EXHIBIT 1
_________________________________________________________________
MARCAM CORPORATION
and
THE FIRST NATIONAL BANK OF BOSTON
as Rights Agent
__________
RIGHTS AGREEMENT
Dated as of December 3, 1996
________________________________________________________________
Table of Contents
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Section Page
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Section 1. Certain Definitions............................................................................1
Section 2. Appointment of Rights Agent....................................................................6
Section 3. Issue of Rights Certificates...................................................................6
Section 4. Form of Rights Certificates....................................................................8
Section 5. Countersignature and Registration..............................................................9
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates...............................................10
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.................................10
Section 8. Cancellation and Destruction of Rights Certificates...........................................12
Section 9. Reservation and Availability of Capital Stock.................................................12
Section 10. Preferred Stock Record Date..................................................................14
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights..................14
Section 12. Certificate of Adjusted Purchase Price or Number of Shares...................................23
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power........................24
Section 14. Fractional Rights and Fractional Shares......................................................26
Section 15. Rights of Action.............................................................................27
Section 16. Agreement of Rights Holders..................................................................27
Section 17. Rights Certificate Holder Not Deemed a Stockholder...........................................28
Section 18. Concerning the Rights Agent..................................................................28
Section 19. Merger or Consolidation or Change of Name of Rights Agent....................................28
Section 20. Duties of Rights Agent.......................................................................29
Section 22. Issuance of New Rights Certificates..........................................................31
Section 23. Redemption and Termination...................................................................32
Section 24. Exchange.....................................................................................33
Section 25. Notice of Certain Events.....................................................................34
Section 26. Notices......................................................................................34
Section 27. Supplements and Amendments...................................................................35
Section 28. Successors...................................................................................36
Section 29. Determinations and Actions by the Board of Directors, etc....................................36
Section 30. Benefits of this Agreement...................................................................36
Section 31. Severability.................................................................................36
Section 32. Governing Law................................................................................37
Section 33. Counterparts.................................................................................37
Section 34. Descriptive Headings.........................................................................37
Exhibits:
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Exhibit A -- Form of Certificate of Vote of Directors Establishing a Series
of a Class of Stock
Exhibit B -- Form of Rights Certificate
Exhibit C -- Form of Summary of Rights
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of December 3, 1996 (the "Agreement"), between
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MARCAM CORPORATION, a Massachusetts corporation (the "Company"), and The First
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National Bank of Boston, a national banking association (the "Rights Agent"):
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WITNESSETH:
WHEREAS, on December 3, 1996 (the "Rights Dividend Declaration Date"), the
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Board of Directors of the Company (the "Board") authorized and declared a
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dividend distribution of one Right for each share of Common Stock (as
hereinafter defined) of the Company outstanding at the close of business on
December 16, 1996 (the "Record Date"), and has authorized the issuance of one
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Right (as such number may hereinafter be adjusted pursuant to the provisions of
Section 11(p) hereof) for each share of Common Stock of the Company issued
(whether originally issued or delivered from the Company's treasury or issued
upon conversion of shares of Convertible Preferred Stock (as hereinafter
defined)) between the Record Date and the Distribution Date, each Right
initially representing the right to purchase one one-thousandth of a share of
Series F Junior Participating Preferred Stock of the Company upon the terms and
conditions hereinafter set forth (the "Rights");
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WHEREAS, on the Rights Dividend Declaration Date, the Board authorized and
declared a dividend distribution of ten Rights (as such number may hereinafter
be adjusted pursuant to the provisions of Section 11(p) hereof) for each share
of Convertible Preferred Stock (as hereinafter defined) of the Company
outstanding at the close of business on the Record Date;
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
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following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together with
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all Affiliates and Associates of such Person, shall be the Beneficial Owner of
20% or more of the shares of Common Stock then outstanding, but shall not
include the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan, or any Exempt Person; provided, however, that if any Person who was at any
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time an Exempt Person but is subsequently no longer considered to be an Exempt
Person and who, at the time such Person is no longer considered to be an Exempt
Person, Beneficially Owns 20% or more of the Common Stock of the Company then
outstanding, such Person shall not be deemed an "Acquiring Person" unless and
until such Person, together with all Affiliates and Associates of such Person,
shall, subsequent to the time at which such Person ceases to be an Exempt
Person, either (i) become the Beneficial Owner of an additional 1% or more of
the shares of Common Stock of the Company then outstanding or (ii) enter into
any of the transactions set forth in Section 11(a)(ii)(A) hereof, then such
Person shall be deemed to be an "Acquiring Person" from and after the time
immediately preceding the earliest to occur of the events specified in clause
(i) or (ii) of this proviso. Notwithstanding the foregoing, no Person shall
become an "Acquiring Person" as the result of an acquisition of Common Stock by
the
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Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 20% or more
of the Common Stock of the Company then outstanding; provided, however, that if
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a Person shall become the Beneficial Owner of 20% or more of the Common Stock of
the Company then outstanding by reason of share purchases by the Company and
shall, after such share purchases by the Company, become the Beneficial Owner of
any additional shares of Common Stock of the Company, then such Person shall be
deemed to be an "Acquiring Person." Notwithstanding the foregoing, if the Board
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.
(b) "Act" shall mean the Securities Act of 1933, as amended.
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(c) "Adjustment Shares" shall have the meaning set forth in Section
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11(a)(ii) hereof.
(d) "Adverse Person" shall mean any Person declared to be an Adverse
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Person by the Continuing Directors upon determination that the criteria set
forth in Section 11(a)(ii)(D) hereof apply to such Person.
(e) "Adverse Person Event" shall mean the determination by the Continuing
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Directors, pursuant to Section 11(a)(ii)(D) hereof, that a Person is an Adverse
Person.
(f) "Affiliate" and "Associate" shall have the respective meanings
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ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended and in effect on the date of
this Agreement (the "Exchange Act").
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(g) "Agreement" shall mean this Rights Agreement as originally executed
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or as it may from time to time be supplemented or amended pursuant to the
applicable provisions hereof.
(h) A Person shall be deemed the "Beneficial Owner" of and shall be
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deemed to "beneficially own" any securities:
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(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right 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, other rights, warrants or
options, or otherwise; provided, however, that a Person shall not be deemed the
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"Beneficial Owner" of, or to "beneficially own", (A) securities tendered
pursuant to a tender offer 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) securities issuable upon exercise of Rights at
any time prior to the occurrence of a Triggering Event, or (C) securities
issuable upon exercise of Rights from and after the occurrence of a Triggering
Event which Rights 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
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"Original Rights") or pursuant to Section 11(a)(i) hereof in connection with an
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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, or any comparable or successor
rule), including pursuant to any agreement, arrangement or understanding,
whether or not in writing; provided, however, that a Person shall not be deemed
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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 or consent 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 also then reportable by such Person on Schedule 13D under the Exchange
Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person (or
any of such Person's Affiliates or Associates) has any agreement, arrangement or
understanding, whether or not in writing, for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy or consent as described in the
proviso to subparagraph (ii) of this paragraph (h)) or disposing of any voting
securities of the Company (a joint filing of a Schedule 13D under the Exchange
Act or any comparable or successor report being deemed to be conclusive evidence
of such an agreement, arrangement or understanding);
provided, however, that nothing in this paragraph (h) shall cause a Person
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engaged in business as an underwriter of securities to be the "Beneficial Owner"
of, or to "beneficially own", any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition. Notwithstanding
anything in this definition of Beneficial Ownership to the contrary, the phrase
"then outstanding," when used with reference to a Person's Beneficial Ownership
of securities of the Company, shall mean the number of such securities then
issued and outstanding together with the number of such securities not then
actually issued and outstanding which such Person would be deemed to own
beneficially hereunder.
(i) "Board" means the Board of Directors of the Company.
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(j) "Business Day" shall mean any day other than a Saturday, Sunday or a
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day on which banking institutions in the Commonwealth of Massachusetts are
authorized or obligated by law or executive order to close.
(k) "Close of Business" on any given date shall mean 5:00 P.M., Boston
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time, on such date; provided, however, that if such date is not a Business Day
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it shall mean 5:00 P.M., Boston time, on the next succeeding Business Day.
(l) "Common Stock" shall mean the common stock, $.01 par value per share,
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of the Company, except that "Common Stock" when used with reference to any
Person other than the Company shall mean the capital stock of such Person with
the greatest voting power, or the
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equity securities or other equity interest having power to control or direct the
management, of such Person.
(m) "Common Stock Equivalents" shall have the meaning set forth in
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Section 11(a)(iii) hereof.
(n) "Company" shall mean the Person named as the "Company" in the first
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paragraph of this Agreement until a successor corporation shall have become such
or until a Principal Party shall assume, and thereafter be liable for, all
obligations and duties of the Company hereunder, pursuant to the applicable
provisions of this Agreement, and thereafter "Company" shall mean such successor
corporation or Principal Party.
(o) "Company Securities" shall mean the Convertible Preferred Stock and
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the Common Stock of the Company.
(p) "Continuing Director" shall mean (i) any member of the Board, while
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such Person is a member of the Board, who is not an Acquiring Person or an
Adverse Person, or an Affiliate or Associate of any such Person, or a
representative of any such Person or of any such Affiliate or Associate, and who
was a member of the Board on the date of this Agreement, or (ii) any Person who
becomes a member of the Board subsequent to the date of this Agreement, while
such Person is a member of the Board, who is not an Acquiring Person or an
Adverse Person, or an Affiliate or Associate of any such Person, or a
representative of any such Person or of any such Affiliate or Associate, if such
Person's nomination for election or election to the Board is recommended or
approved by a majority of the Continuing Directors.
(q) "Convertible Preferred Stock" shall mean the Series D Convertible
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Preferred Stock, par value $1.00 per share, of the Company and the Series E
Convertible Preferred Stock, par value $1.00 per share, of the Company.
(r) "Current Market Price" shall have the meaning set forth in Section
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11(d)(i) hereof.
(s) "Current Value" shall have the meaning set forth in Section
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11(a)(iii) hereof.
