Xxx Research Corporation
and
ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent
Rights Agreement
Dated as of January 23, 1997
TABLE OF CONTENTS
Section Page
1. Certain Definitions . . . . . . . . . . . . 1
2. Appointment of Rights Agent . . . . . . . . 6
3. Issuance of Rights Certificates . . . . . . 7
4. Form of Rights Certificates . . . . . . . . 9
5. Countersignature and Registration . . . . . 10
6. Transfer, Split Up, Combination and Ex-
change of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certifi-
xxxxx . . . . . . . . . . . . . . . . . . 11
7. Exercise of Rights; Purchase Price; Expira-
tion Date of Rights . . . . . . . . . . . 12
8. Cancellation and Destruction of Rights
Certificates . . . . . . . . . . . . . . . 15
9. Reservation and Availability of Capital
Stock . . . . . . . . . . . . . . . . . . 15
10. Preferred Stock Record Date . . . . . . . 17
11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights . . . . 18
12. Certificate of Adjusted Purchase Price or
Number of Shares . . . . . . . . . . . . . 30
13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power . . . . . . . . 31
14. Fractional Rights and Fractional Shares . 34
15. Rights of Action . . . . . . . . . . . . . 36
16. Agreement of Rights Holders . . . . . . . 37
17. Rights Certificate Holder Not Deemed a
Stockholder . . . . . . . . . . . . . . . 38
18. Concerning the Rights Agent . . . . . . . 38
19. Merger or Consolidation or Change of Name
of Rights Agent . . . . . . . . . . . . . 39
20. Duties of Rights Agent . . . . . . . . . . 40
21. Change of Rights Agent . . . . . . . . . . 43
22. Issuance of New Rights Certificates . . . 44
23. Redemption and Termination . . . . . . . . 45
24. Exchange . . . . . . . . . . . . . . . . . 46
25. Notice of Certain Events . . . . . . . . . 48
26. Notices . . . . . . . . . . . . . . . . . 49
27. Supplements and Amendments . . . . . . . . 50
28. Successors . . . . . . . . . . . . . . . . 50
29. Determinations and Actions by the Board,
etc. . . . . . . . . . . . . . . . . . . . 51
30. Benefits of this Agreement . . . . . . . . 51
31. Severability . . . . . . . . . . . . . . . 51
32. Governing Law . . . . . . . . . . . . . . 52
33. Counterparts . . . . . . . . . . . . . . . 52
34. Descriptive Headings . . . . . . . . . . . 52
Exhibit A -- Form of Certificate of Designation, Preferences
and Rights
Exhibit B -- Form of Rights Certificate
Exhibit C -- Summary of Rights to Purchase Preferred Stock
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of January 23, 1997 (this
"Agreement"), between Xxx Research Corporation, a Delaware
corporation (the "Company"), and ChaseMellon Shareholder Servic-
es, L.L.C., a New Jersey limited liability company, as rights
agent (the "Rights Agent"),
W I T N E S S E T H
WHEREAS, on January 23, 1997 (the "Rights Dividend
Declaration Date"), the Board of Directors of the Company (the
"Board") authorized and declared a dividend distribution of one
Right for each share of Common Stock of the Company outstanding
at the close of business on January 31, 1997 (the "Record Date"),
and has authorized the issuance of one Right (as such number may
hereinafter be adjusted pursuant to the provisions of Section
11(p) hereof) for each share of Common Stock issued between the
Record Date (whether originally issued or delivered from the
Company's treasury) and the Distribution Date (as defined below),
each Right initially representing the right to purchase one
one-thousandth of a share of Series A Junior Participating
Preferred Stock of the Company having the rights, powers and
preferences set forth in the form of Certificate of Designation,
Preferences and Rights attached hereto as Exhibit A, upon the
terms and subject to the conditions set forth below (the
"Rights").
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the parties hereby agree
as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who
or which, together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner of fifteen percent (15%) or
more of the shares of Common Stock then outstanding, but shall
not include (i) the Company, (ii) any Subsidiary of the Company,
(iii) any employee benefit plan of the Company or of any Subsid-
iary of the Company, (iv) any Person or entity organized, ap-
pointed or established by the Company for or pursuant to the
terms of any such plan or (v) any Exempted Person.
(b) "Act" shall mean the Securities Act of 1933,
as amended.
(c) "Adjustment Shares" shall have the meaning
set forth in Section 11(a)(ii) hereof.
(d) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.
(e) A Person shall be deemed the "Beneficial
Owner" of, and shall be deemed to "beneficially own," any securi-
ties:
(i) which such Person or any of such
Person's Affiliates or Associates, directly or indi-
rectly, 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, rights,
warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by
such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted
for purchase or exchange, (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 "Original Rights") or
pursuant to Section 11(i) hereof in connection with an
adjustment made with respect to any Original Rights;
(ii) which such Person or any of such
Person's Affiliates or Associates, directly or indi-
rectly, 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), including pursuant to any agreement,
arrangement or understanding, whether or not in writ-
ing; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially
own," any security under this subsection (ii) as a
result of an agreement, arrangement or understanding to
vote such security if such agreement, arrangement or
understanding: (A) arises solely from a revocable
proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and
Regulations under the Exchange Act, and (B) is not also
then reportable by such Person on Schedule 13D under
the Exchange Act (or any comparable or successor re-
port); 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 agree-
ment, arrangement or understanding (whether or not in
writing), for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in
the proviso to subsection (ii) of this subsection (e))
or disposing of any voting securities of the Company;
provided, however, that nothing in this subsection (e) shall
cause a Person engaged in business as an underwriter of securi-
ties 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; and provided
further, however, that any stockholder of the Company, with
affiliate(s), associate(s) or other Person(s) who may be deemed
representatives of it serving as director(s) of the Company,
shall not be deemed to beneficially own securities held by other
Persons as a result of (i) Persons affiliated or otherwise
associated with such stockholder serving as directors or taking
any action in connection therewith, (ii) discussing the status of
its shares with the Company or other stockholders of the Company
similarly situated or (iii) voting or acting in a manner similar
to other stockholders similarly situated, absent a specific
finding by the Board of an express agreement among such stock-
holders to act in concert with one another as stockholders so as
to cause, in the good faith judgment of the Board, each such
stockholder to be the Beneficial Owner of the shares held by such
other stockholder(s).
(f) "Board" shall have the meaning set forth in
the recital at the beginning of this Agreement.
(g) "Business Day" shall mean any day other than
a Saturday, Sunday or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive
order to close.
(h) "Close of business" on any given date shall
mean 5:00 P.M., New York City time, on such date; provided,
however, that if such date is not a Business Day it shall mean
5:00 P.M., New York City time, on the next succeeding Business
Day.
(i) "Common Stock" shall mean the common stock,
par value $.001 per share, of the Company, except that "Common
Stock" when used with reference to any Person other than the
Company shall mean the capital stock of such Person with the
greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of
such Person.
(j) "Common Stock Equivalents" shall have the
meaning set forth in Section 11(a)(iii) hereof.
(k) "Current Market Price" shall have the meaning
set forth in Section 11(d)(i) hereof.
(l) "Current Value" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(m) "Distribution Date" shall have the meaning
set forth in Section 3(a) hereof.
(n) "Equivalent Preferred Stock" shall have the
meaning set forth in Section 11(b) hereof.
(o) "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended and in effect on the date of
this Agreement.
(p) "Exchange Ratio" shall have the meaning set
forth in Section 24(a) hereof.
(q) "Exempted Person" shall mean any Person who
(i) is the Beneficial Owner, on the date hereof, of securities
representing fifteen percent (15%) or more of the shares of
Common Stock outstanding on the date hereof, and such Person's
Affiliates and Associates or, (ii) becomes, after the date
hereof, the Beneficial Owner of securities representing fifteen
percent (15%) or more of the outstanding shares of Common Stock
as a result of a Qualified Offer.
(r) "Expiration Date" shall have the meaning set
forth in Section 7(a) hereof.
(s) "Final Expiration Date" shall mean the close
of business on January 31, 2007.
(t) "NASDAQ" shall have the meaning set forth in
Section 11(d)(i) hereof.
(u) "Person" shall mean any individual, firm
corporation, partnership or other entity.
(v) "Preferred Stock" shall mean shares of Series
A Junior Participating Preferred Stock, par value $.001 per
share, of the Company and, to the extent that there are not a
sufficient number of shares of Series A Junior Participating
Preferred Stock authorized to permit the full exercise of the
Rights, any other series of preferred stock of the Company
designated for such purpose containing terms substantially
similar to the terms of the Series A Junior Participating Pre-
ferred Stock.
(w) "Principal Party" shall have the meaning set
forth in Section 13(b) hereof.
