EXHIBIT 1
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RIGHTS AGREEMENT
Rights Agreement (this "AGREEMENT"), dated as of February 18, 2000,
by and between Giga Information Group, Inc., a Delaware corporation (the
"CORPORATION"), and American Stock Transfer & Trust Co., a corporation organized
under the laws of the State of New York (the "RIGHTS AGENT").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, on February 18, 2000, the Board of Directors of the
Corporation, authorized the issuance of, and declared, a dividend payable in one
right (a "RIGHT") for each Common Share, $0.001 par value per share ("COMMON
STOCK"), of the Corporation outstanding as of close of business on March 3, 2000
(the "RECORD DATE"), each such Right representing the right to purchase one
one-hundredth of a Series A Junior Preferred Share of the Corporation
("PREFERRED STOCK") having the rights and preferences set forth in the form of
Certificate of Designations attached hereto as Exhibit C duly adopted by the
Board of Directors on February 18, 2000, upon the terms and subject to the
conditions hereinafter set forth; and
WHEREAS, the Board of Directors of the Corporation further authorized
the issuance of one Right (subject to adjustment) with respect to each share of
Common Stock which may be issued between the Record Date and the earliest to
occur of the Distribution Date, the Expiration Date or the Final Expiration Date
(as such terms are hereinafter defined); provided, however, that Rights may be
issued with respect to shares of Common Stock that shall become outstanding
after the Distribution Date and prior to the Expiration Date in accordance with
Section 22 hereof;
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 shall have the meanings provided by this Section 1, any
capitalized term defined in this Section 1 and used in the following definitions
having the meaning provided by this Section 1:
(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 15% or more of the Voting Stock of the
Corporation then outstanding; provided, however, that an Acquiring
Person shall not include (i) an Exempt Person or any Affiliate or
Associate of an Exempt Person; (ii) any Person who or which, together
with all Affiliates and Associates of such Person, would be an
Acquiring Person solely by reason of (A) being the Beneficial Owner
of shares of Voting Stock of the Corporation, the Beneficial
Ownership of which was acquired by such Person (together with all
Affiliates and Associates of such Person) pursuant to any action or
transaction or series of related actions or
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transactions approved by the Board of Directors before such Person
(together with all Affiliates and Associates of such Person)
otherwise became an Acquiring Person or (B) a reduction in the number
of issued and outstanding shares of Voting Stock of the Corporation
pursuant to a transaction or a series of related transactions
approved by the Board of Directors of the Corporation; provided,
further, that in the event a Person described in this clause (ii)
does not become an Acquiring Person by reason of subclause (A) or (B)
of this clause (ii), such Person nonetheless shall become an
Acquiring Person in the event such Person (together with all
Affiliates and Associates of such Person) thereafter acquires
Beneficial Ownership of an additional 1% of the Voting Stock of the
Corporation, unless the acquisition of such additional Voting Stock
results from one or more actions or transactions approved by the
Board of Directors of the Corporation; or (iii) any Person who, as of
February 18, 2000, together with all Affiliates and Associates of
such Person, was the Beneficial Owner of 15% or more of the Voting
Stock of the Company outstanding as of such date; provided, further,
that any Person described in this clause (iii) shall become an
Acquiring Person if (A) such Person, together with all Affiliates and
Associates of such Person, after February 18, 2000, acquires
Beneficial Ownership of an additional 1% or more of the Voting Stock
or (B) such Person, together with all Affiliates and Associates of
such Person, after February 18, 2000, reduces its Beneficial
Ownership of the Voting Stock to less than 15% of the outstanding
Voting Stock and thereafter acquires Beneficial Ownership of 15% or
more of the outstanding Voting Stock, unless in the case of clause
(A) or (B) such acquisition of Voting Stock was pursuant to a
transaction described in clauses (ii)(A) or (ii)(B) above; provided,
further, that in the event such Person described in clause (iii) (A)
or (B) above does not become an Acquiring Person by reason of clauses
(ii)(A) or (ii)(B) above, such Person nonetheless shall become an
Acquiring Person in the event such Person (together with all
Affiliates and Associates of such Person) thereafter acquires
Beneficial Ownership of an additional 1% of the Voting Stock of the
Company, unless the acquisition of such Voting Stock would not result
in such Person becoming an Acquiring Person by reason of such clauses
(ii)(A) or (ii)(B) above. Notwithstanding the foregoing, if the Board
of Directors of the Corporation determines in good faith that a
Person who would otherwise be an "Acquiring Person" as defined
pursuant to the foregoing provisions of this paragraph (a) has become
such inadvertently, and such Person divests as promptly as
practicable (as determined in good faith by the Board of Directors) a
sufficient number of shares of Common Stock so that such Person would
no longer be an "Acquiring Person" as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall
not be deemed an "Acquiring Person" for any purposes of this
Agreement.
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(b) "AFFILIATE" shall have the meaning ascribed to such
term in Rule 12b2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended ("EXCHANGE ACT"), as in
effect on the date of this Agreement.
(c) "ASSOCIATE" of a Person shall mean (i) with respect to
a corporation, any officer or director thereof or any Associate of
any Subsidiary thereof, or any Beneficial Owner of 10% or more of any
class of equity security thereof, (ii) with respect to an
association, any officer or director thereof or any Associate of a
Subsidiary thereof, (iii) with respect to a partnership, any general
partner thereof or any limited partner thereof who is, directly or
indirectly, the Beneficial Owner of a 10% ownership interest therein,
and any Associate of any Subsidiary thereof, (iv) with respect to a
limited liability company, any manager or managing member thereof and
any Beneficial Owner of 10% or more or any class of membership
interest therein or other equity security thereof, and any Associate
of any Subsidiary thereof, (v) with respect to a business trust, any
officer or trustee thereof or any Associate of any Subsidiary
thereof, (vi) with respect to any other trust or an estate, any
trustee, executor or similar fiduciary and any Person who has a 15%
or greater interest as a beneficiary in the income from or principal
of such trust or estate, (vii) with respect to a natural person, the
parents and children thereof and any spouse or relative thereof, or
any relative of such spouse, who has the same home as such person,
and (viii) any Affiliate of such Person.
(d) A person shall be deemed the "BENEFICIAL OWNER" of, or
to "BENEFICIALLY OWN", any securities (and correlative terms shall
have correlative meanings):
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly, for purposes of Section 13(d) of the Exchange
Act and Regulations 13D and 13G thereunder (or any
comparable or successor law or regulation), in each case
as in effect on the date hereof; or
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire
(whether such right is exercisable immediately or only
after the passage of time or the fulfillment of a
condition or both) pursuant to any agreement, arrangement
or understanding, or upon the exercise of conversion
rights, exchange rights, other rights (other than the
Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "Beneficially Own", 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
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for purchase or exchange or (B) the right to vote, alone
or in concert with others, pursuant to any agreement,
arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "Beneficially Own", any
securities if the agreement, arrangement or understanding
to vote such security (1) arises solely from a revocable
proxy or consent given in response to a proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations under the Exchange Act
and (2) is not at the time reportable by such Person on a
Schedule 13D report under the Exchange Act (or any
comparable or successor report), other than by reference
to a proxy or consent solicitation being conducted by such
Person; or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or
any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting
(except as described in clause (B) of subparagraph (ii) of
this paragraph (d)) or disposing of any securities of the
Corporation; provided, however, that for purposes of
determining Beneficial Ownership of securities under this
Agreement, officers and directors of the Corporation
solely by reason of their status as such shall not
constitute a group (notwithstanding that they may be
Associates of one another or may be deemed to constitute a
group for purposes of Section 13(d) the Exchange Act) and
shall not be deemed to own shares owned by another officer
or director of the Corporation.
Notwithstanding anything in this paragraph (d) to the
contrary, a Person engaged in the business of underwriting securities
shall not be deemed the "Beneficial Owner" of, or to "Beneficially
Own," any securities acquired or otherwise beneficially owned in good
faith in a firm commitment underwriting until the expiration of forty
days after the date of the sale of securities to the public pursuant
to such firm commitment underwriting.
(e) "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.
(f) "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.
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(g) "COMMON STOCK" when used with reference to the
Corporation shall collectively mean the Common Stock of the
Corporation as defined in the first recital hereof and any other
common stock of the Corporation into or for which it is changed,
converted or exchanged. "COMMON STOCK" when used with reference to
any Person other than the Corporation which shall be organized in
corporate form shall mean the capital shares or other equity security
having of all classes of capital shares or equity securities of such
corporation the greatest aggregate voting power in the election of
directors. "COMMON STOCK" when used with reference to any Person
which shall not be organized in corporate form shall mean units of
beneficial interest in the profits or losses of such Person or other
equity security of such Person having of all classes of equity
securities of such Person the greatest aggregate voting power in the
election of the directors, trustees, managers or other Persons
performing like governance functions for such Person.
(h) "CORPORATION" shall have the meaning provided at the
beginning hereof; provided, however, that "Corporation" shall also
include any successors to the Corporation as provided by Section 28
hereof and shall mean a Principal Party as provided by Section 13(a)
hereof.