(t) "Distribution Date" shall have the meaning set forth in Section 3(a)
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hereof.
(u) "Equivalent Preferred Stock" shall have the meaning set forth in
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Section 11(b) hereof.
(v) "Exchange Act" shall have the meaning set forth in Section 1(f)
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hereof.
(w) "Exempt Person" shall mean General Atlantic Partners 32, L.P.,
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General Atlantic Partners 21, L.P. and GAP Coinvestment Partners, L.P., together
with any of their Affiliates and Associates (the "General Atlantic Parties");
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provided, however, that (i) the General Atlantic Parties shall no longer be
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considered an Exempt Person if at any time the Board determines (with the
concurrence of a majority of the Continuing Directors) that any of the General
Atlantic Parties has breached any of the provisions of (A) Article 9 of the
Convertible Preferred Stock Purchase Agreement dated September 20, 1995 by and
among the Company, General Atlantic Partners 21, L.P., GAP Coinvestment
Partners, L.P. and The Northwestern
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Mutual Life Insurance Company or (B) Section 10.1 of the Convertible Preferred
Stock and Warrant Purchase Agreement dated July 19, 1996 by and among the
Company, General Atlantic Partners 32, L.P. and GAP Coinvestment Partners, L.P.
(as such provisions may be amended or supplemented from time to time, the
"General Atlantic Standstill Agreements"); or (ii) a General Atlantic Party
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shall no longer be considered an Exempt Person from and after the time such
General Atlantic Party's rights and obligations under the General Atlantic
Standstill Agreements shall have terminated.
(x) "Expiration Date" shall have the meaning set forth in Section 7(a)
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hereof.
(y) "Final Amendment Date" shall mean the earlier of the Distribution
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Date or the occurrence of an Adverse Person Event.
(z) "Final Expiration Date" shall mean the close of business on December
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16, 2006.
(aa) "Initial Exercise Price" shall be $60.00.
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(bb) "Nasdaq" shall mean the National Association of Securities Dealers,
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Inc. Automated Quotation System.
(cc) "Original Rights" shall have the meaning set forth in Section
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1(h)(i) hereof.
(dd) "Person" shall mean any natural person, firm, association,
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corporation, partnership, trust or other entity or organization.
(ee) "Preferred Stock" shall mean the Series F Junior Participating
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Preferred Stock, par value $1.00 per share, of the Company having the terms set
forth in the form of Certificate of Vote of Directors Establishing a Series of a
Class of Stock attached hereto as Exhibit A.
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(ff) "Principal Party" shall have the meaning set forth in Section 13(b)
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hereof.
(gg) "Purchase Price" shall have the meaning set forth in Section 4(a)
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hereof.
(hh) "Record Date" shall have the meaning set forth in the preamble of
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the Agreement.
(ii) "Redemption Price" shall have the meaning set forth in Section 23(a)
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hereof.
(jj) "Rights" shall have the meaning set forth in the preamble of the
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Agreement.
(kk) "Rights Agent" shall mean the Person named as the "Rights Agent" in
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the first paragraph of this Agreement until a successor Rights Agent shall have
become such pursuant to the applicable provisions hereof, and thereafter "Rights
Agent" shall mean such successor Rights Agent. If at any time there is more
than one Person appointed by the Company as Rights Agent pursuant to the
applicable provisions of this Agreement, "Rights Agent" shall mean and include
each such Person.
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(ll) "Rights Certificates" shall have the meaning set forth in Section
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3(a) hereof.
(mm) "Rights Dividend Declaration Date" shall have the meaning set forth
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in the preamble of this Agreement.
(nn) "Section 11(a)(ii) Event" shall mean any event described in Section
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11(a)(ii)(A), (B), (C) or (D) hereof.
(oo) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth in
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Section 11(a)(iii) hereof.
(pp) "Section 13 Event" shall mean any event described in clauses (x),
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(y) or (z) of Section 13(a) hereof.
(qq) "Spread" shall have the meaning set forth in Section 11(a)(iii)
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hereof.
(rr) "Stock Acquisition Date" shall mean the first date of a public
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announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such.
(ss) "Subsidiary" shall mean, with reference to any Person, including the
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Company, any corporation (or other entity) of which an amount of voting
securities sufficient to elect at least a majority of the directors (or their
equivalent) of such corporation (or other entity) is beneficially owned,
directly or indirectly, by such Person, or which is otherwise controlled by such
Person.
(tt) "Substitution Period" shall have the meaning set forth in Section
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11(a)(iii) hereof.
(uu) "Trading Day" shall have the meaning set forth in Section 11(d)(i)
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hereof.
(vv) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
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Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
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Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issue of Rights Certificates.
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(a) Until the earliest of (i) the Close of Business on the tenth day (or
such later date as may be determined by action of the Board (with the
concurrence of a majority of the Continuing Directors)) after the Stock
Acquisition Date (or, if the tenth day after the Stock Acquisition Date occurs
before the Record Date, the Close of Business on the Record Date), (ii) the
Close of Business on the tenth Business Day (or, if such tenth Business Day
occurs
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before the Record Date, the Close of Business on the Record Date), or such later
date as may be determined by action of the Board (with the concurrence of a
majority of the Continuing Directors), after the date that a tender offer 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) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if upon consummation thereof for the maximum
number of shares that may be purchased thereunder, such Person would be the
Beneficial Owner of 20% or more of the shares of Common Stock then outstanding
or (iii) the Close of Business on the tenth Business Day after an Adverse Person
Event (the earliest of (i), (ii) and (iii) being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
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provisions of paragraph (b) of this Section 3) by the certificates for the
Company Securities registered in the names of the holders of the Company
Securities (which certificates for Company Securities shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y) the Rights
will be transferable only in connection with the transfer of the underlying
shares of Company Securities (including a transfer to the Company or a
conversion of shares of Convertible Preferred Stock). As soon as practicable
after the Distribution Date, the Rights Agent will send by first-class, insured,
postage prepaid mail, to each record holder of the Company Securities 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 the form
specified in Section 4 hereof (the "Rights Certificates"), evidencing one Right
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for each share of Common Stock so held or evidencing ten Rights for each share
of Convertible Preferred Stock so held (as the case may be), subject to
adjustment as provided herein. In the event that an adjustment in the number of
Rights per share of Company Securities 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) As promptly as practicable following the Record Date, the Company
will send a copy of a Summary of Rights, in substantially the form attached
hereto as Exhibit C, by first-class, postage prepaid mail, to each record holder
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of the Company Securities as of the Close of Business on the Record Date, at the
address of such holder shown on the records of the Company. With respect to
certificates for the Company Securities outstanding as of the Record Date, until
the Distribution Date, the Rights will be evidenced by such certificates for the
Company Securities and the registered holders of the Company Securities shall
also be the registered holders of the associated Rights. Until the earlier of
the Distribution Date or the Expiration Date (as such term is defined in Section
7 hereof), the transfer of any certificates representing shares of Company
Securities in respect of which Rights have been issued shall also constitute the
transfer of the Rights associated with such shares of Company Securities.
(c) Rights shall be issued in respect of all shares of Common Stock that
are issued (whether originally issued or from the Company's treasury) after the
Record Date but prior to the earlier of the Distribution Date or the Expiration
Date. Rights shall also be issued to the extent provided in Section 22 in
respect of all shares of Common Stock which are issued (whether originally
issued or from the Company's treasury) after the Distribution Date and prior to
the Expiration Date. Certificates representing such shares of Common Stock in
respect of
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which Rights are issued pursuant to the first sentence of this Section 3(c)
shall also be deemed to be certificates for Rights, and commencing as soon as
reasonably practicable following the date hereof shall bear the following
legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between Marcam Corporation
(the "Company") and The First National Bank of Boston (the "Rights
Agent") dated as of December 3, 1996 (the "Rights Agreement"), the terms
of which are hereby incorporated herein by reference and a copy of which
is on file at the principal offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by
this certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on the date of
mailing, without charge promptly after receipt of a written request
therefor. Under certain circumstances set forth in the Rights Agreement,
Rights issued to, or held by, any Person who is, was or becomes an
Acquiring Person, an Adverse Person or any Affiliate or Associate of an
Acquiring Person or an Adverse Person (as such terms are defined in the
Rights Agreement), whether currently held by or on behalf of such Person
or by any subsequent holder, may become null and void.
Commencing as soon as reasonably practicable following the date hereof,
certificates representing shares of Company Securities that are delivered prior
to the Distribution Date shall also bear the foregoing legend. 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
Company Securities represented by such certificates shall be evidenced by such
certificates alone and registered holders of Company Securities 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 Company Securities represented by such certificates.
Section 4. Form of Rights Certificates.
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(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
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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 or trading market on which the Rights may from time to
time be listed or traded, 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 one one-thousandths of a share of Preferred
Stock as shall be set forth therein at the price per share set forth therein
(such exercise price per one one-thousandth of a share hereinafter referred to
as the "Purchase Price"), but the amount and type of securities purchasable upon
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the exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights beneficially owned by: (i) an Acquiring Person,
an Adverse Person or any Associate or Affiliate of an Acquiring Person or an
Adverse Person, (ii) a transferee of an
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Acquiring Person or an Adverse Person (or of any such Associate or Affiliate of
an Acquiring Person or an Adverse Person) who becomes a transferee after the
Acquiring Person or Adverse Person becomes such, or (iii) a transferee of an
Acquiring Person or an Adverse Person (or of any such Associate or Affiliate of
an Acquiring Person or an Adverse Person) who becomes a transferee prior to or
concurrently with the Acquiring Person or the Adverse Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person or the Adverse Person to holders of
equity interests in such Acquiring Person or Adverse Person or to any Person
with whom such Acquiring Person or Adverse Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which a majority of the Board has determined is part of a plan, arrangement or
understanding that has as a primary purpose or effect avoidance of Section 7(e)
hereof, and any Rights Certificate issued pursuant to Section 6 or Section 11
hereof upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the extent feasible)
the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person,
Adverse Person, or an Affiliate or Associate of an Acquiring Person or
Adverse Person (as such terms are defined in the Rights Agreement).