(x) "Purchase Price" shall have the meaning set
forth in Section 4(a) hereof.
(y) "Qualified Offer" shall have the meaning set
forth in Section 11(a)(ii) hereof.
(z) "Record Date" shall have the meaning set
forth in the recital at the beginning of this Agreement.
(aa) "Redemption Price" shall have the meaning
set forth in Section 23(a) hereof.
(ab) "Rights" shall have the meaning set forth in
the recital at the beginning of this Agreement.
(ac) "Rights Agent" shall have the meaning set
forth in the introductory paragraph of this Agreement.
(ad) "Rights Certificate(s)" shall have the
meaning set forth in Section 3(a) hereof.
(ae) "Rights Dividend Declaration Date" shall
have the meaning set forth in the recital at the beginning of
this Agreement.
(af) "Section 11(a)(ii) Event" shall mean any
event described in Section 11(a)(ii) hereof.
(ag) "Section 11(a)(ii) Trigger Date" shall have
the meaning set forth in Section 11(a)(iii) hereof.
(ah) "Section 13 Event" shall mean any event
described in clauses (x), (y) or (z) of Section 13(a) hereof.
(ai) "Spread" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(aj) "Stock Acquisition Date" shall mean the
first date of public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed
pursuant to Section 13(d) under the Exchange Act) by the Company
or an Acquiring Person that an Acquiring Person has become such
other than pursuant to a Qualified Offer.
(ak) "Subsidiary" shall mean, with reference to
any Person, any corporation of which an amount of voting securi-
ties sufficient to elect at least a majority of the directors of
such corporation is beneficially owned, directly or indirectly,
by such Person, or otherwise controlled by such Person.
(al) "Substitution Period" shall have the meaning
set forth in Section 11(a)(iii) hereof.
(am) "Summary of Rights" shall have the meaning
set forth in Section 3(b) hereof.
(an) "Trading Day" shall have the meaning set
forth in Section 11(d)(i) hereof.
(ao) "Triggering Event" shall mean any Section
11(a)(ii) Event or any Section 13 Event.
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the Company
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. Issuance of Rights Certificates.
(a) Until the earlier of (i) the close of busi-
ness on the tenth Business Day after the Stock Acquisition Date
(or, if the tenth Business Day after the Stock Acquisition Date
occurs before the Record Date, the close of business on the
Record Date), or (ii) the close of business on the tenth Business
Day (or such later date as the Board shall determine) after the
date that a tender or exchange offer by any Person (other than
the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any
Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan) is first
published or sent or given within the meaning of Rule 14d-2(a) of
the General Rules and Regulations under the Exchange Act, if upon
consummation thereof, such Person would become an Acquiring
Person (the earlier of (i) and (ii) being herein referred to as
the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of subsection (b) of this Section 3)
by the certificates for the Common Stock registered in the names
of the holders of the Common Stock (which certificates for Common
Stock shall be deemed also to be certificates for Rights) and not
by separate certificates, and (y) the Rights will be transferable
only in connection with the transfer of the underlying shares of
Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent will
send by first-class, insured, postage prepaid mail, to each
record holder of the Common Stock as of the close of business on
the Distribution Date, at the address of such holder shown on the
records of the Company, one or more right certificates, in
substantially the form of Exhibit B hereto (the "Rights Certifi-
xxxxx"), evidencing one Right for each share of Common Stock so
held, subject to adjustment as provided herein. In the event
that an adjustment in the number of Rights per share of Common
Stock has been made pursuant to Section 11(p) hereof, at the time
of distribution of the Rights Certificates, the Company shall
make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates
representing only whole numbers of Rights are distributed and
cash is paid in lieu of any fractional Rights. As of and after
the Distribution Date, the Rights will be evidenced solely by
such Rights Certificates.
(b) The Company shall make available a copy of a
summary of the Rights, in substantially the form attached hereto
as Exhibit C (the "Summary of Rights"), to any holder of Rights
who may so request from time to time prior to the Expiration
Date. With respect to certificates for the Common Stock out-
standing as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates for the Common
Stock and the registered holders of the Common Stock shall also
be the registered holders of the associated Rights. Until the
earlier of the Distribution Date or the Expiration Date, the
transfer of any certificates representing shares of Common Stock
in respect of which Rights have been issued shall also constitute
the transfer of the Rights associated with such shares of Common
Stock.
(c) Rights shall be issued in respect of all
shares of Common Stock which are issued (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. Certificates representing such shares of Common Stock
shall also be deemed to be certificates for Rights and shall bear
the following legend:
This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in the
Rights Agreement between Xxx Research Corporation (the
"Company") and the Rights Agent thereunder (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 circum-
stances set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was or be-
comes an Acquiring Person or any Affiliate or Associate
thereof (as such terms are defined in the Rights Agree-
ment), whether currently held by or on behalf of such
Person or by any subsequent holder, may become null and
void.
With respect to such certificates containing the foregoing
legend, until the earlier of (i) the Distribution Date or (ii)
the Expiration Date, the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such
certificates alone and registered holders of Common Stock shall
also be the registered holders of the associated Rights, and the
transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock repre-
sented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of
election to purchase and of assignment to be printed on the
reverse thereof) shall each be substantially in the form set
forth in Exhibit B hereto and may have such marks of identifica-
tion or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may
be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Rights may from time to time
be listed, or to conform to usage. Subject to the provisions of
Section 11 and Section 22 hereof, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date and on
their face shall entitle the holders thereof to purchase such
number of one one-thousandths of a share of Preferred Stock as
shall be set forth therein at the price set forth therein (such
exercise price per one one-thousandth of a share, the "Purchase
Price"), but the amount and type of securities purchasable upon
the exercise of each Right and the Purchase Price thereof shall
be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to
Section 3(a), Section 11(i) or Section 22 hereof that represents
Rights beneficially owned by: (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee after the Acquiring Person becomes such,
or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom
such Acquiring Person has any continuing agreement, arrangement
or understanding regarding the transferred Rights or (B) a
transfer which the Board has determined is part of a plan,
arrangement or understanding which has as a primary purpose or
effect avoidance of Section 7(e) hereof, and any Rights Certifi-
cate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Rights Certificate are
or were beneficially owned by a Person who was or
became an Acquiring Person or an Affiliate or Associate
of an Acquiring Person (as such terms are defined in
the Rights Agreement). Accordingly, this Rights Cer-
tificate and the Rights represented hereby may become
null and void in the circumstances specified in Section
7(e) of the Rights Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on
behalf of the Company by its Chairman of the Board, its President
or any Vice President, either manually or by facsimile signature,
and shall have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signa-
ture. The Rights Certificates shall be countersigned by the
Rights Agent, either manually or by facsimile signature, and
shall not be valid for any purpose unless so countersigned. In
case any officer of the Company who shall have signed any of the
Rights Certificates shall cease to be such officer of the Company
before 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 regis-
tration 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 evi-
denced on its face by each of the Rights Certificates and the
date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Ex-
change of Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b),
Section 7(e) and Section 14 hereof, at any time after the close
of business on the Distribution Date, and at or prior to the
close of business on the Expiration Date, any Rights Certificate
or Certificates (other than Rights Certificates representing
Rights that have been exchanged pursuant to Section 24 hereof)
may be transferred, split up, combined or exchanged for another
Rights Certificate or Rights Certificates entitling the regis-
tered 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 entitles such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to trans-
fer, split up, combine or exchange any Rights Certificate or
Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or
Certificates to be transferred, split up, combined or exchanged
at the principal office or offices of the Rights Agent designated
for such purpose. Neither the Rights Agent nor the Company shall
be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the
registered holder shall have completed and signed the certificate
contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request. Thereupon the Rights Agent
shall, subject to Section 4(b), Section 7(e), Section 14 and
Section 24 hereof, countersign and deliver to the Person entitled
thereto a Rights Certificate or Rights Certificates, as the case
may be, as so requested. The Company may require payment of a
sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer, split up, combination
or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights
Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Rights Certificate, and, in
case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation
of the Rights Certificate if mutilated, the Company will execute
and deliver a new Rights Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered owner
in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights. (a) Subject to Section 7(e)
hereof, at any time after the Distribution Date the
registered holder of any Rights Certificate may exercise
the Rights evidenced thereby (except as otherwise provid-
ed herein including, without limitation, the restrictions
on exercisability set forth in Section 9(c), Section
11(a)(iii) and Section 23(a) hereof) in whole or in part
upon surrender of the Rights Certificate, with the form
of election to purchase and the certificate on the re-
verse side thereof duly executed, to the Rights Agent at
the principal office or offices of the Rights Agent
designated for such purpose, together with payment of the
aggregate Purchase Price with respect to the total number
of one one-thousandths of a share (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 earliest of (i) the close of business on January
31, 2007 (the "Final Expiration Date"), (ii) the time at
which the Rights are redeemed as provided in Section 23
hereof or (iii) the time at which the Rights are ex-
changed pursuant to Section 24 hereof (the earliest of
(i), (ii) and (iii) being referred to herein as the
"Expiration Date").
