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RIGHTS AGREEMENT
between
CREE, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Rights Agent
Dated as of May 30, 2002
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TABLE OF CONTENTS
Section 1. Certain Definitions...................................................................................1
Section 2. Appointment of Rights Agent...........................................................................5
Section 3. Issuance of Rights Certificates.......................................................................6
Section 4. Form of Rights Certificates...........................................................................7
Section 5. Countersignature and Registration.....................................................................8
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates...................................................8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.........................................9
Section 8. Cancellation and Destruction of Rights Certificates..................................................10
Section 9. Reservation and Availability of Capital Stock; Registration of Securities............................11
Section 10. Capital Stock Record Date............................................................................12
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights..........................12
Section 12. Certificate of Adjusted Purchase Price or Number of Shares...........................................19
Section 13. Consolidation, Merger, or Sale or Transfer of Assets or Earning Power................................19
Section 14. Fractional Rights and Fractional Shares..............................................................22
Section 15. Rights of Action.....................................................................................23
Section 16. Agreement of Rights Holders..........................................................................23
Section 17. Rights Certificate Holder Not Deemed a Shareholder...................................................24
Section 18. Concerning the Rights Agent..........................................................................24
Section 19. Merger or Consolidation or Change of Name of Rights Agent............................................25
Section 20. Duties of Rights Agent...............................................................................25
Section 21. Change of Rights Agent...............................................................................27
Section 22. Issuance of New Rights Certificates..................................................................28
Section 23. Redemption and Termination...........................................................................29
Section 24. Exchange.............................................................................................29
Section 25. Notice of Certain Events.............................................................................30
Section 26. Notices..............................................................................................31
Section 27. Supplements and Amendments...........................................................................32
Section 28. Successors...........................................................................................32
Section 29. Determinations and Actions by the Board of Directors, etc............................................32
Section 30. Benefits of this Agreement...........................................................................33
Section 31. Severability.........................................................................................33
Section 32. Governing Law........................................................................................33
Section 33. Counterparts.........................................................................................33
Section 34. Descriptive Headings.................................................................................33
EXHIBIT A - Articles of Amendment...............................................................................A-1
EXHIBIT B - Form of Rights Certificate..........................................................................B-1
EXHIBIT C - Summary of Rights to Purchase Preferred Stock.......................................................C-1
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of May 30, 2002 (this "AGREEMENT"), between
CREE, INC., a North Carolina corporation (the "COMPANY"), and AMERICAN STOCK
TRANSFER & TRUST COMPANY, a New York State banking corporation (the "RIGHTS
AGENT").
W I T N E S S E T H:
WHEREAS, on May 29, 2002 (the "RIGHTS DIVIDEND DECLARATION DATE"), the
Board of Directors of the Company authorized and declared a dividend
distribution of one Right (as such term is hereinafter defined) for each share
of common stock, $.00125 par value per share of the Company (the "COMMON
STOCK"), outstanding at the Close of Business on June 10, 2002 (the "RECORD
DATE"), and has authorized the issuance of one Right (as such number may be
hereinafter adjusted pursuant to the provisions of Section 11(p) hereof) for
each share of Common Stock of the Company issued between the Record Date and the
Distribution Date (as such term is hereinafter defined) and as otherwise
provided herein, each Right initially representing the right to purchase one
one-thousandth (1/1,000) of a share of Preferred Stock (as such term is
hereinafter defined), upon the terms and subject to the conditions hereinafter
set forth (each a "RIGHT" and collectively the "RIGHTS");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter defined)
of fifteen percent (15%) or more of the shares of Common Stock then outstanding,
but shall not include (i) the Company, (ii) any Subsidiary (as such term is
hereinafter defined) of the Company, or (iii) any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan. Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as the result of an acquisition of Common Stock by the Company which, by
reducing the number of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person to 15% or more of the Common Stock of
the Company then outstanding; provided, however, that if a Person shall become
the Beneficial Owner of 15% or more of the shares of Common Stock of the Company
then outstanding by reason of such an acquisition by the Company and shall,
after such acquisition, become the Beneficial Owner of any additional shares of
Common Stock, then such Person shall be deemed to be an "Acquiring Person." In
addition, notwithstanding the foregoing, if the Board of Directors of the
Company determines in good faith that a Person who would otherwise be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
paragraph (a), has become such inadvertently, and such Person divests as
promptly as practicable a sufficient number of shares of Common Stock so that
such Person would no longer be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall not be deemed
to be an "Acquiring Person" for any purposes of this Agreement.
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(b) "Adjustment Shares" shall have the meaning specified in
Section 11(a)(ii) hereof.
(c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.
(d) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right or obligation to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding
(whether or not in writing) or upon the exercise of conversion
rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own,"
(A) securities tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange, or (B) at any time prior to the
occurrence of a Triggering Event, securities issuable upon
exercise of the Rights, or (C) from and after the occurrence
of a Triggering Event, securities issuable upon exercise of
Rights which were acquired by such Person or any of such
Person's Affiliates or Associates prior to the Distribution
Date or pursuant to Section 3(a) or Section 22 hereof (the
"ORIGINAL RIGHTS") or pursuant to Section 11(i) hereof in
connection with an adjustment made with respect to any
Original Rights;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right to vote or dispose of or has "beneficial ownership" of
(as determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act and any successor provision
thereof), including pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however,
that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," any security under this subparagraph
(ii) as a result of an agreement, arrangement or understanding
to vote such security if such agreement, arrangement or
understanding: (A) arises solely from a revocable proxy given
in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable provisions
of the General Rules and Regulations under the Exchange Act,
and (B) is not reportable by such Person on Schedule 13D under
the Exchange Act (or comparable or successor form or report);
or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing), but excluding
customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of
securities until the expiration of forty (40) days after the
date of such acquisition, for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as
described in the proviso to subparagraph (ii) of this
paragraph (d)) or disposing of any voting securities of the
Company.
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(e) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of North Carolina are
authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00
P.M., North Carolina time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., North Carolina time, on the next
succeeding Business Day.
(g) "Closing Price" shall mean for each day the last sale
price or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the securities in
question are not listed or admitted to trading on the New York Stock Exchange,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the securities in question are listed or admitted to trading or, if the
securities in question are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
the National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use, or, if on any such date the
securities in question are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
selected by the Board of Directors of the Company and making a market in the
securities in question. If on any such date no market maker is making a market
in the securities in question, the fair value of such securities on such date as
determined in good faith by the Board of Directors of the Company shall be used.
(h) "Common Stock" shall mean the common stock, $.00125 par
value per share, of the Company, except that "Common Stock" when used with
reference to any Person other than the Company shall mean the capital stock of
such Person with the greatest voting power, or the equity securities or other
equity interest having power to control or direct the management, of such
Person.
(i) "common stock equivalents" shall have the meaning
specified in Section 11(a)(iii) hereof.
(j) "Continuing Director" shall mean (i) any member of the
Board of Directors of the Company, while such Person is a member of the Board of
Directors, who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative of an Acquiring Person or of any such
Affiliate or Associate, and was a member of the Board of Directors prior to the
date of this Agreement, or (ii) any Person who subsequently becomes a member of
the Board of Directors, while such Person is a member of the Board of Directors,
who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring
Person, or a representative of an Acquiring Person or of any such Affiliate or
Associate, if such Person's nomination for election or election to the Board of
Directors is recommended or approved by a majority of the Continuing Directors.
(k) "current market price" shall have the meaning specified in
Section 11(d) hereof.
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(l) "Current Value" shall have the meaning specified in
Section 11(a)(iii) hereof.
(m) "Distribution Date" shall mean the earlier of (i) the
Close of Business on the tenth Business Day after the Stock Acquisition Date
(or, if the tenth Business Day after the Stock Acquisition Date occurs before
the Record Date, the Close of Business on the Record Date), or (ii) the Close of
Business on the tenth Business Day (or such later day as may be determined by
the Company's Board of Directors) after the date of the commencement of, or the
first public announcement of the intent to commence (as determined pursuant to
Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act in
effect on the date of this Agreement), 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 Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such plan), if upon consummation thereof, such Person would be an
Acquiring Person (including any such date which is after the date of this
Agreement and prior to the issuance of the Rights), in either instance other
than pursuant to a Qualified Offer.
(n) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(o) "Expiration Date" shall mean the earliest of (i) the Close
of Business on the tenth anniversary of the Record Date (the "FINAL EXPIRATION
DATE"), (ii) the time at which the Rights are redeemed as provided in Section 23
hereof, or (iii) the time at which the Rights are exchanged pursuant to Section
24 hereof.
(p) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company, joint venture, association, trust, or
other entity, and shall include any successor (by merger or otherwise) of such
entity.
(q) "Preferred Stock" shall mean shares of Series A Preferred
Stock, $.01 par value per share, of the Company having the rights and
preferences set forth in the form of the Articles of Amendment attached to this
Agreement as EXHIBIT A, and to the extent necessary to permit the full exercise
of the then outstanding Rights, any other series of preferred stock of the
Company designated by the Board of Directors of the Company for such purposes
containing terms substantially similar to the Series A Preferred Stock.