(i) "DISTRIBUTION DATE" shall have the meaning set forth
in Section 3(b) hereof.
(j) "EXCHANGE ACT" shall have the meaning set forth in
Section 1(b) hereof.
(k) "EXEMPT PERSON" shall mean (i) the Corporation, (ii)
any Subsidiary of the Corporation, or (iii) any employee benefit plan
or employee stock plan of the Corporation or any Subsidiary of the
Corporation, or any trust or other entity organized, appointed,
established or holding Voting Stock for or pursuant to the terms of
any such plan.
(l) "EXERCISE PRICE" shall have the meaning set forth in
Section 4 hereof.
(m) "EXPIRATION DATE" shall have the meaning set forth in
Section 7(a) hereof.
(n) "FAIR MARKET VALUE" of any property shall mean the
fair market value of such property as determined in accordance with
Section 11(b) hereof.
(o) "FINAL EXPIRATION DATE" shall have the meaning set
forth in Section 7(a) hereof.
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(p) "PERSON" shall mean any individual, company, firm,
corporation or other entity.
(q) "PRINCIPAL PARTY" shall have the meaning set forth in
Section 13(b) hereof.
(r) "REDEMPTION PRICE" shall have the meaning set forth in
Section 23(a) hereof.
(s) "RIGHT CERTIFICATE" shall have the meaning set forth
in Section 3(d) hereof.
(t) "SPREAD" shall mean the excess of (1) the value of the
shares of Preferred Stock issuable upon the exercise of a Right in
accordance with Section 11(a)(ii) over (2) the Exercise Price in
effect at the time of determination of the Spread.
(u) "STOCK ACQUISITION DATE" shall mean the first date on
which there shall be a public announcement by the Corporation or an
Acquiring Person that an Acquiring Person has become such (which, for
purposes of this definition, shall include, without limitation, a
report filed pursuant to Section 13(d) of the Exchange Act) or such
earlier date as a majority of the Board of Directors of the
Corporation shall become aware of the existence of an Acquiring
Person as confirmed by action of the Board of Directors of the
Corporation taken by the affirmative vote of a majority of the Board
of Directors.
(v) "SUBSIDIARY" of a Person shall mean any corporation or
other entity of which securities or other ownership interests having
voting power sufficient to elect a majority of the board of directors
or other persons performing similar functions are beneficially owned,
directly or indirectly, by such Person or by any corporation or other
entity that is otherwise controlled by such Person.
(w) "SUMMARY OF RIGHTS" shall have the meaning set forth
in Section 3(a) hereof.
(x) "TRADING DAY" shall have the meaning set forth in
Section 11(b) hereof.
(y) "TRANSFER TAX" shall mean any tax or charge, including
any documentary stamp tax, imposed or collected by any governmental
or regulatory authority in respect of any transfer of any security,
instrument or right, including the Rights, shares of the Common Stock
and shares of the Preferred Stock.
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(z) "VOTING STOCK" shall mean (i) the Common Stock of the
Corporation and (ii) any other shares of capital stock of the
Corporation entitled to vote generally in the election of directors
or entitled generally to vote together with the Common Stock in
respect of a merger, consolidation, sale of all or substantially all
of the Corporation's assets, liquidation, dissolution or winding up.
For purposes of this Agreement, a stated percentage of the Voting
Stock shall mean a number of shares of the Voting Stock as shall
equal in voting power that stated percentage of the total voting
power of the then outstanding shares of Voting Stock in the election
of a majority of the Board of Directors of the Corporation or in
respect of a merger, consolidation, sale of all or substantially all
of the Corporation's assets, liquidation, dissolution or winding up.
Any determination required to be made by the Board of
Directors of the Corporation for purposes of applying the definitions
contained in this Section 1 shall be made by a majority of the Board
of Directors in its good faith judgment, which determination shall be
binding on the Rights Agent and the holders of the Rights.
Section 2. Appointment of Rights Agent. The Corporation hereby
appoints the Rights Agent to act as agent for the Corporation and the holders of
the Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date be the holders of Common Stock) in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Corporation may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable, upon ten (10) days prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and shall in no event
be liable for, the acts or omissions of any such Co-Rights Agent.
Section 3. Issuance of Right Certificates.
(a) On the Record Date (or as soon as practicable thereafter), the
Corporation or the Rights Agent shall send a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit A (the "SUMMARY OF RIGHTS"),
by first class mail, postage prepaid, to each record holder of the Common Stock
as of the Record Date, at the address of such holder shown on the records of the
Corporation.
(b) Until the close of business on the day which is the earlier of
(i) the tenth day after the Stock Acquisition Date or (ii) the tenth Business
Day (or such later date as may be determined by action of the Board of Directors
prior to such time as any Person becomes an Acquiring Person) after the date of
the commencement by any Person (other than an Exempt Person) of, or the first
public announcement of the intent of any Person (other than an Exempt Person) to
commence, a tender or exchange offer upon the successful consummation of which
such Person would be the Beneficial Owner of 15% or more of the then outstanding
shares of Voting Stock of the Corporation (including any such date which is
after the date of this Agreement and prior to the issuance of the
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Rights; the earlier of such dates being herein referred to as the "DISTRIBUTION
DATE"), (x) the Rights shall be evidenced by the certificates for Common Stock
registered in the names of the holders of Common Stock (together with, in the
case of certificates for Common Stock outstanding as of the Record Date, the
Summary of Rights) and not by separate Right certificates and the record holders
of such certificates for Common Stock shall be the record holders of the Rights
represented thereby and (y) each Right shall be transferable only simultaneously
and together with the transfer of a share of Common Stock (subject to adjustment
as hereinafter provided). Until the Distribution Date (or, if earlier, the
Expiration Date or Final Expiration Date), the surrender for transfer of any
certificate for Common Stock shall constitute the surrender for transfer of the
Right or Rights associated with the Common Stock evidenced thereby, whether or
not accompanied by a copy of the Summary of Rights.
(c) Rights shall be issued in respect of all shares of Common Stock
that become outstanding after the Record Date but prior to the earliest of the
Distribution Date, the Expiration Date or the Final Expiration Date.
Certificates for Common Stock (including, without limitation, certificates
issued upon original issuance, disposition from the Corporation's treasury or
transfer or exchange of Common Stock) after the Record Date but prior to the
earliest of the Distribution Date, the Expiration Date, or the Final Expiration
Date shall have impressed, printed, written or stamped thereon or otherwise
affixed thereto the following legend:
This certificate also evidences and entitles the holder
hereof to the same number of Rights (subject to adjustment) as the
number of shares of Common Stock represented by this certificate,
such Rights being on the terms provided under the Rights Agreement
between Giga Information Group, Inc. and American Stock Transfer &
Trust Co. (the "RIGHTS AGENT"), dated as of February 18, 2000, as it
may be amended from time to time (the "AGREEMENT"), the terms of
which are incorporated herein by reference and a copy of which is on
file at the principal executive offices of Giga Information Group,
Inc. Under certain circumstances, as set forth in the Agreement, such
Rights shall be evidenced by separate certificates and shall no
longer be evidenced by this certificate. Giga Information Group, Inc.
shall mail to the registered holder of this certificate a copy of the
Agreement without charge within five days after receipt of a written
request therefor. As provided in Section 7(e) of the Agreement,
Rights issued to or Beneficially Owned by Acquiring Persons or their
Affiliates or Associates (as such terms are defined in the Agreement)
or any subsequent holder of such Rights shall be null and void and
may not be exercised by or transferred to any Person.
With respect to such certificates containing the foregoing legend, until the
Distribution Date the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such
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certificate, except as otherwise provided herein, shall also constitute the
transfer of the Rights associated with the Common Stock represented thereby. In
the event that the Corporation purchases or otherwise acquires any Common Stock
after the Record Date but prior to the Distribution Date, any Rights associated
with such Common Stock shall be deemed canceled and retired so that the
Corporation shall not be entitled to exercise any Rights associated with the
Common Stock which are no longer outstanding. Notwithstanding this paragraph
(c), the omission of a legend shall not affect the enforceability of any part of
this Agreement or the rights of any holder of the Rights.
(d) As soon as practicable after the Distribution Date, the
Corporation will prepare and execute, the Rights Agent will countersign, and the
Corporation will send or cause to be sent (and the Rights Agent will, if
requested, send), by first class mail, postage prepaid, to each record holder of
the Common Stock as of the close of business on the Distribution Date, as shown
by the records of the Corporation, at the address of such holder shown on such
records, a certificate in the form provided by Section 4 hereof (a "RIGHT
CERTIFICATE"), evidencing one Right (subject to adjustment as provided herein)
for each share of Common Stock so held. As of and after the Distribution Date,
the Rights shall be evidenced solely by Right Certificates and may be
transferred by the transfer of the Right Certificate as permitted hereby,
separately and apart from any transfer of one or more shares of Common Stock.