Accordingly, this Rights Certificate and the Rights represented hereby
may become null and void in the circumstances specified in Section 7(e)
of such Agreement.
Section 5. Countersignature and Registration.
---------------------------------
(a) The Rights Certificates shall be executed on behalf of the Company by
its Chairman of the Board, President or any Vice President, either manually or
by facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Treasurer or Clerk or any
Assistant Treasurer or Assistant Clerk of the Company, either manually or by
facsimile signature. The Rights Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificates may be signed on behalf of the
Company by any person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its principal office or offices designated as the appropriate
place for surrender of Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates, the Rights Certificate number 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.
----------------------------------------------------------------------
-10-
(a) Subject to the provisions of Section 4(b), Section 7(e) and Section
14 hereof, at any time after the Close of Business on the Distribution Date, and
at or prior to the Close of Business on the Expiration Date, any Rights
Certificate or Certificates may be transferred, split up, combined or exchanged
for another Rights Certificate or Certificates, entitling the registered holder
to purchase a like number of one one-thousandths of a share of Preferred Stock
(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 entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged
at the office of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Rights Certificate or
Certificates until the registered holder shall have completed and signed the
certificate contained in the form of assignment set forth on the reverse side of
each such Rights Certificate and shall have provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company shall reasonably request. Thereupon the
Rights Agent shall, subject to Section 4(b), Section 7(e) and Section 14 hereof,
countersign and deliver to the Person entitled thereto a Rights Certificate or
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 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 set forth on the reverse side
thereof and the certificate contained therein completed and duly executed, to
the Rights Agent at the office of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price with respect to the total
number of one one-thousandths of a share of Preferred Stock (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 earlier of (i) the
Final Expiration Date, (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof, (iii) the time at which the Rights expire
pursuant to Section 13(d) hereof or (iv) the time at which such Rights are
exchanged as provided in Section 24 hereof (the earliest of (i), (ii), (iii) or
(iv) being herein referred to as the "Expiration Date").
---------------
-11-
(b) The Purchase Price for each one one-thousandth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be the
Initial Exercise Price, and shall be subject to adjustment from time to time as
provided in Sections 11 and 13(a) hereof and shall be payable in accordance with
paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable Rights,
with the form of election to purchase set forth on the reverse side thereof and
the certificate contained therein completed and duly executed, accompanied by
payment, with respect to each Right so exercised, of the Purchase Price per one
one-thousandth of a share of Preferred Stock (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, promptly (i) 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 one one-thousandths of a
share of Preferred Stock to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, (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 such
certificates, 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
check, cashier's 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 or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so that
such other securities, cash 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, such 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 the 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 an event described in Section 11(a)(ii)(A) or (C)
and from and after the Close of Business on the tenth day after the occurrence
of an event described in Section 11(a)(ii)(B) or (D), any Rights beneficially
owned by (i) an Acquiring Person, an Adverse Person or an Associate or Affiliate
of an Acquiring Person or Adverse Person, (ii) a transferee of any such
Acquiring Person or Adverse Person (or of any such Associate or Affiliate of an
Acquiring Person or an Adverse Person) who becomes a transferee after such
Acquiring Person or Adverse Person becomes such, or (iii) a transferee of any
such Acquiring Person or Adverse Person (or of any such Associate or Affiliate
of an Acquiring Person or an Adverse Person) who becomes a transferee prior to
or concurrently with such Acquiring Person or Adverse Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from such Acquiring Person or Adverse Person to holders of
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equity interests in such Acquiring Person or Adverse Person or to any Person
with whom such Acquiring Person or Adverse Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which a majority of the Board has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. The Company
shall use all reasonable efforts to ensure that the provisions of this Section
7(e) and Section 4(b) hereof are complied with, but shall have no liability to
any holder of Rights Certificates or other Person as a result of its failure to
make any determinations with respect to an Acquiring Person or Adverse Person or
any of their 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,
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.
---------------------------------------------
(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 or other securities or out of its authorized and
issued shares held in its treasury), the number of shares of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock or other
securities) that, as provided in this Agreement, including Section 11(a)(iii)
hereof, 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 or other securities) issuable and
deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Nasdaq National Market or any over-the-counter market
on which the Common Stock is traded, the Company shall use its best efforts to
cause all shares reserved for such issuance to be listed on such exchange or
market upon official notice of issuance upon such exercise.
-13-
(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
Triggering Event in which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with this Agreement, a
registration statement under the Act, with respect to the Common Stock or other
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the 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. 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. Upon any suspension of the
exercisability of the Rights referred to in this Section 9(c), 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. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable and shall be void
so long as held by a holder in any jurisdiction where the requisite
qualification to the issuance to such holder, or the exercise by such holder, of
the Rights in such jurisdiction shall not have been obtained or be obtainable,
the exercise thereof shall not be permitted under applicable law or a
registration statement shall not have been declared effective.
(d) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all one one-thousandths of a share of Preferred
Stock (and, following the occurrence of a Triggering Event, Common Stock or
other securities) delivered upon exercise of 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 that may be
payable in respect of the issuance or delivery of the Rights Certificates and of
any certificates for a number of one one-thousandths of a share of Preferred
Stock (or Common Stock or other securities, as the case may be) upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax that 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 one one-thousandths of a share of Preferred Stock (or Common Stock or
other securities, as the case may be) in respect of a name other than that of,
the registered holder of the Rights Certificates evidencing Rights surrendered
for exercise or to issue or deliver any certificates for a number of one one-
thousandths of a share of Preferred Stock (or Common Stock 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 Certificates at the time of surrender) or
until it has been established to the Company's satisfaction that no such tax is
due.
-14-
Section 10. Preferred Stock Record Date. Each Person in whose name any
---------------------------
certificate for a number of one one-thousandths of a share of Preferred Stock
(or Common Stock or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such Preferred Stock (or Common Stock or other securities, as the case
may be) represented thereby on, and such certificate shall be dated, the date
upon which the Rights Certificate evidencing such Rights was duly surrendered
and payment of the Purchase Price (and all applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
-------- -------
which the Preferred Stock (or Common Stock or other securities, as the case may
be) transfer books of the Company are closed, such Person shall be deemed to
have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Stock (or Common
Stock or other securities, as the case may be) transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Rights Certificate shall not be entitled to any rights of a stockholder of the
Company with respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
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
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 time and at a time when the
Preferred Stock transfer books (or other capital stock transfer books, as the
case may be) of the Company were open, he would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs that 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) In the event:
(A) any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, at any time after the date of this Agreement, directly or
indirectly, (1) shall merge into the Company or otherwise combine with the
Company and the Company shall be the continuing or surviving corporation of such
merger or combination and the Common Stock of
-15-
the Company shall remain outstanding and unchanged, (2) shall merge or otherwise
combine with any Subsidiary of the Company, (3) shall, in one transaction or a
series of transactions, transfer any assets to the Company or to any of its
Subsidiaries in exchange (in whole or in part) for shares of Common Stock, for
shares of other equity or voting securities of the Company or any Subsidiary of
the Company, or for securities exercisable for or convertible into shares of
equity or voting securities of the Company or any Subsidiary of the Company
(Common Stock or otherwise) or otherwise obtain from the Company, with or
without consideration, any additional shares of equity or voting securities of
the Company or securities exercisable for or convertible into shares of such
equity or voting securities of the Company (other than pursuant to a pro rata
distribution to all holders of Common Stock or upon the exercise of a
convertible security of the Company or any Subsidiary of the Company in
accordance with its terms), (4) shall sell, purchase, lease, exchange, mortgage,
pledge, transfer or otherwise acquire or dispose of, in one transaction or a
series of transactions, to, from or with (as the case may be) the Company or any
of its Subsidiaries, assets on terms and conditions less favorable to the
Company than the Company would be able to obtain in arm's-length negotiations
with an unaffiliated third party, other than pursuant to a transaction set forth
in Section 13(a) hereof, (5) shall sell, purchase, lease, exchange, mortgage,
pledge, transfer or otherwise acquire or dispose of in one transaction or a
series of transactions, to, from or with (as the case may be) the Company or any
of its Subsidiaries (other than incidental to the lines of business, if any,
engaged in as of the date hereof between the Company and such Acquiring Person
or Associate or Affiliate) assets having an aggregate fair market value of more
than $1,000,000, other than pursuant to a transaction set forth in Section 13(a)
hereof and other than pursuant to a transaction or series of transactions that
have been approved by a majority of the Continuing Directors, (6) shall receive
any compensation from the Company or any of the Company's Subsidiaries other
than compensation for full-time employment as a regular employee at rates in
accordance with the Company's (or its Subsidiaries') past practices, or (7)
shall receive the benefit, directly or indirectly (except proportionately as a
stockholder and except if resulting from a requirement of law or governmental
regulation), of any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantages provided by the Company or
any of its Subsidiaries, or
(B) (X) 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, any Person or entity organized, appointed or established by the Company
for or pursuant to the terms of any such plan or an Exempt Person), alone or
together with any Affiliates and Associates of such Person, shall, at any time
after the Rights Dividend Declaration Date, become the Beneficial Owner of 20%
or more of the shares of Common Stock then outstanding, or (Y) any Person who
was at any time an Exempt Person but is subsequently no longer considered to be
an Exempt Person, alone or together with any Affiliates and Associates of such
Person, becomes an Acquiring Person, in either case (1) unless the event causing
the 20% threshold to be crossed 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 a majority of the Continuing Directors, after
receiving advice from one or more investment banking firms, to be (a) at a price
that is fair to stockholders (taking into account all factors which such members
of the Board deem relevant including, without limitation, 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 interest
of the Company and its stockholders, (2) unless the event causing the 20%
threshold to be crossed is the result of an acquisition of the Common Stock by
the Company which, by
-16-
reducing the number of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person, alone or together with any Affiliates
and Associates of such Person, to 20% or more of the Common Stock of the Company
