of, any securities:
--- --------------------
(a) that such Person or any of such Person's Affiliates or Associates
is deemed to "Beneficially Own" within the meaning of Rule 13d-3 of the General
Rules and Regulations under the Exchange Act, as in effect on the date of this
Rights Agreement;
(b) that such Person or any of such Person's Affiliates or Associates
have (i) the right to acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement, arrangement or
understanding (written or oral), or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed to be the
Beneficial Owner of, to Beneficially Own, or to have Beneficial Ownership of,
any securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange thereunder or
(ii) the right to vote pursuant to any agreement, arrangement or understanding
(written or oral); provided, however, that a Person shall not be deemed to be
the Beneficial Owner of, to Beneficially Own, or to have Beneficial Ownership
of, any security if (A) the agreement, arrangement or understanding (written or
oral) to vote such security
-2-
arises solely from a revocable proxy or consent given to such Person in response
to a public proxy or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations under the Exchange Act and (B) the
beneficial ownership of such security is not also then reportable on Schedule
13D under the Exchange Act (or any comparable or successor report); or
(c) that are Beneficially Owned, directly or indirectly, by any other
Person with which such Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding (written or oral) for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as
described in clause (b)(ii) of this definition) or disposing of any securities
of the Company.
Notwithstanding the foregoing, nothing contained in this definition shall
cause a Person ordinarily engaged in business as an underwriter of securities to
be the "Beneficial Owner" of, or to "Beneficially Own," any securities acquired
in a bona fide firm commitment underwriting pursuant to an underwriting
agreement with the Company.
Notwithstanding anything in this definition to the contrary, the phrase
"then outstanding," when used with reference to a Person's Beneficial Ownership
of securities of the Company, shall mean the number of such securities then
issued and outstanding, together with the number of such securities not then
actually issued and outstanding which such Person would be deemed to own
beneficially hereunder.
"Book Value," when used with reference to Common Shares issued by any
----------
Person, shall mean the amount of such Person's equity applicable to each Common
Share, determined (a) in accordance with generally accepted accounting
principles in effect on the date as of which such Book Value is to be
determined, (b) using all the consolidated assets and all the consolidated
liabilities of such Person on the date as of which such Book Value is to be
determined, except that no value shall be included in such assets for goodwill
arising from consummation of a business combination, and (c) after giving effect
to (i) the exercise of all rights, options and warrants to purchase such Common
Shares (other than the Rights), and the conversion of all securities convertible
into such Common Shares, at an exercise or conversion price per Common Share
that is less than such Book Value before the exercise or conversion (whether or
not exercisability or convertibility is conditioned upon occurrence of a future
event), (ii) all dividends and other distributions on the capital stock of such
Person declared prior to the date as of which such Book Value is to be
determined and to be paid or made after such date, and (iii) any other
agreement, arrangement or understanding (written or oral), transaction or other
action prior to the date as of which such Book Value is to be determined that
would have the effect of thereafter reducing such Book Value.
"Business Combination" shall have the meaning set forth in Section
--------------------
11(c)(i).
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
------------
which banking institutions in New York, New York, or Bellevue, Washington, are
authorized or obligated by law or executive order to close.
-3-
"Certificate of Designation" shall mean the Certificate of Designation of
--------------------------
Series A Participating Cumulative Preferred Stock setting forth the powers,
preferences, rights, qualifications, limitations and restrictions of such series
of Preferred Stock of the Company, a copy of which is attached to this Rights
Agreement as Exhibit A.
"Close of Business" on any given date shall mean 5 p.m., Pacific time, on
-----------------
such date; provided, however, that if such date is not a Business Day, "Close of
Business" shall mean 5 p.m., Pacific time, on the next succeeding Business Day.
"Common Shares," when used with reference to the Company prior to a
-------------
Business Combination, shall mean the shares of Common Stock of the Company or
any other shares of capital stock of the Company into which the Common Stock
shall be reclassified or changed. "Common Shares," when used with reference to
any Person (other than the Company prior to a Business Combination), shall mean
shares of capital stock of such Person (if such Person is a corporation) of any
class or series, or units of equity interests in such Person (if such Person is
not a corporation) of any class or series, the terms of which (i) do not limit
(as a maximum amount and not merely in proportional terms) the amount of
dividends or income payable or distributable on such class or series or the
amount of assets distributable on such class or series upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person and (ii) do
not provide that such class or series is subject to redemption at the option of
such Person, or any shares of capital stock or units of equity interests into
which the foregoing shall be reclassified or changed; provided, however, that,
if at any time there shall be more than one such class or series of capital
stock or equity interests of such Person, "Common Shares" of such Person shall
include all such classes and series substantially in the proportion of the total
number of shares or other units of each such class or series outstanding at such
time.
"Common Stock" shall have the meaning set forth in the second paragraph of
------------
this Rights Agreement.
"Company" shall have the meaning set forth in the introductory paragraph of
-------
this Rights Agreement; provided, however, that if there is a Business
Combination, "Company" shall have the meaning set forth in Section 11(c)(iii).
"Control" with respect to any Person shall mean the power to direct the
-------
management and policies of such Person, directly or indirectly, by or through
stock ownership, agency or otherwise, or pursuant to or in connection with an
agreement, arrangement or understanding (written or oral) with one or more other
Persons by or through stock ownership, agency or otherwise. The terms
"controlling" and "controlled" shall have meanings correlative to the foregoing.
"Distribution Date" shall have the meaning set forth in Section 3(b).
-----------------
"Exchange Act" shall mean the Securities Exchange Act of 1934, as in effect
------------
on the date in question, unless otherwise specifically provided in this Rights
Agreement.
"Exchange Consideration" shall have the meaning set forth in Section
----------------------
11(b)(i).
-4-
"Expiration Date" shall have the meaning set forth in Section 7(a).
---------------
"Formula Number" shall have the meaning set forth in the Certificate of
--------------
Designation.
"Grandfathered Percentage" shall mean, with respect to any Grandfathered
------------------------
Shareholder, the percentage of the outstanding shares of Common Stock of the
Company that such Grandfathered Shareholder, together with all Affiliates and
Associates of such Grandfathered Shareholder, Beneficially Owns as of the date
hereof plus an additional 1/2%. Notwithstanding the foregoing, in the event any
Grandfathered Shareholder shall sell, transfer, or otherwise dispose of any
outstanding shares of Common Stock of the Company after the date hereof, the
Grandfathered Percentage shall, subsequent to such sale, transfer or
disposition, mean, with respect to such Grandfathered Shareholder, the lesser of
(i) the Grandfathered Percentage as in effect immediately prior to such sale,
transfer or disposition and (ii) the percentage of outstanding shares of Common
Stock of the Company that such Grandfathered Shareholder Beneficially Owns
immediately following such sale, transfer or disposition plus an additional
1/2%.
"Grandfathered Shareholder" shall mean any Person who or which, together
-------------------------
with all Affiliates and Associates of such Person, is, as of the date hereof the
Beneficial Owner of 15% or more of the outstanding shares of Common Stock of the
Company. Notwithstanding the foregoing, any Grandfathered Shareholder who after
the date hereof becomes, for any reason, the Beneficial Owner of less than 15%
of the shares of Common Stock of the Company then outstanding shall cease to be
a Grandfathered Shareholder.
"Major Part," when used with reference to the assets of the Company and its
----------
Subsidiaries as of any date, shall mean assets (a) having a fair market value
aggregating 50% or more of the total fair market value of all the assets of the
Company and its Subsidiaries (taken as a whole) as of the date in question, (b)
accounting for 50% or more of the total value (net of depreciation and
amortization) of all the assets of the Company and its Subsidiaries (taken as a
whole) as would be shown on a consolidated or combined balance sheet of the
Company and its Subsidiaries as of the date in question, prepared in accordance
with generally accepted accounting principles then in effect, or (c) accounting
for 50% or more of the total amount of net income or revenues of the Company and
its Subsidiaries (taken as a whole) as would be shown on or derived from a
consolidated or combined statement of income of the Company and its Subsidiaries
for the period of 12 months ending on the last day of the Company's monthly
accounting period next preceding the date in question, prepared in accordance
with generally accepted accounting principles then in effect.
"Market Value," when used with reference to any securities on any date,
------------
shall mean the average of the daily per share closing prices of such securities
for the period that is the shorter of (a) 30 consecutive Trading Days (as
hereinafter defined) immediately prior to the date in question and (b) the
number of consecutive Trading Days beginning on the Trading Day immediately
after the date of the first public announcement of the event requiring a
determination of the Market Value and ending on the Trading Day immediately
prior to the record date of such event; provided, however, that, in the event
that the Market Value of such
-5-
securities is to be determined in whole or in part during a period following the
announcement by the issuer of such securities of any action of the type
described in Section 12(a) that would require an adjustment thereunder, then,
and in each such case, the Market Value of such securities shall be
appropriately adjusted to reflect the effect of such action on the market price
of such securities. The closing price for each Trading Day shall be the closing
price quoted on the composite tape for securities listed on the New York Stock
Exchange or, if such securities are not quoted on such composite tape or if such
securities are not listed on such exchange, on the principal United States
securities exchange registered under the Exchange Act (or any recognized foreign
stock exchange) on which such securities are listed, or if such securities are
not listed on any such exchange, the closing price quoted on the Nasdaq Stock
Market or, if such securities are not so quoted, the average of the closing bid
and asked quotations with respect to a share of such securities on the Nasdaq
Stock Market or such other system then in use or, if no such quotations are
available, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in such securities selected by the
Company's Board of Directors. If on any such Trading Day no market maker is
making a market in such securities, the closing price of such securities on such
Trading Day shall be deemed to be the fair value of such securities as
determined in good faith by the Company's Board of Directors (whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent, the holders of Rights and all other
Persons); provided, however, that for the purpose of determining the closing
price of the Preferred Shares for any Trading Day on which there is no public
market for the Preferred Shares or there is no such market maker for the
Preferred Shares, the closing price on such Trading Day shall be deemed to be
the Formula Number times the closing price of the Common Stock on such Trading
Day.
"Person" shall mean an individual, corporation, partnership, limited
------
liability company, joint venture, association, trust, unincorporated
organization or other entity and shall include any successor (by merger or
otherwise) of such entity.
"Preferred Shares" shall have the meaning set forth in the second paragraph
----------------
of this Rights Agreement. Any reference in this Rights Agreement to Preferred
Shares shall be deemed to include any authorized fraction of a Preferred Share,
unless the context otherwise requires.