(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 $250, and
shall be subject to adjustment from time to time as
provided in Section 11 and Section 13(a) hereof and shall
be payable in accordance with subsection (c) below.
(c) Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of elec-
tion to purchase and the certificate duly completed and
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
shares, securities, cash or other assets, as the case may
be) to be purchased as set forth below and an amount
equal to any applicable transfer tax, the Rights Agent
shall, subject to Section 20(k) hereof, thereupon prompt-
ly (i) (A) requisition from any transfer agent of the
shares of Preferred Stock (or make available, if the
Rights Agent is the transfer agent for such shares)
certificates for the total number of 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, or (B) if the Company
shall have elected to deposit the total number of shares
of Preferred Stock issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing such
number of one one-thousandths of a share of Preferred
Stock as are to be purchased (in which case certificates
for the shares of Preferred Stock represented by such
receipts shall be deposited by the transfer agent with
the depositary agent) and the Company will direct the
depositary agent to comply with such request, (ii) requi-
sition 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 certifi-
xxxxx or depositary receipts, cause the same to be deliv-
ered 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 Certif-
icate. The payment of the Purchase Price (as such amount
may be reduced pursuant to Section 11(a)(iii) hereof)
shall be made in cash or by certified bank check or bank
draft payable to the order of the Company or by such
other means of payment as will be acceptable to the
Company. In the event that the Company is obligated to
issue other securities (including Common Stock) of the
Company, pay cash and/or distribute other property pursu-
ant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities,
cash and/or other property are available for distribution
by the Rights Agent, if and when appropriate. The Compa-
ny reserves the right to require prior to the occurrence
of a Triggering Event that, upon any exercise of Rights,
a number of Rights be exercised so that only whole shares
of Preferred Stock would be issued.
(d) In case the registered holder of any
Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and
delivered to, or upon the order of, the registered holder
of such Rights Certificate, registered in such name or
names as may be designated by such holder, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this
Agreement to the contrary, from and after the first
occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associ-
ate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of
an Acquiring Person (or of any such Associate or Affili-
ate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders
of equity interests in such Acquiring Person or to any
Person with whom the Acquiring Person has any continuing
agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board has
determined is part of a plan, arrangement or understand-
ing which has as a primary purpose or effect the avoid-
ance 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 insure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but shall have no
liability to any holder of Rights Certificates or other
Person as a result of its failure to make any determina-
tions with respect to an Acquiring Person or its Affili-
ates, 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, combina-
tion 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
and/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 and/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 and/or other securities) issuable and
deliverable upon the exercise of the Rights may be listed
on any national securities exchange, the Company shall
use its best efforts to cause, from and after such time
as the Rights become exercisable, all shares reserved for
such issuance to be listed on such exchange upon official
notice of issuance upon such exercise.
(c) The Company shall use its best ef-
forts to (i) file, as soon as practicable following the
earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be
delivered by the Company upon exercise of the Rights has
been determined in accordance with Section 11(a)(iii)
hereof, a registration statement under the Act with
respect to the securities purchasable upon exercise of
the Rights on an appropriate form, (ii) cause such regis-
tration statement to become effective as soon as practi-
cable after such filing and (iii) cause such registration
statement to remain effective (with a prospectus at all
times meeting the requirements of the Act) until the
earlier of (A) the date as of which the Rights are no
longer exercisable for such securities and (B) the date
of the expiration of the Rights. The Company will also
take such action as may be appropriate under, or to
ensure compliance with, the securities or "blue sky" laws
of the various states in connection with the
exercisability of the Rights. The Company may temporari-
ly 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 registra-
tion statement and permit it to become effective. Upon
any such suspension, the Company shall issue a public
announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no
longer in effect. In addition, if the Company shall
determine that a registration statement is required
following the Distribution Date, the Company may tempo-
rarily suspend the exercisability of the Rights until
such time as a registration statement has been declared
effective. Notwithstanding any provision of this Agree-
ment to the contrary, the Rights shall not be exercisable
in any jurisdiction if the requisite qualification in
such jurisdiction will not have been obtained, the exer-
cise thereof will not be permitted under applicable law
or a registration statement will 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 and/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 which 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 and/or other securities, as the case may be)
upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Rights
Certificates to a Person other than, or the issuance or
delivery of a number of one one-thousandths of a share of
Preferred Stock (or Common Stock and/or other securities,
as the case may be) in respect of a name other than that
of, the registered holder of the Rights Certificates
evidencing Rights surrendered for exercise or to issue or
deliver any certificates for a number of one
one-thousandths of a share of Preferred Stock (or Common
Stock and/or other securities, as the case may be) in a
name other than that of the registered holder upon the
exercise of any Rights until such tax shall have been
paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it
has been established to the Company's satisfaction that
no such tax is due.
Section 10. 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 and/or other securities, as the case may be) is
issued upon the exercise of Rights shall for all purposes
be deemed to have become the holder of record of such
fractional shares of Preferred Stock (or Common Stock
and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date
upon which the Rights Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment
is a date upon which the Preferred Stock (or Common Stock
and/or other securities, as the case may be) transfer
books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares
(fractional or otherwise) on, and such certificate shall
be dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock and/or other securities,
as the case may be) transfer books of the Company are
open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate shall not be
entitled to any rights of a 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 connec-
tion 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 effec-
tive 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 Pur-
chase Price then in effect, the aggregate num-
ber and kind of shares of Preferred Stock or
capital stock, as the case may be, which, if
such Right had been exercised immediately prior
to such date and at a time when the Preferred
Stock transfer books of the Company were open,
such holder would have owned upon such exercise
and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassi-
fication. If an event occurs which would re-
quire an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be
made prior to, any adjustment required pursuant
to Section 11(a)(ii) hereof.
(ii) Subject to Section 24 hereof,
in the event any Person shall, at any time
after the Rights Dividend Declaration Date,
become an Acquiring Person unless the event
causing such Person to become an Acquiring
Person is a transaction set forth in Section
13(a) hereof, or is an acquisition of shares of
Common Stock pursuant to a tender offer or an
exchange offer for all outstanding shares of
Common Stock at a price and on terms determined
by at least a majority of the members of the
Board who are not officers of the Company and
who are not representatives, nominees, Affili-
ates or Associates of an Acquiring Person,
after receiving advice from one or more invest-
ment banking firms, to be (a) at a price that
is not inadequate (taking into account all
factors that such members of the Board deem
relevant including, without limitation, prices
that could reasonably be achieved if the Compa-
ny or its assets were sold on an orderly basis
designed to realize maximum value) and (b)
otherwise in the best interests of the Company
and its stockholders (a "Qualified Offer"),
then, promptly following the occurrence of such
an event, proper provision shall be made so
that each holder of a Right (except as provided
below and in Section 7(e) hereof) shall there-
after 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 exercisable immedi-
ately prior to the first occurrence of a Sec-
tion 11(a)(ii) Event, and (y) dividing that
product (which, following such first occur-
rence, shall thereafter be referred to as the
"Purchase Price" for each Right and for all
purposes of this Agreement) by fifty percent
(50%) of the Current Market Price per share of
Common Stock on the date of such first occur-
rence (such number of shares, the "Adjustment
Shares").