then outstanding (provided, however, that if such Person, alone or together with
-------- -------
any Affiliates and Associates of such Person, shall become the Beneficial Owner
of 20% or more of the Common Stock of the Company then outstanding by reason of
share purchases by the Company and shall after such share purchases by the
Company become the Beneficial Owner of any additional Common Stock of the
Company, then such Person shall be deemed to become the Beneficial Owner of 20%
or more of the shares of Common Stock then outstanding for purposes of this
clause (B)); or (3) unless the Board determines in good faith that such Person,
alone or together with any Affiliates and Associates of such Person, has become
the Beneficial Owner of 20% or more of the shares of Common Stock then
outstanding 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 the Beneficial Owner of 20% or more of the shares of Common Stock then
outstanding, or
(C) during such time as there is an Acquiring Person, there shall be
any reclassification of securities (including any reverse stock split), or
recapitalization of the Company, or any merger or consolidation of the Company
with any of its Subsidiaries or any other transaction or series of transactions
involving the Company or any of its Subsidiaries (whether or not with or into or
otherwise involving an Acquiring Person), other than a transaction or
transactions to which the provisions of Section 13(a) hereof apply (whether or
not with or into or otherwise involving an Acquiring Person), which has the
effect, directly or indirectly, of increasing by more than 1% the proportionate
share of the outstanding shares of any class of equity securities of the Company
or any of its Subsidiaries which is directly or indirectly beneficially owned by
any Acquiring Person or any Associate or Affiliate of any Acquiring Person, or
(D) a majority of the Continuing Directors shall declare any Person to
be an Adverse Person, upon a determination that such Person, alone or together
with its Affiliates and Associates, has, at any time after the Rights Dividend
Declaration Date, become the Beneficial Owner of an amount of Common Stock which
a majority of Continuing Directors determine to be substantial (which amount
shall in no event be less than 10% of the shares of Common Stock then
outstanding) and a majority of the Continuing Directors determines, after
reasonable inquiry and investigation, which may include a review of the public
record regarding such Person and any information such directors may request from
such Person and consultation with such persons as such directors shall deem
appropriate, that (1) such Beneficial Ownership by such Person is intended to
cause the Company to repurchase the Common Stock beneficially owned by such
Person or to cause pressure on the Company to take action or enter into a
transaction or series of transactions intended to provide such Person with
short-term financial gain under circumstances where such directors determine
that the best long-term interests of the Company and its stockholders would not
be served by taking such action or entering into such transactions or series of
transactions at that time or (2) such Beneficial Ownership is causing or is
reasonably likely to cause a material adverse impact (including, but not limited
to, impairment of relationships with customers, impairment of the Company's
ability to maintain its competitive position or impairment of the Company's
business reputation) on the business or prospects of the Company,
then, promptly following the occurrence of any event described in Section
11(a)(ii)(A), (B), (C) or (D) hereof, proper provision shall be made so that
each holder of a Right (except as provided
-17-
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 one one-thousandths of a share
of Preferred Stock, such number of shares of Common Stock of the Company as
shall equal the result obtained by (x) multiplying the then current Purchase
Price by the then number of one one-thousandths of a share of Preferred Stock
for which a Right was or would have been exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event, whether or not such Right was
then exercisable, 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 50% of the Current Market Price
per share of Common Stock (determined pursuant to Section 11(d) hereof) 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 are
authorized by the Company's articles of organization but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit the exercise in full of the Rights in accordance with
the foregoing subparagraph (ii) of this Section 11(a), the Company shall (A)
determine the value of the Adjustment Shares issuable upon the exercise of a
Right (the "Current Value"), and (B) with respect to each Right (subject to
-------------
Section 7(e) hereof), make adequate provision to substitute, upon the exercise
of a Right and 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 has deemed to have the same value as shares of
Common Stock (such shares of preferred stock being referred to herein as "Common
------
Stock Equivalents")), (4) debt securities of the Company, (5) other assets, or
-----------------
(6) any combination of the foregoing, having an aggregate value equal to the
Current Value, as adjusted (less the amount of any reduction in the Purchase
Price), where such aggregate value has been determined by the Board based upon
the advice of a nationally recognized investment banking firm selected by the
Board; 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 later of (x) the first occurrence of a Section 11(a)(ii) Event and
(y) the date on which the Company's right of redemption pursuant to Section
23(a) expires (the later of (x) and (y) being referred to herein as 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 or cash have an aggregate value equal to the
Spread. For purposes of the preceding sentence, the term "Spread" shall mean
------
the excess of (i) the Current Value over (ii) the Purchase Price. If the number
of shares of Common Stock that are authorized by the Company's articles of
organization but not outstanding or reserved for issuance for purposes other
than upon exercise of the Rights are not sufficient to permit the exercise in
full of any Rights and the Board determines 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
stockholder approval for the authorization of such additional shares (such
thirty (30) day period, as it may be extended, shall be referred to as the
"Substitution Period"). To the extent that the Company determines that some
--------------------
action need be taken pursuant to the preceding provisions of this Section
11(a)(iii), the Company (x) shall provide, subject to Section 7(e) hereof, that
such action shall apply uniformly to all outstanding Rights, and (y) may suspend
the exercisability of the Rights until the
-18-
expiration of the Substitution Period in order to seek any authorization of
additional shares or to decide the appropriate form of distribution to be made
pursuant to such provisions and to determine the value thereof. In the event of
any such suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iii), the value of each Adjustment Share shall be
the Current Market Price per share of the Common Stock (as determined pursuant
to Section 11(d) hereof) 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, 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 per share of
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 per share of Preferred Stock (as determined
pursuant to Section 11(d) hereof) 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 or
Equivalent Preferred Stock (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 or Equivalent Preferred Stock to be offered for subscription or
purchase (or into which the convertible securities so 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 noncash consideration shall be as determined in good faith by the
Board, 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, options 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 or
surviving corporation) of evidences of indebtedness, cash (other than a regular
quarterly or other periodic 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 per share of Preferred Stock (as determined pursuant to Section 11(d)
hereof) on
-19-
such record date, less the fair market value (as determined in good faith by the
Board whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on 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 per share of Preferred
Stock (as determined pursuant to Section 11(d) hereof). 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 the 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) any dividend or distribution on such Common Stock payable in
shares of such Common Stock or securities convertible into shares of such Common
Stock (other than the Rights), or (B) any subdivision, combination or
reclassification of such Common Stock, and the ex-dividend date for such
dividend or distribution, or the record date for such subdivision, combination
or reclassification shall not have occurred prior to the commencement of the
requisite thirty (30) Trading Day or ten (10) Trading Day period, as set forth
above, then, and in each such case, the Current Market Price shall be properly
adjusted to take into account ex-dividend trading. The closing price for each
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the shares of Common Stock are listed or admitted to trading
or, if the shares of Common Stock are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices on the Nasdaq National Market or in
the over-the-counter market, as reported by Nasdaq or such other system then in
use, or, if on any such date the shares of Common Stock are not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Common Stock selected by
the Board. If on any such date no market maker is making a market in the Common
Stock, the fair value of such shares on such date as determined in good faith by
the Board shall be used. The term "Trading Day" shall mean a day on which the
-----------
principal national securities exchange on which the shares of Common Stock are
listed or admitted to trading is open for the transaction of business or, if the
shares of Common Stock are not listed or admitted to trading on any national
securities exchange, a Business Day. If the Common Stock is not publicly held
or not so listed or traded, Current Market Price per share shall mean the fair
value per share as determined in good faith by the Board whose determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the Current
Market Price per share of Preferred Stock shall be determined in the same manner
as set forth above for the
-20-
Common Stock in clause (i) of this Section 11(d) (other than the last sentence
thereof). 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 clause (i) of this
Section 11(d), the Current Market Price per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 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 the Common
Stock. If neither the Common Stock nor the Preferred Stock is publicly held or
so listed or traded, Current Market Price per share of the Preferred Stock shall
mean the fair value per share as determined in good faith by the Board, 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 one one-thousandth of a share of Preferred Stock shall
be equal to the Current Market Price of one share of Preferred Stock divided by
1,000.
(iii) For the purpose of any computation hereunder, the value of any
securities or assets other than Common Stock or Preferred Stock shall be the
fair value as determined in good faith by the Board, or, if at the time of such
determination there is an Acquiring Person, by a majority of the Continuing
Directors then in office, or, if there are no Continuing Directors, by a
nationally recognized investment banking firm selected by the Board, which
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(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 hundred-thousandth of a share of
Common Stock or other share or one ten-millionth of a share of 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)(ii) 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.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
- 21 -
(h) Unless the Company shall have exercised its election as provided in
Section 11(i) hereof, upon each adjustment of the Purchase Price as a result of
the calculations made in Sections 11(b) and (c) hereof, each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one one-
thousandths of a share of Preferred Stock obtained by (i) multiplying (x) the
number of one one-thousandths of a share 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 shares of Preferred Stock 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 one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest one-
hundred-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
record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of one one-thousandths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per share and the number of
shares 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 of the shares of Common Stock issuable
upon exercise of the Rights, the Company shall take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable such number of one one-
thousandths of a share of Preferred Stock at such adjusted Purchase Price.
- 22 -
(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 one one-thousandths of a share of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one one-thousandths of a share of Preferred Stock 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 in their good faith judgment the Board shall determine to be
advisable in order that any (i) consolidation or subdivision of the Preferred
Stock, (ii) issuance wholly for cash of any shares of Preferred Stock at less
than the Current Market Price, (iii) issuance wholly for cash of 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 stockholders.
(n) The Company covenants and agrees that it shall not, at any time after
the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), if (x) at the time of or immediately after
such consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect that would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger or sale, the stockholders of 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 Distribution Date,
it will not, except as permitted by Section 23 or Section 27 hereof, take (or
permit any Subsidiary to take) any action if at 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) (i) 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 (A) declare a dividend on
the outstanding shares of Common Stock payable in shares of Common Stock, (B)
subdivide the outstanding shares of Common Stock, or (C)
- 23 -
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.