"Principal Party" shall mean the Surviving Person (as hereinafter defined)
---------------
in a Business Combination; provided, however, that if such Surviving Person is a
direct or indirect Subsidiary of any other Person, "Principal Party" shall mean
the Person which is the ultimate parent of such Surviving Person and which is
not itself a Subsidiary of another Person. In the event ultimate control of
such Surviving Person is shared by two or more Persons, "Principal Party" shall
mean that Person which is immediately controlled by such two or more Persons.
"Purchase Price" with respect to each Right shall mean $120, subject to
--------------
adjustment as provided herein, and shall be payable in lawful money of the
United States of America. All references herein to the Purchase Price shall
mean the Purchase Price as in effect at the time in question.
-6-
"Record Date" shall have the meaning set forth in the second paragraph of
-----------
this Rights Agreement.
"Redemption Date" shall have the meaning set forth in Section 24(a).
---------------
"Redemption Price" with respect to each Right shall mean $.01, as such
----------------
amount may from time to time be adjusted in accordance with Section 12. All
references in this Rights Agreement to the Redemption Price shall mean the
Redemption Price as in effect at the time in question.
"Registered Common Shares" shall mean Common Shares that are, as of the
------------------------
date of consummation of a Business Combination, and have continuously been for
the 12 months immediately preceding such date, registered under Section 12 of
the Exchange Act.
"Right" shall mean the right to purchase Preferred Shares (or other
-----
securities) as provided in this Rights Agreement.
"Right Certificate" shall mean a certificate evidencing a Right in
-----------------
substantially the form attached to this Rights Agreement as Exhibit B.
"Securities Act" shall mean the Securities Act of 1933, as in effect on the
--------------
date in question, unless otherwise specifically provided in this Rights
Agreement.
"Shares Acquisition Date" shall mean the first date of public announcement
-----------------------
by the Company or an Acquiring Person that an Acquiring Person has become such.
"Subsidiary" shall mean a Person, at least a majority of the total
----------
outstanding voting power (being the power under ordinary circumstances and not
merely upon the happening of a contingency) to vote in the election of directors
of such Person (if such Person is a corporation) or to participate in the
management and control of such Person (if such Person is not a corporation) of
which is owned, directly or indirectly, by another Person or by one or more
other subsidiaries of such other Person or by such other Person or by one or
more other subsidiaries of such other Person.
"Summary of Rights" shall mean the Summary of Rights to Purchase Preferred
-----------------
Shares in substantially the form of Exhibit C.
"Surviving Person" shall mean (a) the Person which is the continuing or
----------------
surviving Person in a consolidation or merger specified in Section 11(c)(i)(A)
or 11(c)(i)(B) or (b) the Person to which the Major Part of the assets of the
Company and its Subsidiaries is sold, leased, exchanged or otherwise transferred
or disposed of in a transaction specified in Section 11(c)(i)(C); provided,
however, that if the Major Part of the assets of the Company and its
Subsidiaries is sold, leased, exchanged or otherwise transferred or disposed of
in one or more related transactions specified in Section 11(c)(i)(C) to more
than one Person, the "Surviving Person" in such case shall mean the Person that
acquired assets of the Company and/or its Subsidiaries with the greatest fair
market value in such transaction or transactions.
-7-
"Trading Day" shall mean a day on which the principal national securities
-----------
exchange (or principal recognized foreign stock exchange, as the case may be) on
which any securities or Rights, as the case may be, are listed or admitted to
trading is open for the transaction of business or, if the securities or Rights
in question are not listed or admitted to trading on any national securities
exchange (or recognized foreign stock exchange, as the case may be), 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 of this Rights Agreement,
and the Rights Agent hereby accepts such appointment. The Company may from time
to time appoint one or more co-Rights Agents as it may deem necessary or
desirable (the term "Rights Agent" being used in this Rights Agreement to refer,
collectively, to the Rights Agent together with any such co-Rights Agents). In
the event the Company appoints one or more co-Rights Agents, the respective
duties of the Rights Agent and any co-Rights Agents shall be as the Company
shall determine. The Rights Agent shall have no duty to supervise, and in no
event shall be liable for, the acts or omissions of any such co-Rights Agent
SECTION 3. ISSUANCE OF RIGHTS AND RIGHT CERTIFICATES
(a) One Right shall be associated with each share of Common Stock
outstanding on the Record Date, each additional share of Common Stock that shall
become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date and the Expiration Date and each additional share of
Common Stock with which Rights are issued after the Distribution Date but prior
to the earlier of the Redemption Date and the Expiration Date as provided in
Section 23; provided, however, that if the number of outstanding Rights are
combined into a smaller number of outstanding Rights pursuant to Section 12(a),
the appropriate fractional Right determined pursuant to such Section shall
thereafter be associated with each such share of Common Stock.
(b) Until the earlier of (i) the Close of Business on the tenth Business
Day after the Shares Acquisition Date and (ii) the Close of Business on such
date, if any, as may be designated by the Company's Board of Directors following
the commencement of, or first public disclosure of an intent to commence, a
tender or exchange offer by any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of any of its
Subsidiaries, or any Person holding Common Stock for or pursuant to the terms of
any such employee benefit plan) for outstanding Common Stock, if upon
consummation of such tender or exchange offer such Person could be the
Beneficial Owner of 15% or more of the outstanding Common Stock (the Close of
Business on the earlier of such dates being the "Distribution Date"), (x) the
Rights will be evidenced by the certificates for Common Stock registered in the
names of the holders thereof and not by separate Right Certificates, (y) the
Rights, including the right to receive Right Certificates, will be transferable
only in connection with the transfer of Common Stock, and (z) the Company will
notify the Rights Agent as promptly as practicable that such Distribution Date
has occurred
-8-
and provide the Rights Agent with a shareholders list of Common Stock. As soon
as practicable after the Distribution Date, the Company will prepare and
execute, the Rights Agent will countersign, and the Company will send or cause
to be sent (and the Rights Agent, if requested, will send) by first-class,
postage-prepaid mail to each record holder of Common Stock as of the
Distribution Date, at the address of such holder shown on the records of the
Company, a Right Certificate evidencing one whole Right for each share of Common
Stock (or for the number of shares of Common Stock with which one whole Right is
then associated if the number of Rights per share of Common Stock held by such
record holder has been adjusted in accordance with the proviso in Section 3(a)).
If the number of Rights associated with each share of Common Stock has been
adjusted in accordance with the proviso in Section 3(a), at the time of
distributing the Right Certificates the Company may make any necessary and
appropriate rounding adjustments so that Right Certificates representing only
whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Right in accordance with Section 15(a). The Company will notify the
Rights Agent as promptly as practicable of any such adjustments. As of and after
the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(c) As soon as practicable, and in any event no later than 30 days, after
the Record Date, the Company will send a copy of a Summary of Rights, by first-
class, postage-prepaid mail, to each record holder of Common Stock as of the
close of business on the Record Date at the address of such holder shown on the
records of the Company. With respect to certificates for Common Stock
outstanding as of the Record Date, until earliest of the Distribution Date, the
Redemption Date and the Expiration Date, (i) the Rights will be evidenced by
such certificates registered in the names of the holders thereof, together with
a copy of the Summary of Rights attached thereto and the registered holders of
the Common Stock shall also be the registered holders of the associated Rights,
and (ii) the surrender for transfer of any such certificate, even without a copy
of the Summary of Rights attached thereto, shall also constitute the transfer of
the Rights associated with the Common Stock represented thereby.
(d) Certificates representing Common Stock issued after the Record Date
(including, without limitation, upon transfer or exchange of outstanding Common
Stock), but prior to the earliest of the Distribution Date, the Redemption Date
and the Expiration Date, shall have printed on, written on or otherwise affixed
to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in the Rights Agreement dated as of
October 25, 1999 as it may be amended from time to time (the "Rights
Agreement"), between Onyx Software Corporation ("Onyx") and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent (or between
Onyx and any successor Rights Agent under the Rights Agreement), the
terms of which are hereby incorporated herein by reference and a copy
of which is on file at the principal executive offices of Onyx. Under
certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and
-9-
will no longer be evidenced by this certificate. The Rights Agent will
mail to the holder of this certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor. Rights
Beneficially Owned by Acquiring Persons or their Affiliates or
Associates (as such terms are defined in the Rights Agreement) and by
any subsequent holder of such Rights are null and void and
nontransferable.
Notwithstanding the requirements of this paragraph (d), neither the omission of
this legend nor the inclusion of a legend that refers to a rights agreement
other than the Rights Agreement shall not affect the enforceability of any part
of this Rights Agreement or the rights of any holder of Rights.
SECTION 4. FORM OF RIGHT CERTIFICATES
The Right Certificates (and the form of election to purchase and form of
assignment to be printed on the reverse side thereof) shall be in substantially
the form set forth as Exhibit B and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Rights Agreement and which do not affect the rights, duties or
responsibilities of the Rights Agent, 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 to conform to usage. Subject to the provisions of Sections
7, 11 and 23, the Right Certificates, whenever issued, shall be dated as of the
Distribution Date, and on their face shall entitle the holders thereof to
purchase such number of Preferred Shares as shall be set forth therein for the
Purchase Price set forth therein, subject to adjustment from time to time as
herein provided.
SECTION 5. EXECUTION, COUNTERSIGNATURE AND REGISTRATION
(a) The Right Certificates shall be executed on behalf of the Company by
the Chairman of the Board, the Chief Executive Officer, the President, the Chief
Financial Officer, the Treasurer or a Vice President (whether preceded by any
additional title) of the Company, either manually or by facsimile signature, and
shall have affixed thereon the Company's seal or a facsimile thereof, which
shall be attested by the Secretary, an Assistant Secretary or a Vice President
(whether preceded by any additional title, provided that such Vice President
shall not have also executed the Right Certificates) of the Company, either
manually or by facsimile signature. The Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose unless
so countersigned. In case any officer of the Company who shall have signed any
of the Right Certificates shall cease to be such an officer of the Company
before countersignature by the Rights Agent and issuance and delivery by the
Company, such Right Certificates may nevertheless be countersigned by the Rights
Agent and issued and delivered by the Company with the same force and effect as
though the person who
-10-
signed such Right Certificates had not ceased to be such an officer of the
Company; and any Right Certificate may be signed on behalf of the Company by any
person who, at the actual date of execution of such Right Certificate, shall be
a proper officer of the Company to sign such Right Certificate, although at the
date of execution of this Rights Agreement any such person was not such an
officer of the Company.
(b) Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its office designated for such purpose, books for registration
and transfer of the Right Certificates issued under this Rights Agreement. Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced by each Right Certificate, the
certificate number of each Right Certificate and the date of each Right
Certificate.
SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES;
LOST, STOLEN, DESTROYED OR MUTILATED RIGHT CERTIFICATES; UNCERTIFICATED
RIGHTS
(a) Subject to the provisions of Sections 7(e) and 15, at any time after
the Distribution Date, and at or prior to the Close of Business on the earlier
of the Redemption Date and the Expiration Date, any Right Certificate or Right
Certificates (other than Right Certificates representing Rights that have become
void pursuant to Section 7(e) or that have been exchanged pursuant to Section
11(b)) may be transferred, split up, combined or exchanged for another Right
Certificate or Right Certificates entitling the registered holder to purchase a
like number of one one-hundredths of a Preferred Share as the Right Certificate
or Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Right
Certificate or Right Certificates shall make such request in writing delivered
to the Rights Agent and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at the office of
the Rights Agent designated for such purpose; provided, however, that neither
the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any Right Certificate surrendered for
transfer until the registered holder shall have properly completed and signed
the certification contained in the form of assignment on the reverse side of
such Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company or the Rights Agent shall reasonably request.
Thereupon the Rights Agent shall, subject to the provisions of Sections 7(e) and
15, countersign and deliver to the Person entitled thereto a Right Certificate
or Right Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split-up, combination or
exchange of Right Certificates.
The Rights Agent shall have no duty or obligation under this Section 6 or
under any provision of this Agreement which requires the payment of taxes or
governmental charges unless and until it is satisfied that all such taxes and/or
charges have been paid in full.
-11-
(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 valid Right Certificate, and, in case of such loss, theft or destruction, of
indemnity or security satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make a new Right
Certificate of like tenor and deliver such new Right Certificate to the Rights
Agent for delivery to the registered holder in lieu of the Right Certificate so
lost, stolen, destroyed or mutilated.
(c) Notwithstanding any other provision of this Rights Agreement to the
contrary, the Company and the Rights Agent may amend this Rights Agreement to
provide for uncertificated Rights in addition to or in place of Rights evidenced
by Right Certificates.
SECTION 7. EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS
(a) Subject to Section 7(e) and except as otherwise provided in this
Rights Agreement (including Section 11), each Right shall entitle the registered
holder thereof, upon exercise thereof as provided in this Rights Agreement, to
purchase for the Purchase Price, at any time after the Distribution Date and at
or prior to the earlier of (i) the Close of Business on the 10th anniversary of
the date of this Rights Agreement (the Close of Business on such date being the
"Expiration Date") and (ii) the Redemption Date, one one-hundredth (1/100) of a
Preferred Share, subject to adjustment from time to time as provided in Sections
11 and l2.
(b) The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided in this Rights Agreement) in
whole or in part at any time after the Distribution Date, upon surrender of the
Right Certificate with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the office of the Rights Agent
designated for such purpose, together with payment of the Purchase Price for
each one one-hundredth (1/100) of a Preferred Share as to which the Rights are
exercised, at or prior to the earliest of (i) the Expiration Date, (ii) the
Redemption Date, and (iii) the time at which such Rights are exchanged as
provided in Section 11(b).
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase duly executed, accompanied by payment of
the Purchase Price for the Preferred Shares to be purchased, together with an
amount equal to any applicable tax or governmental charge, by certified check,
cashier's check or money order payable to the order of the Company, the Rights
Agent shall thereupon (i) either (A) promptly requisition from any transfer
agent of the Preferred Shares (or make available, if the Rights Agent is the
transfer agent) certificates for the number of Preferred Shares to be purchased,
and the Company hereby irrevocably authorizes its transfer agent to comply with
all such requests, or (B) if the Company shall have elected to deposit the
Preferred Shares with a depositary agent under a depositary arrangement,
promptly requisition from the depositary agent depositary receipts representing
the number of one one-hundredths of a Preferred Share to be purchased (in which
case certificates for the Preferred Shares to be represented by such receipts
shall be
-12-
deposited by the transfer agent with the depositary agent) and the Company will
direct the depositary agent to comply with all such requests, (ii) when
necessary to comply with this Agreement, promptly requisition from the Company
the amount of cash to be paid in lieu of the issuance of fractional shares in
accordance with Section 15, (iii) promptly after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder, and (iv) when necessary to comply with this
Agreement, after receipt, promptly deliver such cash to or upon the order of the
registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall exercise
fewer than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to the registered holder of such Right Certificate or
to his or her duly authorized assigns, subject to the provisions of Section 6
and Section 15.
(e) Notwithstanding anything in this Rights Agreement to the contrary, if
the Rights are at any time Beneficially Owned by (i) an Acquiring Person or an
Affiliate or Associate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Persons becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing arrangement,
arrangement or understanding regarding the transferred rights or (B) a transfer
which the Board of Directors of the Company has determined is part of an
agreement, arrangement or understanding which has as a primary purpose or effect
the avoidance of this Section 7(e), such Rights shall be null and void and
nontransferable and no holder of any such Right (including any purported
transferee or subsequent holder) shall have any rights whatsoever with respect
to such Rights, whether under any provision of this Rights Agreement or
otherwise. No Right Certificate shall be issued at any time upon the transfer
of any Rights to an Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof or to any nominee of
such Acquiring Person, Associate or Affiliate; and any Right Certificate
delivered to the Rights Agent for transfer to an Acquiring Person whose Rights
would be void pursuant to the preceding sentence shall be canceled. The Company
shall notify the Rights Agent when this Section 7(e) applies and shall use all
reasonable efforts to ensure that the provisions of this Section 7(e) are
complied with, but neither the Company nor the Rights Agent shall have any
liability to any holder of any Right Certificate or any other Person as a result
of the Company's failure to make any determinations with respect to an Acquiring
Person or its Affiliate or Associate, or any transferee thereof, hereunder.
(f) Notwithstanding anything in this Rights Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of any Right Certificates upon the
occurrence of any purported exercise as
-13-
set forth in this Section 7 unless such registered 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 Right Certificate surrendered
for such exercise and (ii) provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company or the Rights Agent shall reasonably request.
(g) The Company may temporarily suspend, for a period of time not to
exceed 90 calendar days after the Distribution Date, the exercisability of the
Rights in order to prepare and file a registration statement under the
Securities Act, on an appropriate form, with respect to the Preferred Shares
purchasable upon exercise of the Rights and permit such registration statement
to become effective; provided, however, that no such suspension shall remain
effective after, and the Rights shall without any further action by the Company
or any other Person become exercisable immediately upon, the effectiveness of
such registration statement. Upon any such suspension, the Company shall notify
the Rights Agent thereof and issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended and shall issue a
further public announcement at such time as the suspension is no longer in
effect (with prompt notice thereof to the Rights Agent). Notwithstanding any
provision in this Rights Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite qualification under the blue
sky or securities laws of such jurisdiction shall not have been obtained or the
exercise of the Rights shall not be permitted under applicable law.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES
All Right Certificates surrendered or presented for the purpose of
exercise, transfer, split-up, combination or exchange shall, and any Right
Certificate surrendered or presented for any purpose that represents Rights that
have become null and void and nontransferable pursuant to Section 7(e) shall, if
surrendered or presented to the Company or to any of its agents, be delivered to
the Rights Agent for cancellation or in canceled form, or, if surrendered or
presented to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
this Rights Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any Right Certificate purchased or acquired by the Company. The Rights Agent
shall deliver all canceled Right Certificates to the Company, or shall, at the
Company's written request, destroy such canceled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES
(a) The Company shall cause to be reserved and kept available out of its
authorized and unissued Preferred Shares or any authorized and issued Preferred
Shares held in its treasury, free from preemptive rights or any right of first
refusal, a number of Preferred Shares sufficient to permit the exercise in full
of all outstanding Rights.
-14-
(b) In the event that there shall not be sufficient Preferred Shares
authorized but unissued to permit the exercise or exchange of Rights in
accordance with Section 11, the Company shall take all such action as may be
necessary to authorize additional Preferred Shares for issuance upon the
exercise or exchange of Rights pursuant to Section 11; provided, however, that
-------- -------
if the Company is unable to cause the authorization of additional Preferred
Shares, then the company shall, or if action by the Company's shareholders is
necessary to cause such authorization in lieu of seeking any such authorization,
the Company may, to the extent necessary and permitted by applicable law and any
agreements or instruments in effect prior to the Distribution Date to which it
is a party, (i) upon surrender of a Right, pay cash equal to the Purchase Price
in lieu of issuing Preferred Shares and requiring payment therefor, (ii) upon
due exercise of a Right and payment of the Purchase Price for each Preferred
Share as to which such Right is exercised, issue equity securities having a
value equal to the value of the Preferred Shares that otherwise would have been
issuable pursuant to Section 11, which value shall be determined by a nationally
recognized investment banking firm selected by the Board of Directors of the
Company, or (iii) upon due exercise of a Right and payment of the Purchase Price
for each Preferred Share as to which such Right is exercised, distribute a
combination of Preferred Shares, cash and/or other equity and/or debt securities
having an aggregate value equal to the value of the Preferred Shares that
otherwise would have been issuable pursuant to Section 11, which value shall be
determined by a nationally recognized investment banking firm selected by the
Board of Directors of the Company. To the extent that any legal or contractual
restrictions (pursuant to agreements or instruments in effect prior to the
Distribution Date to which it is party) prevent the Company from paying the full
amount payable in accordance with the foregoing sentence, the company shall pay
to holders of the Rights as to which such payments are being made all amounts
that are not then restricted on a pro rata basis as such payments become
permissible under such legal or contractual restrictions until such payments
have been paid in full.
(c) The Company shall take all such action as may be necessary to ensure
that all Preferred Shares delivered upon exercise or exchange of Rights shall,
at the time of delivery of the certificates for such Preferred Shares (subject
to payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares.
(d) So long as the Preferred Shares issuable upon the exercise or exchange
of Rights are to be listed on the Nasdaq Stock Market or any national securities
exchange, the Company shall use its commercially reasonable best efforts to
cause, from and after such time as the Rights become exercisable or
exchangeable, all Preferred Shares reserved for such issuance to be listed on
the Nasdaq Stock Market or such securities exchange upon official notice of
issuance.
(e) The Company shall pay when due and payable any and all taxes and
governmental charges that may be payable in respect of the issuance or delivery
of Right Certificates or of any Preferred Shares upon the exercise or exchange
of Rights. The Company shall not, however, be required to pay any tax or charge
that may be payable in respect of any transfer or delivery of Right Certificates
to a Person other than, or in respect of the issuance or delivery of
certificates representing the Preferred Shares in a name other than
-15-
that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise or exchange or to issue or deliver any certificates
representing Preferred Shares upon the exercise or exchange 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 Right Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such tax or
charge is due.