Section 4. Form of Right Certificates. The Right Certificates (and
the forms of election to purchase shares, certificate and assignment to be
printed on the reverse thereof), when, as and if issued, shall be substantially
in the form set forth in Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Common Stock or the Rights may from time to time be listed
or as the Corporation may deem appropriate to conform to usage or otherwise and
as are not inconsistent with the provisions of this Agreement. Subject to the
provisions of Section 22 hereof, Right Certificates evidencing Rights whenever
issued, (i) shall be dated as of the date of issuance of the Rights they
represent and (ii) subject to adjustment from time to time as provided herein,
on their face shall entitle the holders thereof to purchase such number of one
one-hundredths of a share (including fractional shares which are integral
multiples of one-hundredth of a share) of Preferred Stock as shall be set forth
thereon at the price per one one-hundredth of a share of Preferred Stock payable
upon exercise of a Right provided by Section 7(b) hereof, as the same may from
time to time be adjusted as provided herein (the "EXERCISE PRICE").
Section 5. Countersignature and Registration.
(a) Each Right Certificate shall be executed on behalf of the
Corporation by its Chairman of the Board, President or any Vice President,
either manually or by facsimile signature, and have affixed thereto the
Corporation's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Corporation, either manually or by
facsimile signature. Each Right Certificate shall be
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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 Corporation who shall have signed any Right Certificate shall cease to be
such officer of the Corporation before countersignature by the Rights Agent and
issuance and delivery of the certificate by the Corporation, such Right
Certificate, nevertheless, may be countersigned by the Rights Agent and issued
and delivered with the same force and effect as though the person who signed
such Right Certificates had not ceased to be such officer of the Corporation.
Any Right Certificate may be signed on behalf of the Corporation by any person
who, on the date of the execution of such Right Certificate, shall be a proper
officer of the Corporation to sign such Right Certificate, although at the date
of the execution of this 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 one or more offices designated as
the appropriate place for surrender of Right Certificates upon exercise or
transfer, and in such other locations as may be required by law, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Section 7(e), 7(f) and 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 earlier of the Expiration Date or the Final
Expiration Date, any Right Certificate, may be (i) transferred or (ii) split up,
combined or exchanged for one or more other Right Certificates, entitling the
registered holder to purchase a like number of one one-hundredths of a share of
Preferred Stock as the Right Certificate or Rights Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate shall surrender the Right
Certificate at the office of the Rights Agent designated for the surrender of
Right Certificates with the form of certificate and assignment on the reverse
side thereof duly endorsed (or enclose with such Right Certificate a written
instrument of transfer in form satisfactory to the Corporation and the Rights
Agent), duly executed by the registered holder thereof or his attorney duly
authorized in writing, and with such signature duly guaranteed. Any registered
holder desiring to split up, combine or exchange any Right Certificate shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate to be split up, combined or exchanged at the office of the
Rights Agent designated therefor. Thereupon, the Rights Agent shall countersign
and deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Corporation may require
payment of a sum sufficient to cover any Transfer Tax that may be imposed in
connection with any transfer, split up, combination or exchange of any Right
Certificates.
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(b) Subject to the provisions of Section 7(e), 7(f) and 14 hereof, at
any time after the Distribution Date and prior to the Expiration Date, upon
receipt by the Corporation and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them and, if requested by the Corporation,
reimbursement to the Corporation and the Rights Agent of all reasonable expenses
incidental thereto, or upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Corporation shall cause a new Right
Certificate of like tenor to be issued and delivered to the registered owner in
lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Exercise Price; Expiration Date of
Rights; Invalidation of Certain Rights.
(a) The Rights shall not be exercisable until, and shall become
exercisable on, the Distribution Date (unless otherwise provided herein,
including, without limitation, the restrictions on exercisability set forth in
Section 7(e) and 27(b) hereof). Except as otherwise provided herein, the Rights
may be exercised, in whole or in part, at any time commencing with the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and certificate on the reverse side thereof duly executed
(with signatures duly guaranteed), to the Rights Agent at the designated office
of the Rights Agent in New York, together with payment of the Exercise Price for
each Right exercised (as the same may have been adjusted as hereinafter
provided), at or prior to the Close of Business on the earlier of (i) February
18, 2010 (the "FINAL EXPIRATION DATE") or (ii) the date on which the Rights are
redeemed as provided in Section 23 hereof or the date on which the Rights are
exchanged as provided in Section 27 hereof (such earlier date being herein
referred to as the "EXPIRATION DATE").
(b) The Exercise Price shall initially be $95.00 for each one
one-hundredth (1/100) of a share of Preferred Stock issued pursuant to the
exercise of a Right. The Exercise Price and the number of one one-hundredths of
a share of Preferred Stock or other securities or property to be acquired upon
exercise of a Right shall be subject to adjustment from time to time as provided
in Sections 11 and 13 hereof. The Exercise Price shall be payable in lawful
money of the United States of America, in accordance with paragraph (c) below.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights with the form of election to
purchase and certificate duly executed, accompanied by payment by certified
check, cashier's check, bank draft or money order payable to the Corporation or
the Rights Agent of the Exercise Price for the shares of Preferred Stock to be
purchased and an amount equal to any applicable Transfer Tax required to be paid
by the holder of the Right Certificate in accordance with Section 9(e) hereof,
the Rights Agent shall thereupon promptly (i) requisition from any transfer
agent of the Preferred Stock of the Corporation one or more certificates
representing the number of shares of Preferred Stock to be so purchased,
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and the Corporation hereby authorizes and directs such transfer agent to comply
with all such requests, (ii) as provided in Section 14(b), at the election of
the Corporation, cause depositary receipts to be issued in lieu of fractional
shares of Preferred Stock, (iii) if the election provided for in the immediately
preceding clause (ii) has not been made, requisition from the Corporation the
amount of cash to be paid in lieu of the issuance of fractional shares (other
than fractions that are integral multiples of one one-hundredth of a share) in
accordance with Section 14(b) hereof, (iv) after receipt of such Preferred Stock
certificates and, if applicable, depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (v) when appropriate, after receipt, promptly deliver such cash to or
upon the order of the registered holder of such Right Certificate; provided,
however, that in the case of a purchase of securities other than Preferred
Stock, pursuant to Section 13 hereof, the Rights Agent shall promptly take the
appropriate actions corresponding in such case to that referred to in the
foregoing clauses (i) through (v) of this Section 7(c). Notwithstanding the
foregoing provisions of this Section 7(c), the Corporation may suspend the
issuance of shares of Preferred Stock and other securities upon exercise of a
Right for a reasonable period, not in excess of 90 days, during which the
Corporation seeks to register under the Securities Act of 1933, as amended (the
"ACT"), and any applicable securities law of any other jurisdiction, the shares
of Preferred Stock or other securities to be issued pursuant to the Rights;
provided, however, that nothing contained in this Section 7(c) shall relieve the
Corporation of its obligations under Section 9(d) hereof. Upon any such
suspension, the Corporation 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.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or his
assign, subject to the provisions of Section 14(b) hereof.
(e) Notwithstanding any provision of this Agreement to the contrary,
from and after the time (the "INVALIDATION TIME") when any Person first becomes
an Acquiring Person, any Rights that are Beneficially Owned by (x) such
Acquiring Person (or any Associate or Affiliate of such Acquiring Person), (y) a
transferee of such Acquiring Person (or any such Associate or Affiliate) who
becomes a transferee after the invalidation time or (z) a transferee of such
Acquiring Person (or any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the invalidation time pursuant to either (I) a
transfer from the Acquiring Person (or any such Associate or Affiliate) to
holders of its equity securities or to any Person with whom it has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (II) a transfer which the Board of Directors has determined is part of
a plan, arrangement or understanding which has the purpose or effect of avoiding
the provisions of this Section 7(e), and subsequent transferees of such Persons
referred to in clause (y) and (z)
12
above, shall be null and void without any further action and any holder of such
Rights shall thereafter have no rights whatsoever with respect to such Rights
under any provision of this Agreement. No Right Certificate shall be issued
pursuant to Section 3 hereof that represents Rights beneficially owned by an
Acquiring Person or any Affiliate or Associate thereof whose Rights would be
null and void pursuant to the provisions of this Section 7(e); no Right
Certificate shall be issued at any time upon the transfer of any Rights to an
Acquiring Person (or an Affiliate or Associate of such Acquiring Person) whose
Rights would be null and void pursuant to the provisions of this Section 7(e) or
any Associate or Affiliate thereof or to any nominee of such Acquiring Person,
Associate or Affiliate; and any Right Certificate delivered to the Rights Agent
for transfer to an Acquiring Person (or an Associate or Affiliate of such
Acquiring Person) whose Rights would be void pursuant to the provisions of this
Section 7(e) shall be cancelled. The Corporation shall use all reasonable
efforts to ensure that the provisions of this Section 7(e) are complied with,
but shall have no liability to any holder of Right Certificates or any other
Person as a result of its failure to make any determination with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Corporation 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 following the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Corporation shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Corporation or to 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
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Agreement. The Corporation shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall cancel
and retire, any Right Certificate purchased or acquired by the Corporation
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Corporation, or shall, at the written
request of the Corporation, destroy such cancelled Right Certificates, and in
such case shall deliver a certificate of destruction thereof to the Corporation.