(ii) Anything in this Agreement to the contrary notwithstanding, in
the event that an adjustment is required pursuant to the terms of any series of
the Convertible Preferred Stock to be made to the number of shares of Common
Stock issuable upon conversion of shares of such series of the Convertible
Preferred Stock, the number of Rights associated with each share of such series
of the Convertible Preferred Stock then outstanding shall be adjusted so that
the number of Rights thereafter associated with each share of such series of the
Convertible Preferred Stock following any such adjustment shall equal the number
of shares of Common Stock issuable upon conversion of shares of such series of
the Convertible Preferred Stock immediately following such adjustment.
(q) The failure by the Continuing Directors to declare a Person to be an
Adverse Person following such Person becoming the Beneficial Owner of 10% or
more of the outstanding Common Stock shall not imply that such Person is not an
Adverse Person or limit such directors' right at any time in the future to
declare such Person to be an Adverse Person.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
----------------------------------------------------------
Whenever an adjustment is made as provided in Section 11 and 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 Company Securities, a copy of such certificate, and (c)
mail a brief summary thereof to each holder of a Rights Certificate (or, if
prior to the Distribution Date, to each holder of a certificate representing
shares of Company Securities) 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.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
---------------------------------------------------------------
Power.
-----
(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 that
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 in a transaction that complies with Section
11(o) hereof) shall consolidate with, or merge with or into, the Company, and
the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding shares of Common Stock shall be changed into or
exchanged for stock or other 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 or earning power aggregating more than
50% of the assets or earning
- 24 -
power 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 and except as contemplated in Section 13(d) hereof, proper
provision shall be made so that: (i) each holder of a Right, except as provided
in Section 7(e) hereof, shall thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price in accordance with the terms
of this Agreement, such number of validly authorized and issued, fully paid,
nonassessable and freely tradeable shares of Common Stock of the Principal
Party, not subject to any liens, encumbrances, rights of first refusal or other
adverse claims, as shall be equal to the result obtained by (1) multiplying the
then current Purchase Price by the number of one one-thousandths of a share of
Preferred Stock for which a Right was 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
such one one-thousandths of a share 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
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 (2) 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 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, 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 or earning power 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 Stocks of two or more of which are and have been so
registered,
- 25 -
"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, sale
or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any Section
13 Event, the Principal Party will:
(i) prepare and file a registration statement under the Act, with
respect to the Rights and the securities purchasable upon exercise of the Rights
on an appropriate form, and will use its best efforts to cause such registration
statement to (A) become effective as soon as practicable after such filing and
(B) remain effective (with a prospectus at all times meeting the requirements of
the Act) until the Expiration Date; and
(ii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates that 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 or
consolidations 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, Section
13 shall not be applicable to a transaction described in subparagraphs (x) and
(y) of Section 13(a) 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 complies with
the provisions of Section 11(a)(ii)(B) 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 that evidence fractional Rights. If the Company
determines not to issue fractional Rights, there shall be paid in lieu thereof
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
- 26 -
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price of the Rights for any day shall be
the last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the Rights are listed or admitted to trading, or if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by Nasdaq or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board.
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
shall be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one one-
thousandth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates that evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-thousandth of a share of Preferred Stock,
the Company may pay to the registered holders of Rights Certificates, with
regard to which such fractional shares of Preferred Stock would otherwise be
issuable, at the time such Rights are exercised as herein provided, an amount in
cash equal to the same fraction of the current market value of one one-
thousandth of a share of Preferred Stock. For purposes of this Section 14(b),
the current market value of one one-thousandth share of Preferred Stock shall be
one one-thousandth of the closing price per share of Common Stock (determined
pursuant to Section 11(d)(ii) hereof) on 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 value of one share of Common Stock. For purposes of this Section 14(c),
the current market value of one share of Common Stock shall be the closing price
of one share of Common Stock (as determined pursuant to Section 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 the Right expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
----------------
Agreement, other than rights of action vested in the Rights Agent in Section 18
hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Company Securities); and any registered holder of any Rights Certificate (or,
prior to the Distribution Date, of the Company Securities), without the consent
of the Rights Agent or of the holder of any other Rights Certificate (or, prior
to the Distribution Date, of the Company Securities), may, in his own behalf and
for his own benefit, enforce, and may institute and
- 27 -
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by such
Rights Certificate in the manner provided in such Rights Certificate and in this
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:
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of Company Securities;
(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 purposes, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates duly completed and 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 Company Securities
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 Company Securities 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 Stockholder. No holder,
--------------------------------------------------
as such, of any Rights Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the number of one one-thousandths of
a share of Preferred Stock or any other securities of the Company which may at
any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Rights Certificate be construed to
confer upon the holder of any Rights Certificate, as such, any of the rights of
a stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise, until the Right or
- 28 -
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and 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 for, and to hold it harmless against,
any loss, liability or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
its administration of this Agreement in reliance upon any Rights Certificate or
certificate for Company Securities or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
Section 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 counter-signature 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
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.
- 29 -
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 opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such 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 Adverse
Person and the determination of Current Market Price) be proved or established
by the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Clerk or any Assistant
Clerk 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
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 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 or
Section 13 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after 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 to be issued pursuant
to this Agreement or any Rights Certificate or as to whether any shares of
Common Stock will, when so issued, be validly authorized and issued, fully paid
and 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.
- 30 -
(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 President, any Vice President, the Clerk, any
Assistant Clerk, the Treasurer or any Assistant Treasurer of the Company, and to
apply to such officers for advice or instructions in connection with its duties,
and 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.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not 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, reasonable care was exercised 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, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has either not been completed or indicates an affirmative
response to clause 1 or 2 thereof, the Rights Agent shall not take any further
action with respect to such requested exercise of transfer without first
consulting with the Company.
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 Company Securities 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
Company Securities 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 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
any registered holder of a Rights Certificate (who shall, with such notice,
submit his Rights Certificate for inspection by the Company), then any
registered holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights
- 31 -
Agent. Any successor Rights Agent, whether appointed by the Company or by such a
court, shall be (a) a corporation organized and doing business under the laws of
the United States or any state thereof in good standing, 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 a corporation described
in clause (a) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Company Securities and Preferred Stock, and mail a notice thereof in writing
to the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of the
-----------------------------------
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by the Board to reflect any adjustment or change in the Purchase
Price 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 (other than upon exercise
of a Right) and prior to the redemption or expiration of the Rights, the Company
(a) shall, with respect to shares of Common Stock so issued or sold pursuant to
the exercise of stock options or under any employee plan or arrangement, or upon
the exercise, conversion or exchange of securities, notes, warrants or
debentures issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Rights 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, (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, and
(iii) no such Rights Certificate shall be issued upon the conversion of any
shares of the Convertible Preferred Stock.
Section 23. Redemption and Termination.
--------------------------
(a) The Board may, at its option, at any time prior to the earlier of (i)
the Close of Business on the tenth day following the Stock Acquisition Date (or,
if the Stock Acquisition Date shall have occurred prior to the Record Date, the
close of business on the tenth day following the Record Date), or such later
date as may be determined by action of the Board (with the concurrence of a
majority of the Continuing Directors), or (ii) the Final Expiration Date, redeem
all but not less than all of the then outstanding Rights at a redemption price
of $.01 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 the Board may not redeem any Rights
----- -------- -------
- 32 -
following an Adverse Person Event; and provided, further, that if the Board
-------- -------
authorizes redemption of the Rights at 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. Notwithstanding anything contained in this Agreement to
the contrary, the Rights shall not be exercisable after the first occurrence of
a Section 11(a)(ii) Event until such time as the Company's right of redemption
set forth in the first sentence of this Section 23(a) has expired. 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) hereof, of the
Common Stock at the time of redemption) or any other form of consideration
deemed appropriate by the Board. The redemption of the Rights by the Board may
be made effective at such time, on such basis and with such conditions as the
Board in its sole discretion may establish; provided, however, that if the Board
-------- -------
authorizes redemption of the Rights at or after the time a Person becomes an
Acquiring Person, then there must be Continuing Directors then in office and
such terms and conditions shall require the concurrence of a majority of such
Continuing Directors.
(b) Immediately upon the action of the Board 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 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 the redemption will state the method by which the payment of the Redemption
Price will be made.
Section 24. Exchange. (a) At any time after any Person becomes an Acquiring
--------
Person or an Adverse Person, the Board (with the concurrence of a majority of
the Continuing Directors) may, at their option, exchange all or part of the then
outstanding and exercisable Rights (which (i) shall not include Rights that have
become void pursuant to Section 7(e) and (ii) shall include, without limitation,
any Rights issued after the Distribution Date as contemplated by Section 22
hereof) for shares of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "Exchange Ratio"). Notwithstanding
--------------
the foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any of its
Subsidiaries, any employee benefit plan of the Company or any of its
Subsidiaries or any Person organized, appointed or established by the Company or
any of its Subsidiaries for or pursuant to the terms of any such plan), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the shares of Common Stock then outstanding.
(b) Immediately upon the action of the Board electing to exchange any
Rights pursuant to Section 24(a) and without any further action and without any
notice, the right to exercise such Rights will terminate and thereafter the only
right 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
- 33 -
by such holder multiplied by the Exchange Ratio. The Company shall promptly
thereafter give notice of such exchange to the Rights Agent and the holders of
the Rights to be exchanged in the manner set forth in Section 26; provided,
--------
however, that the failure to give, or any defect in, such notice shall not
-------
affect the validity of such exchange. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the shares of Common Stock for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to Section 7(e)) held by each holder of
Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Common Stock Equivalents (as defined in Section
11(a)(iii)) for shares of Common Stock exchangeable for Rights, at the initial
rate of one Common Stock Equivalent for each share of Common Stock, as
appropriately adjusted to reflect adjustments in dividend, liquidation and
voting rights of Common Stock Equivalents pursuant to the terms thereof, so that
each Common Stock Equivalent delivered in lieu of each share of Common Stock
shall have essentially the same dividend, liquidation and voting rights as one
share of Common Stock.