SECTION 10. PREFERRED SHARES RECORD DATE
Each Person in whose name any certificate for Preferred Shares is issued
upon the exercise or exchange of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Shares represented thereby on, and
such certificate shall be dated, the date on which the Right Certificate
evidencing such Rights was duly surrendered and payment of any Purchase Price
(and any applicable taxes and governmental charges ) was made; provided,
however, that if the date of such surrender and payment is a date on which the
Preferred Shares transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such Preferred Shares on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Shares transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred Shares for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
SECTION 11. ADJUSTMENTS IN RIGHTS AFTER THERE IS AN ACQUIRING PERSON; EXCHANGE
OF RIGHTS FOR SHARES; BUSINESS COMBINATIONS
(a) Upon a Person's becoming an Acquiring Person, each holder of a Right,
except as provided in Section 7(e), shall thereafter have a right to receive,
upon exercise thereof for the Purchase Price in accordance with the terms of
this Rights Agreement, such number of shares of Common Stock as shall equal the
result obtained by multiplying the Purchase Price by a fraction, the numerator
of which is the number of one one-hundredths of a Preferred Share for which a
Right is then exercisable and the denominator of which is 50% of the Market
Value of the Common Stock on the date on which a Person becomes an Acquiring
Person. As soon as practicable after a Person becomes an Acquiring Person
(provided the Company shall not have elected to make the exchange permitted by
Section 11(b)(i) for all outstanding Rights), the Company shall use its
commercially reasonable best efforts to:
(i) prepare and file a registration statement under the Securities
Act, on an appropriate form, with respect to the securities purchasable upon
exercise of the Rights;
(ii) cause such registration statement to become effective as soon
as practicable after such filing;
-16-
(iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the Expiration Date; and
(iv) qualify or register the securities purchasable upon exercise of
the Rights under the blue sky or securities laws of such jurisdictions as may be
necessary or appropriate.
(b) (i) The Company's Board of Directors may, at its option, at any time
after a Person becomes an Acquiring Person, mandatorily exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights that
shall have become null and void and nontransferable pursuant to the provisions
of Section 7(e)) for consideration per Right consisting of either (A) one-half
of the securities that would be issuable at such time upon the exercise of one
Right in accordance with Section 11(a), or, if applicable, Section 9(b)(ii) or
9(b)(iii) or (B) if applicable, the cash consideration specified in Section
9(b)(i) (the consideration issuable per Right pursuant to this Section 11(b)(i)
being the "Exchange Consideration"). The Company's Board of Directors may, at
its option, issue, in substitution for Preferred Shares, Common Shares in an
amount per Preferred Share equal to the Formula Number if there are sufficient
Common Shares issued but not outstanding or authorized but unissued. If the
Company's Board of Directors elects to exchange all the Rights for the Exchange
Consideration pursuant to this Section 11(b)(i) prior to the physical
distribution of the Right Certificates, the Company may distribute the Exchange
Consideration in lieu of distributing Right Certificates, in which case for
purposes of this Rights Agreement holders of Rights shall be deemed to have
simultaneously received and surrendered for exchange Right Certificates on the
date of such distribution. Notwithstanding the foregoing, the Board of
Directors of the Company shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any such Subsidiary, or any Person
holding Common Shares for or pursuant to the terms of any such plan), together
with all Affiliates and Associates of such Person, becomes the Beneficial owner
of more than 50% of the Common Shares then outstanding.
(ii) Any action of the Company's Board of Directors ordering the
exchange of any Rights pursuant to Section 11(b)(i) shall be irrevocable and,
immediately upon the taking of such action and without any further action and
without any notice, the right to exercise any such Right pursuant to Section
11(a) shall terminate and the only right thereafter of a holder of such Right
shall be to receive the Exchange Consideration in exchange for each such Right
held by such holder or, if the Exchange Consideration shall not have been paid
or issued, to exercise any such Right pursuant to Section 11(c)(i). The Company
shall promptly notify the Rights Agent and 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 all holders of such Rights at their
last addresses as they appear on the registry books of the Rights Agent. Any
notice that is mailed in the manner provided in this Rights Agreement 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 Rights for the
Exchange Consideration will be effected and, in the event of any partial
exchange, the number of Rights that will be exchanged. Any partial
-17-
exchange shall be effected pro rata based on the number of Rights (other than
Rights that shall have become null and void and nontransferable pursuant to the
provisions of Section 7(e)) held by each holder of Rights.
(c) (i) In the event that, following a Distribution Date, any
transactions specified in the following clause (A), (B) or (C) of this Section
11(c)(i) (each such transaction being a "Business Combination") shall be
consummated, directly or indirectly:
(A) the Company shall consolidate with, or merge with and into, any
Acquiring Person or any Affiliate or Associate of an Acquiring Person;
(B) any Acquiring Person or any Affiliate or Associate of an
Acquiring Person shall merge with and into the Company and, in connection with
such merger, all or part of the Common Shares shall be changed into or exchanged
for capital stock or other securities of the Company or of an Acquiring Person
or any Affiliate or Associate of an Acquiring Person or cash or any other
property; or
(C) the Company shall sell, lease, exchange or otherwise transfer or
dispose of (or one or more of its Subsidiaries shall sell, lease, exchange or
otherwise transfer or dispose of), in one or more transactions, the Major Part
of the assets of the Company and its Subsidiaries (taken as a whole) to an
Acquiring Person or any Affiliate or Associate of an Acquiring Person;
then, in each such case, proper provision shall be made so that each holder of a
Right, except as provided in Section 7(e), shall thereafter have the right to
receive, upon the exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, the securities specified below (or, at such
holder's option, the securities specified in Section 11(a) if the Company is the
surviving corporation in such Business Combination):
(1) If the Principal Party in such Business Combination has
Registered Common Shares outstanding, each Right shall thereafter represent the
right to receive, upon the exercise thereof for the Purchase Price in accordance
with the terms of this Rights Agreement, such number of Registered Common Shares
of such Principal Party, free and clear of all liens, encumbrances or other
adverse claims, as shall have an aggregate Market Value equal to the result
obtained by multiplying the Purchase Price by two; or
(2) If the Principal Party in such Business Combination does not
have Registered Common Shares outstanding, each Right shall thereafter represent
the right to receive, upon the exercise thereof for the Purchase Price in
accordance with the terms of this Rights Agreement, at the election of the
holder of such Right at the time of the exercise thereof, any of:
(x) such number of Common Shares of the Surviving Person in
such Business Combination as shall have an aggregate Book Value immediately
after giving effect to such Business Combination equal to the result obtained by
multiplying the Purchase Price by two;
-18-
(y) such number of Common Shares of the Principal Party in
such Business Combination (if the Principal Party is not also the Surviving
Person in such Business Combination) as shall have an aggregate Book Value
immediately after giving effect to such Business Combination equal to the result
obtained by multiplying the Purchase Price by two; or
(z) if the Principal Party in such Business Combination is
an Affiliate of one or more Persons which has Registered Common Shares
outstanding, such number of Registered Common Shares of whichever of such
Affiliates of the Principal Party has Registered Common Shares with the greatest
aggregate Market Value on the date of consummation of such Business Combination
as shall have an aggregate Market Value on the date of such Business Combination
equal to the result obtained by multiplying the Purchase Price by two.
(ii) The Company shall not consummate any Business Combination unless
each issuer of Common Shares for which Rights may be exercised, as set forth in
this Section 11(c), shall have sufficient authorized Common Shares that have not
been issued or reserved for issuance (and that shall, when issued upon exercise
thereof in accordance with this Rights Agreement, be validly issued, fully paid
and nonassessable and free of preemptive rights, rights of first refusal or any
other restrictions or limitations on the transfer or ownership thereof) to
permit the exercise in full of the Rights in accordance with this Section 11(c)
and unless prior thereto:
(A) a registration statement under the Securities Act, on an
appropriate form, with respect to the Rights and the Common Shares of such
issuer purchasable upon exercise of the Rights, shall be effective; and
(B) the Company and each such issuer shall have:
(1) executed and delivered to the Rights Agent a
supplemental agreement providing for the assumption by such issuer of the
obligations set forth in this Section 11(c) (including the obligation of such
issuer to issue Common Shares upon the exercise of Rights in accordance with the
terms set forth in Sections 11(c)(i) and 11(c)(iii)) and further providing that
such issuer, at its own expense, will use its best efforts to:
(x) cause a registration statement under the Securities
Act, on an appropriate form, with respect to the Rights and the Common Shares of
such issuer purchasable upon exercise of the Rights, to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the Expiration Date;
(y) qualify or register the Rights and the Common Shares of
such issuer purchasable upon exercise of the Rights under the blue sky or
securities laws of such jurisdictions as may be necessary or appropriate; and
(z) list the Rights and the Common Shares of such issuer
purchasable upon exercise of the Rights on each national securities exchange on
which the
-19-
Common Shares were listed prior to the consummation of the Business Combination
or, if the Common Shares were not listed on a national securities exchange prior
to the consummation of the Business Combination, on a national securities
exchange;
(2) furnished to the Rights Agent a written opinion of
independent counsel stating that such supplemental agreement is a valid, binding
and enforceable agreement of such issuer; and
(3) filed with the Rights Agent a certificate of a nationally
recognized firm of independent accountants setting forth the number of Common
Shares of such issuer that may be purchased upon the exercise of each Right
after the consummation of such Business Combination.
(iii) After consummation of any Business Combination and subject to
the provisions of Section 11(c)(ii), (A) each issuer of Common Shares for which
Rights may be exercised as set forth in this Section 11(c) shall be liable for,
and shall assume, by virtue of such Business Combination, all the obligations
and duties of the Company pursuant to this Rights Agreement, (B) the term
"Company" shall thereafter be deemed to refer to such issuer, (C) each such
issuer shall take such steps in connection with such consummation as may be
necessary to ensure that the provisions of this Rights Agreement (including the
provisions of Sections 11(a) and 11(c)) shall thereafter apply, as nearly as
reasonably may be, in relation to its Common Shares thereafter deliverable upon
the exercise of the Rights, and (D) the number of Common Shares of each such
issuer thereafter receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of Sections 11 and 12, and the provisions of
Sections 7, 9 and 10 with respect to the Preferred Shares shall apply, as nearly
as reasonably may be, on like terms to any such Common Shares.