13
Section 9. Reservation and Availability of Shares of Preferred Stock.
(a) The Corporation covenants and agrees that it will cause to be
reserved and kept available out of the authorized and unissued shares of
preferred stock of the Corporation or out of authorized and issued shares of
Preferred Stock held in its treasury, such number of shares of Preferred Stock
as will from time to time be sufficient to permit the exercise in full of all
outstanding Rights.
(b) The Corporation shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares of Preferred Stock
issued or reserved for issuance in accordance with this Agreement to be listed,
upon official notice of issuance, upon the principal national securities
exchange, if any, upon which the Common Stock is listed or, if the principal
market for the Common Stock is not on any national securities exchange, to be
eligible for quotation in the National Association of Securities Dealers'
Automated Quotation System or any successor thereto or other comparable
quotation system.
(c) The Corporation covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Exercise Price in
respect thereof), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(d) The Corporation shall use its best efforts to (i) file, as soon
as practicable following the occurrence of the event described in Section
11(a)(ii), or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Act, with respect to the
shares of Preferred Stock purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become effective as
soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (a) the date as of which the
Rights are no longer exercisable for Preferred Stock and (b) the earlier of the
Expiration Date and the Final Expiration Date. The Corporation may temporarily
suspend, for a period of time not to exceed ninety days, the issuance of shares
of Preferred Stock upon exercise of a Right in order to prepare and file a
registration statement under the Act and permit it to become effective. The
Corporation 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. Notwithstanding any provision
of this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall have
been obtained and until a registration statement under the Act (if required)
shall have been declared effective.
(e) The Corporation covenants and agrees that it will pay when due
and payable any and all federal and state Transfer Taxes which may be payable in
respect of the issuance or delivery of the Right Certificates or of any shares
of Preferred Stock
14
issued or delivered upon the exercise of Rights. The Corporation shall not,
however, be required to pay any Transfer Tax which may be payable in respect of
any transfer or delivery of a Right Certificate to a Person other than, or the
issuance or delivery of certificates for Preferred Stock upon exercise of Rights
in a name other than that of, the registered holder of the Right Certificate,
and the Corporation shall not be required to issue or deliver a Right
Certificate or certificate for Preferred Stock to a Person other than such
registered holder until any such Transfer Tax shall have been paid (any such
Transfer Tax being payable by the holder of such Right Certificate at the time
of surrender) or until it has been established to the Corporation's satisfaction
that no such Transfer Tax is due.
(f) The requirements of this Section 9 shall apply to shares of
Common Stock of the Corporation if the Corporation has elected in accordance
with Section 11(a)(iii) hereof to substitute shares of Common Stock for shares
of Preferred Stock that otherwise may be purchased upon the exercise of Rights.
Section 10. Preferred Stock Record Date. Each Person in whose name
any certificate for shares of Preferred Stock is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
the Preferred Stock represented thereby on, and such certificate shall be dated
as of, the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Exercise Price (and any applicable Transfer
Taxes) was made; provided, however, that, if the date of such surrender and
payment is a date upon which the Preferred Stock transfer books of the
Corporation are closed, such Person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated as of, the next
succeeding Business Day on which the Preferred Stock transfer books of the
Corporation are open.
Section 11. Adjustment of Exercise Price or Number of Shares. The
Exercise Price and the number of shares of Preferred Stock which may be
purchased upon exercise of a Right are subject to adjustment from time to time
as provided in this Section 11.
(a) (i) In the event the Corporation shall at any time after the date
of this Agreement (A) declare or pay any dividend on Common Stock
payable in shares of Common Stock, (B) subdivide or split the
outstanding shares of Common Stock into a greater number of shares or
(C) combine or consolidate the outstanding shares of Common Stock
into a smaller number of shares or effect a reverse split of the
outstanding shares of Common Stock, then and in each such event the
number of one one-hundredths of a share of Preferred Stock issuable
upon the Exercise of a Right after the record date for such event (if
one shall have been established or, if not, after the date of such
event) shall be the number of one one-hundredths of a share of
Preferred Stock issuable immediately prior to such event multiplied
by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately prior to such
15
event and the denominator of which is the number of shares of Common
Stock outstanding immediately after such event and the Exercise Price
to be in effect after the record date for such event (if one shall
have been established or, if not, after the date of such event) shall
be determined by multiplying the Exercise Price in effect immediately
prior to such event by such fraction. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 27 of this Agreement, in the event
that any Person shall become an Acquiring Person, then, except as
otherwise provided in this Section 11, each holder of a Right, except
as provided in Section 7(e) hereof, shall thereafter have the right
to receive upon exercise of such Right in accordance with the terms
of this Agreement and payment of the Exercise Price, such number of
one one-hundredths of a share of Preferred Stock as shall equal the
result obtained by (1) multiplying the then current Exercise Price by
the number of one one-hundredths of a share of Preferred Stock for
which a Right would, absent adjustment pursuant to this Section
11(a)(ii), be then exercisable and dividing the product by (2) 50% of
the proportionate Fair Market Value of one one-hundredth of a share
of the Preferred Stock (determined pursuant to Section 11(b) hereof)
on the Stock Acquisition Date in respect of such event.
(iii) In the event that the Corporation does not have
available sufficient authorized but unissued Preferred Stock to
permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii), the Corporation shall take all such
action as may be necessary to authorize and reserve for issuance such
number of additional shares of Preferred Stock as may from time to
time be required to be issued upon the exercise in full of all Rights
from time to time outstanding and, if necessary, shall use its best
efforts to obtain stockholder approval thereof. In lieu of issuing
shares of Preferred Stock in accordance with the foregoing
subparagraph (ii), the Corporation may, if the Board of Directors
determines that such action is necessary or appropriate, elect to
issue or pay, upon the exercise of the Rights, cash, property, shares
of Preferred Stock or Common Stock, or any combination thereof,
having an aggregate Fair Market Value equal to the Fair Market Value
of the shares of Preferred Stock which otherwise would have been
issuable pursuant to Section 11(a)(ii) hereof as of the date the
Board of Directors of the Corporation makes such election (which Fair
Market Value shall be determined as provided by Section 11(b)
hereof). Subject to Section 23 hereof, any such election by the Board
of Directors of the Corporation must be made and publicly announced
within thirty (30) days after the date on which the event described
in Section 11(a)(ii)
16
occurs and shall be applicable with respect to all Rights exercised
after such public announcement. Notice of such election shall
promptly be given to the Rights Agent.
(b) For the purpose of this Agreement, the "FAIR MARKET VALUE" of any
share of Preferred Stock, Common Stock or any other stock or any Right or other
security or any other property on any date shall be determined as provided in
this Section 11(b). In the case of a publicly traded stock or other security,
the Fair Market Value thereof on any date shall be deemed to be the average of
the daily closing prices per share of such stock or per unit of such other
security for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that in the event
that the Fair Market Value of any share of Common Stock is to be determined as
of a date that is within 30 Trading Days after (i) the ex-dividend date for a
dividend or distribution on the Common Stock payable in shares of Common Stock
or securities convertible into shares of Common Stock or (ii) the effective date
of any subdivision, split, combination, consolidation, reverse stock split or
reclassification of the Common Stock, then, and in each such case, the Fair
Market Value shall be appropriately adjusted by the Board of Directors of the
Corporation to take into account such dividend, distribution, subdivision,
split, combination, consolidation, reverse stock split or reclassification. The
closing price 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 applicable transaction
reporting system with respect to securities listed or admitted to trading on the
New York Stock Exchange), or, if the securities are not listed or admitted to
trading on the New York Stock Exchange, as reported in the applicable
transaction reporting system with respect to securities listed on the principal
national securities exchange (which, if approved by the Board of Directors of
the Corporation, may be a securities exchange of a country other than the United
States of America) on which such security is listed or admitted to trading; or,
if not listed or admitted to trading on any such national securities exchange,
the last quoted price (or, if not so quoted, the average of the high bid and low
asked prices) in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or
such other quotation reporting system then in use in the United States of
America; or, if no bids for such security are so quoted, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in such security selected by the Board of Directors of the Corporation.