(r) "Preferred Stock Fraction" shall mean one one-thousandth
(1/1,000) of a share of Preferred Stock.
(s) "Principal Party" shall have the meaning specified in
Section 13(b) hereof.
(t) "Purchase Price" shall have the meaning specified in
Section 4(a) hereof and Section 7(b) hereof, as modified by Section 11(a)(ii)
and Section 13(a) hereof.
(u) "Qualified Offer" shall have the meaning specified in
Section 11(a)(ii) hereof.
(v) "Record Date" shall have the meaning specified in the
first Whereas clause hereof.
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(w) "Redemption Price" shall have the meaning specified in
Section 23(a) hereof.
(x) "Rights Certificate" shall have the meaning specified in
Section 3(a) hereof.
(y) "Section 11(a)(ii) Event" shall mean any event described
in Section 11(a)(ii) hereof.
(z) "Section 11(a)(ii) Trigger Date" shall have the meaning
specified in Section 11(a)(iii).
(aa) "Section 13 Event" shall mean any event described in
clause (x), (y) or (z) of Section 13(a) hereof.
(bb) "Securities Act" shall have the meaning specified in
Section 9(c) hereof.
(cc) "Spread" shall have the meaning specified in Section
11(a)(iii) hereof.
(dd) "Stock Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed or amended pursuant to Section 13(d) under
the Exchange Act) by the Company or an Acquiring Person, that an Acquiring
Person has become such, other than pursuant to a Qualified Offer.
(ee) "Subsidiary" shall mean, with reference to any Person,
any corporation or other entity of which securities or other ownership interests
having ordinary voting power, in the absence of contingencies, to elect at least
a majority of the directors or other persons performing similar functions, is
beneficially owned, directly or indirectly, by such Person, or otherwise
controlled by such Person.
(ff) "Substitution Period" shall have the meaning specified in
Section 11(a)(iii) hereof.
(gg) "Summary of Rights" shall have the meaning specified in
Section 3(b) hereof.
(hh) "Trading Day" shall mean a day on which the principal
national securities exchange on which the securities in question are listed or
admitted to trading is open for the transaction of business or, if such
securities are not listed or admitted to trading on any national securities
exchange, a Business Day.
(ii) "Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Stock) in accordance with the terms and conditions
5
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-rights agents as it may deem necessary or
desirable.
Section 3. ISSUANCE OF RIGHTS CERTIFICATES. (a) Until the Distribution
Date, (x) the Rights will be evidenced by the certificates for the Common Stock
registered in the names of the holders of the Common Stock (which certificates
for Common Stock shall be deemed also to be certificates for Rights) and not by
separate certificates, and (y) the Rights will be transferable with and only
with the transfer of the underlying shares of Common Stock (including a transfer
to the Company). As soon as practicable after the Distribution Date, the Rights
Agent will send by first-class, postage prepaid mail, to each record holder of
the Common Stock as of the Close of Business on the Distribution Date, at the
address of such holder shown on the records of the Company, one or more rights
certificates, in substantially the form of EXHIBIT B hereto (each a "RIGHTS
CERTIFICATE" and, collectively, the "RIGHTS CERTIFICATES"), evidencing one Right
for each share of Common Stock so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of Rights per share of
Common Stock has been made pursuant to Section 11(p) hereof, at the time of
distribution of the Rights Certificates, the Company shall make the necessary
and appropriate rounding adjustments (in accordance with Section 14(a) hereof)
so that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of and after
the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) The Company will make available a copy of a Summary of Rights, in
substantially the form attached hereto as EXHIBIT C (the "SUMMARY OF RIGHTS"),
to any holder of Rights who may so request from time to time. With respect to
certificates for the Common Stock outstanding as of the Record Date or issued
subsequent to the Record Date, until the Distribution Date, the Rights will be
evidenced by such certificates for the Common Stock and the registered holders
of the Common Stock shall also be the registered holders of the associated
Rights. Until the earlier of the Distribution Date or the Expiration Date, the
transfer of any certificates representing shares of Common Stock in respect of
which Rights have been issued shall also constitute the transfer of the Rights
associated with such shares of Common Stock.
(c) Subject to Section 22 hereof, Rights shall be issued in respect of
all shares of Common Stock which are outstanding on the Record Date and which
are issued after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date. Certificates representing such shares of Common
Stock shall also be deemed to be certificates for Rights and shall (as soon as
practicable following the Record Date) bear the following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in the Rights Agreement between
Cree, Inc. (the "Company") and American Stock Transfer & Trust
Company, dated as of May 30, 2002 (as it may be amended,
modified or supplemented from time to time, the "Rights
Agreement"), the terms of which are hereby incorporated herein
by reference. Under certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on
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the date of mailing, without charge promptly after receipt of
a written request therefor. Under certain circumstances set
forth in the Rights Agreement, Rights issued to, or held by,
any person who is, was or becomes an Acquiring Person or any
Affiliate or Associate thereof (as such terms are defined in
the Rights Agreement), whether currently held by or on behalf
of such person or by any subsequent holder of such Rights,
shall become null and void.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and the registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer
of any of such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
Section 4. FORM OF RIGHTS CERTIFICATES. (a) The Rights Certificates
(and the forms of election to purchase and of assignment to be printed on the
reverse thereof) shall each be substantially in the form set forth in EXHIBIT B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 11 and Section 22 hereof, the Rights
Certificates, whenever distributed, shall be dated as of the Record Date and on
their face shall entitle the holders thereof to purchase such number of
Preferred Stock Fractions as shall be set forth therein at the exercise price
therefor set forth therein (such exercise price per Preferred Stock Fraction,
the "PURCHASE PRICE"), but the amount and type of securities purchasable upon
the exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a),
Section 11(i) or Section 22 hereof that represents Rights beneficially owned by:
(i) an Acquiring Person or any Associate or Affiliate of an Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom such Acquiring Person has any
plan, agreement, arrangement or understanding (whether or not in writing)
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, agreement, arrangement or
understanding (whether or not in writing) which has as a primary purpose or
effect the avoidance of Section 7(e) hereof, and any Rights Certificate issued
pursuant to Section 6 or Section 11 hereof upon transfer, exchange, replacement
or adjustment of any other Rights Certificate referred to in this sentence,
shall contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Rights Certificate and the Rights represented hereby
shall become null and void in the circumstances specified in
Section 7(e) of the Rights Agreement.
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The provisions of Section 7(e) of this Agreement shall be operative whether or
not the foregoing legend is contained on any such Rights Certificates.
Section 5. COUNTERSIGNATURE AND REGISTRATION. (a) The Rights
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its Chief Executive Officer, its President or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the Company's
seal or a facsimile thereof, and shall be attested by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer of the Company.
The Rights Certificates shall be countersigned by the Rights Agent, either
manually or by facsimile signature, and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such officer of the
Company before counter-signature by the Rights Agent and issuance and delivery
by the Company, such Rights Certificates, nevertheless, may be countersigned by
the Rights Agent, and issued and delivered by the Company with the same force
and effect as though the person who signed such Rights Certificates had not
ceased to be such officer of the Company; and any Rights Certificate may be
signed on behalf of the Company by any person who, at the actual date of the
execution of such Rights Certificate, shall be a proper officer of the Company
to sign such Rights Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or offices designated as the
appropriate place for the surrender of the Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the certificate number of each of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES. (a)
Subject to the provisions of Section 4(b), Section 7(e) and Section 14 hereof,
at any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the Expiration Date, any Rights Certificate or
Certificates (other than Rights Certificates representing Rights that have been
exchanged pursuant to Section 24 hereof) may be transferred, split up, combined
or exchanged for another Rights Certificate or Certificates, entitling the
registered holder to purchase a like number of Preferred Stock Fractions (or,
following a Triggering Event, Common Stock, other securities, cash or other
assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitles such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged
at the principal office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer, split up, combination or
exchange of any such surrendered Rights Certificate until the registered holder
thereof shall have completed and signed the form of assignment and related
certificate set forth on the reverse side of such Rights Certificate and shall
have provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
8
shall reasonably request. Thereupon, the Rights Agent shall, subject to Section
4(b), Section 7(e), Section 14 and Section 24 hereof, countersign and deliver to
the Person entitled thereto a Rights Certificate or Rights Certificates, as the
case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights
Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature and delivery
to the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS. (a) Subject to Section 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
related certificate on the reverse side thereof duly executed, to the Rights
Agent at the principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price for the total
number of the Preferred Stock Fractions (or other securities, cash or other
assets, as the case may be) as to which such surrendered Rights are then
exercisable, at or prior to the Expiration Date.