(iii) In the event that the number
of shares of Common Stock that are authorized
by the Company's Certificate of Incorporation
but not outstanding or reserved for issuance
for purposes other than upon exercise of the
Rights are not sufficient to permit the exer-
cise in full of the Rights in accordance with
the foregoing subsection (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 for the Adjustment Shares, 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, such as
the Preferred Stock, which the Board has deemed
to have essentially the same value or economic
rights as shares of Common Stock (such shares
of preferred stock, the "Common Stock Equiva-
xxxxx")), (4) debt securities of the Company,
(5) other assets or (6) any combination of the
foregoing, having an aggregate value equal to
the Current Value (less the amount of any re-
duction 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 Com-
pany 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 re-
ferred to herein as the "Section 11(a)(ii)
Trigger Date"), then the Company shall be obli-
gated to deliver, upon the surrender for exer-
cise of a Right and without requiring payment
of the Purchase Price, shares of Common Stock
(to the extent available) and then, if neces-
sary, cash, which shares and/or cash have an
aggregate value equal to the Spread. For pur-
poses of the preceding sentence, the term
"Spread" shall mean the excess of (i) the Cur-
rent Value over (ii) the Purchase Price. If
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, the "Substitu-
tion Period"). To the extent that action is to
be taken pursuant to the first and/or third
sentences of this Section 11(a)(iii), the Com-
pany (1) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly
to all outstanding Rights and (2) may suspend
the exercisability of the Rights until the
expiration of the Substitution Period in order
to seek such stockholder approval for such
authorization of additional shares and/or to
decide the appropriate form of distribution to
be made pursuant to such first sentence and to
determine the value thereof. In the event of
any such suspension, the Company shall issue a
public announcement stating that the
exercisability of the Rights has been tempo-
rarily suspended, as well as a public announce-
ment at such time as the suspension is no lon-
ger 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 on the Section 11(a)(ii) Trig-
ger 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 war-
rants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within
forty-five (45) days after such record date) Preferred
Stock (or shares having the same rights, privileges and
preferences as the shares of Preferred Stock ("Equivalent
Preferred Stock")) or securities convertible into Pre-
ferred 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 Equiva-
lent Preferred Stock) less than the Current Market Price
per share of Preferred Stock on such record date, the
Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a frac-
tion, 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 that
the aggregate offering price of the total number of
shares of Preferred Stock and/or Equivalent Preferred
Stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be
offered) would purchase at such Current Market Price, and
the denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date, plus the
number of additional shares of Preferred Stock and/or
Equivalent Preferred Stock 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 consider-
ation part or all of which may be in a form other than
cash, the value of such consideration shall be as deter-
mined 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 computa-
tion. Such adjustment shall be made successively whenev-
er such a record date is fixed, and in the event that
such rights or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price that
would then be in effect if such record date had not been
fixed.
(c) In case the Company shall fix a
record date for a distribution to all holders of
Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash
dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in
Preferred Stock, but including any dividend payable in
stock other than Preferred Stock) or subscription rights
or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Pur-
chase 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 on 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) of
the portion of the cash, assets or evidences of indebted-
ness 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. 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 computa-
tion hereunder, other than computations made pursuant to
Section 11(a)(iii) hereof, the "Current Market Price" per
share of Common Stock on any date shall be deemed to be
the average of the daily closing prices per share of such
Common Stock for the thirty (30) consecutive Trading Days
immediately prior to such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof,
the Current Market Price per share of Common Stock on any
date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the ten
(10) consecutive Trading Days immediately following such
date; provided, however, that in the event that the
Current Market Price per share of the Common Stock is
determined during a period following the announcement by
the issuer of such Common Stock of (A) a dividend or
distribution on such Common Stock payable in shares of
such Common Stock or securities convertible into shares
of 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 or
admitted to trading on the Nasdaq National Market System
or, if the shares of Common Stock are not listed or
admitted to trading on the Nasdaq National Market System,
as reported in the principal consolidated transaction
reporting system with respect to securities listed on the
principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading
or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange,
the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the
over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quota-
tion System ("NASDAQ") or such other system then in use,
or, if on any such date the shares of Common Stock are
not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a profes-
sional 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 securi-
ties 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 determina-
tion 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 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 pro-
vided 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 one thousand (1,000) (as such
number may be appropriately adjusted for such events as
stock splits, stock dividends and recapitalizations with
respect to the Common Stock occurring after the date of
this Agreement) multiplied by the Current Market Price
per share of 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 determina-
tion shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
For all purposes of this Agreement, the Current Market
Price of a Unit shall be equal to the Current Market
Price of one share of Preferred Stock divided by one
thousand (1,000).
(e) Anything herein to the contrary
notwithstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the
Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to
the nearest ten-thousandth of a share of Common Stock or
other share or one-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 earli-
er of (i) three (3) years from the date of the transac-
tion that mandates such adjustment and (ii) the Expira-
tion 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), and the provi-
sions 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.
(h) Unless the Company shall have exer-
cised its election as provided in Section 11(i), upon
each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to pur-
chase, at the adjusted Purchase Price, that number of one
one-thousandths of a share of Preferred Stock (calculated
to the nearest one-millionth) 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 one one-thousandths of a share 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 adjust-
ment. Each Right held of record prior to such adjustment
of the number of Rights shall become that number of
Rights (calculated to the nearest one-ten-thousandth)
obtained by dividing the Purchase Price in effect immedi-
ately 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 evidenc-
ing all the Rights to which such holders shall be enti-
tled 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 one one-thousandth of a share and
the number of one one-thousandths of a share that 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 stated value, if any, of the number of one
one-thousandths of a share of Preferred Stock issuable
upon exercise of the Rights, the Company shall take any
corporate action that 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.
(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 exer-
cised 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 (frac-
tional or otherwise) 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 addi-
tion 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 Pre-
ferred 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 fifty percent (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
and/or any of its Subsidiaries in one or more transac-
tions each of which complies with Section 11(o) hereof),
if (x) at the time of or immediately after such xxxxxxx-
dation, merger or sale there are any rights, warrants or
other instruments or securities outstanding or agreements
in effect which would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the
Rights or (y) prior to, simultaneously with or immediate-
ly after such consolidation, merger or sale, the stock-
holders of the Person who constitutes, or would consti-
tute, 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 26 hereof, take (or
permit any Subsidiary to take) any action if at the time
such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the
Rights.
(p) Anything in this Agreement to the
contrary notwithstanding, in the event that the Company
shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a
dividend on the outstanding shares of Common Stock pay-
able in shares of Common Stock, (ii) subdivide the out-
standing shares of Common Stock or (iii) combine the
outstanding shares of Common Stock into a smaller number
of shares, the number of Rights associated with each
share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date,
shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common
Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated
with each share of Common Stock immediately prior to such
event by a fraction the numerator which shall be the
total number of shares of Common Stock outstanding imme-
diately prior to the occurrence of the event and the
denominator of which shall be the total number of shares
of Common Stock outstanding immediately following the
occurrence of such event.
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares. Whenever an adjustment is
made as provided in Section 11 and Section 13 hereof, the
Company shall promptly (a) prepare a certificate setting
forth such adjustment and a brief statement of the facts
accounting for such adjustment, (b) file with the Rights
Agent, and with each transfer agent for the Preferred
Stock and the Common Stock, a copy of such certificate
and (c) if a Distribution Date has occurred, mail a brief
summary thereof to each registered holder of a Rights
Certificate in accordance with Section 26 hereof. The
Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein contained.
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 which complies with Section 11(o) here-
of), 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 which complies with Section 11(o) hereof)
shall consolidate with, or merge with or into, the Compa-
ny, 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 trans-
fer), in one transaction or a series of related transac-
tions, assets or earning power aggregating more than
fifty percent (50%) of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any
Person or Persons (other than the Company or any Subsid-
iary of the Company in one or more transactions each of
which complies with Section 11(o) hereof), then, and in
each such case (except as may be contemplated by Section
13(d) hereof), proper provision shall be made so that:
(i) each holder of a Right, 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,
non-assessable and freely tradeable shares of Common
Stock of the Principal Party (as defined below), 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 is exercisable
immediately prior to the first occurrence of a Section 13
Event (or, if a Section 11(a)(ii) Event has occurred
prior to the first occurrence of a Section 13 Event,
multiplying the number of 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)
fifty percent (50%) of the Current Market Price 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 specif-
ically 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 Princi-
pal 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 con-
summation 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 transac-
tion described in clause (x) or (y) of the
first sentence of Section 13(a), the Person
that is the issuer of any securities into which
shares of Common Stock of the Company are con-
verted in such merger or consolidation, and if
no securities are so issued, the Person that is
the other party to such merger or consolida-
tion; and
(ii) in the case of any trans-
action described in clause (z) of the first
sentence of Section 13(a), the Person that is
the party receiving the greatest portion of the
assets or earning power transferred pursuant to
such transaction or transactions;
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 Subsid-
iary, directly or indirectly, of more than one Person,
the Common Stocks of two or more of which are and have
been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common
Stock having the greatest aggregate market value.
(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 subsections (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of
any consolidation, merger or sale of assets mentioned in
subsection (a) of this Section 13, the Principal Party
will:
(i) prepare and file a
registration statement under the Act with re-
spect to the Rights and the securities purchas-
able upon exercise of the Rights on an appro-
priate 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 pro-
spectus at all times meeting the requirements
of the Act) until the Expiration Date;
(ii) take all such other action
as may be necessary to enable the Principal
Party to issue the securities purchasable upon
exercise of the Rights, including but not lim-
ited to the registration or qualification of
such securities under all requisite securities
laws of jurisdictions of the various states and
the listing of such securities on such exchang-
es and trading markets as may be necessary or
appropriate; and
(iii) deliver to holders of the
Rights historical financial statements for the
Principal Party and each of its Affiliates
which comply in all respects with the require-
ments 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).