The term "TRADING DAY" shall mean a day on which the principal national
securities exchange on which such security is listed or admitted to trading is
open for the transaction of business or, if such security is not listed or
admitted to trading on any national securities exchange, a Business Day. For
purposes of this Section 11(b), a stock or other security shall be considered
"PUBLICLY TRADED" only (i) if registered under Section 12 of the Exchange Act or
exempt from such registration pursuant to Section 12(g)(2)(B), (C) or (G) of the
Exchange Act or (ii) if traded on a national securities exchange of a country
other than the United States of America approved by the Board of Directors of
the Corporation or (iii) if, in the judgment of the Board of Directors of the
Corporation, there is sufficient active trading in such stock or other security
that reported
17
trading transactions therein fairly reflect the fair market value thereof. If a
security is not publicly held or not so listed or traded, "Fair Market Value"
shall mean the fair value per share of stock or per other unit of such other
security, as determined by an independent investment banking firm experienced in
the valuation of securities selected in good faith by the Board of Directors of
the Corporation, or, if no such investment banking firm is, in the good faith
judgment of the Board of Directors, available to make such determination, as
determined in good faith by the Board of Directors of the Corporation; provided,
however, that for purposes of making the adjustment provided for by Section
11(a)(ii) hereof, the Fair Market Value of a share of Preferred Stock, unless
the Preferred Stock shall at the time be publicly traded (in which case its Fair
Market Value shall be determined pursuant to the foregoing provisions of this
Section 11(b)), shall be 102% of the product of the Fair Market Value of a share
of Common Stock multiplied by the higher of the then Dividend Multiple or Vote
Multiple applicable to the Preferred Stock (as defined in the Certificate of
Designations of the Corporation relating to the Preferred Stock); provided,
however, that the Board of Directors of the Corporation may, by resolution,
determine that the Fair Market Value of a share of Preferred Stock shall be more
or less than such amount but not less than 100% or more than 110% of the product
of the then Fair Market Value of a share of Common Stock multiplied by the
higher of the then Dividend Multiple or Vote Multiple applicable to the
Preferred Stock. In the case of property other than securities, the "Fair Market
Value" thereof shall be determined in good faith by the Board of Directors of
the Corporation based upon such appraisals or valuation reports of such
independent experts as the Board of Directors of the Corporation shall in good
faith determine to be appropriate in accordance with good business practices and
fair to the interests of the holders of Rights. Any determination made by the
Board of Directors of the Corporation as provided for by this Section 11(b)
shall be described in a statement filed by the Corporation with the Rights
Agent, shall be effective thereupon and only thereupon and shall be binding upon
the Rights Agent and, as provided by Section 34 hereof, all holders of Rights.
(c) In case the Corporation shall fix a record date for the issuance
of rights, options or warrants to all holders of Common Stock entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Common Stock or securities convertible into Common
Stock at a price per share (or having a conversion price per share, if a
security convertible into Common Stock) less than the then current per share
Fair Market Value of the Common Stock on such record date, the Exercise Price to
be in effect after such record date shall be determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
on such record date plus the number of shares of Common Stock which the
aggregate offering price of the total number of shares of Common 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 Fair Market Value
and the denominator of which shall be the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of Common
Stock to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible).
18
In case such subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such consideration shall
be as determined in good faith by the Board of Directors of the Corporation,
whose determination shall be described in a statement filed with the Rights
Agent. Shares of Common Stock owned by or held for the account of the
Corporation shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed and in the event that such rights, options or warrants are not so
issued, the Exercise Price shall be adjusted to be the Exercise Price which
would then be in effect if such record date had not been fixed.
(d) In case the Corporation shall fix a record date for the making of
a distribution to all holders of the Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation) of evidences of
indebtedness of the Corporation or any of its Subsidiaries, cash (other than a
regular quarterly cash dividend not in excess of 300% of the previous regular
quarterly cash dividend), other assets (other than a dividend payable in shares
of Common Stock) or options, rights or warrants to subscribe for shares of the
Corporation or any Subsidiary (excluding those referred to in Section 11(c)
hereof), the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the Fair Market Value
of the shares of Common Stock on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the Corporation, whose
determination shall be described in a statement filed with the Rights Agent) of
the portion of the assets or evidences of indebtedness or options, rights or
warrants so to be distributed in respect of one share of Common Stock, and the
denominator of which shall be such current Fair Market Value of the shares of
Common Stock. Such adjustment shall be made successively whenever such a record
date is fixed, and, in the event that such distribution is not so made
notwithstanding the setting of a record date therefor, the Exercise Price shall
again be adjusted to be the Exercise Price which would then be in effect if such
record date had not been fixed.
(e) Unless the Corporation shall have exercised its election as
provided in Section 11(f), upon each adjustment of the Exercise Price as a
result of the calculations made in Section 11(c) and (d), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Exercise Price, that number of one
one-hundredths of a share of Preferred Stock obtained by (i) multiplying (x) the
number of one one-hundredths of a share of Preferred Stock that could be
purchased upon exercise of a Right immediately prior to the adjustment pursuant
to this Section 11(e) by (y) the Exercise Price in effect immediately prior to
such adjustment of the Exercise Price and (ii) dividing the product so obtained
by the Exercise Price in effect immediately after such adjustment of the
Exercise Price.
(f) The Corporation may elect on or after the date of any adjustment
of the Exercise Price pursuant to Section 11(c) and 11(d) to adjust the number
of Rights in substitution for any adjustment pursuant to Section 11(e) in the
number of one one-hundredths of a share of Preferred Stock purchasable upon the
exercise of a Right.
19
Each of the Rights outstanding after such adjustment of the number of Rights
shall be exercisable for the number of one one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights obtained by dividing the Exercise
Price in effect immediately prior to adjustment of the Exercise Price by the
Exercise Price in effect immediately after adjustment of the Exercise Price. The
Corporation 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 Exercise Price is adjusted or any day thereafter, but, if
the Right Certificates have been issued, shall be at least 10 days later than
the date of the public announcement. If the Right Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section 11(e), the
Corporation shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights, if any, to
which such holders shall be entitled as a result of such adjustment, or, at the
option of the Corporation, shall cause to be distributed to such holders of
record in substitution and replacement for the Right Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, if required
by the Corporation, new Right Certificates evidencing all the Rights to which
such holders shall be entitled after such adjustment. Right Certificates so to
be distributed shall be issued, executed and countersigned in the manner
provided for herein and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the public
announcement.
(g) All calculations under this Section 11 shall be made to the
nearest cent or to the nearest one one-hundredth of a share, as the case may be.
(h) Irrespective of any adjustment or change in the Exercise Price or
the number of shares of Preferred Stock issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue to
express the Exercise Price and the number of shares to be issued upon exercise
of the Rights as in the initial Right Certificates issued hereunder but,
nevertheless, shall represent the Rights as so adjusted.
(i) Before taking any action that would cause an adjustment reducing
the purchase price per whole share of Preferred Stock upon exercise of the
Rights below the then par value, if any, of the shares of Preferred Stock, the
Corporation shall use its best efforts to take any corporate action which may,
in the opinion of its counsel, be necessary in order that the Corporation may
validly and legally issue fully paid and non-assessable shares of such Preferred
Stock at such adjusted purchase price per share.
(j) Anything in this Section 11 to the contrary notwithstanding, in
the event of any reclassification of stock of the Corporation or any
recapitalization, reorganization or partial liquidation of the Corporation or
similar transaction, the Corporation shall be entitled to make such further
adjustments in the number of shares of
20
Preferred Stock which may be acquired upon exercise of the Rights, and such
adjustments in the Exercise Price therefor, in addition to those adjustments
expressly required by the other paragraphs of this Section 11, as the Board of
Directors of the Corporation shall determine to be necessary or appropriate in
order for the holders of the Rights in such event to be treated equitably and in
accordance with the purpose and intent of this Agreement or in order that any
such event shall not, but for such adjustment, in the opinion of counsel to the
Corporation, result in the stockholders of the Corporation being subject to any
United States federal income tax liability by reason thereof.
(k) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Corporation other than the Preferred
Stock, thereafter the Exercise Price and the number of such other shares so
receivable upon exercise of a Right 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),
11(c), 11(e), 11(f) and 11(j) hereof, as applicable, and the provisions of
Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock shall
apply on like terms to any such other shares.
Section 12. Certification of Adjusted Exercise Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11, 13, 23 or 27,
the Corporation shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts giving rise to such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 25.