(b) The Purchase Price for each Preferred Stock Fraction
pursuant to the exercise of a Right shall initially be One Hundred Ten Dollars
($110.00), and shall be subject to adjustment from time to time as provided in
Section 11(a)(ii) and Section 13(a) hereof and shall be payable in lawful money
of the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
contained therein duly executed, accompanied by payment with respect to each
Right so exercised, of the Purchase Price per Preferred Stock Fraction (or other
securities, cash or other assets, as the case may be) to be purchased as set
forth below and an amount equal to any applicable transfer tax, the Rights Agent
shall, subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition
from any transfer agent of the shares of Preferred Stock (or make available, if
the Rights Agent is the transfer agent for such shares) certificates for the
total number of Preferred Stock Fractions to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests, or
(B) if the Company shall have elected to deposit the total number of shares of
Preferred Stock issuable upon exercise of the Rights hereunder with a depositary
agent, requisition from the depositary agent depositary receipts representing
such number of Preferred Stock Fractions as are to be purchased (in which case
certificates for the shares of Preferred Stock represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Company will direct the depositary agent to comply with such request, (ii)
requisition from the Company the amount of cash, if any, to be paid in lieu of
fractional shares in accordance with Section 14 hereof, (iii) after receipt of
9
such certificates or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder and (iv) after receipt
thereof, deliver such cash, if any, to or upon the order of the registered
holder of such Rights Certificate. The payment of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii) hereof) shall be made in
cash or by certified bank check or bank draft payable to the order of the
Company. In the event that the Company is obligated to issue other securities
(including Common Stock) of the Company, pay cash and/or distribute other
property pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities, cash and/or other property
are available for distribution by the Rights Agent, if and when appropriate. The
Company reserves the right to require, prior to the occurrence of a Triggering
Event, that upon any exercise of Rights, a number of Rights be exercised so that
only whole shares of Preferred Stock would be issued.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii) Event, any
Rights beneficially owned by: (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
the Acquiring Person has any plan, agreement, arrangement or understanding
(whether or not in writing) regarding the transferred Rights or (B) a transfer
which a majority of the Continuing Directors of the Company has determined is
part of any plan, agreement, arrangement or understanding (whether or not in
writing) which has as a primary purpose or effect the avoidance of this Section
7(e), shall become null and void without any further action and no holder of
such Rights shall thereupon have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise from and
after such occurrence. The Company shall use all reasonable efforts to ensure
that the provisions of this Section 7(e) and Section 4(b) hereof are complied
with, but shall have no liability to any holder of Rights Certificates or any
other Person as a result of its failure to make any determinations with respect
to an Acquiring Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the form
of election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
10
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company,
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Rights Certificates to the Company, or shall, at the written request
of the Company, destroy such cancelled Rights Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK; REGISTRATION
OF SECURITIES. (a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and following the occurrence of a Triggering Event, out of its
authorized and unissued shares of Common Stock and/or other securities) the
number of shares of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) that, as provided in
this Agreement, will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) So long as the shares of Preferred Stock (and, following
the occurrence of a Triggering Event, Common Stock and/or other securities)
issuable and deliverable upon the exercise of the Rights may be listed on any
national securities exchange or national securities association, the Company
shall use its best efforts to cause, from and after such time as the Rights
become exercisable, all shares reserved for such issuance to be listed on such
national securities exchange or association upon official notice of issuance
upon such exercise; provided, however, that the Company shall have no obligation
hereunder to list the shares of Preferred Stock on any national securities
exchange or association.
(c) The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) hereof), or, if required by law, the Distribution Date, a
registration statement under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), with respect to the securities purchasable upon exercise of
the Rights on an appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities, and
(B) the Expiration Date. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various States in connection with the exercisability of the Rights.
The Company may temporarily suspend, for a period of time not to exceed ninety
(90) days after the date set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. In addition,
if the Company shall determine that a registration statement is required
following the Distribution Date, the Company may temporarily suspend the
exercisability of the Rights until such time as a registration statement has
been declared effective. Notwithstanding any provision of this Agreement to the
11
contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction has not been obtained, the exercise
thereof is not permitted under applicable law or a registration statement has
not been declared effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Preferred Stock Fractions
(and, following the occurrence of a Triggering Event, Common Stock and/or other
securities) delivered upon exercise of the Rights shall, at the time of delivery
of the certificates for such shares (subject to payment of the Purchase Price),
be duly and validly authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for a number of Preferred Stock Fractions
(or Common Stock and/or other securities, as the case may be) upon the exercise
of Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or delivery of Rights
Certificates to a Person other than, or the issuance or delivery of a number of
Preferred Stock Fractions (or Common Stock and/or other securities, as the case
may be) in respect of a name other than that of, the registered holder of the
Rights Certificates evidencing Rights surrendered for transfer or exercise, or
to issue or deliver any certificates for a number of Preferred Stock Fractions
(or Common Stock and/or other securities, as the case may be) in a name other
than that of the registered holder upon the exercise of any Rights until such
tax shall have been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax is due.
Section 10. CAPITAL STOCK RECORD DATE. Each Person in whose name any
certificate for a number of Preferred Stock Fractions (or Common Stock and/or
other securities, as the case may be) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of such
Preferred Stock Fractions (or Common Stock and/or other securities, as the case
may be) represented thereby on, and such certificate shall be dated, the date
upon which the Rights Certificate evidencing such Rights was duly surrendered
and payment of the Purchase Price (and all applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Stock Fraction (or Common Stock and/or other securities, as
the case may be) transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the Preferred Stock
Fraction (or Common Stock and/or other securities, as the case may be) transfer
books of the Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate shall not be entitled to any rights
of a shareholder of the Company with respect to shares for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares covered by
each Right, and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the
Preferred Stock payable in shares of Preferred Stock, (B)
subdivide the outstanding Preferred Stock, (C) combine the
12
outstanding Preferred Stock into a smaller number of shares,
or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger
in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section
11(a) and Section 7(e) hereof, the Purchase Price in effect at
the time of the record date for such dividend or of the
effective date of such subdivision, combination or
reclassification, and the number and kind of shares of
Preferred Stock or capital stock, as the case may be, issuable
on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be
entitled to receive, upon payment of the Purchase Price then
in effect, the aggregate number and kind of shares of
Preferred Stock or capital stock, as the case may be, which,
if such Right had been exercised immediately prior to such
date and at a time when the Preferred Stock transfer books of
the Company were open, such holder would have owned upon such
exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. If an
event occurs which would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment
provided for in this Section 11(a)(i) shall be in addition to,
and shall be made prior to, any adjustment required pursuant
to Section 11(a)(ii) hereof.
(ii) Subject to Section 24 of this Agreement, in the
event any Person shall become an Acquiring Person (unless the
event causing such Person to become an Acquiring Person is a
transaction set forth in Section 13(a) hereof, or is an
acquisition of shares of Common Stock pursuant to a tender
offer or an exchange offer for all outstanding shares of
Common Stock at a price and on terms determined by at least a
majority of the members of the Board of Directors, who are not
officers of the Company and who are not representatives,
nominees, Affiliates or Associates of an Acquiring Person,
after receiving advice from one or more investment banking
firms, to be (a) at a price which is fair and adequate to
shareholders (taking into account all factors which such
members of the Board of Directors of the Company deem relevant
including, without limitation, the long-term prospects and
value of the Company and prices which could reasonably be
achieved if the Company or its assets were sold on an orderly
basis designed to realize maximum value) and (b) otherwise in
the best interests (including the possibility that these
interests may best be served by the continued independence of
the Company) of the Company and its shareholders (a "QUALIFIED
OFFER")), then, from and after the latest of the Share
Acquisition Date and the Distribution Date, proper provision
shall be made so that each holder of a Right (except as
provided below and in Section 7(e) hereof) shall thereafter
have the right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of this
Agreement, in lieu of a number of Preferred Stock Fractions,
such number of shares of Common Stock of the Company as shall
equal the result obtained by (x) multiplying the then current
Purchase Price by the then number of Preferred Stock Fractions
for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event, and (y)
dividing that product (which, following such first occurrence,
shall thereafter be referred to as the "PURCHASE PRICE" for
each Right and for all purposes of this Agreement) by fifty
13
percent (50%) of the current market price (determined pursuant
to Section 11(d) hereof) per share of Common Stock on the date
of such first occurrence (such number of shares being referred
to herein as the "ADJUSTMENT SHARES").