(d) Notwithstanding anything in this
Agreement to the contrary, Section 13 shall not be appli-
cable to a transaction described in subsections (x) and
(y) of Section 13(a) if (i) such transaction is consum-
mated with a Person or Persons who acquired shares of
Common Stock pursuant to a Qualified Offer (or a wholly
owned subsidiary of any such Person or Persons), (ii) the
price per share of Common Stock offered in such transac-
tion 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 Qualified
Offer. Upon consummation of any such transaction contem-
plated by this Section 13(d), all Rights hereunder shall
expire.
Section 14. Fractional Rights and Fractional
Shares.
(a) The Company shall not be required to
issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(p) hereof, or
to distribute Rights Certificates which evidence frac-
tional Rights. In lieu of such fractional Rights, there
shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to
the same fraction of the current market value of a whole
Right. For purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price
of the Rights for the Trading Day immediately prior to
the date on which such fractional Rights would have been
otherwise issuable. The closing price of the Rights for
any day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transac-
tion reporting system with respect to securities listed
or admitted to trading on the Nasdaq National Market
System or, if the Rights are not listed or admitted to
trading on the Nasdaq National Market System, 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 that are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exer-
cise of the Rights or to distribute certificates which
evidence fractional shares of Preferred Stock (other than
fractions that 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 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 pur-
poses of this Section 14(b), the current market value of
one one-thousandth of a share of Preferred Stock shall be
one one-thousandth of the closing price of a share of
Preferred Stock (as determined pursuant to Section
11(d)(ii) hereof) for the Trading Day immediately prior
to the date of such exercise.
(c) Following the occurrence of a Trig-
xxxxxx 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 (1) 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 accep-
tance of the Rights expressly waives his right to receive
any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section
14.
Section 15. Rights of Action. All rights of
action in respect of this Agreement are vested in the
respective registered holders of the Rights Certificates
(and, prior to the Distribution Date, the registered
holders of the Common Stock); and any registered holder
of any Rights Certificate (or, prior to the Distribution
Date, of the Common Stock), without the consent of the
Rights Agent or of the holder of any other Rights Certif-
icate (or, prior to the Distribution Date, of the Common
Stock), may, in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or other-
wise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate in the manner pro-
vided 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 threat-
ened violations of the obligations hereunder of any
Person subject to this Agreement.
Section 16. Agreement of Rights Holders.
Every holder of a Right by accepting the same consents
and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) prior to the Distribution Date, the
Rights will be transferable only in connection with the
transfer of Common Stock;
(b) 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 fully executed;
(c) subject to Section 6(a) and Section
7(f) hereof, the Company and the Rights Agent may deem
and treat the Person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated
Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (not-
withstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock cer-
tificate 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 compe-
tent 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 other-
wise 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 that 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 with-
hold consent to any corporate action, or to receive
notice of meetings or other actions affecting stockhold-
ers (except as provided in Section 25 hereof), or to
receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Rights Cer-
tificate 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.
In no case shall the Rights Agent be liable for special,
indirect, incidental or consequential loss or damage of
any kind whatsoever, even if the Rights Agent has been
advised of the likelihood of such loss or damage.
(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 Common
Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorse-
ment, 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 result-
ing 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
shareholder services 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 suc-
cessor 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 counter-
signed but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights
Agent and deliver such Rights Certificates so counter-
signed; and in case at that time any of the Rights Cer-
tificates shall not have been countersigned, any succes-
sor Rights Agent may countersign such Rights Certificates
either in the name of the predecessor or in the name of
the successor Rights Agent; and in all such cases such
Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
(b) In case at any time the name of the
Rights Agent shall be changed and at such time any of the
Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersigna-
ture under its prior name and deliver Rights Certificates
so countersigned; and in case at that time any of the
Rights Certificates shall not have been countersigned,
the Rights Agent may countersign such Rights Certificates
either in its prior name or in its changed name; and in
all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in
this Agreement.
Section 20. Duties of Rights Agent. The
Rights Agent undertakes the duties and obligations im-
posed 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 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 Secretary or any Assistant Secretary of the Company
and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such cer-
tificate.
(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 Cer-
tificate (except its countersignature thereof); nor shall
it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in
any Rights Certificate; nor shall it be responsible for
any adjustment required under the provisions of Section
11, Section 13 or Section 24 hereof or responsible for
the manner, method or amount of any such adjustment or
the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the
exercise of Rights evidenced by Rights Certificates after
actual notice of any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any
shares of Common Stock or Preferred Stock to be issued
pursuant to this Agreement or any Rights Certificate or
as to whether any shares of Common Stock or Preferred
Stock will, when so issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will
perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carry-
ing out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized
and directed to accept instructions with respect to the
performance of its duties hereunder from the Chairman of
the Board, the President, any Vice President, the
Secretary, any Assistant Secretary, 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 perfor-
xxxxx 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 indem-
nification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Cer-
tificate surrendered to the Rights Agent for exercise or
transfer, the certificate attached to the form of assign-
ment or form of election to purchase, as the case may be,
has either not been completed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent
shall not take any further action with respect to such
requested exercise or transfer without first consulting
with the Company.
Section 21. Change of Rights Agent. The
Rights Agent or any successor Rights Agent may resign and
be discharged from its duties under this Agreement upon
thirty (30) days' notice in writing mailed to the Company
and to each transfer agent of the Common Stock and Pre-
ferred Stock, by registered or certified mail, and, if
such resignation occurs after the Distribution Date, to
the registered holders of the Rights Certificates by
first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent upon thirty (30)
days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and Preferred Stock,
by registered or certified mail, and, if such removal
occurs after the Distribution Date, to the registered
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 the holder of a Rights Certificate (who
shall, with such notice, submit his Rights Certificate
for inspection by the Company), then any registered
holder of any Rights Certificate may apply to any court
of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether ap-
pointed by the Company or by such a court, shall be (a) a
corporation or other entity organized and doing business
under the laws of the United States or of any of the
states of the United States, in good standing, that is
authorized under such laws to exercise corporate trust
powers and is subject to supervision or examination by
federal or state authority and which has at the time of
its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000 or (b) an affiliate of a
corporation or other entity described in clause (a) of
this sentence. After appointment, the successor Rights
Agent shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time
held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in
writing with the predecessor Rights Agent and each
transfer agent of the Common Stock and the Preferred
Stock and, if such appointment occurs after the Distribu-
tion Date, mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure
to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights
Agent, as the case may be.
Section 22. Issuance of New Rights Certifi-
xxxxx. 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 evi-
dencing 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 and prior to the redemption or expira-
tion of the Rights, the Company (a) shall, with respect
to shares of Common Stock so issued or sold pursuant to
the exercise of stock options or under any employee plan
or arrangement, granted or awarded as of the Distribution
Date, or upon the exercise, conversion or exchange of
securities hereafter 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, and (ii) no
such Rights Certificate shall be issued if, and to the
extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board may, at its option, at any
time prior to the earlier of (i) the close of business on
the tenth Business Day following the Stock Acquisition
Date (or, if the Stock Acquisition Date shall have oc-
curred prior to the Record Date, the close of business on
the tenth Business Day following the Record Date), or
(ii) the Final Expiration Date, redeem all but not less
than all the then outstanding Rights at a redemption
price of $.001 per Right, as such amount may be appropri-
ately 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"). Notwithstanding anything con-
tained 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 hereunder has expired. The Company
may, at its option, pay the Redemption Price in cash,
shares of Common Stock (based on the Current Market Price
of the Common Stock at the time of redemption) or any
other form of consideration deemed appropriate by the
Board.
(b) Immediately upon the action of the
Board ordering the redemption of the Rights, evidence of
which shall be filed by the Company 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 redemption will state the method by
which the payment of the Redemption Price will be made.
(c) Notwithstanding the provisions of
Section 23(a) hereof, in the event that a majority of the
Board is elected by stockholder action by written con-
sent, or is comprised of persons elected at a meeting of
stockholders who were not nominated by the Board in
office immediately prior to such meeting, then for a
period of one hundred eighty (180) days following the
effectiveness of such election the Rights shall not be
redeemed if such redemption is reasonably likely to have
the purpose or effect of allowing any Person to become an
Acquiring Person or otherwise facilitating the occurrence
of a Triggering Event or a transaction with an Acquiring
Person.
Section 24. Exchange.