Notwithstanding the foregoing sentence, the failure of the Corporation to make
such certification or give such notice shall not affect the validity of or the
force or effect of the requirement for such adjustment. Any adjustment to be
made pursuant to Section 11, 13 or 23(c) of this Agreement shall be effective as
of the date of the event giving rise to such adjustment. The Rights Agent shall
be fully protected in relying on any such certificate and on any adjustment
therein contained and shall not be deemed to have knowledge of any adjustment
unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, at any time after the time that any Person
becomes an Acquiring Person, (x) the Corporation shall, directly or indirectly,
consolidate with, or merge with and into, any other Person or Persons and the
Corporation shall not be the surviving or continuing corporation of such
consolidation or merger, or (y) any Person or Persons shall, directly or
indirectly, consolidate with, or merge with and into, the Corporation, and the
Corporation 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 or
converted into or exchanged for stock or other securities of any other Person
21
or of the Corporation or cash or any other property, or (z) the Corporation or
one or more of its Subsidiaries shall, directly or indirectly, sell or otherwise
transfer to any other Person in one or more transactions, assets or earning
power aggregating more than 50% of the assets or earning power of the
Corporation and its Subsidiaries (taken as a whole), then, on the first
occurrence of any such event, proper provision shall be made so that (i) each
holder of record of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise thereof at a price equal
to the then current Exercise Price multiplied by the number of one
one-hundredths of a share of Preferred Stock for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of
shares of Preferred Stock, such number of shares of validly issued, fully paid,
non-assessable and freely tradeable Common Stock of the Principal Party (as
defined in Section 13(b) hereof), not subject to any liens, encumbrances, rights
of first refusal or other adverse claims, as shall equal the result obtained by
(1) multiplying the then current Exercise Price by the number of one
one-hundredths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by (2) 50% of the then per share Fair
Market Value of the Common Stock of the Principal Party on the date of the
consummation, merger, sale or transfer; provided, however, that the Exercise
Price (as adjusted) and the number of shares of Common Stock of such Principal
Party so receivable upon exercise of a Right shall be subject to further
adjustment as appropriate in accordance with Section 11 hereof to reflect any
events occurring in respect of the Common Stock of such Principal Party after
the occurrence of such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the obligations and duties of
the Corporation pursuant to this Agreement; (iii) the term "Corporation" for all
purposes of this Agreement shall thereafter be deemed to refer to such Principal
Party; (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common Stock
in accordance with the provisions of Section 9 hereof applicable to the
reservation of Preferred Stock) in connection with such consummation 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; provided, however, that,
upon the subsequent occurrence of any merger, consolidation, sale of all or
substantially all of the assets, recapitalization, reclassification of shares,
reorganization or other extraordinary transaction in respect of such Principal
Party, each holder of a Right shall thereupon be entitled to receive, upon
exercise of a Right and payment of the Exercise Price, such cash, shares,
rights, warrants and other property which such holder would have been entitled
to receive had it, at the time of such transaction, owned the shares of Common
Stock of the Principal Party purchasable upon the exercise of a Right, and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property; and (v) the provisions of Section
11(a)(ii) hereof shall be of no effect following the occurrence of any event
described in clause (x), (y) or (z) above of this Section 13(a).
22
(b) "PRINCIPAL PARTY" shall mean
(i) in the case of any transaction described in clause (x)
or (y) of the first sentence of Section 13(a) hereof: (A) the Person
that is the issuer of the securities into which shares of Common
Stock of the Corporation are changed or otherwise exchanged or
converted in such merger or consolidation, or, if there is more than
one such issuer, the issuer of the Common Stock of which has the
greatest market value or (B) if no securities are so issued, (I) the
Person that is the other party to the merger or consolidation and
that survives such merger or consolidation, or, if there is more than
one such Person, the Person the Common Stock of which has the
greatest market value or (II) if the Person that is the other party
to the merger or consolidation does not survive the merger or
consolidation, the Person that does survive the merger or
consolidation (including the Corporation if it survives); and
(ii) in the case of any transaction described in clause
(z) of the first sentence in 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, or, if each
Person that is a party to such transaction or transactions receives
the same portion of the assets or earning power so transferred or if
the Person receiving the greatest portion of the assets or earning
power cannot be determined, whichever of such Persons as is the
issuer of Common Stock having the greatest market value of shares
outstanding;
provided, however, that in any such case, if the Common Stock of such Person is
not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, then (1) if such Person
is a direct or indirect Subsidiary of another Person the Common Stock of which
is and has been so registered, the term "Principal Party" shall refer to such
other Person, or (2) if such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Stocks of all of which are and have been so
registered, the term "Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Stock having the greatest market value of shares
outstanding, or (3) if such Person is owned, directly or indirectly, by a joint
venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in clauses (1) and (2) above
shall apply to each of the owners having an interest in the venture as if the
Person owned by the joint venture was a Subsidiary of both or all of such joint
venturers, and the Principal Party in each such case shall bear the obligations
set forth in this Section 13 in the same ratio as its interest in such Person
bears to the total of such interests.
(c) The Corporation shall not consummate any consolidation, merger or
sale or transfer of assets or earning power referred to in Section 13(a) unless
the Principal Party shall have a sufficient number of authorized shares of its
Common Stock that have not been issued or reserved for issuance to permit
exercise in full of all Rights
23
in accordance with this Section 13 and unless prior thereto the Corporation and
the Principal Party involved therein shall have executed and delivered to the
Rights Agent an agreement confirming that the Principal Party shall, upon
consummation of such consolidation, merger or sale or transfer of assets or
earning power, assume this Agreement in accordance with Section 13(a) hereof and
that all rights of first refusal or preemptive rights in respect of the issuance
of shares of Common Stock of the Principal Party upon exercise of outstanding
Rights have been waived and that such transaction shall not result in a default
by the Principal Party under this Agreement, and further providing that, as soon
as practicable after the date of any consolidation, merger or sale or transfer
of assets or earning power referred to in Section 13(a) hereof, the Principal
Party will:
(i) prepare and file a registration statement under the
Act with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, use its best efforts
to cause such registration statement to become effective as soon as
practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Act) until the date of
expiration of the Rights, and similarly comply with applicable state
securities laws;
(ii) use its best efforts to list (or continue the listing
of) the Rights and the securities purchasable upon exercise of the
Rights on a national securities exchange or to meet the eligibility
requirements for quotation on NASDAQ;
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party which comply in all
respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act. In the event that any of the
transactions described in Section 13(a) hereof shall occur at any
time after the occurrence of a transaction described in Section
11(a)(ii) hereof, the Rights which have not theretofore been
exercised shall, subject to the provisions of Section 7(e) hereof,
thereafter be exercisable in the manner described in Section 13(a);
and
(iv) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Stock of the Principal
Party subject to purchase upon exercise of outstanding Rights.
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or other
instrument governing its affairs, which provision would have the effect of (i)
causing such Principal Party to issue, in connection with, or as a consequence
of, the consummation of a transaction referred to in this Section 13, shares of
Common Stock of such Principal Party at less than the then Fair
24
Market Value per share (determined pursuant to Section 11(b) hereof) or
securities exercisable for, or convertible into, Common Stock of such Principal
Party at less than such then Fair Market Value (other than to holders of Rights
pursuant to this Section 13) or (ii) providing for any special tax or similar
payment in connection with the issuance to any holder of a Right of Common Stock
of such Principal Party pursuant to the provisions of this Section 13, then, in
such event, the Corporation shall not consummate any such transaction unless
prior thereto the Corporation and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing that the
provision in question of such Principal Party shall have been canceled, waived
or amended, or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or as a consequence
of, the consummation of the proposed transaction.
(e) The Corporation covenants and agrees that it shall not, at any
time after any Person becomes an Acquiring Person, enter into any transaction of
the type described in clauses (x) through (z) of the first sentence of Section
13(a) hereof if (i) at the time of or immediately after such consolidation,
merger, sale, transfer or other transaction 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, (ii) prior to, simultaneously with or immediately after
such consolidation, merger, sale, transfer or other transaction, the
stockholders of the Person who constitutes, or would constitute, the Principal
Party for purposes of Section 13(a) hereof shall have received a distribution of
Rights previously owned by such Person or any of its Affiliates or Associates or
(iii) the form or nature of organization of the Principal Party would preclude
or limit the exercisability of the Rights.
Section 14. Fractional Rights and Fractional Shares.
(a) The Corporation shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional Rights
(i.e., Rights to acquire less than one one-hundredth of a share of Preferred
Stock), unless such fractional Rights result from a transaction referred to in
Section 11(a)(i) or 11(f) hereof. If the Corporation shall determine not to
issue such fractional Rights, then, in lieu of such fractional Rights, there
shall be paid to the holders of record of the Right Certificates with regard to
which such fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the Fair Market Value of a whole Right.
(b) The Corporation shall not be required to issue fractions of
shares of Preferred Stock (other than fractions that are integral multiples of
one one-hundredth of a share) upon exercise of the Rights or to distribute
certificates which evidence fractional shares (other than fractions that are
integral multiples of one one-hundredth of a share). In lieu of issuing
fractions of shares of Preferred Stock, the Corporation may, at its election,
issue depositary receipts evidencing fractions of shares pursuant to an
appropriate agreement between the Corporation and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have
25
all of the rights, privileges and preferences to which they would be entitled as
owners of the Preferred Stock. With respect to fractional shares that are not
integral multiples of one one-hundredth of a share, if the Corporation does not
issue such fractional shares or depositary receipts in lieu thereof, there shall
be paid to the holders of record of Right Certificates at the time such Right
Certificates are exercised as herein provided an amount in cash equal to the
same fraction of the Fair Market Value of a share of Preferred Stock.