(d) In the event that the number of shares of Common Stock which are
authorized by the Company's articles of organization, but not outstanding or
reserved for issuance are not sufficient to permit an exchange of Rights as
contemplated by 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 that 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 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 purposes of this Section 24(e), the current market value of a
whole share of Common Stock shall be the closing price per share of Common Stock
(determined pursuant to Section 11(d)(ii) hereof) on the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
------------------------
(a) In case the Company shall propose, at any time after the Distribution
Date, (i) to pay any dividend payable in stock of any class to the holders of
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 or merger 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 50% of the assets or earning power of the Company and its
- 34 -
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), 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, 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 or distribution
of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of 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 Common
Stock shall, to the extent appropriate, also be deemed thereafter to refer to
Common Stock 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 Certificate to
or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Marcam Corporation
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: President and Chief Executive Officer
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
The First National Bank of Boston
c/o Boston Equiserve
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
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 Company Securities) 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.
- 35 -
Section 27. Supplements and Amendments. At any time prior to the Final
--------------------------
Amendment 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 Final Amendment 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
shorten or lengthen any time period hereunder (which lengthening or shortening,
following the first occurrence of an event set forth in the second proviso of
the first sentence of 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) or (iv) 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, an Adverse Person or an Affiliate or Associate of such
Person); provided, however, that this Agreement may not be supplemented or
-------- -------
amended, pursuant to clause (iii) of this sentence, to lengthen (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 or the
benefits to the holders of Rights (other than any Acquiring Person, an Adverse
Person or an Associate or Affiliate of such Person). 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 Company Securities.
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 provisions of the last sentence of Rule 13d-3(d)(l)(i) of the General Rules
and Regulations under the Exchange Act; provided, however, that for all purposes
-----------------
of this Agreement any calculation of the number of shares of Common Stock
outstanding at any particular time shall also include all shares of Common Stock
issuable upon conversion of all shares of Convertible Preferred Stock
outstanding at the applicable time. The Board (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 to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including a
determination to redeem or not redeem the Rights, to declare that a Person is an
Adverse Person or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or
- 36 -
made by the Board (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 any member of the Board or any Continuing
Director to any liability to the holders of the Rights. Notwithstanding anything
to the contrary in this Agreement, from and after the election of directors of
the Company at the first annual meeting of stockholders of the Company called
after the time a Person becomes an Acquiring Person, all provisions of this
Agreement that require the action or concurrence of the Continuing Directors
shall no longer require the action or concurrence of the Continuing Directors
but instead shall require only the action of a majority of the Board.
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 determines
in its good faith judgment that severing the invalid language from this
Agreement would materially and 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. Without limiting the
foregoing, if any provision requiring that a determination made by less than the
entire Board is held by a court of competent jurisdiction or other authority to
be invalid, void or unenforceable, such determination shall then be made by the
entire Board.
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 Commonwealth of Massachusetts and for all purposes shall be governed
by and construed in accordance with the laws of such Commonwealth applicable to
contracts made and to be performed entirely within such Commonwealth.
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.
- 37 -
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
Attest: MARCAM CORPORATION
By: /s/Xxxxx X. Xxxxxx By: /s/Xxxxxxx Xxxxxxx
--------------------------- ------------------------------
Name: Xxxxx X. Xxxxxx, Esq. Name: Xxxxxxx Xxxxxxx
Title: Vice President and Title: President and Chief
General Counsel Executive Officer
Attest: THE FIRST NATIONAL BANK OF BOSTON,
as Rights Agent
By: /s/Xxxx Xxxxx By: /s/Xxxxxx X. Xxxxxxxxx
--------------------------- ------------------------------
Name: Xxxx Xxxxx Name: Xxxxxx X. Xxxxxxxxx
Title: Account Manager Title: Administration Manager
EXHIBIT A
---------
FORM CD-26-5M-8-83
FEDERAL IDENTIFICATION
NO. 00-0000000
------------------
THE COMMONWEALTH OF MASSACHUSETTS
OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
XXXXXXX XXXXXX XXXXXXXX, SECRETARY
ONE ASHBURTON PLACE, BOSTON, MASS. 02108
CERTIFICATE OF VOTE OF DIRECTORS ESTABLISHING
A SERIES OF A CLASS OF STOCK
GENERAL LAWS, CHAPTER 156B, SECTION 26
WE, XXXXXXX X. XXXXXXX , PRESIDENT AND
XXXXX X. XXXXXX , CLERK OF
Marcam Corporation
--------------------------------------------------------------------------------
(Name of Corporation)
Located at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
---------------------------------------------------------------------
do hereby certify that at a meeting of the directors of the corporation held on
December 3
----------------------------,
1996, the following vote establishing and designating a series of a class of
stock and determining the relative rights and preferences thereof was duly
adopted:
VOTED: That pursuant to the authority conferred upon the Board of Directors of
the Corporation by the provisions of the Restated Articles of
Organization of the Corporation, as amended, the proper officers of the
Corporation are authorized to file with the Secretary of the
Commonwealth of Massachusetts a Certificate of Vote of Directors
establishing a series of shares of Preferred Stock, $1.00 par value per
share, and that of the 1,000,000 authorized shares of Preferred Stock,
$1.00 par value per share, 30,000 shares are hereby designated as Series
F Junior Participating Preferred Stock, the relative rights,
preferences, powers, privileges and restrictions, qualifications and
limitations granted to or imposed upon such series of shares to be as
follows:
NOTE: Votes for which the space provided above is not sufficient should be set
out on continuation sheets to be numbered 2A, 2B, etc. Continuation sheets
must have a left-hand margin 1 inch wide for binding and shall be 81/2" x
11". Only one side should be used.
[Continuation Pages of Certificate of Vote of Directors establishing a series
of Preferred Stock designated Series F Junior Participating Preferred Stock]
Section 1. Designation and Amount. The shares of such series shall
----------------------
be designated as "Series F Junior Participating Preferred Stock" and the number
---------------------------------------------
of shares constituting such series shall be 30,000.
Section 2. Dividends and Distributions.
---------------------------
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock ranking prior and superior to the shares of Series F Junior
Participating Preferred Stock with respect to dividends, the holders of shares
of Series F Junior Participating Preferred Stock, in preference to the holders
of Common Stock, $.01 par value per share (the "Common Stock"), of the
------------
Corporation, and of any other junior stock, shall be entitled to receive, when,
as and if declared by the Board of Directors, out of funds of the Corporation
legally available for the payment of dividends, quarterly dividends payable in
cash on March 31, June 30, September 30 and December 31 in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
-------------------------------
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series F Junior Participating Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the
greater of (a) $1.00 or (b) subject to the provision for adjustment hereinafter
set forth, 1,000 times the aggregate per share amount of all cash dividends, and
1,000 times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series F Junior Participating Preferred Stock. In the
event the Corporation shall at any time declare or pay any dividend on Common
Stock payable in shares of Common Stock or effect a subdivision, combination or
consolidation of the outstanding 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 amount to
which holders of shares of Series F Junior Participating 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
- 2 -
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series F Junior Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock) and the Corporation
shall pay such dividend or distribution on the Series F Junior Participating
Preferred Stock before the dividend or distribution declared on the Common Stock
is paid or set apart; provided, however, that, in the event no dividend or
-------- -------
distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share on the Series F Junior
Participating Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series F Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
F Junior Participating Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of issue
of such shares, or unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of holders of shares of
Series F Junior Participating 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 F Junior Participating
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 F Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no more
than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series F Junior
-------------
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series F Junior Participating Preferred Stock shall entitle the
holder thereof to 1,000 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at any time
declare or pay any dividend on Common Stock payable in shares of Common Stock or
effect a subdivision, combination or consolidation of the outstanding 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 number of votes per share to which
- 3 -
holders of shares of Series F Junior Participating 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.
(B) Except as otherwise provided herein, by law, or in any other
Certificate of Vote of Directors establishing a series of Preferred Stock or any
similar stock, the holders of shares of Series F Junior Participating Preferred
Stock, 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 stockholders of the Corporation.
(C) (i) If at any time dividends on any Series F Junior
Participating Preferred Stock shall be in arrears in an amount equal to six (6)
quarterly dividends thereon, the occurrence of such contingency shall xxxx the
beginning of a period (herein called a "default period") which shall extend
--------------
until such time when all accrued and unpaid dividends for all previous quarterly
dividend periods and for the current quarterly dividend period on all shares of
Series F Junior Participating Preferred Stock then outstanding shall have been
declared and paid or set apart for payment. During each default period, all
holders of Preferred Stock (including holders of the Series F Junior
Participating Preferred Stock) with dividends in arrears in an amount equal to
six (6) quarterly dividends thereon, voting as a class, irrespective of series,
shall have the right to elect two (2) Directors.