(a) The Board may, at its option, at any
time after any Person becomes an Acquiring Person, ex-
change all or part of the then outstanding and exercis-
able Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 7(e)
hereof) for Common Stock at an exchange ratio of one
share of Common Stock per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such ex-
change ratio being hereinafter referred to as the "Ex-
change Ratio"). Notwithstanding the foregoing, the Board
shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Sub-
sidiary of the Company, any employee benefit plan of the
Company or any such Subsidiary, or any entity holding
Common Stock for or pursuant to the terms of any such
plan), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of fifty per-
cent (50%) or more of the Common Stock then outstanding.
(b) Immediately upon the action of the
Board ordering the exchange of any Rights pursuant to
subsection (a) of this Section 24 and without any further
action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of
shares of Common Stock equal to the number of such Rights
held by such holder multiplied by the Exchange Ratio.
The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or
any defect in, such notice shall not affect the validity
of such exchange. The Company promptly shall mail a
notice of any such exchange to the registered holders of
such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice of
exchange mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the
notice. Each such notice of exchange shall state the
method by which the exchange of the Common Stock for
Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on
the number of Rights (other than Rights which have become
void pursuant to the provisions of Section 7(e) hereof)
held by each holder of Rights.
(c) In any exchange pursuant to this
Section 24, the Company, at its option, may substitute
Preferred Stock (or Equivalent Preferred Stock) for
Common Stock exchangeable for Rights, at the initial rate
of one one-thousandth of a share of Preferred Stock (or
Equivalent Preferred Stock) for each share of Common
Stock, as appropriately adjusted to reflect stock splits,
stock dividends and other similar transactions after the
date hereof.
(d) In the event that there shall not be
sufficient shares of Common Stock issued but not out-
standing or authorized but unissued to permit any ex-
change of Rights as contemplated in accordance with this
Section 24, the Company shall take all such action as may
be necessary to authorize additional shares of Common
Stock for issuance upon exchange of the Rights.
(e) The Company shall not be required to
issue fractions of shares of Common Stock or to distrib-
ute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of
Common Stock, there shall be paid to each registered
holder of a Rights Certificate with regard to which such
fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of
the current market value of a whole share of Common
Stock. For the purposes of this subsection (e), the
current market value of a whole share of Common Stock
shall be the closing price of the Common Stock (as deter-
mined pursuant to the second sentence of Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date
of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at
any time after the Distribution Date, (i) to pay any
dividend payable in 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 quarter-
ly 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 reclassifica-
tion of its Preferred Stock (other than a reclassifica-
tion 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 Subsid-
iaries to effect any sale or other transfer), in one
transaction or a series of related transactions, of more
than fifty percent (50%) of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to
any other Person or Persons (other than the Company
and/or any of its Subsidiaries in one or more transac-
tions each of which complies with Section 11(o) hereof),
or (v) to effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company
shall give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26 hereof,
a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on which
such reclassification, consolidation, merger, 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 of the events set forth
in Section 11(a)(ii) hereof 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 subsection to
Preferred Stock shall be deemed thereafter to refer to
Common Stock and/or, if appropriate, other securities.
Section 26. Notices. Notices or demands
authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights 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:
Xxx Research Corporation
0000 Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
General Counsel and
Corporate Secretary
Subject to the provisions of Section 21 hereof, any
notice or demand authorized by this Agreement to be given
or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be suffi-
ciently given or made if sent by first-class mail, post-
age prepaid, addressed (until another address is filed in
writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
00 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Notices or demands authorized by this Agreement to be
given or made by the Company or the Rights Agent to the
holder of any Rights Certificate (or, if prior to the
Distribution Date, to the holder of certificates
representing shares of Common Stock) shall be sufficient-
ly given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such
holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. Prior
to the Distribution Date, the Company and the Rights
Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement without the approv-
al of any holders of certificates representing shares of
Common Stock. From and after the Distribution Date and
subject to the penultimate sentence of this Section 27,
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 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 or an Affiliate or Associate of an Acquiring
Person); provided, however, this Agreement may not be
supplemented or amended to lengthen, pursuant to clause
(iii) of this sentence, (A) a time period relating to
when the Rights may be redeemed at such time as the
Rights are not then redeemable or (B) any other time
period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or
the benefits to, the holders of Rights. Upon the
delivery of a certificate from an appropriate officer of
the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or
amendment. Prior to the Distribution Date, the interests
of the holders of Rights shall be deemed coincident with
the interests of the holders of Common Stock.
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, etc. For all purposes of this Agreement, any
calculation of the number of shares of Common Stock
outstanding at any particular time, including for purpos-
es of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is
the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General
Rules and Regulations under the Exchange Act. The Board
shall have the exclusive power and authority to adminis-
ter this Agreement and to exercise all rights and powers
specifically granted to the Board or to the Company, or
as may be necessary or advisable in the administration of
this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agree-
ment, and (ii) make all determinations deemed necessary
or advisable for the administration of this Agreement
(including a determination to redeem or not redeem the
Rights or to amend this Agreement and any determination
as to whether actions of any Person shall be such as to
cause such Person to beneficially own shares held by
another Person). All such actions, calculations, inter-
pretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board in good
faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and
all other parties, and (y) not subject the Board or any
of its members to any liability to the holders of the
Rights.
Section 30. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to
any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and,
prior to the Distribution Date, registered holders of the
Common Stock) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be
for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock).
Section 31. Severability. If any term,
provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force
and effect and shall in no way be affected, impaired or
invalidated; provided, however, that notwithstanding
anything in this Agreement to the contrary, if any such
term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable
and the Board determines in its good faith judgment that
severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the close
of business on the tenth Business Day following the date
of such determination by the 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 State of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of
such State applicable to contracts made and to be per-
formed entirely within such State.
Section 33. Counterparts. This Agreement may
be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be
an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive
headings of the several sections of this Agreement are
inserted for convenience only and shall not control or
affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed by their duly autho-
rized representatives as of the day and year first above
written.
XXX RESEARCH CORPORATION
By /s/ Xxxxx X. Xxxxxxx
________________________________
Name: Xxxxx X. Xxxxxxx
Title: Chief Executive Officer
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By /s/ Xxxx Xxxxxxx
________________________________
Name: Xxxx Xxxxxxx
Title: Assistant Vice President
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK
OF
XXX RESEARCH CORPORATION
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
The undersigned officers of Xxx Research Cor-
poration, a corporation organized and existing under the
General Corporation Law of the State of Delaware, in
accordance with the provisions of Section 103 thereof,
DO HEREBY CERTIFY:
That pursuant to the authority conferred upon
the Board of Directors by the Certificate of Incorpora-
tion of the said Corporation, the said Board of Direc-
tors on January 23, 1997, adopted the following resolu-
tion creating a series of one hundred thousand (100,000)
shares of Preferred Stock designated as "Series A Junior
Participating Preferred Stock:"
RESOLVED, that pursuant to the authority vest-
ed in the Board of Directors of this Corporation in
accordance with the provisions of its Certificate of
Incorporation, a series of Preferred Stock of the Corpo-
ration be and it hereby is created, and that the desig-
nation and amount thereof and the voting powers, prefer-
ences and relative, participating, optional and other
special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof are
as follows:
Section 1. Designation and Amount. The
shares of such series shall be designated as "Series A
Junior Participating Preferred Stock" and the number of
shares constituting such series shall be one hundred
thousand (100,000).
Section 2. Dividends and Distributions.
(A) The holders of shares of Series A Junior
Participating Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Direc-
tors out of funds legally available for the purpose,
quarterly dividends payable in cash on the last day of
March, June, September and December in each year (each
such date being referred to herein as a "Quarterly Divi-
dend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a
share or fraction of a share of Series A Junior Partici-
pating Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $.01 or
(b) subject to the provision for adjustment set forth
below, one thousand (1,000) times the aggregate per
share amount of all cash dividends, and one thousand
(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, par value $.001 per share, of the
Corporation (the "Common Stock") since the immediately
preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a
share of Series A Junior Participating Preferred Stock.
In the event the Corporation shall at any time after
January 23, 1997 (the "Rights Dividend Declaration
Date") (i) declare any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivide the outstand-
ing Common Stock or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such
case the amount to which holders of shares of Series A
Junior Participating Preferred Stock were entitled imme-
diately 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 num-
ber 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) The Corporation shall declare a dividend
or distribution on the Series A Junior Participating
Preferred Stock as provided in subsection (A) above
immediately after it declares a dividend or distribution
on the Common Stock (other than a dividend payable in
shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $.01 per share on
the Series A 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 A Junior
Participating Preferred Stock from the Quarterly Divi-
dend Payment Date next preceding the date of issue of
such shares of Series A 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 A
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 A 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 deter-
mination of holders of shares of Series A Junior Partic-
ipating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record
date shall be no more than 30 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights. The holders of
shares of Series A Junior Participating Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment
set forth below, each share of Series A Junior Partici-
pating Preferred Stock shall entitle the holder thereof
to one thousand (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 after the
Rights Dividend Declaration Date (i) declare any divi-
dend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock or (iii)
combine the outstanding Common Stock into a smaller
number of shares, then in each such case the number of
votes per share to which holders of shares of Series A
Junior Participating Preferred Stock were entitled imme-
diately prior to such event shall be adjusted by multi-
plying 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 or by
law, the holders of shares of Series A Junior Partici-
pating Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all
matters submitted to a vote of stockholders of the Cor-
poration.