(c) The holder of a Right by the acceptance of a Right expressly
waives his right to receive any fractional Right or any fractional shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share) upon exercise of a Right.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, except the rights of action given to the Rights Agent in Section 18
hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the holders of record of the
Common Stock), and any holder of record of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Corporation to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right 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 will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Each holder of a Right, by
accepting the same, consents and agrees with the Corporation and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be
evidenced by the certificates for Common Stock registered in the name
of the holders of Common Stock (together, as applicable, with the
Summary of Rights), which certificates for Common Stock shall also
constitute certificates for Rights, and not by separate Right
Certificates, and each Right shall be transferable only
simultaneously and together with the transfer of shares of Common
Stock;
(b) after the Distribution Date, the Right Certificates
are transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of
transfer; and
26
(c) the Corporation and the Rights Agent may deem and
treat the Person in whose name the Right Certificate (or, prior to
the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the associated Common Stock certificate made by
anyone other than the Corporation or the Rights Agent) for all
purposes whatsoever, and neither the Corporation nor the Rights Agent
shall be affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Preferred Stock or any
other securities which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder or other securityholder of the
Corporation or of a securityholder of any other Person 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
securityholder action, or to receive notice of meetings or other actions
affecting stockholders or securityholders (except as provided in Section 24
hereof), or to receive dividends or subscription rights, or otherwise, except in
any such case the rights, if any, in respect thereof provided by this Agreement,
until the Right or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions hereof for such stock or other
security.
Section 18. Concerning the Rights Agent.
(a) The Corporation 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
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The
Corporation 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 to be done by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the cost and expenses of
defending against any claim of liability relating to the Rights or this
Agreement.
(b) The Rights Agent shall be protected against, 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 Right
Certificate or certificate for Preferred Stock or for other securities of the
Corporation, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement or other paper or document believed by it to be genuine and to be
27
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons.
Section 19. Merger or Consolidation of, or Change in Name of, the
Rights Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement any of the Rights Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; in case at that time any
of the Right Certificates shall not have been countersigned, the Rights Agent
may countersign such Right Certificates either in its prior name or in its
changed name; in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Corporation and the holders of Right
Certificates by their acceptance thereof shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be an
employee of or outside legal counsel for the Corporation or the Rights Agent),
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 be
proved or
28
established by the Corporation 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
or any Vice President and by the Treasurer or any Assistant Treasurer or the
Secretary or any Assistant Secretary of the Corporation and delivered to the
Rights Agent. Any such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct. Anything to the contrary
notwithstanding, in no event shall the Rights Agent be liable for special,
indirect, consequential or incidental loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Rights Agent has been
advised of the likelihood of such loss or damage.
(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 Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Corporation 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 Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Corporation of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any adjustment required under the provisions of Section 11 or
13 hereof or responsible for the manner, method or amount of any such adjustment
or the ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after receipt of a certificate describing 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 Preferred Stock or other
security to be delivered pursuant to the exercise of any Right or as to whether
any shares of Preferred Stock or other security will, when issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Corporation agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of the 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 or any Vice President or the Secretary or
the Treasurer of the
29
Corporation, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with instructions of any
such officer or for any delay in acting while waiting for those instructions.
Any application by the Rights Agent for written instructions from the
Corporation may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent under this Agreement
and the date on and/or after which such action shall be taken or such omission
shall be effective. The Rights Agent shall not be liable for any action taken
by, or omission of, the Rights Agent in accordance with a proposal included in
any such application on or after the date specified in such application (which
date shall not be less than three Business Days after the date any officer of
the Corporation actually receives such application unless any such officer shall
have consented in writing to an earlier date) unless, prior to taking any such
action (or the effective date in the case of an omission), the Rights Agent
shall have received written instructions in response to such application
specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Corporation or become pecuniarily interested in any
transaction in which the Corporation may be interested, or contract with or lend
money to the Corporation or otherwise act as fully and freely as though it were
not the Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Corporation 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 Corporation resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has not been completed to certify the holder is not an
Acquiring Person (or an Affiliate or Associate thereof), a Rights Agent shall
not take any further action with respect to such requested exercise or transfer
without first consulting with the Corporation.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Corporation and to each transfer
agent of the Common Stock and the Preferred Stock by registered or certified
mail. The Corporation may remove the Rights Agent or any successor Rights Agent
(with or without cause) upon 30 days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Common Stock and the Preferred Stock by registered or certified mail. If
the Rights Agent shall resign or be
30
removed or shall otherwise become incapable of acting, the Corporation shall
appoint a successor to the Rights Agent. If the Corporation shall fail to make
such appointment within a period of 30 days after such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the
Corporation), then the incumbent Rights Agent or the holder of record of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Corporation or by such a court, shall be (a) a corporation organized and
doing business under the laws of the United States or of any state thereof, in
good standing, which is authorized under such laws to exercise corporate trust
or stock transfer powers and is subject to supervision or examination in the
conduct of its corporate trust or stock transfer business by federal or state
authorities 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
controlled by or under common control with one or more corporations 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 Corporation shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock and Preferred Stock, and mail a notice thereof in
writing to the registered holders of the Right 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.
Notwithstanding the foregoing provisions, in the event of resignation, removal
or incapacity of the Rights Agent, the Corporation shall have the authority to
act as the Rights Agent until a successor Rights Agent shall have assumed the
duties of the Rights Agent hereunder.
Section 22. Issuance of New Right Certificates. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Corporation may, at its option, issue new Right Certificates evidencing Rights
in such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Exercise Price per share and the number or kind or
class of shares of stock or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Voting Stock following the
Distribution Date and prior to the Expiration Date, the Corporation may with
respect to shares of Voting Stock so issued or sold pursuant to (i) the exercise
of stock options, (ii) under any employee plan or arrangement, (iii) upon the
exercise, conversion or exchange of securities, notes or debentures issued by
the Corporation or (iv) a contractual obligation of the Corporation, in each
case existing prior to the Distribution Date, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale.
31
Section 23. Redemption.
(a) The Corporation may, at its option, but only by the vote of a
majority of the Board of Directors, redeem all but not less than all of the then
outstanding Rights at any time prior to the Close of Business on the tenth day
following the Stock Acquisition Date at a redemption price of $.01 per Right,
subject to adjustment as provided in Section 23(c) hereof (the "REDEMPTION
PRICE"). The redemption of the Rights by the Board of Directors may be made
effective at such time after the Board's action to redeem the Rights on such
basis and subject to such conditions, as the Board of Directors in its
discretion may establish.
(b) Without any further action and without any notice, the right to
exercise the Rights will terminate effective at the time so designated by action
of the Board of Directors ordering the redemption of the Rights and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price. Within 10 days after the effective time of the action of the Board of
Directors ordering the redemption of the Rights, the Corporation shall give
notice of such redemption to the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Stock. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each notice of redemption will state the
method by which the payment of the Redemption Price will be made. At the option
of the Board of Directors, the Redemption Price may be paid in cash to each
Rights holder or by the issuance of shares (and, at the Corporation's election
pursuant to Section 14(b) hereof, cash or depositary receipts in lieu of
fractions of shares other than fractions which are integral multiples of one
one-hundredth of a share) of Preferred Stock or Common Stock having a Fair
Market Value equal to such cash payment.
(c) In the event the Corporation shall at any time after the date of
this Agreement but before the Distribution Date (A) pay any dividend on Common
Stock in shares of Common Stock, (B) subdivide or split the outstanding shares
of Common Stock into a greater number of shares or (C) combine or consolidate
the outstanding shares of Common Stock into a smaller number of shares or effect
a reverse split of the outstanding shares of Common Stock and as a consequence
thereof the number of Rights outstanding shall change, then, and in each such
event, the Redemption Price may, by action of the Board of Directors of the
Corporation in its discretion, be appropriately adjusted in respect of such
transaction so as to maintain the aggregate Redemption Price of all Rights after
such transaction at the same amount, insofar as practicable, as before the
transaction.
Section 24. Notice of Proposed Actions.
(a) In case the Corporation, after the Distribution Date, shall
propose (i) to effect any of the transactions referred to in Section 11(a)(i) or
to pay any dividend to the holders of record of its shares of Common Stock
payable in shares of capital stock
32
of any class or to make any other distribution to the holders of record of its
Common Stock (other than a regular periodic cash dividend at a rate not in
excess of 150% of the rate of the last cash dividend theretofore paid), or (ii)
to offer to the holders of record of its Common Stock options, warrants, or
other rights to subscribe for or to purchase shares of Common Stock (including
any security convertible into or exchangeable for Common Stock) or shares of
stock of any class or any other securities, options, warrants, convertible or
exchangeable securities or other rights, or (iii) to effect any reclassification
of its Preferred Stock or Common Stock or any recapitalization or reorganization
of the Corporation, or (iv) to effect any consolidation or merger with or into,
or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions,
of more than 50% of the assets or earning power of the Corporation and its
Subsidiaries (taken as a whole) to, any other Person or Persons, or (v) to
effect the liquidation, dissolution or winding up of the Corporation, then, in
each such case, the Corporation shall give to each holder of record of a Right
Certificate, in accordance with Section 25, notice of such proposed action,
which shall specify the record date for the purposes of such transaction
referred to in Section 11(a)(i) or such dividend or distribution, or the date on
which such reclassification, recapitalization, reorganization, consolidation,
merger, sale or transfer of assets, liquidation, dissolution, or winding up is
to take place and the record date for determining participation therein by the
holders of record of Common Stock or 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 10 days prior to the record date for
determining holders of record of the Preferred Stock for purposes of such
action, and in the case of any such other action, at least 10 days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of record of Common Stock or Preferred Stock, whichever shall be
the earlier. The failure to give notice required by this Section 24 or any
defect therein shall not affect the legality or validity of the action taken by
the Corporation or the vote upon any such action.