(iii) In the event that the number of shares of
Common Stock which is authorized by the Company's articles of
incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights is not
sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this
Section 11(a), the Company shall: (A) determine the excess of
(1) the value of the Adjustment Shares issuable upon the
exercise of a Right (the "CURRENT VALUE") over (2) the
Purchase Price (such excess, the "SPREAD"), and (B) with
respect to each Right, make adequate provision to substitute
for the Adjustment Shares, upon payment of the applicable
Purchase Price, (1) cash, (2) a reduction in the Purchase
Price, (3) Common Stock or other equity securities of the
Company (including, without limitation, shares, or units of
shares, of preferred stock), which the Board of Directors of
the Company has deemed to have essentially the same value or
economic rights as shares of Common Stock (such shares,
"COMMON STOCK EQUIVALENTS"), (4) debt securities of the
Company, (5) other assets or (6) any combination of the
foregoing, having an aggregate value equal to the Current
Value (less the amount of any reduction to the Purchase
Price), where such aggregate value has been determined by the
Board of Directors of the Company based upon the advice of a
nationally recognized investment banking firm selected by the
Board of Directors of the Company; provided, however, that if
the Company shall not have made adequate provision to deliver
value pursuant to clause (B) above within thirty (30) days
following the first occurrence of a Section 11(a)(ii) Event
(the "SECTION 11(A)(II) TRIGGER DATE"), then the Company shall
be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price,
shares of Common Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate
value equal to the Spread. If the Board of Directors of the
Company shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the Rights,
the thirty (30) day period set forth above may be extended to
the extent necessary, but not more than ninety (90) days after
the Section 11(a)(ii) Trigger Date, in order that the Company
may seek shareholder approval for the authorization of such
additional shares (such thirty (30) day period, as it may be
extended, being referred to herein as the "SUBSTITUTION
PERIOD"). To the extent that the Company determines that some
action is to be taken pursuant to the first and/or second
sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights and (y) may
suspend the exercisability of the Rights until the expiration
of the Substitution Period in order to seek shareholder
approval for such authorization of additional shares and/or to
decide the appropriate form of distribution to be made
pursuant to such first sentence and to determine the value
thereof. In the event of any such suspension, the Company
shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended,
14
as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of each Adjustment Share shall
be the current market price (as determined pursuant to Section
11(d) hereof) per share of Common Stock on the Section
11(a)(ii) Trigger Date and the per share or per unit value of
any "common stock equivalent" shall be deemed to equal the
current market price per share of the Common Stock on such
date.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Stock
entitling them to subscribe for or purchase (for a period expiring within
forty-five (45) calendar days after such record date) Preferred Stock (or shares
having the same rights, privileges and preferences as the shares of Preferred
Stock ("EQUIVALENT PREFERRED STOCK")), or securities convertible into Preferred
Stock or equivalent preferred stock, at a price per share of Preferred Stock or
equivalent preferred stock (or having a conversion price per share, if a
security convertible into Preferred Stock or equivalent preferred stock) less
than the current market price (as determined pursuant to Section 11(d) hereof)
per share of Preferred Stock on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date, plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock and/or
equivalent preferred stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price, and the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or equivalent preferred stock so to be
offered for subscription or purchase (or into which the convertible securities
to be offered are initially convertible). In case such subscription price may be
paid by delivery of consideration, part or all of which may be in a form other
than cash, the value of such consideration shall be as determined in good faith
by the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. Shares of Preferred Stock owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made successively whenever
such a record date is fixed; and in the event that such rights or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a regular
quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the current market
price (as determined pursuant to Section 11(d) hereof) per share of Preferred
Stock on such record date, less the fair market value (as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent) of the portion of the
cash, assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to a share of Preferred Stock, and
the denominator of which shall be such current market price (as determined
15
pursuant to Section 11(d) hereof) per share of Preferred Stock. Such adjustments
shall be made successively whenever such a record date is fixed, and in the
event that such distribution is not so made, the Purchase Price shall be
adjusted to be the Purchase Price which would have been in effect if such record
date had not been fixed.
(d)(i) For the purpose of any computation hereunder, other
than computations made pursuant to Section 11(a)(iii) hereof,
the "CURRENT MARKET PRICE" per share of Common Stock on any
date shall be deemed to be the average of the daily Closing
Prices per share of such Common Stock for the thirty (30)
consecutive Trading Days immediately prior to such date, and
for purposes of computations made pursuant to Section
11(a)(iii) hereof, the "CURRENT MARKET PRICE" per share of
Common Stock on any date shall be deemed to be the average of
the daily Closing Prices per share of such Common Stock for
the ten (10) consecutive Trading Days immediately following
such date; provided, however, that in the event that the
current market price per share of the Common Stock is
determined during a period following the announcement by the
issuer of such Common Stock of (A) a dividend or distribution
on such Common Stock payable in shares of such Common Stock or
securities convertible into shares of Common Stock (other than
the Rights), or (B) any subdivision, combination or
reclassification of such Common Stock, and prior to the
expiration of the requisite thirty (30) Trading Day or ten
(10) Trading Day period, as set forth above, after the
ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or
reclassification, then, and in each such case, the "current
market price" shall be properly adjusted to take into account
ex-dividend trading.
(ii) For the purpose of any computation hereunder,
the "CURRENT MARKET PRICE" per share of Preferred Stock shall
be determined hereof the same manner as set forth above for
the Common Stock in Section 11(d)(i) hereof. If the current
market price per share of Preferred Stock cannot be determined
in the manner provided above or if the Preferred Stock is not
publicly held or listed or traded in a manner described in
Section 1(g) hereof, the "CURRENT MARKET PRICE" per share of
Preferred Stock shall be conclusively deemed to be an amount
equal to one thousand (1,000) (as such number may be
appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common
Stock occurring after the date of this Agreement) multiplied
by the current market price per share of Common Stock. If
neither the Common Stock nor the Preferred Stock is publicly
held or so listed or traded, "CURRENT MARKET PRICE" per share
shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes. For all
purposes of this Agreement, the "CURRENT MARKET PRICE" of a
Preferred Stock Fraction shall be equal to the "CURRENT MARKET
PRICE" of one share of Preferred Stock divided by one thousand
(1,000).
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one ten-thousandth of a
share of Common Stock or other share or one one-millionth of a share of
16
Preferred Stock, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three (3) years from the date of the transaction which
mandates such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of any Right and the Purchase Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Stock contained in
Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m) hereof, and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred
Stock shall apply on like terms to any such other shares; provided, however,
that the Company shall not be liable for its inability to reserve and keep
available for issuance upon exercise of the Rights pursuant to Section 11(a)(ii)
a number of shares of Common Stock greater than the number then authorized by
the articles of incorporation of the Company but not outstanding or reserved for
other purposes.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Preferred Stock
Fractions purchasable from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
Preferred Stock Fractions (calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of Preferred Stock Fractions covered by a Right
immediately prior to this adjustment, by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of Preferred Stock Fractions purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of Preferred Stock
Fractions for which a Right was exercisable immediately prior to such
adjustment, at the adjusted Purchase Price. Each Right held of record prior to
such adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the
Rights Certificates have been issued, shall be at least ten (10) days later than
the date of the public announcement. If Rights Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders of
17
record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates to be so
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of Preferred Stock Fractions issuable upon the exercise of
the Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per Preferred Stock Fraction and the
number of Preferred Stock Fractions which were expressed in the initial Rights
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, attributable to
the number of Preferred Stock Fractions issuable upon exercise of the Rights,
the Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable such a number of Preferred Stock Fractions at such
adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, the issuance to the holder of any Right exercised after such record date
the number of Preferred Stock Fractions and other capital stock or securities of
the Company, if any, issuable upon such exercise over and above the number of
Preferred Stock Fractions and other capital stock or securities of the Company,
if any, issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the Company shall deliver to
such holder a due xxxx or other appropriate instrument evidencing such holder's
right to receive such additional shares or securities upon the occurrence of the
event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that the Board of Directors of the Company, in
its good faith judgment, shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Stock, (ii) issuance wholly for
cash of shares of Preferred Stock at less than the current market price, (iii)
issuance wholly for cash of any shares of Preferred Stock or securities which by
their terms are convertible into or exchangeable for shares of Preferred Stock,
(iv) stock dividends or (v) issuance of rights, options or warrants referred to
in this Section 11, hereafter made by the Company to holders of its Preferred
Stock shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person (other
than with a Subsidiary of the Company in a transaction which does not violate
the provisions of Section 11(o) hereof), (ii) merge with or into any other
Person (other than with a Subsidiary of the Company in a transaction which does
not violate the provisions of Section 11(o) hereof) or engage in a share
18
exchange with any other Person or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction or a series of related
transactions, assets, earning power or cash flow aggregating more than fifty
percent (50%) of the assets, earning power or cash flow of the Company and its
Subsidiaries (taken as a whole) to, any other Person or Persons (other than to
the Company and/or any of its Subsidiaries in one or more transactions each of
which does not violate the provisions of Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger, share exchange or sale,
there are any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger, share
exchange or sale, the shareholders of the Person who constitutes, or would
constitute, the "Principal Party" for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned by such Person or any of
its Affiliates and Associates.
(o) The Company covenants and agrees that, after the earlier
of the Distribution Date or the Stock Acquisition Date, it will not, except as
permitted by Section 23 or Section 27 hereof, take (or permit any Subsidiary to
take) any action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or otherwise eliminate
the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after the
Rights Dividend Declaration Date and prior to the Distribution Date (i) declare
a dividend on the outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding shares of Common Stock or (iii) combine
the outstanding shares of Common Stock into a smaller number of shares, the
number of Rights associated with each share of Common Stock then outstanding, or
issued or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction, the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event, and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate and (c) if a
Distribution Date has occurred, mail a brief summary thereof to each holder of a
Rights Certificate in accordance with Section 26 hereof. The Rights Agent shall
be fully protected in relying on any such certificate and on any adjustment
therein contained and shall not be obligated or responsible for calculating any
adjustment nor shall it be deemed to have knowledge of any such adjustment
unless and until it shall have received such a certificate.