SECTION 12. CERTAIN ADJUSTMENTS
(a) To preserve the actual or potential economic value of the Rights, if
at any time after the date of this Rights Agreement there shall be any change in
the Common Stock or the Preferred Shares, whether by reason of stock dividends,
stock splits, recapitalizations, mergers, consolidations, combinations or
exchanges of securities, split-ups, split-offs, spin-offs, liquidations, other
similar changes in capitalization, any distribution or issuance of cash, assets,
evidences of indebtedness or subscription rights, options or warrants to holders
of Common Stock or Preferred Shares, as the case may be (other than distribution
of the Rights or regular quarterly cash dividends), or otherwise, then, in each
such event the Company's Board of Directors shall make such appropriate
adjustments in the number of Preferred Shares (or the number and kind of other
securities) issuable upon exercise of each Right, the Purchase Price and
Redemption Price in effect at such time and the number of Rights outstanding at
such time (including the number of Rights or fractional Rights associated with
each share of Common Stock) such that following such adjustment such event shall
not have had the effect of reducing or limiting the benefits the holders of the
Rights would have had absent such event.
-20-
(b) If, as a result of an adjustment made pursuant to Section 12(a), the
holder of any Right thereafter exercised shall become entitled to receive any
securities other than Preferred Shares, then the number of such securities so
receivable upon exercise of any Right thereafter shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions of Sections 11 and 12, and the provisions of Sections 7, 9 and
10 with respect to the Preferred Shares shall apply, as nearly as reasonably may
be possible, on like terms to any such other securities.
(c) All Rights originally issued by the Company subsequent to any
adjustment made to the amount of Preferred Shares or other securities relating
to a Right shall evidence the right to purchase, for the Purchase Price, the
adjusted number and kind of securities purchasable from time to time under this
Rights Agreement upon exercise of the Rights, all subject to further adjustment
as provided in this Rights Agreement.
(d) Irrespective of any adjustment or change in the Purchase Price or the
number of Preferred Shares or number or kind of other securities issuable upon
the exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the terms that were expressed in the initial
Right Certificates issued under this Rights Agreement.
(e) In any case in which action taken pursuant to Section 12(a) requires
that an adjustment be made effective as of a record date for a specified event,
the Company may elect to defer, until the occurrence of such event, issuing to
the holder of any Right exercised after such record date the Preferred Shares
and/or other securities, if any, issuable upon such exercise over and above the
Preferred Shares and/or other securities, if any, issuable before giving effect
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.
SECTION 13. CERTIFICATE OF ADJUSTMENT
Whenever an adjustment is made as provided in Section 11 or 12, the Company
shall (a) promptly prepare a certificate setting forth such adjustment and a
brief, reasonably detailed statement of the facts and computations accounting
for such adjustment, (b) promptly file with the Rights Agent and with each
transfer agent for the Preferred Shares a copy of such certificate, and (c) mail
a brief summary thereof to each holder of a Right Certificate (or, prior to the
Distribution Date, of Common Stock) in accordance with Section 25. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment contained therein, and shall have no duty with respect to and shall
not be deemed to have knowledge of any such adjustment unless and until it shall
have received such a certificate.
SECTION 14. ADDITIONAL COVENANTS
(a) Notwithstanding any other provision of this Rights Agreement, no
adjustment to the number of Preferred Shares (or fraction of a share) or other
securities for which a Right is exercisable or the number of Rights outstanding
or associated with each Common Share or
-21-
any similar or other adjustment shall be made or be effective if such adjustment
would have the effect of reducing or limiting the benefits the holders of the
Rights would have had absent such adjustment, including, without limitation, the
benefits under Sections 11 and 12, unless the terms of this Rights Agreement are
amended so as to preserve such benefits.
(b) The Company shall not, after the Distribution Date, except as permitted
by Section 26, take (or permit any Subsidiary of the Company to take) any action
if at the time such action is taken it is reasonably foreseeable that such
action will reduce or otherwise limit the benefits the holders of the Rights
would have had absent such action, including, without limitation, the benefits
under Sections 11 and 12. Any action taken by the Company during any period
after any Person becomes an Acquiring Person but prior to the Distribution Date
shall be null and void unless such action could be taken under this Section
14(b) from and after the Distribution Date. The Company shall not consummate
any Business Combination if any issuer of Common Shares for which Rights may be
exercised after such Business Combination in accordance with Section 11(c) shall
have taken any action that reduces or otherwise limits the benefits the holders
of the rights would have had absent such action, including the benefits under
Sections 11 and 12.
SECTION 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES
(a) The Company may, but shall not be required to, issue fractional Rights
or distribute Right Certificates that evidence fractional Rights. In lieu of
such fractional Rights, the Company may pay to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this Section 15(a), the current market
value of a whole Right shall be the closing price of the Rights (as determined
pursuant to the second and third sentences of the definition of Market Value
contained in Section 1) for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable.
(b) The Company may, but shall not be required to, issue fractional
Preferred Shares upon exercise of the Rights or distribute certificates that
evidence fractional Preferred Shares. In lieu of fractional Preferred Shares,
the Company may elect to (i) utilize a depository arrangement as provided by the
terms of the Preferred Shares or (ii) in the case of a fractional Preferred
Share (other than one one-hundredth (1/100th) of a Preferred Share or any
integral multiple thereof), pay to the registered holders of Right Certificates
at the time such Rights are exercised as provided in this Rights Agreement an
amount in cash equal to the same fraction of the current market value of one
Preferred Share, if any are outstanding and publicly traded (or the Formula
Number times the current market value of one share of Common Stock if the
Preferred Shares are not outstanding and publicly traded). For purposes of this
Section 15(b), the current market value of a Preferred Share (or share of Common
Stock) shall be the closing price of a Preferred Share (or share of Common
Stock) (as determined pursuant to the second and third sentences of the
definition of Market Value contained in Section 1) for the Trading Day
immediately prior to the date of such exercise. If, as a result of an
adjustment made pursuant to Section 12(a), the holder of any Right thereafter
-22-
exercised shall become entitled to receive any securities other than Preferred
Shares, the provisions of this Section 15(b) shall apply, as nearly as
reasonably may be, on like terms to such other securities.
(c) The Company may, but shall not be required to, issue fractional Common
Shares upon exchange of Rights pursuant to Section 11(b), or to distribute
certificates that evidence fractional Common Shares. In lieu of such fractional
Common Shares, the Company may pay to the registered holders of Right
Certificates with regard to which such fractional Common Shares would otherwise
be issuable an amount in cash equal to the same fraction of the current Market
Value of one Common Share as of the date on which a Person became an Acquiring
Person.
(d) Each holder of Rights, by accepting the Rights, expressly waives his or
her right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as provided in this Section 15.
SECTION 16. RIGHTS OF ACTION
(a) All rights of action in respect of this Rights Agreement are vested in
the respective registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock), and any
registered holder of any Right Certificate (or, prior to the Distribution Date,
of the Common Stock), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in his or her own behalf and for his or her own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, his or her right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in the Rights Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Rights Agreement and shall be entitled to specific
performance of the obligations of any Person under, and injunctive relief
against actual or threatened violations of the obligations of any Person subject
to, this Rights Agreement.
(b) Any holder of Rights who prevails in an action to enforce the
provisions of this Rights Agreement shall be entitled to recover the reasonable
costs and expenses, including attorneys' fees, incurred in such action.
SECTION 17. AGREEMENT OF RIGHT HOLDERS
Every holder of a Right, by accepting the same, consents and agrees with
the Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of the Common Stock, and the Right associated with
each share of Common Stock shall be automatically transferred upon the transfer
of each share of Common Stock;
-23-
(b) after the Distribution Date, the Right Certificates will be
transferable, subject to Section 7(e), 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; and
(c) the Company and the Rights Agent may deem and treat the Person in which
name a Right Certificate (or, prior to the Distribution Date, the associated
Common Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Right Certificates or the associated Common Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice to
the contrary.
SECTION 18. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER
No holder, as such, of any Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company that may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained in this Rights Agreement or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the rights of a
shareholder of the Company, including, without limitation, any right to vote for
the election of directors or on any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders, or to
receive dividends or other distributions or subscription rights, or otherwise,
until the Right or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions of this Rights Agreement.
SECTION 19. CONCERNING THE RIGHTS AGENT
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it under this Rights Agreement and, from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in preparing, amending, administering and
executing this Rights Agreement and exercising and performing its duties under
this Rights Agreement, including any taxes or governmental charges imposed as a
result of the action taken by it hereunder (other than taxes on the fees payable
to it). The Company also agrees to indemnify the Rights Agent for, and to hold
it harmless against, any loss, liability, damage, judgment, fine, penalty,
claim, demand, settlement, cost or expense incurred without gross negligence or
willful misconduct on the part of the Rights Agent for any action taken,
suffered or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of defending
against any claim of liability in the premises. The indemnity provided herein
shall survive the termination of this Agreement and the termination and the
expiration of the Rights. The costs and expenses incurred in enforcing this
right of indemnification shall be paid by the Company.
-24-
(b) The Rights Agent shall be authorized to rely on, shall be protected and
shall incur no liability for or in respect of any action taken, suffered or
omitted by it in connection with the acceptance and administration of this
Rights Agreement in reliance on any Right Certificate or certificate for the
Common Stock or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged by the proper Person or Persons.
SECTION 20. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT
(a) Any Person into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any Person resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any Person succeeding to the shareholder services
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Rights Agreement without the execution
or filing of any paper or any further act on the part of any of the parties to
this Rights Agreement; provided, however, that such Person would be eligible for
appointment as a successor Rights Agent under the provisions of Section 22. In
case at the time such successor Rights Agent shall succeed to the agency created
by this Rights Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and, in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and, in all such cases, such
Right Certificates shall have the full force provided in the Right Certificates
and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and, in case at that time any
of the Right Certificates shall not have been countersigned, the Rights Agent
may countersign such Right Certificates either in its prior name or in its
changed name; and, in all such cases, such Right Certificates shall have the
full force provided in the Right Certificates and in this Rights Agreement.
SECTION 21. DUTIES OF RIGHTS AGENT
The Rights Agent undertakes the duties and obligations, and only the duties
and obligations, expressly imposed by this Rights Agreement (and no implied
duties or obligations) upon the following terms and conditions, by all of which
the Company and the holders of the Right Certificates (or, prior to the
Distribution Date, of the Common Stock), by their acceptance thereof, shall be
bound:
-25-
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent, and the
Rights Agent shall incur no liability for or in respect of 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 Rights Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person) be proved
or established by the Company prior to taking, suffering or omitting any action
under this Rights Agreement, such fact or matter (unless other evidence in
respect thereof be specifically prescribed in this Rights Agreement) may be
deemed to be conclusively proved and established by a certificate signed by any
one of the Chairman of the Board, any Vice Chairman of the Board, the Chief
Executive Officer, the President, the Chief Financial Officer, a Vice President
(whether preceded by any additional title), the Treasurer or the Secretary of
the Company and delivered to the Rights Agent, and such certificate shall be
full authorization and protection to the Rights Agent, and the Rights Agent
shall incur no liability for or in respect of any action taken or suffered or
omitted in good faith by it under the provisions of this Rights Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable under this Rights Agreement only for
its own gross negligence, bad faith or willful misconduct (as finally determined
by a court of competent jurisdiction). Anything in this Agreement to the
contrary notwithstanding, in no event shall the Rights Agent be liable for
special, punitive, indirect, incidental or consequential loss or damage of any
kind whatsoever (including, but not limited to, lost profits), even if the
Rights Agent has been advised of the possibility of such loss or damage.