(ii) During any default period, such voting right of the holders
of Series F Junior Participating Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at
any annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting right nor the right of the
holders of any other series of Preferred Stock, if any, to increase, in certain
cases, the authorized number of Directors shall be exercised unless the holders
of ten percent (10%) in number of shares of Preferred Stock outstanding shall be
present in person or by proxy. The absence of a quorum of the holders of Common
Stock shall not affect the exercise by the holders of Preferred Stock of such
voting right. At any meeting at which the holders of Preferred Stock shall
exercise such voting right initially during an existing default period, they
shall have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two (2)
Directors or, if such right is exercised at an annual meeting, to elect two (2)
Directors. If the number which may be so elected at any special meeting does not
amount to the required number, the holders of the Preferred Stock shall have the
right to make such increase in the number of Directors as shall be necessary to
permit the election by them of the required number. After the holders of the
Preferred Stock shall have exercised their right to elect Directors in any
default period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of the holders of
Preferred Stock as herein provided or
- 4 -
pursuant to the rights of any equity securities ranking se nior to or pari passu
---- -----
with the Series F Junior Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors shall within twenty (20) Business Days after
such default amend the Corporation's by-laws to make provision for the election
of directors consistent with the provisions of this Section 3 and call a special
meeting of the holders of shares of the Series F Junior Participating Preferred
Stock and all other holders of Preferred Stock who are then entitled to
participate in the election of such Directors for the purpose of electing the
additional Directors provided by this Section 3. Notice of such meeting and of
any annual meeting at which holders of Preferred Stock are entitled to vote
pursuant to this paragraph (C)(iii) shall be given to each holder of record of
Preferred Stock by mailing a copy of such notice to him at his last address as
the same appears on the books of the Corporation. Such meeting shall be called
for a time not earlier than 10 days and not later than 60 days after such order
or request. Notwithstanding the provisions of this paragraph (C)(iii), no such
special meeting shall be called during the period within 60 days immediately
preceding the date fixed for the next annual meeting of the stockholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation, if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of Preferred
Stock shall have exercised their right to elect two (2) Directors voting as a
class, after the exercise of which right (x) the Directors so elected by the
holders of Preferred Stock shall continue in office until their successors shall
have been elected by such holders or until the expiration of the default period,
and (y) any vacancy in the Board of Directors may (except as provided in
paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the
remaining Directors theretofore elected by the holders of the class of stock
which elected the Director whose office shall have become vacant. References in
this paragraph (C) to Directors elected by the holders of a particular class of
stock shall include Directors elected by such Directors to fill vacancies as
provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x)
the right of the holders of Preferred Stock as a class to elect Directors shall
cease, (y) the term of any Directors elected by the holders of Preferred Stock
as a class shall terminate, and (z) the number of Directors shall be such number
as may be provided for in the Corporation's by-laws irrespective of any increase
made pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such
number being subject, however, to change thereafter in any manner provided by
law or in the Corporation's articles of organization or by-laws). Any vacancies
in the Board of Directors effected by the provisions of clauses (y) and (z) in
the preceding sentence may be filled by a majority of the remaining Directors.
- 5 -
(D) Except as set forth herein, or as otherwise provided by law,
holders of Series F Junior Participating 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.
Section 4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series F Junior Participating Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of Series F Junior
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends on 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 F Junior Participating
Preferred Stock;
(ii) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series F Junior Participating
Preferred Stock, except dividends paid ratably on the Series F Junior
Participating 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 F Junior Participating 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 F Junior Participating Preferred Stock;
(iv) purchase or otherwise acquire for consideration any shares
of Series F Junior Participating Preferred Stock, or any shares of stock ranking
on a parity with the Series F Junior Participating 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 Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
- 6 -
Section 5. Reacquired Shares. Any shares of Series F Junior Participating
-----------------
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of undesignated Preferred Stock and may be reissued as part of a new
series of Preferred Stock to be created by resolution or resolutions of the
Board of Directors, subject to the conditions and restrictions on issuance set
forth herein.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any
--------------------------------------
liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series F Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series F Junior Participating Preferred Stock
shall have received $1,000 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Series F Liquidation Preference"). Following the payment of
-------------------------------
the full amount of the Series F Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series F Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the "Common Adjustment")
-----------------
equal to the quotient obtained by dividing (i) the Series F Liquidation
Preference by (ii) 1,000 (as appropriately adjusted as set forth in subparagraph
C below to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in clause (ii),
the "Adjustment Number"). Following the payment of the full amount of the Series
-----------------
F Liquidation Preference and the Common Adjustment in respect of all outstanding
shares of Series F Junior Participating Preferred Stock and Common Stock,
respectively, holders of Series F Junior Participating Preferred Stock and
holders of shares of Common Stock shall receive their ratable and proportionate
share of the remaining assets to be distributed in the ratio of the Adjustment
Number to 1 with respect to such Preferred Stock and Common Stock, on a per
share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series F Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if any,
which rank on a parity with the Series F Junior Participating Preferred Stock,
then such remaining assets shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquidation preferences. In the
event, however, that there are not sufficient assets available to permit payment
in full of the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision, combination or consolidation of the outstanding Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or
- 7 -
lesser number of shares of Common Stock, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment 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.
(D) Neither the consolidation, merger or other business combination
of the Corporation with or into any other corporation nor the sale, lease,
exchange or conveyance of all or any part of the property, assets or business of
the Corporation shall be deemed to be a liquidation, dissolution or winding up
of the Corporation for purposes of this Section 6.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
--------------------------
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series F Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 1,000 times the aggregate amount
of stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision, combination or consolidation of the outstanding 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 amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series F Junior Participating 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.
Section 8. No Redemption. The shares of Series F Junior Participating
-------------
Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series F Junior Participating 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 upon liquidation,
dissolution, winding up or otherwise, unless the terms of any such series shall
provide otherwise.
Section 10. Amendment. The articles of organization of the Corporation
---------
shall not be further amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series F Junior
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least seventy-five
- 8 -
percent of the outstanding shares of Series F Junior Participating Preferred
Stock, voting together as a single class.
Section 11. Fractional Shares. Series F Junior Participating Preferred
-----------------
Stock may be issued in fractions of a share which shall entitle the holder, in
proportion to such holders fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all other
rights of holders of Series F Junior Participating Preferred Stock.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our
names this ____ day of December in the year 1996.
______________________________________________________________, President
______________________________________________________________, Clerk
THE COMMONWEALTH OF MASSACHUSETTS
CERTIFICATE OF VOTE OF DIRECTORS ESTABLISHING
A SERIES OF A CLASS OF STOCK
(General Laws, Chapter 156B, Section 26)
I hereby approve the within certificate and, the filing fee in the amount of $
having been paid, said certificate is hereby filed this
day of ,19 .
XXXXXXX XXXXXX XXXXXXXX
Secretary of State
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF CERTIFICATE TO BE SENT
TO:
Xxxx X. Xxxxxxx
------------------------------------------
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
------------------------------------------
High Xxxxxx Xxxxx, 000 Xxxx Xxxxxx
------------------------------------------
Xxxxxx, XX 00000
------------------------------------------
Telephone (000) 000-0000
------------------
Copy Mailed
EXHIBIT B
---------
[Form of Rights Certificate]
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER DECEMBER 16, 2006 OR EARLIER IF REDEEMED BY THE COMPANY.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON, AN ADVERSE
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON OR AN ADVERSE PERSON
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON, AN ADVERSE PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING
PERSON OR ADVERSE PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH
AGREEMENT.]*
Rights Certificate
MARCAM CORPORATION
This Rights Certificate certifies that _________, or registered assigns, is
the registered holder of the number of Rights set forth above, each of which
entitles the holder thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of December 3, 1996 (the "Rights Agreement"),
between Marcam Corporation, a Massachusetts corporation (the "Company"), and The
First National Bank of Boston, a national banking association (the "Rights
Agent"), to purchase from the Company after the Distribution Date (as such term
is defined in the Rights Agreement) and at any time prior to the Expiration Date
(as such term is defined in the Rights Agreement) at the office or offices of
the Rights Agent designated for such purpose or its successors as Right Agent,
one-thousandth of a fully
* If applicable, insert this portion of the legend and delete preceding
sentence.
- 2 -
paid, nonassessable share of Series F Junior Participating Preferred Stock (the
"Preferred Stock") of the Company, at a purchase price of $60.00 per one one-
thousandth of a share (the "Purchase Price"), upon presentation and surrender of
this Rights Certificate with the Form of Election to Purchase 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 ______________, based on the Preferred Stock
as constituted at such date. 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.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to such terms in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights evidenced
by this Rights Certificate are beneficially owned by (i) an Acquiring Person, an
Adverse Person or an Affiliate or Associate of an Acquiring Person or Adverse
Person, (ii) a transferee of an Acquiring Person or an Adverse Person (or of any
such Associate or Affiliate of an Acquiring Person or an Adverse Person), 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 Adverse Person (or an Associate or Affiliate of an Acquiring Person or an
Adverse 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.
Copies of the Rights Agreement are on file at the office of the Company and are
also available upon written request to the Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office or offices of the Rights Agent designated for
such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of one one-thousandths of a share of Preferred
Stock as the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If this Rights
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $.01 per Right at any time prior to the earlier of (i) the close of
business on the tenth day
- 3 -
following the Stock Acquisition Date (or, if the Stock Acquisition Date shall
have occurred prior to the Record Date, the close of business on the tenth day
following the Record Date), or such later date as may be determined by action of
the Board (with the concurrence of a majority of the Continuing Directors),
or(ii) the Final Expiration Date. 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 of a share of Preferred Stock), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
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 stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or, to receive notice of
meetings or other actions affecting stockholders (except as provided in 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.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal by its authorized officers.
Dated:
ATTEST: MARCAM CORPORATION
___________________________ By:___________________________
Secretary President and Chief
Executive Officer
Countersigned:
THE FIRST NATIONAL BANK OF BOSTON
By:________________________
Authorized Signature
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ________________________________________________________
hereby sells, assigns and transfers unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint __________ Attorney, to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated:
____________________________
Signature
Signature Guaranteed:
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person, an
Adverse Person or an Affiliate or Associate of an Acquiring Person or an Adverse
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, an Adverse Person
or an Affiliate or Associate of an Acquiring Person or an Adverse Person.
Dated:
____________________________
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: MARCAM CORPORATION
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 insert social security
or other identifying number
______________________________________________________________________________
______________________________________________________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
______________________________________________________________________________
______________________________________________________________________________
(Please print name and address)
Dated:
______________________________
Signature
Signature Guaranteed:
- 2 -
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person, an Adverse Person or an Affiliate or Associate of an Acquiring Person or
an Adverse 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, an
Adverse Person or an Affiliate or Associate of an Acquiring Person or an Adverse
Person.