Section 13. CONSOLIDATION, MERGER, SHARE EXCHANGE, SALE OR TRANSFER OF
ASSETS, EARNING POWER OR CASH FLOW. (a) In the event that, following the Stock
Acquisition Date, directly or indirectly, (x) the Company shall consolidate
with, or merge with and into, any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof), and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any Person (other than a Subsidiary of the Company
19
in a transaction which complies with Section 11(o) hereof) shall consolidate
with, or merge with or into, the Company, or the Company shall engage in a share
exchange with any Person, and the Company shall be the continuing or surviving
corporation of such consolidation, merger or share exchange and, in connection
with such consolidation, merger or share exchange, all or part of the
outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other Person or cash or any other property, or (z)
the Company shall sell, or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one transaction or a series
of related transactions, assets, earning power or cash flow aggregating more
than fifty percent (50%) of the assets, earning power or cash flow of the
Company and its Subsidiaries (taken as a whole) to any Person or Persons (other
than the Company or any Subsidiary of the Company in one or more transactions
each of which complies with Section 11(o) hereof), then, and in each such case
(except as may be contemplated by Section 13(d) hereof), proper provision shall
be made so that:
(i) each holder of a Right (other than Rights that
theretofore became null and void pursuant to Section 7(e)
hereof) shall thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement (or, if any
Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, at the Purchase Price in
effect immediately prior to the first occurrence of a Section
11(a)(ii) Event), such number of validly authorized and
issued, fully paid, nonassessable and freely tradeable shares
of Common Stock of the Principal Party (as such term is
hereinafter defined), free and clear of any liens,
encumbrances, rights of first refusal or other adverse claims,
as shall be equal to the result obtained by (1) multiplying
the then current Purchase Price by the number of Preferred
Stock Fractions for which a Right is exercisable immediately
prior to the first occurrence of a Section 13 Event (or, if a
Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of
Preferred Stock Fractions for which a Right was exercisable
immediately prior to the first occurrence of a Section
11(a)(ii) Event by the Purchase Price in effect immediately
prior to such first occurrence), and (2) dividing that product
(which, following the first occurrence of a Section 13 Event,
shall be referred to as the "Purchase Price" for each Right
and for all purposes of this Agreement) by fifty percent (50%)
of the current market price (determined pursuant to Section
11(d)(i) hereof) per share of the Common Stock of such
Principal Party on the date of consummation of such Section 13
Event;
(ii) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such Section 13 Event, all
the obligations and duties of the Company pursuant to this
Agreement;
(iii) the term "COMPANY" shall thereafter be deemed
to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply
only to such Principal Party following the first occurrence of
a Section 13 Event;
(iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) in connection
with the consummation of any such transaction as may be
20
necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in
relation to its shares of Common Stock thereafter deliverable
upon the exercise of the Rights; and
(v) the provisions of Section 11(a)(ii) hereof shall
be of no effect following the first occurrence of any Section
13 Event.
(b) "PRINCIPAL PARTY" shall mean:
(i) in the case of any transaction described in
clause (x) or (y) of the first sentence of Section 13(a)
hereof, the Person that is the issuer of any securities into
which shares of Common Stock of the Company are converted in
such merger or consolidation, or for which such shares of
Common Stock of the Company are exchanged in such share
exchange, and if no securities are so issued, the Person that
is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in
clause (z) of the first sentence of Section 13(a) hereof, the
Person that is the party receiving the greatest portion of the
assets, earning power or cash flow transferred pursuant to
such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of such Person
is not at such time, and has not been continuously over the preceding twelve
(12) month period, registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect Subsidiary of another Person the Common Stock of
which is and has been so registered, "Principal Party" shall refer to such other
Person; and (2) in case such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Stock of two or more of which are and have been
so registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation,
merger, share exchange, sale or transfer unless the Principal Party shall have
sufficient authorized and unissued shares of Common Stock not reserved for other
purposes to permit the full exercise of the Rights in accordance with this
Section 13, and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger, share exchange, sale or transfer of assets mentioned in
paragraph (a) of this Section 13, the Principal Party at its own expense will:
(i) prepare and file a registration statement under
the Securities Act, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an
appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date;
(ii) take all such other action as may be necessary
to enable the Principal Party to issue the securities
purchasable upon exercise of the Rights, including but not
limited to the registration or qualification of such
21
securities under all requisite securities laws of
jurisdictions of the various states and the listing of such
securities on such exchanges and trading markets as may be
necessary or appropriate and the securing of any regulatory
approvals which may be required; and
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates which comply in all respects with the requirements
for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers,
consolidations or share exchanges or sales or other transfers. In the event that
a Section 13 Event shall occur at any time after the occurrence of a Section
11(a)(ii) Event, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section 13(a) hereof.
(d) Notwithstanding anything in this Agreement to the
contrary, this Section 13 shall not be applicable to a transaction described in
clauses (x) and (y) of the first sentence of Section 13(a) hereof if (i) such
transaction is consummated with a Person or Persons who acquired shares of
Common Stock pursuant to a tender offer or exchange offer for all outstanding
shares of Common Stock which is a Qualified Offer as such term is defined in
Section 11(a)(ii) hereof (or a wholly-owned Subsidiary of any such Person or
Persons), (ii) the price per share of Common Stock offered in such transaction
is not less than the price per share of Common Stock paid to all holders of
shares of Common Stock whose shares were purchased pursuant to such tender offer
or exchange offer, and (iii) the form of consideration being offered to the
remaining holders of shares of Common Stock pursuant to such transaction is the
same as the form of consideration paid pursuant to such tender offer or exchange
offer. Upon consummation of any such transaction contemplated by this Section
13(d), all Rights hereunder shall expire.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company
shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(p) hereof, or to distribute Rights
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Rights Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For purposes of this Section 14(a), the current market value of a whole
Right shall be the Closing Price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been otherwise
issuable. The Closing Price of the Rights for any day shall be the last sale
price, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Rights are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights are
listed or admitted to trading, or if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by Nasdaq or such other system then in use or, if on any
such date the Rights are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
22
a market in the Rights selected by the Board of Directors of the Company. If on
any such date no such market maker is making a market in the Rights, the fair
value of the Rights on such date as determined in good faith by the Board of
Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than integral multiples of Preferred Stock
Fractions) upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Preferred Stock (other than integral multiples of
Preferred Stock Fractions). In lieu of fractional shares of Preferred Stock that
are not Preferred Stock Fractions or integral multiples thereof, the Company may
pay to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market price of a share of Preferred Stock. For purposes of this Section
14(b), the current market price of one share of Preferred Stock shall be the
Closing Price of a share of Preferred Stock (as determined pursuant to Section
11(d)(ii) hereof) for the Trading Day immediately prior to the date of such
exercise.
(c) Following the occurrence of a Triggering Event, the
Company shall not be required to issue fractions of shares of Common Stock upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of fractional shares of Common Stock, the
Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market price of one share of Common Stock. For purposes
of this Section 14(c), the current market price of one share of Common Stock
shall be the Closing Price of a share of Common Stock (as determined pursuant to
Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of
such exercise.
(d) The holder of a Right, by the acceptance of such Right,
expressly waives such holder's right to receive any fractional Rights or any
fractional shares (other than, in the case of Preferred Stock, integral
multiples of Preferred Stock Fractions) upon exercise of a Right, except as
permitted by this Section 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in such holder's own behalf and
for such holder's benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in respect
of, such holder's right to exercise the Rights evidenced by such Rights
Certificate (or, prior to the Distribution Date, certificates for Common Stock)
in the manner provided in such Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual or
threatened violations of the obligations hereunder of any Person subject to this
Agreement.
Section 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
23
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such purpose,
duly endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in whose name a
Rights Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be required to be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of Preferred
Stock Fractions or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights evidenced by either a certificate for Common Stock or by
any Rights Certificate, 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, as the case may be, or to give
or withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such certificate for Common Stock or Rights Certificate, as
the case may be, shall have been exercised in accordance with the provisions
hereof.
Section 18. CONCERNING THE RIGHTS AGENT. (a) The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other disbursements incurred in
the administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent, its directors, officers, employees and agents for, and to hold
each of them harmless against, any loss, liability, or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
24
Agent, for anything done or omitted by the Rights Agent or such other
indemnified party in connection with the acceptance and administration of this
Agreement or the performance of the Rights Agent's duties hereunder, including
the costs and expenses of defending against any claim of liability in the
premises.
(b) The Rights Agent shall incur no liability for or in
respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement or the performance of the Rights Agent's duties
hereunder in reliance upon any Rights Certificate or certificate for Common
Stock or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document reasonably believed
by it to be genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons.