(d) The Rights Agent shall not have any liability for, nor be liable for or
by reason of any of the statements of fact or recitals contained in this Rights
Agreement or in the Right Certificates (except as to its countersignature
thereof) or be required to verify the same, but all such statements and recitals
are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not have any liability for, nor be under any
responsibility in respect of the validity of this Rights Agreement or the
execution and delivery hereof (except the due execution of this Rights Agreement
by the Rights Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); it shall not be responsible
for any breach by the Company of any covenant or condition contained in this
Rights Agreement or in any Right Certificate; it shall not be responsible for
any adjustment required under the provisions of Section 11 or 12 or for the
manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Right Certificates after actual notice of
any such adjustment); and it shall not by any act under this Rights Agreement be
deemed to make any representation or warranty as to the authorization or
reservation of any Preferred Shares or Common Stock to be issued pursuant to
this Rights
-26-
Agreement or any Right Certificate or as to whether any Preferred Shares or
Common Stock will, when so issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it shall perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties under this Rights
Agreement from any one of the Chairman of the Board, any Vice Chairman of the
Board, the Chief Executive Officer, the President, the Chief Financial Officer,
a Vice President (whether preceded by any additional title), the Treasurer or
the Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and such advice or instructions
shall be full authorization and protection to the Rights Agent and the Rights
Agent shall incur no liability for or in respect of any action taken, suffered
or omitted by it in good faith in accordance with the advice or instructions of
any such officer.
(h) The Rights Agent and any shareholder, affiliate director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Rights Agreement. Nothing in this Rights Agreement shall
preclude the Rights Agent from acting in any other capacity for the Company or
for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty under this Rights Agreement 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 or any other Person
resulting from any such act, default, neglect or misconduct absent any gross
negligence or willful misconduct in the selection and continued employment
thereof.
SECTION 22. CHANGE OF RIGHTS AGENT
The Rights Agent or any successor Rights Agent may resign and be discharged
from its duties under this Rights Agreement upon thirty (30) days' notice in
writing mailed to the Company and to each transfer agent of the Common Stock and
the Preferred Shares by registered or certified mail, and to the holders of the
Right Certificates (or, prior to the Distribution Date, of the Common Stock) by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty (30) days' notice in writing mailed to the Rights Agent
or successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and the Preferred Shares by registered or certified mail, and to
the holders of the Right Certificates (or, prior to the Distribution Date, of
the Common Stock) by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable
-27-
of acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of thirty (30) days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Right Certificate (or, prior to the Distribution Date, of
Common Stock) (who shall, with such notice, submit his or her Right Certificate
or, prior to the Distribution Date, the certificate representing his or her
Common Stock, for inspection by the Company), then the registered holder of any
Right Certificate (or, prior to the Distribution Date, of the Common Stock) 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 either (A) a Person in good standing organized and doing
business under the laws of the United States or of any state of the United
States so long as such Person 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 fifty million dollars
($50,000,000), or (B) an affiliate of a Person described in clause (A) of this
sentence; provided that the principal transfer agent for the Common Stock shall
in any event be qualified to be the Rights Agent. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; provided, however, that the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it under this Rights Agreement, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Company shall file notice thereof in
writing with the predecessor Rights Agent and each transfer agent of the Common
Stock and the Preferred Shares, and mail a notice thereof in writing to the
registered holders of the Right Certificates (or, prior to the Distribution
Date, of the Common Stock). Failure to give any notice provided for in this
Section 22, 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 23. ISSUANCE OF ADDITIONAL RIGHTS AND RIGHT CERTIFICATES
Notwithstanding any of the provisions of this Rights Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change made in accordance with the
provisions of this Rights Agreement. In addition, in connection with the
issuance or sale of Common Stock following the Distribution Date and prior to
the earlier of the Redemption Date and the Expiration Date, the Company (a)
shall issue, with respect to 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, notes or debentures issued by
the Company, and (b) may issue, in any other case, if deemed necessary or
appropriate by the Company's Board of Directors, Right Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Right Certificate shall be issued if, and to
the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax
-28-
consequences to the Company or the Person to whom such Right Certificate would
be issued, (ii) no such Right Certificate shall be issued if, and to the extent
that, appropriate adjustment shall otherwise have been made in lieu of the
issuance thereof, and (iii) no such Right Certificate shall be issued to an
Acquiring Person or an Affiliate or Associate of any Acquiring Person.
SECTION 24. REDEMPTION AND TERMINATION
(a) The Company's Board of Directors may, at its option, at any time prior
to the earlier of (i) such time as any Person becomes an Acquiring Person and
(ii) the Close of Business on the Expiration Date, order the redemption of all,
but not fewer than all, the then outstanding Rights at the Redemption Price (the
date of such redemption being the "Redemption Date"), and the Company, at its
option, may pay the Redemption Price either in cash or in Common Shares or other
securities of the Company deemed by the Board of Directors of the Company, in
the exercise of its sole discretion, to be at least equivalent in value to the
Redemption Price. The redemption of the Rights by the Board of Directors may be
made effective at such time, on such basis and with such conditions as the Board
of Directors in its sole discretion may establish.
(b) Immediately upon the action of the Company's Board of Directors
ordering the redemption of the Rights, and without any further action and
without any notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price. Within ten (10) Business Days after the action of the Company's Board of
Directors ordering the redemption 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. Each such notice of
redemption will state the method by which payment of the Redemption Price will
be made. The notice, if mailed in the manner provided in this Rights Agreement,
shall be conclusively presumed to have been duly given, whether or not the
holder of Rights receives such notice. In any case, failure to give such notice
by mail, or any defect in the notice, to any particular holder of Rights shall
not affect the sufficiency of the notice to other holders of Rights.
SECTION 25. NOTICES
Notices or demands authorized by this Rights Agreement to be given or made
by the Rights Agent or by the holder of a Right Certificate (or, prior to the
Distribution Date, of Common Stock) to or on the Company shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Rights Agent) as follows:
Onyx Software Corporation
0000 000xx Xxxxxx XX, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Chief Financial Officer
-29-
Subject to the provisions of Section 22, notices or demands authorized by this
Rights Agreement to be given or made by the Company or by the holder of a Right
Certificate (or, prior to the Distribution Date, of Common Stock) to or on the
Rights Agent shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Relationship Manager
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to any holder of a Right Certificate (or, prior
to the Distribution Date, of Common Stock) shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed to such holder at such
holder's address as shown on 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.
SECTION 26. SUPPLEMENTS AND AMENDMENTS
At any time prior to the time any Person becomes an Acquiring Person and
subject to the last sentence of this Section 26, the Company may, and the Rights
Agent shall if the Company so directs, supplement or amend any provision of this
Rights Agreement (including, without limitation, the date on which the
Distribution Date or the Expiration Date shall occur, the amount of the Purchase
Price, the definition of "Acquiring Person," the time during which the Rights
may be redeemed pursuant to Section 24 or any provision of the Certificate of
Designation) without the approval of any holder of the Rights. From and after
the time any Person becomes an Acquiring Person and subject to applicable law,
the Company may, and the Rights Agent shall if the Company so directs, amend
this Rights Agreement without the approval of any holder of Right Certificates
to (a) cure any ambiguity or correct or supplement any provision contained in
this Rights Agreement that may be defective or inconsistent with any other
provision of this Rights Agreement or (b) make any other provision in regard to
matters or questions arising under this Rights Agreement that the Company may
deem necessary or desirable and that shall not adversely affect the interests of
the Rights Agent or the holders of Right Certificates (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person). Any supplement or
amendment adopted during any period after any Person has become an Acquiring
Person but prior to the Distribution Date shall be null and void unless such
supplement or amendment could have been adopted under the prior sentence from
and after the Distribution Date. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 26 and, provided such
supplement or amendment does not change or increase the Rights Agent's duties,
liabilities or obligations hereunder, the Rights Agent shall execute such
supplement or amendment. In addition, notwithstanding anything to the contrary
contained in this Rights
-30-
Agreement, no supplement or amendment to this Rights Agreement shall be made
which reduces the Redemption Price (except as required by Section 12(a)).
SECTION 27. SUCCESSORS
All the covenants and provisions of this Rights Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns under this Rights Agreement.
SECTION 28. BENEFITS OF THIS RIGHTS AGREEMENT; DETERMINATIONS AND ACTIONS BY
THE COMPANY'S BOARD OF DIRECTORS
(a) Nothing in this Rights Agreement shall be construed to give to any
Person other than the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, of the Common
Stock) any legal or equitable right, remedy or claim under this Rights
Agreement; provided, however, that this Rights Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, of the
Common Stock).
(b) Except as explicitly otherwise provided in this Rights Agreement, the
Company's Board of Directors shall have the exclusive power and authority to
administer this Rights Agreement and to exercise all rights and powers
specifically granted to the Company's Board of Directors or to the Company, or
as may be necessary or advisable in the administration of this Rights Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Rights Agreement and (ii) make all determinations deemed
necessary or advisable for the administration of this Rights Agreement
(including, without limitation, a determination to redeem or not redeem the
Rights or to amend this Rights Agreement and a determination of whether there is
an Acquiring Person).
(c) Nothing contained in this Rights Agreement shall be deemed to be in
derogation of the obligation of the Board of Directors of the Company to
exercise its fiduciary duty. Without limiting the foregoing, nothing contained
herein shall be construed to suggest or imply that the Board of Directors shall
not be entitled to reject any tender offer, or to take any other action
(including the commencement, prosecution, defense or settlement of any
litigation and the submission of additional or alternative offers or other
proposals) with respect to any tender offer or other acquisition proposal that
the Board of Directors believes is necessary or appropriate in the exercise of
such fiduciary duty.
SECTION 29. SEVERABILITY
If any term, provision, covenant or restriction of this Rights Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Rights Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.