Dated:
______________________________
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
EXHIBIT C
---------
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On December 3, 1996, the Board of Directors of Marcam Corporation (the
"Company") declared a dividend of one preferred stock purchase right (a "Right")
for each outstanding share of the Company's Common Stock and a dividend of ten
Rights for each outstanding share of the Company's Series D and E Convertible
Preferred Stock (the "Convertible Preferred Stock" and together with the Common
Stock, the "Company Securities") to stockholders of record at the close of
business on December 16, 1996 (the "Record Date"). Each Right entitles the
registered holder to purchase from the Company a unit consisting of one one-
thousandth of a share (a "Unit") of Series F Junior Participating Preferred
Stock, $1.00 par value per share (the "Preferred Stock"), at a purchase price of
$60.00 per Unit (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and The First National Bank of Boston, as Rights
Agent.
Initially, the Rights will be attached to all certificates
representing Company Securities then outstanding, and no separate Rights
Certificates will be distributed. The Rights will separate from the Company
Securities and a Distribution Date will occur upon the earlier of (i) 10 days
(or such later date as may be determined by action of the Board of Directors
(with the concurrence of a majority of the Continuing Directors (as defined
below))) following a public announcement either that a person or group of
affiliated or associated persons, other than an Exempt Person (as defined
below), (an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the outstanding shares of Common Stock,
or that a person or group who was at any time an Exempt Person but is
subsequently no longer considered to be an Exempt Person becomes an Acquiring
Person (the "Stock Acquisition Date"), (ii) 10 business days (or such later date
as may be determined by action of the Board of Directors (with the concurrence
of a majority of the Continuing Directors)) following the commencement of a
tender offer or exchange offer that may result in a person or group beneficially
owning 20% or more of such outstanding shares of Common Stock or (iii) 10
business days after the Continuing Directors of the Company shall declare any
Person to be an Adverse Person (as defined below), upon a determination that
such Person, alone or together with its affiliates and associates, has become
the beneficial owner of an amount of Common Stock which the Continuing Directors
determine to be substantial (which amount shall in no event be less than 10% of
the shares of Common Stock then outstanding) and a majority of the Continuing
Directors determines, after reasonable inquiry and investigation, including
consultation with such persons as such directors shall deem appropriate, that
(a) such beneficial ownership by such person is intended to cause the Company to
repurchase the Common Stock beneficially owned by such person or to cause
pressure on the Company to take action or enter into a transaction or series of
transactions intended to provide such person with short-term financial gain
under circumstances where such directors determine that the best long-term
interests of the Company and its stockholders would not be served by taking such
action or entering into such transaction or series of transactions at that time
or (b) such beneficial ownership is causing or is reasonably likely to cause a
material adverse impact (including, but not limited to, impairment of
relationships with customers, impairment of the Company's ability to maintain
its competitive position or impairment of the Company's business reputation) on
the business or prospects of the Company.
- 2 -
The term "Exempt Person" means General Atlantic Partners 32, L.P.,
General Atlantic Partners 21, L.P. and GAP Coinvestment Partners, L.P., together
with their affiliates and associates, as long as the Company's standstill
agreement still applies to such persons and as long as such persons have not
breached such standstill agreements. If any person or group who was at any time
an Exempt Person but is subsequently no longer considered to be an Exempt Person
and who, at the time such person or group is no longer considered to be an
Exempt Person, Beneficially Owns 20% or more of the Common Stock of the Company
then outstanding, such person or group shall not be deemed an "Acquiring Person"
unless and until such person or group shall, subsequent to the time at which
such person or group ceases to be an Exempt Person, either (i) become the
Beneficial Owner of an additional 1% or more of the shares of Common Stock of
the Company then outstanding or (ii) enter into one or more "self-dealing"
transactions as set forth in the Rights Agreement, then such person or group
shall be deemed to be an "Acquiring Person" from and after the time immediately
preceding the earliest to occur of the events specified in clause (i) or (ii) of
this sentence.
Until the Distribution Date (or earlier redemption or expiration of
the Rights), (i) the Rights will be evidenced by the Company Security
certificates and will be transferred with and only with such Company Security
certificates, (ii) new Company Security 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 Company Securities
outstanding, even without such notation, will also constitute the transfer of
the Rights associated with the Company Securities represented by such
certificate. Pursuant to the Rights Agreement, the Company reserves the right
to require prior to the occurrence of a Triggering Event (as defined below)
that, upon any exercise of Rights, a number of Rights may be exercised so that
only whole shares of Preferred Stock will be issued.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on December 16, 2006, unless earlier redeemed by
the Company as described below.
As soon as practicable after the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Company Securities as of the close of business on the
Distribution Date and, thereafter, such separate Rights Certificates alone will
represent the Rights. All shares of Common Stock issued prior to the
Distribution Date will be issued with Rights. Shares of Common Stock issued
following the Distribution Date (other than upon exercise of a Right) pursuant
to the exercise of stock options or under any employee plan or arrangement, or
upon the exercise, conversion or exchange of securities, notes, warrants or
debentures issued by the Company (other than the Convertible Preferred Stock)
will be issued with Rights. Except as otherwise determined by the Board of
Directors, no other shares of Common Stock issued following the Distribution
Date will be issued with Rights.
In the event that the Continuing Directors determine that a person is
an Adverse Person or, at any time following the Distribution Date, (i) the
Company is the surviving corporation in a merger with an Acquiring Person and
its Common Stock is not changed or exchanged, (ii) either a person or group,
other than an Exempt Person, becomes the beneficial owner of 20% or more of the
then outstanding shares of Common Stock, or a person or group who was at any
time an Exempt Person but is subsequently no longer considered to be an Exempt
Person becomes an Acquiring Person (in either case except pursuant to an offer
for all outstanding shares of Common Stock which the Continuing Directors
determine to be fair to, and otherwise in the best
- 3 -
interests of, the Company and its stockholders), (iii) an Acquiring Person
engages in one or more "self-dealing" transactions as set forth in the Rights
Agreement, or (iv) during such time as there is an Acquiring Person, an event
occurs which results in such Acquiring Person's ownership interest being
increased by more than 1% (e.g., a reverse stock split), each holder of a Right
will thereafter have the right to receive, upon exercise, that number of shares
of Common Stock (or, in certain circumstances, cash, property or other
securities of the Company) which equals the exercise price of the Right divided
by one-half of the current market price (as defined in the Rights Agreement) of
the Common Stock at the date of the occurrence of the event. However, Rights are
not exercisable following the occurrence of any of the events set forth above
until such time as the Rights are no longer redeemable by the Company as set
forth below. Notwithstanding any of the foregoing, following the occurrence of
any of the events set forth in this paragraph, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were, beneficially
owned by an Acquiring Person or an Adverse Person will be null and void. The
events set forth in this paragraph are described in Section 11(a)(ii) of the
Rights Agreement and are referred to as "Section 11(a)(ii) Events."
For example, at an exercise price of $60.00, each Right not owned by
an Acquiring Person or an Adverse Person (or by certain related parties)
following an event set forth in the preceding paragraph would entitle its holder
to purchase $120.00 worth of Common Stock (or other consideration, as noted
above) for $60.00. Assuming that the Common Stock has a per share value of
$20.00 at such time, the holder of each valid Right would be entitled to
purchase six shares of Common Stock for $60.00.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction in which the Company is not the surviving corporation (other than a
merger which follows an offer determined by the Board of Directors to be fair as
described in clause (ii) of the second preceding paragraph), or (ii) more than
50% of the Company's assets or earning power is sold or transferred, each holder
of a Right (except Rights which previously have been voided as set forth above)
shall thereafter have the right to receive, upon exercise, that number of shares
of common stock of the acquiring company which equals the exercise price of the
Right divided by one-half of the current market price (as defined in the Rights
Agreement) of such common stock at the date of the occurrence of the event. The
events set forth in this paragraph and in the second preceding paragraph are
referred to as the "Triggering Events."
At any time after the occurrence of a Section 11(a)(ii) Event, the
Board (with the concurrence of a majority of the Continuing Directors) may
exchange the Rights (other than Rights owned by an Acquiring Person or Adverse
Person which have become void), in whole or in part, at an exchange ratio of one
share of Common Stock, or one Common Stock Equivalent (as defined in the Rights
Agreement), per Right (subject to adjustment).
The Purchase Price payable, and the number of Units of Preferred Stock
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, or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) if holders of the Preferred Stock are granted certain
rights or warrants to subscribe for Preferred Stock or convertible securities 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
- 4 -
dividends payable on the Preferred Stock) or of subscription rights or warrants
(other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an adjustment
in cash will be made based on the market price of the Preferred Stock on the
last trading date prior to the date of exercise.
In general, the Company may redeem the Rights in whole, but not in
part, at any time until ten days following the Stock Acquisition Date or such
later date as may be determined by action of the Board of Directors (with the
concurrence of a majority of the Continuing Directors), at a price of $.01 per
Right (payable in cash, Common Stock or other consideration deemed appropriate
by the Board of Directors). If the Board of Directors authorizes redemption of
the Rights at or after the time a Person becomes an Acquiring Person, 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 not
redeem the Rights if the Continuing Directors have previously declared a person
to be an Adverse Person. Immediately upon the action of the Board of Directors
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 $.01 per Right redemption price.
The term "Continuing Directors" means any member of the Board of
Directors of the Company who was a member of the Board of Directors on the date
of the Rights Agreement, and any person who is subsequently elected to the Board
of Directors if such person is recommended or approved by a majority of the
Continuing Directors, but shall not include an Acquiring Person, an Adverse
Person or an affiliate or associate of an Acquiring Person or an Adverse Person,
or any representative of the foregoing entities.
Calculations of the number of shares of Common Stock outstanding at
any time shall include the number of shares of Common Stock issuable upon
conversion of all shares of Convertible Preferred Stock outstanding at the
applicable time.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.
Any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the earlier to occur of the
determination that a person is an Adverse Person or the Distribution Date.
After the earlier of such events, the provisions of the Rights Agreement may be
amended by the Board of Directors (in certain circumstances, with the
concurrence of the Continuing Directors) in order to cure any ambiguity, to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person or any Adverse Person), or to
shorten or lengthen any time period under the Rights Agreement; provided,
--------
however, that no amendment to adjust the time period governing redemption shall
-------
be made at such time as the Rights are not redeemable.
- 5 -
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
December 5, 1996. 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.