(C) (i) If at any time dividends on any
Series A Junior Participating Preferred Stock
shall be in arrears in an amount equal to six
(6) quarterly dividends thereon, the occur-
rence of such contingency shall xxxx the be-
ginning 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 A Junior Participating Pre-
ferred 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 Se-
xxxx A Junior Participating Preferred Stock)
with dividends in arrears in an amount equal
to or greater than 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 A
Junior Participating Preferred Stock may be
exercised initially at a special meeting
called pursuant to subsection (iii) of this
Section 3(C) or at any annual meeting of
stockholders, and thereafter at annual meet-
ings of stockholders, provided that such vot-
ing right shall not 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 Pre-
ferred Stock of such voting right. At any
meeting at which the holders of Preferred
Stock shall exercise such voting right ini-
tially 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 ex-
ercised 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 pro-
vided or pursuant to the rights of any equity
securities ranking senior to or pari passu
with the Series A Junior Participating Pre-
ferred Stock.
(iii) Unless the holders of Pre-
ferred Stock shall, during an existing default
period, have previously exercised their right
to elect Directors, the Board of Directors may
order, or any stockholder or stockholders own-
ing in the aggregate not less than ten percent
(10%) of the total number of shares of Pre-
ferred Stock outstanding, irrespective of se-
xxxx, may request, the calling of a special
meeting of the holders of Preferred Stock,
which meeting shall thereupon be called by the
President, a Vice President or the Secretary
of the Corporation. Notice of such meeting
and of any annual meeting at which holders of
Preferred Stock are entitled to vote pursuant
to this subsection (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 20 days and
not later than 60 days after such order or
request or in default of the calling of such
meeting within 60 days after such order or
request, such meeting may be called on similar
notice by any stockholder or stockholders own-
ing in the aggregate not less than ten percent
(10%) of the total number of shares of Pre-
ferred Stock outstanding. Notwithstanding the
provisions of this subsection (C)(iii), no
such special meeting shall be called during
the period within 60 days immediately preced-
ing 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 Pre-
ferred Stock shall have exercised their right
to elect two (2) Directors voting as a class,
after the exercise of which right (x) the Di-
rectors 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 subsec-
tion (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. Refer-
ences in this subsection (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 certificate of in-
corporation or by-laws irrespective of any
increase made pursuant to the provisions of
subsection (C)(ii) of this Section 3 (such
number being subject, however, to change
thereafter in any manner provided by law or in
the certificate of incorporation or by-laws).
Any vacancies in the Board of Directors ef-
fected by the provisions of clauses (y) and
(z) in the preceding sentence may be filled by
a majority of the remaining Directors.
(D) Except as set forth herein, holders of
Series A 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 A Ju-
nior Participating Preferred Stock as provided in Sec-
tion 2 are in arrears, thereafter and until all accrued
and unpaid dividends and distributions, whether or not
declared, on shares of Series A Junior Participating
Preferred Stock outstanding shall have been paid in
full, the Corporation shall not:
(i) declare or pay dividends
on, make any other distributions on, or redeem
or purchase or otherwise acquire for consider-
ation any shares of stock ranking junior (ei-
ther as to dividends or upon liquidation, dis-
solution or winding up) to the Series A 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 A Junior Par-
ticipating Preferred Stock, except dividends
paid ratably on the Series A Junior Partici-
pating 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 on a parity (either as to
dividends or upon liquidation, dissolution or
winding up) with the Series A Junior Partici-
pating Preferred Stock, provided that the Cor-
poration may at any time redeem, purchase or
otherwise acquire shares of any such parity
stock in exchange for shares of any stock of
the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or
winding up) to the Series A Junior Participat-
ing Preferred Stock; or
(iv) purchase or otherwise
acquire for consideration any shares of Series
A Junior Participating Preferred Stock, or any
shares of stock ranking on a parity with the
Series A Junior Participating Preferred Stock,
except in accordance with a purchase offer
made in writing or by publication (as deter-
mined by the Board of Directors) to all hold-
ers 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 respec-
tive 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 subsec-
tion (A) of this Section 4, purchase or otherwise ac-
quire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of
Series A Junior Participating Preferred Stock purchased
or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after
the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares
of Preferred Stock and may be reissued as part of a new
series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth here-
in.
Section 6. Liquidation, Dissolution or Wind-
ing Up. (A) Upon any liquidation (voluntary or other-
wise), 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 A
Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series A Junior Par-
ticipating Preferred Stock shall have received an amount
equal to $[one thousand times the Purchase Price] per
share of Series A Junior Participating Preferred Stock,
plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the
date of such payment (the "Series A Liquidation Prefer-
ence"). Following the payment of the full amount of the
Series A Liquidation Preference, no additional distribu-
tions shall be made to the holders of shares of Series A
Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Common Stock shall
have received an amount per share (the "Common Adjust-
ment") equal to the quotient obtained by dividing (i)
the Series A Liquidation Preference by (ii) one thousand
(1,000) (as appropriately adjusted as set forth in sub-
section (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 A Liquidation Prefer-
ence and the Common Adjustment in respect of all out-
standing shares of Series A Junior Participating Pre-
ferred Stock and Common Stock, respectively, holders of
Series A Junior Participating Preferred Stock and hold-
ers of shares of Common Stock shall receive their rat-
able 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 A Liquidation Preference and the liquidation
preferences of all other series of preferred stock, if
any, which rank on a parity with the Series A Junior
Participating Preferred Stock, then such remaining as-
sets shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquida-
tion preferences. In the event, however, that there are
not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining as-
sets shall be distributed ratably to the holders of
Common Stock.
(C) In the event the Corporation shall at any
time after the Rights Dividend Declaration Date (i)
declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to
such event shall be adjusted by multiplying such Adjust-
ment 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.
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 proper-
ty, then in any such case the shares of Series A 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 set forth be-
low) equal to one thousand (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 after the Rights Dividend Declaration Date (i)
declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with
respect to the exchange or change of shares of Series A
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 out-
standing immediately after such event and the denomina-
tor 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 A Junior Participating Preferred Stock shall not
be redeemable.
Section 9. Amendment. The Certificate of
Incorporation 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 A Junior Participating Preferred Stock so as to
affect them adversely without the affirmative vote of
the holders of a majority or more of the outstanding
shares of Series A Junior Participating Preferred Stock,
voting separately as a class.
Section 10. Fractional Shares. Series A
Junior Participating Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exer-
cise voting rights, receive dividends, participate in
distributions and to have the benefit of all other
rights of holders of Series A Junior Participating Pre-
ferred Stock.
IN WITNESS WHEREOF, we have executed and
subscribed this Certificate and do affirm the foregoing
as true under the penalties of perjury this [ ] day of
January 1997.
XXX RESEARCH CORPORATION
__________________________________
Name:
Title:
Attest:
____________________________
Secretary
Exhibit B
[Form of Rights Certificate]
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER JANUARY 31, 2007 OR EARLIER IF
REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.001 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED
BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE
RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENT-
ED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON
OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). AC-
CORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRE-
SENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUM-
STANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREE-
MENT.]*
Rights Certificate
Xxx Research Corporation
This certifies that , or
registered assigns, is the registered owner of the num-
ber of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of January
23, 1997 (the "Rights Agreement"), between Xxx Research
Corporation, a Delaware corporation (the "Company"), and
ChaseMellon Shareholder Services, L.L.C., a New Jersey
limited liability company (the "Rights Agent"), to pur-
chase from the Company at any time prior to 5:00 P.M.
(New York City time) on January 31, 2007 at the office
or offices of the Rights Agent designated for such pur-
pose, or its successors as Rights Agent, one one-thou-
sandth of a fully paid, non-assessable share of Series A
Junior Participating Preferred Stock (the "Preferred
Stock") of the Company, at a purchase price of $[250]
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 [date]
based on the Preferred Stock and Common Stock as consti-
tuted at such date. The Company reserves the right to
require prior to the occurrence of a Triggering Event
_________________________
* The portion of the legend in brackets shall be inserted only
if applicable and shall replace the preceding sentence.
(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.