-31-
SECTION 30. GOVERNING LAW
This Rights Agreement and each Right Certificate issued under this Rights
Agreement shall be deemed to be a contract made under the laws of the state of
Washington and for all purposes shall be governed by and construed in accordance
with the law of Washington applicable to contracts to be made and performed
entirely within Washington; provided, however, that all provisions regarding the
rights, duties and obligations of the Rights Agent shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within such State.
SECTION 31. COUNTERPARTS; EFFECTIVENESS
This Rights Agreement may be executed in any number of counterparts, each
of which shall for all purposes be deemed to be an original, and all of which
shall together constitute but one and the same instrument. This Rights
Agreement shall be effective as of the Close of Business on the date of this
Rights Agreement first set forth above.
SECTION 32. DESCRIPTIVE HEADINGS
Descriptive headings of the several Sections of this Rights Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Rights Agreement.
-32-
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to
be duly executed as of the day and year first above written.
ONYX SOFTWARE CORPORATION
By: /s/ XXXXXX X. XXXXXXX
-------------------------------
Name: Xxxxxx X. Xxxxxxx
Its: Vice President, Chief Financial Officer,
Secretary and Treasurer
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By: /s/ XXXXXX X. XXXXXX
-------------------------------
Name: Xxxxxx X. Xxxxxx
Its: Assistant Vice President
-33-
EXHIBIT A
2.8 Designation of Rights and Preferences of Series A Participating
Cumulative Preferred Stock
The following series of Preferred Stock is hereby designated, which series
shall have the rights, preferences and privileges and limitations set forth
below:
2.8.1 Designation of Series A Participating Cumulative Preferred
Stock
The shares of such series shall be designated the "Series A Participating
Cumulative Preferred Stock" (the "Series A Preferred Stock"), par value $0.01
per share. The number of shares initially constituting the Series A Preferred
Stock shall be 400,000; provided, however, if more than a total of 400,000
shares of Series A Preferred Stock shall be issuable upon the exercise of Rights
(the "Rights") issued pursuant to the Rights Agreement dated as of October 25,
1999 between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent (the "Rights Agreement"), the Company's Board of Directors, pursuant to
Section 23B.06.020 of the Revised Code of Washington, shall direct by resolution
or resolutions that Articles of Amendment be properly executed and filed with
the Washington Secretary of State providing for the total number of shares of
Series A Preferred Stock authorized for issuance to be increased (to the extent
that the Restated Articles of Incorporation then permit) to the largest number
of whole shares (rounded up to the nearest whole number) issuable upon exercise
of such Rights. In addition, such number of shares may be decreased by
resolution of the Board of Directors; provided, however, that no decrease shall
reduce the number of shares of Series A Preferred Stock to a number less than
the number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Company convertible
into Series A Preferred Stock.
2.8.2 Dividends and Distributions
(a) Subject to the prior and superior rights of the holders of shares
of any other series of Preferred Stock or other class of capital stock of the
Company ranking prior and superior to the shares of Series A Preferred Stock
with respect to dividends, the holders of shares of Series A Preferred Stock
shall be entitled to receive, when, as, and if declared by the Board of
Directors, out of the assets of the Company legally available therefor,
quarterly dividends payable in cash on the last day of each fiscal quarter in
each year, or such other dates as the Company's Board of Directors shall approve
(each such date being referred to in this Designation as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend
-1-
Payment Date after the first issuance of a share or a fraction of a share of
Series A Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (i) $.01 and (ii) the Formula Number (as hereinafter
defined) then in effect times the cash dividends then to be paid on each share
of Common Stock. In addition, if the Company shall pay any dividend or make any
distribution on the Common Stock payable in assets, securities or other forms of
noncash consideration (other than dividends or distributions solely in shares of
Common Stock), then, in each such case, the Company shall simultaneously pay or
make on each outstanding whole share of Series A Preferred Stock a dividend or
distribution in like kind equal to the Formula Number then in effect times such
dividend or distribution on each share of Common Stock. As used in this
Designation and in the Rights Agreement, the "Formula Number" shall be 100;
provided, however, that if at any time after November 5, 1999 the Company shall
(i) declare or pay any dividend on the Common Stock payable in shares of Common
Stock or make any distribution on the Common Stock in shares of Common Stock,
(ii) subdivide (by a stock split or otherwise) the outstanding shares of Common
Stock into a larger number of shares of Common Stock, or (iii) combine (by a
reverse stock split or otherwise) the outstanding shares of Common Stock into a
smaller number of shares of Common Stock, then in each such event the Formula
Number shall be adjusted to a number determined by multiplying the Formula
Number in effect immediately prior to such event by a fraction, the numerator of
which is the number of shares of Common Stock that are outstanding immediately
after such event and the denominator of which is the number of shares of Common
Stock that are outstanding immediately prior to such event (and rounding the
result to the nearest whole number); and provided further, that if at any time
after November 5, 1999 the Company shall issue any shares of its capital stock
in a merger, reclassification or change of the outstanding shares of Common
Stock, then in each such event the Formula Number shall be appropriately
adjusted to reflect such merger, reclassification or change so that each share
of Preferred Stock continues to be the economic equivalent of a Formula Number
of shares of Common Stock prior to such merger, reclassification or change.
(b) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in Section 2.8.2(a) immediately prior to or
at the same time it declares a dividend or distribution on the Common Stock
(other than a dividend or distribution solely in shares of Common Stock);
provided, however, that in the event no dividend or distribution (other than a
dividend or distribution in shares of Common Stock) shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment Date
and the next subsequent Quarterly Dividend Payment Date, a dividend of $.01 per
share on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date. The Corporation's Board of
Directors may fix a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a dividend or distribution declared
thereon, which record date shall be the same as the record date
-2-
for any corresponding dividend or distribution on the Common Stock and which
shall not be more than 60 days prior to the date fixed for payment thereof.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from and after the Quarterly Dividend Payment
Date next preceding the date of original issue of such shares of Series A
Preferred Stock; provided, however, that dividends on such shares that are
originally issued after the record date for the determination of holders of
shares of Series A Preferred Stock entitled to receive a quarterly dividend on
or prior to the next succeeding Quarterly Dividend Payment Date shall begin to
accrue and be cumulative from and after such Quarterly Dividend Payment Date.
Notwithstanding the foregoing, dividends on shares of Series A Preferred Stock
that are originally issued prior to the record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive a quarterly
dividend on or prior to the first Quarterly Dividend Payment Date shall be
calculated as if cumulative from and after the last day of the fiscal quarter
(or such other Quarterly Dividend Payment Date as the Company's Board of
Directors shall approve) next preceding the date of original issuance of such
shares. Accrued but unpaid dividends shall not bear interest. Dividends paid
on the shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding.
(d) So long as any shares of Series A Preferred Stock are outstanding,
no dividends or other distributions shall be declared, paid or distributed, or
set aside for payment or distribution, on the Common Stock unless, in each case,
the dividend required by this Section 2.8.2 to be declared on the Series A
Preferred Stock shall have been declared.
(e) The holders of shares of Series A Preferred Stock shall not be
entitled to receive any dividends or other distributions except as provided in
this Designation.
2.8.3 Voting Rights
The holders of shares of Series A Preferred Stock shall have the following
voting rights:
(a) Each holder of Series A Preferred Stock shall be entitled to a
number of votes equal to the Formula Number then in effect for each share of
Series A Preferred Stock held of record on each matter on which holders of the
Common Stock or shareholders generally are entitled to vote, multiplied by the
maximum number of votes per share that any holders of the Common Stock or
shareholders generally then have with respect to such matter (assuming any
holding period or other requirement to vote a greater number of shares is
satisfied).
-3-
(b) Except as otherwise provided in this Designation or by applicable
law, the holders of shares of Series A Preferred Stock and the holders of shares
of Common Stock and any other capital stock of the Company having general voting
rights shall vote together as one class for the election of directors of the
Company and on all other matters submitted to a vote of shareholders of the
Company.
(c) Except as provided in this Designation or by applicable law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth in this Designation) for
authorizing or taking any corporate action.
2.8.4 Certain Restrictions
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2.8.2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Company shall not:
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any shares
of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A Preferred
Stock and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock;
provided, however, that the Company may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares of
any stock of the Company ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock ranking on a
parity with the Series A Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Company's Board
-4-
of Directors) to all holders of such shares upon such terms as the
Company's Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(b) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (a) of this Section 2.8.4,
purchase or otherwise acquire such shares at such time and in such manner.
2.8.5 Liquidation Rights
Upon the liquidation, dissolution or winding up of the Company, whether
voluntary or involuntary, no distribution shall be made to (a) the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless, prior
thereto, the holders of shares of Series A Preferred Stock shall have received
an amount equal to the greater of (i) $.01 per share and (ii) the accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment, plus an aggregate amount per share equal to the Formula Number
then in effect times the aggregate amount to be distributed per share to holders
of Common Stock or (b) the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up.
2.8.6 Consolidation, Merger, etc.
In case the Company shall enter into any consolidation, merger, combination
or other transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other property, then in
any such case the then outstanding shares of Series A Preferred Stock shall at
the same time be similarly exchanged or changed into an amount per share equal
to the Formula Number then in effect 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 exchanged or changed.
In the event both this Section 2.8.6 and Section 2.8.2 appear to apply to a
transaction, this Section 2.8.6 will control.
2.8.7 No Redemption; No Sinking Fund
(a) The shares of Series A Preferred Stock shall not be subject to
redemption by the Company or at the option of any holder of Series A Preferred
-5-
Stock; provided, however, that the Company may purchase or otherwise acquire
outstanding shares of Series A Preferred Stock in the open market or by offer to
any holder or holders of shares of Series A Preferred Stock.
(b) The shares of Series A Preferred Stock shall not be subject to or
entitled to the operation of a retirement or sinking fund.
2.8.8 Ranking
The Series A Preferred Stock shall rank junior to all other series of
Preferred Stock of the Company, unless the Company's Board of Directors shall
specifically determine otherwise in fixing the powers, preferences and relative,
participating, optional and other special rights of the shares of such series
and the qualifications, limitations and restrictions thereof.
2.8.9 Fractional Shares
The Series A Preferred Stock shall be issuable upon exercise of the Rights
issued pursuant to the Rights Agreement in whole shares or in any fractional
share that is one one-hundredth (1/100th) of a share or any integral multiple of
such fraction, and shall entitle the holder, in proportion to such holder's
fractional shares, to receive dividends, exercise voting rights, participate in
distributions and have the benefit of all other rights of holders of Series A
Preferred Stock. In lieu of fractional shares, the Company, prior to the first
issuance of a share or a fractional share of Series A Preferred Stock, may elect
to (a) make a cash payment as provided in the Rights Agreement for a fractional
share other than one one-hundredth (1/100th) of a share or any integral multiple
thereof or (b) issue depository receipts evidencing such authorized fractional
share of Series A Preferred Stock pursuant to an appropriate agreement between
the Company and a depository selected by the Company; provided, however, that
such agreement shall provide that the holders of such depository receipts shall
have all the rights, privileges and preferences to which they are entitled as
holders of the Series A Preferred Stock.