(c) The indemnity provided in this Section 18 shall survive
the expiration of the Rights and the termination of this Agreement.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party or any corporation succeeding to the corporate
trust or stock transfer business of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto; provided, however, that such corporation would be eligible
for appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the advice or opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent as
25
to any action taken or omitted by it in good faith and in accordance with such
advice or opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person or
any Affiliate or Associate thereof and the determination of "current market
price") be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution and delivery hereof by the Rights Agent) or in respect
of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any adjustment required
under the provisions of Section 11, Section 13 or Section 24 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Rights Certificates
after actual notice of any such adjustment); nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any shares of Common Stock or Preferred Stock to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any shares
of Common Stock or Preferred Stock will, when so issued, be validly authorized
and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the Chief Executive Officer, the President, any Vice
President, the Treasurer or the Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer or for any delay in acting
26
while awaiting instructions. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set forth
in writing any action proposed to be taken or omitted by the Rights Agent under
this Agreement and the date on or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which shall not be less than five Business Days after the date any
officer of the Company actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct; provided, however, the Rights Agent was not
grossly negligent in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, split up, combination or exchange,
the certificate attached to the form of assignment or form of election to
purchase, as the case may be, has either not been completed or indicates an
affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not
take any further action with respect to such requested exercise or transfer
without first consulting with the Company.
(l) The Rights Agent undertakes only the express duties and
obligations imposed on it by this Agreement and no implied duties or obligations
shall be read into this Agreement against the Rights Agent.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent 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 Preferred Stock, by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
27
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit such holder's Rights
Certificate for inspection by the Company), then any registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a corporation or other legal
business entity organized, doing business and in good standing under the laws of
the United States or of the State of North Carolina (or of any other state of
the United States so long as such corporation is authorized to do business in
the State of North Carolina), having a principal office in such state, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000 or (b) an Affiliate of any such corporation or
other legal business entity described in clause (a) above. After appointment,
the successor Rights Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the Preferred Stock, and mail a
notice thereof in writing to the registered holders of the Rights Certificates
or, if prior to the Distribution Date, to the registered holders of shares of
Common Stock. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights Certificates to the contrary,
the Company may, at its option, issue new Rights Certificates evidencing Rights
in such form as may be approved by the Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Rights Certificates
made in accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of shares of Common Stock following the
Distribution Date and prior to the redemption or expiration of the Rights, the
Company (a) shall, with respect to shares of Common Stock so issued or sold
pursuant to the exercise of stock options or under any employee plan or
arrangement, granted or awarded as of the Distribution Date, or upon the
exercise, conversion or exchange of securities issued by the Company hereafter
but prior to the Distribution Date, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Rights Certificate
would be issued, and (ii) no such Rights Certificate shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
28
Section 23. REDEMPTION AND TERMINATION. (a) Subject to Section 27
hereof, the Board of Directors of the Company may, at its option, at any time
prior to the Close of Business on the later of the Distribution Date and the
Share Acquisition Date, redeem all but not less than all the then outstanding
Rights at a redemption price of $.001 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "REDEMPTION PRICE"); provided, however, that in
the event of a change, resulting from a proxy or consent solicitation, in a
majority of the directors in office at the commencement of such solicitation,
until the later to occur of (x) one hundred eighty (180) days following the
effectiveness of such change or (y) the next regular annual meeting of
shareholders of the Company following the effectiveness of such change, the
Rights shall not be redeemed unless there are Continuing Directors then in
office and a majority of such Continuing Directors concur with such redemption;
provided, further, however, that if the Board of Directors of the Company
authorizes redemption of the Rights on or after the time a Person becomes an
Acquiring Person, then there must be Continuing Directors then in office and
such authorization shall require the concurrence of a majority of such
Continuing Directors. The Company may, at its option, pay the Redemption Price
in cash, shares of Common Stock (based on the "current market price," as defined
in Section 11(d)(i) hereof, of the Common Stock at the time of redemption) or
any other form of consideration, or any combination of any of the foregoing,
deemed appropriate by the Board of Directors of the Company.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights, evidence of which shall have
been filed with the Rights Agent and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for
each Right so held. Promptly after the action of the Board of Directors ordering
the redemption of the Rights, the Company shall give notice of such redemption
to the Rights Agent and the holders of the then outstanding Rights by mailing
such notice to all such holders at each holder's last address as it appears upon
the registry books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the transfer agent for the Common Stock. Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made.
Section 24. EXCHANGE. (a) The Board of Directors of the Company may, at
its option, at any time after any Person becomes an Acquiring Person, exchange
all or part of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of Section 7(e)
hereof) for Common Stock at an exchange ratio of one share of Common Stock per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "EXCHANGE RATIO"). 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 entity holding Common Stock for or pursuant to the terms of any such plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of fifty percent (50%) or more of the Common Stock then
outstanding.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to subsection (a) of
this Section 24 and without any further action and without any notice, the right
29
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of shares of Common Stock
equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Company. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the Common Stock for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute Preferred Stock (or equivalent preferred stock, as
such term is defined in paragraph (b) of Section 11 hereof) for Common Stock
exchangeable for Rights, at the initial rate of one one-thousandth of a share of
Preferred Stock (or equivalent preferred stock) for each share of Common Stock,
as appropriately adjusted to reflect stock splits, stock dividends or other
similar transactions effected after the date hereof.
(d) In the event that there shall not be sufficient Common
Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock, there
shall be paid to the registered holders of the Right Certificates with regard to
which such fractional shares of Common Stock would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
share of Common Stock. For the purposes of this subsection (e), the current
market value of a whole share of Common Stock shall be the Closing Price of a
share of Common Stock (as determined pursuant to Section 11(d)(i) hereof) for
the Trading Day immediately prior to the date of exchange pursuant to this
Section 24.
Section 25. NOTICE OF CERTAIN EVENTS. (a) In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in shares of any class of stock to the holders of Preferred Stock or to
make any other distribution to the holders of Preferred Stock (other than a
regular quarterly cash dividend out of earnings or retained earnings of the
Company), or (ii) to offer to the holders of Preferred Stock rights or warrants
to subscribe for or to purchase any additional shares of Preferred Stock or
shares of stock of any class or any other securities, rights or options, or
(iii) to effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Preferred Stock), or (iv) to effect any consolidation, merger or share exchange
30
into or with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof) or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one transaction or a series of related transactions, of
more than fifty percent (50%) of the assets, earning power or cash flow of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), or (v) to effect
the liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of a Rights Certificate, to the
extent feasible, and in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, share exchange, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Preferred Stock, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least twenty (20) days prior to
the record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the shares of Preferred Stock,
whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then, in
any such case, (i) the Company shall as soon as practicable thereafter give to
each holder of a Rights Certificate, to the extent feasible, and in accordance
with Section 26 hereof, a notice of the occurrence of such event which shall
specify the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof, and (ii) all references in the preceding paragraph to
Preferred Stock shall be deemed thereafter to refer to Common Stock and/or, if
appropriate, other securities.
Section 26. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificates
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:
Cree, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000
Attention: General Counsel
With a copy to:
Smith, Anderson, Blount, Dorsett, Xxxxxxxx &
Xxxxxxxx, L.L.P.
0000 Xxxxx Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Rights Certificates 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:
American Stock Transfer & Trust Company
00 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Shareholder Services Group
31
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or if prior
to the Distribution Date, to the holder of certificates representing shares of
Common Stock) shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.
Section 27. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date,
the Company and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement without the approval of any holders of
certificates representing shares of Common Stock. From and after the
Distribution Date, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Rights Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, (iii) to change or supplement the provisions
hereunder in any manner which the Company may deem necessary or desirable and
which shall not adversely affect the interests of the holders of Rights
Certificates (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person), or (iv) to shorten or lengthen any time period hereunder
(which lengthening or shortening, following the first occurrence of an event set
forth in the provisos to Section 23(a) hereof, shall be effective only if there
are Continuing Directors and shall require the concurrence of a majority of such
Continuing Directors); provided, however, from and after the Distribution Date,
this Agreement may not be supplemented or amended to lengthen, pursuant to
clause (iv) of this sentence, (A) a time period relating to when the Rights may
be redeemed at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights. 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 27, the Rights Agent shall execute such supplement or amendment.
Prior to the Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Stock.
Notwithstanding anything contained herein to the contrary, (i) this Agreement
may not be amended at a time when the Rights are not redeemable and (ii) no
supplement or amendment that changes the rights and duties of the Rights Agent
under this Agreement shall be effective without the consent of the Rights Agent.
Section 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act. The Board of Directors of the Company (with, where
specifically provided for herein, the concurrence of the Continuing Directors)
shall have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board (with, where
specifically provided for herein, the concurrence of the Continuing Directors)
or the Company, or as may be necessary or advisable in the administration of
32
this Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Agreement, and (ii) make all determinations
deemed necessary or advisable for the administration of this Agreement
(including a determination to redeem or not redeem the Rights or to amend this
Agreement and any determination as to whether actions of any Person shall be
such as to cause such Person to beneficially own shares held by another Person).