Upon the occurrence of a Section 11(a)(ii)
Event (as such term is defined in the Rights Agreement),
if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as
such terms are defined in the Rights Agreement), (ii) a
transferee of any such Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances speci-
fied in the Rights Agreement, a transferee of a Person
(as such term is defined in the Rights Agreement) who,
after such transfer, became an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, such
Rights shall become null and void and no holder hereof
shall have any right with respect to such Rights from
and after the occurrence of such Section 11(a)(ii)
Event.
As provided in the Rights Agreement, the Pur-
chase Price and the number and kind of shares of Pre-
ferred Stock or other securities that 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 Trigger-
ing 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 above-mentioned office of the Rights Agent
and are also available upon written request to the
Rights Agent.
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 Cer-
tificate 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 Agree-
ment, the Rights evidenced by this Certificate may be
redeemed by the Company at its option at a redemption
price of $.001 per Right at any time prior to the earli-
er of the close of business on (i) the tenth Business
Day (as such term is defined in the Rights Agreement)
following the Stock Acquisition Date (as such time peri-
od may be extended pursuant to the Rights Agreement) and
(ii) the Final Expiration Date. Notwithstanding the
foregoing, the Rights generally may not be redeemed for
one hundred eighty (180) days following a change in a
majority of the Board of Directors of the Company as a
result of a proxy contest. In addition, the Rights may
be exchanged, in whole or in part, for shares of the
Common Stock, or shares of preferred stock of the Compa-
ny having essentially the same value or economic rights
as such shares. Immediately upon the action of the
Board of Directors of the Company authorizing any such
exchange, and without any further action or any notice,
the Rights (other than Rights which are not subject to
such exchange) will terminate and the Rights will only
enable holders to receive the shares issuable upon such
exchange.
No fractional shares of Preferred Stock will
be issued upon the exercise of any Right or Rights evi-
denced hereby (other than fractions which are integral
multiples of one one-thousandth of a share of Preferred
Stock, which may, at the election of the Company, be
evidenced by depositary receipts), but in lieu thereof a
cash payment will be made, as provided in the Rights
Agreement.
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 any-
thing 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 af-
fecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evi-
denced by this Rights Certificate shall have been exer-
cised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or
obligatory for any purpose until it shall have been
countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper
officers of the Company and its corporate seal.
Dated as of ,
ATTEST: XXX RESEARCH CORPORATION
____________________ By_________________________
Secretary Title:
Countersigned:
[____________]
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 or an Affiliate or
Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge
of the undersigned, it [ ] did [ ] did not acquire the
Rights evidenced by this Rights Certificate from any Person
who is, was or subsequently became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person.
Dated: __________, __________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and
Certificate must correspond to the name as written upon the
face of this Rights Certificate in every particular, with-
out 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: XXX RESEARCH 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 regis-
tered in the name of and delivered to:
Please insert social security
or other identifying number: _______ ____ _______
___________________________________________________________
(Please print name and address)
__________________________________________________________
Dated: _____________, ____ ______________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Rights Certifi-
cate [ ] are [ ] are not being exercised by or on behalf of
a Person who is or was an Acquiring Person or an Affiliate
or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge
of the undersigned, it [ ] did [ ] did not acquire the
Rights evidenced by this Rights Certificate from any Person
who is, was or became an Acquiring Person or an Affiliate
or Associate of an Acquiring Person.
Dated: ___________, ____ ___________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Pur-
chase and Certificate must correspond to the name as writ-
ten 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 January 23, 1997, the Board of Directors of
Xxx Research Corporation (the "Company") declared a
dividend distribution of one Right for each outstanding
share of Common Stock to stockholders of record at the
close of business on January 31, 1997 (the "Record
Date"). Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share
of Series A Junior Participating Preferred Stock, par
value $.001 per share (the "Preferred Stock"), at a
Purchase Price of $250, subject to adjustment. The
description and terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement") between the
Company and ChaseMellon Shareholder Services, L.L.C., as
Rights Agent.
Initially, the Rights will be attached to all
Common Stock certificates representing shares then out-
standing, and no separate Rights Certificates will be
distributed. Subject to certain exceptions specified in
the Rights Agreement, the Rights will separate from the
Common Stock and a Distribution Date will occur upon the
earlier of (i) ten business days following a public
announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired
beneficial ownership of 15% or more of the outstanding
shares of Common Stock, other than a person or group that
beneficially owns 15% or more of the outstanding shares
of Common Stock on January 31, 1997 (the "Stock Acquisi-
tion Date"), or (ii) ten business days (or such later
date as the Board of Directors of the Company will deter-
mine) following the commencement of a tender offer or
exchange offer that would result in a person or group
becoming an Acquiring Person.
Until the Distribution Date, (i) the Rights
will be evidenced by the Common Stock certificates and
will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued
after the Record Date will contain a notation incorporat-
ing the Rights Agreement by reference and (iii) the
surrender for transfer of any certificates for Common
Stock outstanding will also constitute the transfer of
the Rights associated with the Common Stock represented
by such certificate. 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 be exer-
cised so that only whole shares of Preferred Stock will
be issued.
The Rights are not exercisable until the Dis-
tribution Date and will expire at the close of business
on January 31, 2007, unless earlier redeemed or exchanged
by the Company as described below.
As soon as practicable after the Distribution
Date, Rights Certificates will be mailed to holders of
record of the Common Stock as of the close of business on
the Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights.
Except as otherwise determined by the Board, only shares
of Common Stock issued prior to the Distribution Date
will be issued with Rights.
In the event that a person becomes an Acquiring
Person (except pursuant to an offer for all outstanding
shares of Common Stock that the disinterested directors
determine not to be inadequate and to otherwise be in the
best interests of the Company and its stockholders), each
holder of a Right will thereafter have the right to
receive, upon exercise, Common Stock (or, in certain
circumstances, cash, property or other securities of the
Company) having a value equal to twice the exercise price
of the Right. Notwithstanding any of the foregoing,
following the occurrence of the event set forth in this
paragraph, all Rights that are, or (under certain circum-
stances specified in the Rights Agreement) were, benefi-
cially owned by any Acquiring Person will be null and
void. However, Rights are not exercisable following the
occurrence of the event set forth above until such time
as the Rights are no longer redeemable by the Company as
set forth below.
For example, at an exercise price of $250 per
Right, each Right not owned by an Acquiring Person (or by
certain related parties) following an event set forth in
the preceding paragraph would entitle its holder to
purchase $500 worth of Common Stock (or other consider-
ation, as noted above) for $250. Assuming that the
Common Stock had a per share value of $50 at such time,
the holder of each valid Right would be entitled to
purchase ten shares of Common Stock for $250.
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 described in the second
preceding paragraph) or (ii) 50% or more of the Company's
assets, cash flow or earning power is sold or trans-
ferred, each holder of a Right (except Rights which
previously have been voided as set forth above) shall
thereafter have the right to receive, upon exercise,
common stock of the acquiring company having a value
equal to twice the exercise price of the Right. The
events set forth in this paragraph and in the second
preceding paragraph are referred to as the "Triggering
Events."
At any time after a person becomes an Acquiring
Person and prior to the acquisition by such person or
group of 50% or more of the outstanding Common Stock, the
Board may exchange the Rights (other than Rights owned by
such person or group that have become void), in whole or
in part, at an exchange ratio of one share of Common
Stock, or one one-thousandth of a share of Preferred
Stock (or of a share of a class or series of the
Company's preferred stock having equivalent rights,
preferences and privileges), per Right (subject to ad-
justment).
At any time until ten business days following
the Stock Acquisition Date, the Company may redeem the
Rights in whole, but not in part, at a price of $.001 per
Right (payable in cash, Common Stock or other consider-
ation deemed appropriate by the Board). Immediately upon
the action of the Board ordering redemption of the
Rights, the Rights will terminate and the only right of
the holders of Rights will be to receive the $.001 re-
demption price. Notwithstanding the foregoing, the
Rights generally may not be redeemed for 180 days follow-
ing a change in a majority of the Board as a result of a
proxy contest.
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 circum-
stances, 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 prior to the Distribution
Date. After the Distribution Date, the provisions of the
Rights Agreement may be amended by the Board in order to
cure any ambiguity, to make changes which do not adverse-
ly affect the interests of holders of Rights, or to
shorten or lengthen any time period under the Rights
Agreement; provided, however, that no amendment may be
made at such time as the Rights are not redeemable.
A copy of the Rights Agreement is being filed
with the Securities and Exchange Commission as an Exhibit
to a Current Report on Form 8-K. A copy of the Rights
Agreement is available free of charge from the Company.
This summary description of the Rights does not purport
to be complete and is qualified in its entirety by refer-
ence to the Rights Agreement, which is incorporated
herein by reference.