2.8.10 Reacquired Shares
Any shares of Series A Preferred Stock purchased or otherwise acquired by
the Company 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, without designation as
to series until such shares are once more designated as part of a particular
series by the Company's Board of Directors pursuant to the provisions of Article
2 of the Restated Articles of Incorporation.
-6-
2.8.11 Amendment
None of the powers, preferences and relative, participating, optional and
other special rights of the Series A Preferred Stock as provided in this
Designation or in the Restated Articles of Incorporation shall be amended in any
manner that would alter or change the powers, preferences, rights or privileges
of the holders of Series A Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Series A Preferred Stock, voting as a separate class.
-7-
EXHIBIT B
FORM OF RIGHT CERTIFICATE
Certificate No. R- Rights
NOT EXERCISABLE AFTER November 9, 2009 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT THE OPTION OF THE COMPANY,
AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT.
RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) AND BY ANY SUBSEQUENT HOLDER OF SUCH RIGHTS ARE NULL AND VOID
AND NONTRANSFERABLE.
RIGHT CERTIFICATE
ONYX SOFTWARE CORPORATION
This certifies that ________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of October 25, 1999 (the "Rights Agreement"), between Onyx
Software Corporation, a Washington corporation (the "Company"), and ChaseMellon
Shareholder Services L.L.C., a New Jersey limited liability company (the "Rights
Agent"), unless the Rights evidenced hereby have been previously redeemed by the
Company, 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.,
Seattle time, on November 9, 2009 at the principal office of the Rights Agent,
or at the office of its successor as Rights Agent, one one-hundredth of a fully
paid non-assessable share of Series A Participating Cumulative Preferred Stock,
par value $.01 per share (the "Preferred Shares"), of the Company, at a purchase
price of $120 per one one-hundredth of a Preferred Share (the "Purchase Price"),
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this
Right Certificate (and the number of one-hundredths of a Preferred Share that
may be purchased upon exercise hereof) set forth above, and the Purchase Price
set forth above, are the number and Purchase Price as of November 9, 1999, based
on the Preferred Shares as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of one one-hundredths of a
Preferred Share that may be purchased upon the exercise of the Rights evidenced
by this Right Certificate are subject to modification and adjustment upon the
happening of certain events.
-1-
If the Rights evidenced by this Right Certificate are at any time
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement), such
Rights shall be null and void and nontransferable and the holder of any such
Right (including any purported transferee or subsequent holder) shall not have
any right to exercise or transfer any such Right.
The Right Certificate is subject to all 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 Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate (i) may be redeemed by the Company at a redemption price (in
cash or shares of Common Stock or other securities of the Company deemed by the
Company's Board of Directors to be at least equivalent in value) of $.01 per
Right (subject to adjustment, as provided in the Rights Agreement) or (ii) may
be exchanged in whole or in part for shares of the Company's Common Stock, par
value $.01 per share, or for Preferred Shares.
The Company may, but shall not be required to, issue fractions of Preferred
Shares or distribute certificates that evidence fractions of Preferred Shares
upon the exercise of any Right or Rights evidenced hereby. In lieu of issuing
fractional shares, the Company may elect to make a cash payment as provided in
the Rights Agreement for fractions of a share other than one one-hundredth
(1/100) of a share or any integral multiple thereof or to issue certificates or
utilize a depository arrangement as provided in the terms of the Rights
Agreement and the Preferred Shares.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Company that 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
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting,
-2-
shareholders (except as provided in the Rights Agreement), or to receive
dividends or subscriptions rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided in the
Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of _______________.
ONYX SOFTWARE CORPORATION
By: _______________________________
Its: ______________________________
COUNTERSIGNED:
ChaseMellon Shareholder Services L.L.C.,
as Rights Agent
By:______________________________
Its:___________________________
-3-
--Form of Reverse Side of Right Certificate--
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Right Certificate)
FOR VALUE RECEIVED _____________________________________________ hereby sells,
assigns and transfer unto ______________________________________
_____________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _____________ as attorney, to
transfer this Right Certificate on the books of the within-named Company, with
full power of substitution.
The undersigned hereby certifies that (1) the Rights evidenced by this
Right Certificate are not being sold, assigned or transferred by or on behalf of
a Person who is or was an Acquiring Person or an Affiliate or Associate thereof
(as such terms are defined in the Rights Agreement), (2) this Right Certificate
is not being sold, assigned or transferred to or on behalf of any such Acquiring
Person, Affiliate or Associate, and (3) after inquiry and to the best knowledge
of the undersigned, the undersigned did not acquire the Rights evidenced by this
Right Certificate from any Person who is or was an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement).
Dated:______________
Signature:________________________________
Signature Guarantee*
____________________________
*Your signature must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
-4-
--Form of Reverse Side of Right Certificate--
(continued)
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights represented by
the Right Certificate)
To: ONYX SOFTWARE CORPORATION
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights and requests that certificates for such
Preferred Shares be issued in the name of:
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 Right
Certificate, a new Right 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)
The undersigned hereby certifies that (1) the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement), and (2) after inquiry and to the best knowledge of the undersigned,
the undersigned did not acquire the Rights evidenced by this Right Certificate
from any Person who is or was an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement).
Dated:____________
Signature:______________________________
Signature Guarantee*
_________________________
*Your signature must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
-5-
--Form of Reverse Side of Right Certificate--
(continued)
NOTICE
The signature in the Form of Assignment or Form of Election to Purchase, as the
case may be, must conform to the name as written on the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form of Assignment or the
Form of Election to Purchase, as the case may be, is not completed, the Company
and the Rights Agent will deem the beneficial owner of the Rights evidenced by
this Right Certificate to be an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement) and such Assignment or Election to
Purchase will not be honored.
-6-
EXHIBIT C
ONYX SOFTWARE CORPORATION
SHAREHOLDER RIGHTS PLAN
SUMMARY OF RIGHTS
Distribution and On October 22, 1999, the Board of Directors (the "Board of
Transfer of Rights; Directors") of Onyx Software Corporation (the "Company")
Right Certificates: declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of Common Stock, par
value $.01 per share (the "Common Shares"), of the Company.
Prior to the Distribution Date referred to below, if any,
the Rights will be evidenced by and trade with the
certificates for the Common Stock. After the Distribution
Date, if any, the Company will mail Right certificates to
the Company's shareholders and the Rights will become
transferable apart from the Common Stock.
Distribution Date: The Rights will separate from the Common Stock and become
exercisable following the earlier of (i) the close of
business on the tenth business day after a public
announcement that a person or group (including any affiliate
or associate of such person or group), other than certain
grandfathered shareholders who owned 15% or more of the
Company's outstanding Common Stock on November 9, 1999, has
acquired beneficial ownership of 15% or more of the
outstanding Common Shares (such person or group being an
"Acquiring Person") and (ii) such date, if any, as may be
designated by the Board of Directors following the
commencement of, or first public disclosure of an intent to
commence, a tender or exchange offer for outstanding Common
Shares which could result in the offeror becoming the
beneficial owner of 15% or more of the outstanding Common
Shares (the earlier of such dates being the "Distribution
Date").
Preferred Stock After the Distribution Date, each Right will entitle the
Purchasable upon Exercise holder to purchase, for $120 (the "Purchase Price"), one
of Rights: one-hundredth (1/100) of a share of preferred stock of
Company stock with economic terms similar to that of one
share of the Company's Common Stock.
-1-
Flip-In: In the event a person becomes an Acquiring Person, the
Rights will entitle each holder of a Right (other than an
Acquiring Person (or any affiliate or associate of such
Acquiring Person)) to purchase, for the Purchase Price, that
number of Common Shares equivalent to the number of Common
Shares which at the time of the transaction would have a
market value of twice the Purchase Price. Any Rights that
are at any time beneficially owned by an Acquiring Person
(or any affiliate or associate of an Acquiring Person) will
be null and void and nontransferable and any holder of any
such Right (including any purported transferee or subsequent
holder) will be unable to exercise or transfer any such
Right.
Flip-Over: If the Company is acquired in a merger or other business
combination with another entity, or if 50% or more of its
assets or assets accounting for 50% or more of its net
income or revenues are transferred (in one or more
transactions), each Right will entitle its holder to
purchase, for the Purchase Price, that number of shares of
common stock of the person engaging in the transaction
having a then current market value of twice the Purchase
Price.
Exchange Provisions: After there is an Acquiring Person, the Board of Directors
may elect to exchange each Right (other than Rights that
have become null and void and nontransferable as described
above) for consideration per Right consisting of one-half of
the number of Common Shares that would be issuable at such
time upon the exercise of one Right and without payment of
the Purchase Price.
Redemption of Rights: At any time prior to any person or group becoming an
Acquiring Person, the Board of Directors may redeem the
Rights in whole, but not in part, at a price of $.01 per
Right, subject to adjustment as provided in the Rights
Agreement (the "Redemption Price").
Expiration of Rights: The Rights are not exercisable until the Distribution Date
and will expire on November 9, 2009, unless earlier redeemed
or exchanged by the Company.
Amendment of Terms of The terms of the Rights and the Rights Agreement may be
Rights: amended in any respect, without the approval of any holder
of the Rights, at any time prior to the Distribution Date.
-2-
Voting Rights: Until a Right is exercised, the holder thereof, as such,
will have no rights as a shareholder of the Company,
including, without limitation, the right to vote or receive
dividends.
Antidilution Provisions: In order to preserve the actual or potential economic value
of the Rights, the number of Preferred Shares or other
securities issuable upon exercise of the Right, the Purchase
Price, the Redemption Price and the number of Rights
associated with each outstanding Common Share are all
subject to adjustment by the Board of Directors pursuant to
certain customary antidilution provisions.
Taxes: The Rights distribution should not be taxable for federal
income tax purposes. Following an event that renders the
Rights exercisable or upon redemption of the Rights,
shareholders may recognize taxable income.
The foregoing is a summary of certain principal terms of the Shareholder
Rights Plan and is qualified in its entirety by reference to the detailed terms
of the Rights Agreement. A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an exhibit to a Registration Statement on
Form 8-A filed October 28, 1999 and is available free of charge from the
Company.
-3-