All such actions, calculations, interpretations and determinations (including,
for purposes of clause (y) below, all omissions with respect to the foregoing)
which are done or made by the Board of Directors of the Company (with, where
specifically provided for herein, the concurrence of the Continuing Directors)
in good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other parties, and (y) not
subject the Board of Directors or the Continuing Directors to any liability to
the holders of the Rights.
Section 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
Section 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid, void or unenforceable language from this Agreement would adversely
affect the purpose or effect of this Agreement, the right of redemption set
forth in Section 23 hereof shall be reinstated and shall not expire until the
Close of Business on the tenth day following the date of such determination by
the Board of Directors of the Company. Without limiting the foregoing, if any
provision requiring a majority of the Board of Directors of the Company to be
Continuing Directors to act is held by any court of competent jurisdiction or
other authority to be invalid, void or unenforceable, such determination shall
then be made by the Board of Directors of the Company in accordance with
applicable law and the Company's Articles of Incorporation and Bylaws.
Section 32. GOVERNING LAW. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of North Carolina and for all purposes shall be governed by
and construed in accordance with the laws of such State applicable to contracts
made and to be performed entirely within such State and without regard to
conflicts of laws principles.
Section 33. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
[Signatures appear on next page.]
33
[Signature page to Cree Rights Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CREE, INC.
By: /s/ XXXXXXX X. XXXXXXX
-----------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer and President
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------------------
Name: Xxxxxxx. X. Xxxxxx
Title: Vice President
34
EXHIBIT A
State of North Carolina
Department of the Secretary of State
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
CREE, INC.
Pursuant to Section 55-10-06 and Section 55-6-02 of the General Statutes of
North Carolina, the undersigned corporation hereby submits the following
Articles of Amendment for the purpose of amending its Articles of Incorporation
to fix the preferences, limitations, and relative rights of a series of its
shares:
I. The name of the corporation is Cree, Inc.
II. The text of the amendment adopted is as follows:
The Articles of Incorporation of the corporation are hereby amended as
follows:
Article IV of the Articles of Incorporation is amended by inserting the
following new paragraphs at the end of the existing provisions of Article IV:
A series of Preferred Stock of the Corporation is hereby created and
the designation and amount thereof and the preferences, relative rights, and
powers of the shares of such series, and the qualifications, limitations or
restrictions thereof, are fixed, determined and set forth as follows:
(a) DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Preferred Stock," $.01 par value per share, and the
number of shares constituting such series shall be two hundred thousand
(200,000). Such number of shares may be increased or decreased by action of the
Board of Directors; provided 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 Corporation convertible into Series A
Preferred Stock.
(b) DIVIDENDS AND DISTRIBUTIONS.
(1) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and superior to
the Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of Common Stock and of
any other junior stock, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of March, June, September
and December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series A Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $10 or (b) subject to the provision for adjustment
hereinafter set forth, one thousand (1,000) times the aggregate per share amount
of all cash dividends, and one thousand (1,000) times the aggregate per share
A-1
amount (payable in kind) of all non-cash dividends or other distributions, other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A Preferred Stock.
In the event the Corporation shall declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event,
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(2) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $10 per share on the
Series A Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(3) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series 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. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than sixty (60) days prior to the
date fixed for the payment thereof.
(c) VOTING RIGHTS. The holders of shares of Series A Preferred Stock
shall have the following voting rights:
(1) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to one thousand (1,000) votes on all matters submitted to a vote of the
shareholders of the Corporation. In the event the Corporation shall at any time
A-2
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than a
payment of dividend in shares of Common Stock into a greater or lesser number of
shares of Common Stock), then in each such case the number of votes per share to
which holders of shares of Series A Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event, and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(2) Except as otherwise provided herein, in any articles of
amendment to articles of incorporation of the Corporation, or by 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 Corporation having general
voting rights shall vote together as one class on all matters submitted to a
vote of shareholders of the Corporation.
(3) Except as set forth herein, or as otherwise provided by
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 herein) for taking any corporate
action.
(d) CERTAIN RESTRICTIONS.
(1) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided above 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 Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on 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, 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) to the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock of
the Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series 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 Board
of Directors) to all holders of such shares upon such terms as the Board of
A-3
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.
(2) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (d)(1),
purchase or otherwise acquire such shares at such time and in such manner.
(e) REACQUIRED SHARES. Any shares of Series A Preferred Stock purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock, subject to
the conditions and restrictions on issuance set forth herein, in articles of
amendment of articles of incorporation of the Corporation, or as otherwise
required by law.
(f) LIQUIDATION, DISSOLUTION OR WINDING UP.
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (i) to 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 $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to one
thousand (1,000) times the aggregate amount to be distributed per share to
holders of shares of Common Stock or (ii) to 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 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. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under clause (i) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event, and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(g) CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter
into any consolidation, merger, combination, share exchange 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 each
share of Series A Preferred Stock shall at the same time be similarly exchanged
or changed into an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to one thousand (1,000) times the aggregate amount
of stock, securities, cash and/or any other property (payable in kind), as the
A-4
case may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock, then in
each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series A Preferred Stock shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event, and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(h) NO REDEMPTION. The shares of Series A Preferred Stock shall not be
redeemable.
(i) RANK. The Series A Preferred Stock shall rank junior to all other
series of the Corporation's Preferred Stock as to the payment of dividends and
the distribution of assets, unless the terms of any such series shall provide
otherwise.
(j) AMENDMENT. The Articles of Incorporation of the Corporation shall
not be further amended in any manner which would materially alter or change the
preferences, rights or powers of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at least
two-thirds (2/3) or more of the outstanding shares of Series A Preferred Stock,
voting separately as a single class.
(k) FRACTIONAL SHARES. Series A Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Participating Preferred Stock.
III. The foregoing amendment was duly adopted and approved on the 29th
day of May, 2002, by the board of directors without shareholder action, which
was not required because the amendment only fixes the preferences, limitations
and relative rights of a series of the corporation's preferred stock pursuant to
authority granted to the directors by the corporation's Articles of
Incorporation and Section 55-6-02 of the General Statutes of North Carolina.
IV. These articles shall be effective upon filing.
A-5
[Signature page to Cree Preferred Stock Charter Amendment]
IN WITNESS WHEREOF, the corporation has caused this instrument to be
duly executed as of the _____ day of ___________, 2002.
CREE, INC.
By:
------------------------------------
Name:
Title:
A-6
EXHIBIT B
[Form of Rights Certificate]
Certificate No. R- __________ __________ Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS SUCH TERM IS DEFINED IN THE RIGHTS
AGREEMENT REFERRED TO BELOW). THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY SHALL
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE
RIGHTS AGREEMENT.](1)
Rights Certificate
CREE, INC.
This certifies that __________________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of May 30, 2002 (as it may be amended, modified
or supplemented from time to time, the "Rights Agreement"), between Cree, Inc.,
a North Carolina corporation (the "Company"), and American Stock Transfer Trust
Company, a New York State banking corporation (the "Rights Agent"), to purchase
from the Company at any time prior to 5:00 P.M. (North Carolina time) on the
Expiration Date (as such term is defined in the Rights Agreement), which shall
not be later than June 10, 2012, at the office or offices of the Rights Agent
designated for such purpose, or its successors as Rights Agent, one
one-thousandth (1/1,000) of a fully paid, nonassessable share of the Company's
Series A Preferred Stock, $.01 par value per share (the "Preferred Stock"), at a
purchase price of One Hundred Ten Dollars ($110.00) (the "Purchase Price") per
one one-thousandth (1/1,000) of a share of Preferred Stock (such fraction, a
"Preferred Stock Fraction"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate duly
executed. The number of Rights evidenced by this Rights Certificate (and the
number of shares which may be purchased upon exercise thereof) set forth above,
and the Purchase Price per share set forth above, are the number and Purchase
Price as of _________________, 20__(2), based on the Preferred Stock as
constituted at such date and may be adjusted in accordance with the provisions
of the Rights Agreement. The Company reserves the right to require, prior to the
occurrence of a Triggering Event (as such term is defined in the Rights
Agreement), that a number of Rights be exercised so that only whole shares of
Preferred Stock will be issued.
--------
(1) The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentences.
(2) Insert the Distribution Date.
B-1
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or any Affiliate
or Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person, Affiliate or
Associate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, after such transfer, became an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, such
Rights shall become null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such Section 11(a)(ii)
Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities, which may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate,
are subject to modification and adjustment upon the happening of certain events,
including Triggering Events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
A copy of the Rights Agreement is on file at the office of the Company and is
also available upon written request to the Company.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Preferred Stock Fractions as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered shall
have entitled such holder to purchase. The Rights evidenced by this Rights
Certificate may be transferred, in whole or in part, upon surrender of this
Rights Certificates at the principal office or offices of the Rights Agent
designated for such purpose, with the form of Assignment and related Certificate
duly executed. If the Rights evidenced by this Rights Certificate shall be
transferred or exercised in part, the holder shall be entitled to receive upon
surrender hereof another Rights Certificate or Rights Certificates for the
number of whole Rights not transferred or exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may generally be redeemed by the Company at its option at a
redemption price of $.001 per Right at any time before the later of the
Distribution Date (as such term is defined in the Rights Agreement) and the
Stock Acquisition Date (as such term is defined in the Rights Agreement). Under
certain circumstances set forth in the Rights Agreement, the decision to redeem
shall require the concurrence of a majority of the Continuing Directors.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-thousandth (1/1,000) of a share of Preferred
Stock, which may, at the election of the Company, be evidenced by depositary
receipts), but in lieu thereof a cash payment will be made, as provided in the
Rights Agreement.