(b) In case the event referred to in Section 11(a)(ii) shall occur,
then the Corporation shall as soon as practicable thereafter, in accordance with
Section 25 hereof, give to each holder of a Right notice of the occurrence of
such event, which notice shall describe the event and the consequences of the
event to holders of Rights under Section 11(a)(ii) hereof.
Section 25. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of record of any Right
Certificate or Right to or on the Corporation shall be in writing and shall be
considered given upon receipt or seven Business Days after being sent by
first-class mail, postage prepaid, in any case addressed (until another address
is filed in writing with the Rights Agent) as follows:
GIGA INFORMATION GROUP, INC.
000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Corporate Secretary
33
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Corporation or by the holder of record of
any Right Certificate or Right to or on the Rights Agent shall be in writing and
shall be considered given upon receipt or seven Business Days after being sent
by first-class mail, postage prepaid, in any case addressed (until another
address is filed in writing with the Corporation) as follows:
American Stock Transfer and Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Vice President, Adminstration
Notices or demands authorized by this Agreement to be given or made by the
Corporation or the Rights Agent to the holder of record of any Right Certificate
or Right shall be in writing and shall be considered given upon receipt or seven
Business Days after being 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 Corporation.
Section 26. Supplements and Amendments. For as long as the Rights are
then redeemable and except as provided in the last sentence of this Section 26,
the Corporation may, in its sole and absolute discretion, and the Rights Agent
shall if the Corporation so directs, supplement or amend any provision of this
Agreement without the approval of any holders of the Rights. At any time when
the Rights are not then redeemable and except as provided in the last sentence
of this Section 26, the Corporation may, and the Rights Agent shall if the
Corporation so directs, supplement or amend this Agreement without the approval
of any holders of Right Certificates (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 or (iii) to change or supplement
the provisions hereunder in any manner which the Corporation may deem necessary
or desirable, provided that no such supplement or amendment pursuant to this
clause (iii) shall materially adversely affect the interest of the holders of
Right Certificates. Upon the delivery of a certificate from an appropriate
officer of the Corporation which states that the proposed supplement or
amendment is in compliance with the terms of this Section 26, the Rights Agent
shall execute such supplement or amendment. Notwithstanding anything contained
in this Agreement to the contrary, no supplement or amendment shall be made
which changes the Redemption Price; it being understood that an adjustment of
the Redemption Price in accordance with Section 23 shall not be considered a
supplement or amendment of this Agreement.
Section 27. Exchange.
(a) The Board of Directors of the Corporation may, at its option, at
any time after any Person becomes an Acquiring Person, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights that
have become null and void pursuant to the provisions of Section 7(e) hereof) by
exchanging for each such
34
Right a number of shares of Common Stock having an aggregate Fair Market Value
on the date such Person becomes an Acquiring Person equal to the Spread,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such amount per Right being
hereinafter referred to as the "EXCHANGE RATIO"); provided, however, in no event
shall the Exchange Ratio be greater than four shares of Common Stock for each
outstanding Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof. Notwithstanding
the foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than an Exempt Person), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the Voting Stock then outstanding. From and after the
occurrence of an event specified in Section 13(a) hereof, any Rights that
theretofore have not been exchanged pursuant to this Section 27(a) shall
thereafter be exercisable only in accordance with Section 13 and may not be
exchanged pursuant to this Section 27(a).
(b) Immediately upon the action of the Board of Directors of the
Corporation ordering the exchange of any Rights pursuant to paragraph (a) of
this Section 27 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 Corporation 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 Corporation promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the shares of Common Stock for Rights
will be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become null and void
pursuant to the provisions of Section 7(e) hereof) held by each holder of
Rights.
(c) In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 27, the
Corporation shall substitute to the extent of such insufficiency, for each share
of Common Stock that would otherwise be issuable upon exchange of a Right, a
number of shares of Preferred Stock or fractions thereof having an aggregate
Fair Market Value equal to the Fair Market Value of one share of Common Stock as
of the date any Person becomes an Acquiring Person.
(d) The Corporation shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares. In lieu of such fractional shares, the Corporation shall pay to the
registered holders of the Right Certificates with regard to which such
fractional shares of Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the current market
35
value of a whole share of Common Stock. For the purposes of this paragraph (d),
the current market value of a whole share of Common Stock shall be the closing
price of a share of Common Stock for the Trading Day immediately prior to the
date of exchange pursuant to this Section 27.
Section 28. Successors. All of the covenants and provisions of this
Agreement by or for the benefit of the Corporation or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the
Corporation, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the holders of Common Stock
in their capacity as holders of the Rights) any legal or equitable right, remedy
or claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Corporation, the Rights Agent and the holders of record
of the Right Certificates (and, prior to the Distribution Date, the holders of
Common Stock in their capacity as holders of the Rights).
Section 30. Delaware Contract. This Agreement and each Right
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 and enforced in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state.
Section 31. 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 32. 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.
Section 33. 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.
Section 34. Determinations and Actions by the Board of Directors. The
Board of Directors of the Corporation shall have the exclusive power and
authority to administer, interpret and apply this Agreement and to exercise the
rights and powers specifically granted to the Board of Directors of the
Corporation or to the Corporation by this Agreement or by law and may take such
action as may be necessary or advisable in the administration of this Agreement
or to amend or supplement this Agreement in accordance with its terms,
including, without limitation, the right and power (i) to make
36
all determinations deemed necessary or advisable for the administration of this
Agreement, (ii) to decide to redeem the Rights and (iii) to decide to amend or
supplement this Agreement. All such actions, calculations, interpretations and
determinations (including any decision not to take any action) done or made by
the Board of Directors of the Corporation in good faith shall (x) be final,
conclusive and binding on the Corporation, the Rights Agent, the holders of the
Rights, as such, and all other Persons and (y) not subject any member of the
Board of Directors to any liability to the holders of Rights.
37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the day and year first above written.
GIGA INFORMATION GROUP, INC.
By: /s/ Xxxxxx Xxxxxx
------------------------------------
Name: Xxxxxx Xxxxxx
Title: President and Chief Executive
Officer
AMERICAN STOCK TRANSFER & TRUST CO.,
as Rights Agent
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
38
RIGHTS AGREEMENT
by and between
GIGA INFORMATION GROUP, INC.
and
AMERICAN STOCK TRANSFER & TRUST CO.,
as Rights Agent
-----------------
Dated as of
February 18, 2000
TABLE OF CONTENTS
Section Page
------- ----
Section 1. Certain Definition............................................................1
Section 2. Appointment of Rights Agent...................................................7
Section 3. Issuance of Right Certificates................................................7
Section 4. Form of Right Certificates....................................................9
Section 5. Countersignature and Registration.............................................9
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates........10
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights;
Invalidation of Certain Rights...............................................11
Section 8. Cancellation and Destruction of Right Certificates...........................13
Section 9. Reservation and Availability of Shares of Preferred Stock....................14
Section 10. Preferred Stock Record Date..................................................15
Section 11. Adjustment of Exercise Price or Number of Shares.............................15
Section 12. Certification of Adjusted Exercise Price or Number of Shares.................21
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.........21
Section 14. Fractional Rights and Fractional Shares......................................25
Section 15. Rights of Action.............................................................26
Section 16. Agreement of Right Holders...................................................26
Section 17. Right Certificate Holder Not Deemed a Stockholder............................27
Section 18. Concerning the Rights Agent..................................................27
Section 19. Merger or Consolidation of, or Change in Name of, the Rights Agent...........28
Section 20. Duties of Rights Agent.......................................................28
Section 21. Change of Rights Agent.......................................................30
Section 22. Issuance of New Right Certificates...........................................31
Section 23. Redemption...................................................................32
Section 24. Notice of Proposed Actions...................................................32
Section 25. Notices......................................................................33
Section 26. Supplements and Amendments...................................................34
Section 27. Exchange.....................................................................34
Section 28. Successors...................................................................36
i
TABLE OF CONTENTS
(CONT'D)
Section Page
------- ----
Section 29. Benefits of this Agreement...................................................36
Section 30. Delaware Contract............................................................36
Section 31. Counterparts.................................................................36
Section 32. Descriptive Headings.........................................................36
Section 33. Severability.................................................................36
Section 34. Determinations and Actions by the Board of Directors.........................36
Exhibit A - Summary of Rights
Exhibit B - Form of Right Certificate
Exhibit C - Form of Certificate of Amendment of the Restated Certificate of
Incorporation
ii