B-2
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a 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 shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of __________, 20__.
ATTEST: CREE, INC.
By: __________________________ By: __________________________
Name: Name:
Title: Title:
Countersigned:
[RIGHTS AGENT]
By: ___________________________
Name:
Title:
B-3
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Rights Certificate.)
FOR VALUE RECEIVED ________________________________________________ hereby
sells, assigns and transfers unto
_______________________________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint
________________________Attorney, to transfer the within Rights Certificate on
the books of the within-named Company with full power of substitution.
Dated: , 20
---------------------- --
-------------------------------
Signature
Signature Guaranteed:
------------------------
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: , 20
---------------------- --
-------------------------------
Signature
Signature Guaranteed:
------------------------
NOTICE
The signature(s) to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B-4
FORM OF ELECTION TO PURCHASE
(To be executed if the holder desires to exercise Rights represented by
the Rights Certificate.)
To: CREE, INC.
The undersigned hereby irrevocably elects to exercise
____________ Rights represented by this Rights Certificate to purchase
the shares of Preferred Stock issuable upon the exercise of the Rights
(or such other securities of the Company or of any other person which
may be issuable upon the exercise of the Rights) and requests that
certificates for such shares be issued in the name of and delivered to:
______________________________________________________________________________
(Please print name and address)
Please insert social security
or other identifying number: ________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
______________________________________________________________________________
(Please print name and address)
Please insert social security
or other identifying number: ________________________________________________
Dated: , 20
---------------------- --
-------------------------------
Signature
Signature Guaranteed:
------------------------
B-5
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: , 20
---------------------- --
-------------------------------
Signature
Signature Guaranteed:
------------------------
NOTICE
The signature(s) to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
B-6
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On May 29, 2002, the Board of Directors of Cree, Inc., a North Carolina
corporation (the "Company"), declared a dividend distribution of one preferred
stock purchase right (a "Right") for each outstanding share of the Company's
common stock, $.00125 par value (the "Common Stock"), to shareholders of record
at the close of business on June 10, 2002 (the "Record Date"). Each Right
entitles the registered holder to purchase from the Company one one-thousandth
(1/1,000) of a share (a "Preferred Stock Fraction") of the Company's Series A
Preferred Stock, $.01 par value (the "Preferred Stock"), at a price of One
Hundred Ten Dollars ($110.00) (the "Purchase Price"), subject to adjustment in
certain circumstances. The description and terms of the Rights are set forth in
a Rights Agreement dated May 30, 2002 between the Company and American Stock
Transfer & Trust Company, as Rights Agent (as it may be amended, modified or
supplemented from time to time, the "Rights Agreement").
Initially, the Common Stock certificates representing the outstanding
shares shall be deemed to be certificates for Rights, and no separate Rights
Certificates will be distributed. Subject to certain exceptions specified in the
Rights Agreement, the Rights will separate from the Common Stock and a
"Distribution Date" will occur upon the earlier of (i) 10 business days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of fifteen percent (15%) or more of the
outstanding shares of Common Stock (the date of such announcement being the
"Stock Acquisition Date"), or (ii) 10 business days (or such later date as the
Company's Board of Directors shall determine) following the commencement of a
tender offer or exchange offer that would result in a person or group becoming
an Acquiring Person.
Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such Common
Stock certificates, (ii) new Common Stock certificates issued after the Record
Date will contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, and except in connection with the exercise of stock
options and any other issuances of Common Stock with respect to awards under
employee benefit plans, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on June 10, 2012, North Carolina time, unless
extended prior to such time by the Board of Directors, or earlier if redeemed by
the Company as described below.
Except in the circumstances described below, after the Distribution
Date each Right will be exercisable for a Preferred Stock Fraction. Each
Preferred Stock Fraction carries voting and dividend rights that are intended to
produce the equivalent of one share of Common Stock. The voting and dividend
rights of the Preferred Stock are subject to adjustment in the event of
C-1
dividends, subdivisions and combinations with respect to the Common Stock of the
Company. In lieu of issuing certificates for fractions of shares of Preferred
Stock (other than fractions which are integral multiples of Preferred Stock
Fractions), the Company may pay cash in accordance with the Rights Agreement.
In the event that any person becomes an Acquiring Person, except
pursuant to an offer for all outstanding shares of Common Stock which the
independent directors, who are not associated with an Acquiring Person,
determine to be fair and adequate to shareholders and to be otherwise in the
best interests of the Company and its shareholders (a "Qualified Offer"), each
holder of a Right will thereafter have the right to receive, upon exercise,
Common Stock (or, in certain circumstances, cash, property or other securities
of the Company) having a value equal to two times the exercise price of the
Right. In any event, following the occurrence of the events described in this
paragraph, any Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person will be null
and void.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company engages in a merger or other business combination transaction in
which the Company is not the surviving corporation, (ii) the Company engages in
a merger or other business combination transaction with another person in which
the Company is the surviving corporation, but its Common Stock is changed or
exchanged, or (iii) 50% or more of the Company's assets, earning power or cash
flow is sold or transferred (except with respect to clauses (i) and (ii), a
merger or other business combination which follows a Qualified Offer and in
which the amount and form of consideration is the same as was paid in such
offer), each holder of a Right (except Rights which previously have been voided
as set forth above) shall thereafter have the right to receive, upon exercise,
common stock of the acquiring company having a value equal to two times the
exercise price of the Right.
The Purchase Price payable, and the number of Preferred Stock Fractions
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on the Preferred Stock or other capital stock, or a
subdivision, combination or reclassification of the Preferred Stock, (ii) if the
holders of the Preferred Stock are granted certain rights or warrants to
subscribe for Preferred Stock or securities convertible into Preferred Stock at
less than the current market price of the Preferred Stock, or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular quarterly cash dividends or dividends payable in
Preferred Stock) or of subscription rights or warrants (other than those
referred to above).
At any time after a person or group of affiliated or associated persons
becomes an Acquiring Person and prior to the acquisition by such person or group
of 50% or more of the outstanding Common Stock, the Board of Directors may
exchange the Rights (other than Rights owned by such person or its affiliates
and associates, which have become void), in whole or in part, at an exchange
ratio of one share of Common Stock, or one one-thousandth of a share of
Preferred Stock (or of a share of a series of the Company's preferred stock
having equivalent preferences, limitations and relative rights), per Right
(subject to adjustment).
In general, at any time until the later of the Distribution Date and
the Stock Acquisition Date, the Company may redeem the Rights in whole, but not
in part, at a price of $.001 per Right (payable in cash, Common Stock or other
consideration deemed appropriate by the Board of Directors). Under certain
circumstances set forth in the Rights Agreement, the decision to redeem the
Rights will require the concurrence of a majority of the Continuing Directors
(as defined below). Immediately upon the action of the Board of Directors of the
C-2
Company ordering redemption of the Rights (with, where required, the concurrence
of the Continuing Directors), the Rights will terminate and the only right of
the holders of Rights will be to receive the $.001 redemption price.
The term "Continuing Director", as that term is defined in the Rights
Agreement, means any member of the Board of Directors of the Company who was a
member of the Board of Directors prior to the date of the Rights Agreement, and
any person who is subsequently elected to the Board if such person is
recommended or approved by a majority of the Continuing Directors, but shall not
include an Acquiring Person or an affiliate or associate of an Acquiring Person,
or any representative of any of such entities.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights is not
includable in a shareholder's taxable income for federal income tax purposes
under U.S. law, shareholders may, depending upon the circumstances, recognize
taxable income in the event that the Rights become exercisable for Common Stock
(or other consideration) of the Company, or for common stock of the acquiring
company or in the event of the redemption of the Rights as set forth above.
Prior to the Distribution Date, any of the provisions of the Rights
Agreement may be amended by the Board of Directors of the Company. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board (in certain circumstances, with the concurrence of the Continuing
Directors) in order to cure any ambiguity, to correct or supplement any
defective or inconsistent provision, to make changes which do not adversely
affect the interests of holders of Rights (excluding the interests of any
Acquiring Person or affiliate or associate of such Acquiring Person), or to
shorten or lengthen any time period under the Rights Agreement; provided that no
amendment may be made at such time as the Rights are not redeemable.
A copy of the Rights Agreement is being filed by the Company with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A
and/or an Exhibit to a Current Report on Form 8-K. A copy of the Rights
Agreement is available free of charge from the Company. This summary description
of the Rights does not purport to be complete and is qualified in its entirety
by reference to the Rights Agreement, which is incorporated herein by reference.
C-3
