EXHIBIT 1
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of January 7, 1998 (the
"Agreement"), between Standard Microsystems Corporation, a
Delaware corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C., a New Jersey limited liability
company (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on January 6, 1998 (the "Rights Dividend
Declaration Date"), the Board of Directors of the Company
authorized and declared a dividend distribution of one Right
for each share of Common Stock of the Company (as such terms
are hereinafter defined) outstanding at the close of
business on January 13, 1998 (the "Record Date"), and has
authorized the issuance of one Right (as such number may
hereafter be adjusted pursuant to the provisions of Section
11(p) hereof) for each share of Common Stock of the Company
issued between the Record Date (whether originally issued or
delivered from the Company's treasury) and the Distribution
Date (as such term is hereinafter defined), each Right
initially representing the right to purchase one one-
thousandth of a share (a "Unit") of Series A Participating
Preferred Stock of the Company having the rights, powers and
preferences set forth in the Certificate of Designation,
Preferences and Rights of Series A Participating Preferred
Stock, a copy of which is attached hereto as Exhibit A, upon
the terms and subject to the conditions hereinafter set
forth (the "Rights");
NOW, THEREFORE, in consideration of the premises
and the mutual agreements herein set forth, the parties
hereby agree as follows:
Section 1. Certain Definitions. For purposes of
this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" shall mean any Person
who or which, together with all Affiliates and Associates of
such Person, shall be the Beneficial Owner of 20% or more of
the shares of Common Stock then outstanding, but shall not
include (i) the Company, (ii) any Subsidiary of the Company,
(iii) any employee benefit plan of the Company or of any
Subsidiary of the Company, (iv) any Person organized,
appointed or established by the Company for or pursuant to
the terms of any such plan, or (v) a Person that shall
become a Beneficial Owner of 20% or more of the shares of
Common Stock then outstanding pursuant to a transaction
directly with the Company, approved and determined to be in
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the best interest of the Company and its stockholders
generally by at least a majority of the members of the Board
of Directors who are not officers of the Company and who are
not representatives, nominees, Affiliates or Associates, of
an Acquiring Person.
(b) "Act" shall mean the Securities Act of
1933, as amended.
(c) "Adverse Person" shall mean any Person
declared to be an Adverse Person by the Board of Directors
upon determination that the criteria set forth in Section
11(a)(ii)(B) hereof describe such Person.
(d) "Affiliate" and "Associate" shall have
the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(e) A Person shall be deemed the "Beneficial
Owner" of, and shall be deemed to "beneficially own," any
securities:
(i) that such Person or any of such Person's
Affiliates or Associates, directly or indirectly,
has the right to acquire (whether such right is
exercisable immediately or only after the passage
of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon
the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise;
provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to
"beneficially own," (A) securities tendered
pursuant to a tender or exchange offer made by
such Person or any of such Person's Affiliates or
Associates until such tendered securities are
accepted for purchase or exchange, or (B)
securities issuable upon exercise of Rights at any
time prior to the occurrence of a Triggering
Event, or (C) securities issuable upon exercise of
Rights from and after the occurrence of a
Triggering Event which Rights were acquired by
such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or
pursuant to Section 3(a) or Section 22 hereof (the
"Original Rights") or pursuant to Section 11(i)
hereof in connection with an adjustment made with
respect to any Original Rights;
(ii) that such Person or any of such
Person's Affiliates or Associates, directly or
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indirectly, has the right to vote or dispose of or
has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act), including
pursuant to any agreement, arrangement or
understanding, whether or not in writing;
provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this
subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security
if such agreement, arrangement or understanding:
(A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the
applicable provisions of the General Rules and
Regulations under the Exchange Act, and (B) is not
also then reportable by such Person on Schedule
13D under the Exchange Act (or any comparable or
successor report); or
(iii) that are beneficially owned, directly
or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or
Associates) has any agreement, arrangement or
understanding (whether or not in writing), for the
purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the
proviso to subparagraph (ii) of this paragraph
(e)) or disposing of any voting securities of the
Company;
provided, however, that nothing in this paragraph (e) shall
cause a person engaged in business as an underwriter of
securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired through such
person's participation in a firm commitment underwriting
until the expiration of forty days after the date of such
acquisition.
(f) "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.
(g) "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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(h) "Common Stock" shall mean the common
stock, $.10 par value, of the Company, except that "Common
Stock" when used with reference to any Person other than the
Company shall mean the capital stock of such Person with the
greatest voting power, or the equity securities or other
equity interest having Power to control or direct the
management, of such Person.
(i) "Common stock equivalents" shall have
the meaning set forth in Section 11(a)(iii) hereof.
(j) "Continuing Director" shall mean (i) any
member of the Board of Directors of the Company, while such
Person is a member of the Board, who was a member of the
Board prior to the date of this Agreement, or (ii) any
Person who subsequently becomes a member of the Board, while
such Person is a member of the Board, who is not an
Acquiring Person, a Person referred to in Section 1(a),
clause (v) hereof, or an Affiliate or Associate of either
such Persons, or a representative of an Acquiring Person, a
Person referred to in Section l(a), clause (v) hereof, or of
any such Affiliate or Associate of either such Persons, if
such Person's nomination for election or election to the
Board is recommended or approved by a majority of the
Continuing Directors.
(k) "Current market price" shall have the
meaning set forth in Section 11(d)(i) hereof.
(l) "Current Value" shall have the meaning
set forth in Section 11(a)(iii) hereof.
(m) "Distribution Date" shall have the
meaning set forth in Section 3(a) hereof.
(n) "Exchange Act" shall have the meaning
set forth in Section 1(d) hereof.
(o) "Expiration Date" shall have the meaning
set forth in Section 7(a) hereof.
(p) "Final Expiration Date" shall mean the
close of business on the day before the tenth anniversary of
the Record Date.
(q) "Person" shall mean any individual,
firm, corporation, partnership or other entity.
(r) "Preferred Stock" shall mean shares of
Series A Participating Preferred Stock, $.10 par value, of
the Company and, to the extent that there are not a
sufficient number of shares of Series A Participating
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Preferred Stock authorized to permit the full exercise of
the Rights, any other series of Preferred Stock, $.10 par
value, of the Company designated for such purpose containing
terms substantially similar to the terms of the Series A
Participating Preferred Stock.
(s) "Principal Party" shall have the meaning
set forth in Section 13(b) hereof.
(t) "Purchase Price" shall have the meaning
set forth in Section 4(a) hereof.
(u) "Record Date" shall have the meaning set
forth in the WHEREAS clause at the beginning of this
Agreement.
(v) "Redemption Price" shall have the
meaning set forth in Section 23(a) hereof.
(w) "Rights" shall have the meaning set
forth in the WHEREAS clause at the beginning of this
Agreement.
(x) "Rights Certificates" shall have the
meaning set forth in Section 3(a) hereof.
(y) "Rights Dividend Declaration Date" shall
have the meaning set forth in the WHEREAS clause as the
beginning of this Agreement.
(z) "Section 11(a)(ii) Event" shall mean any
event described in Section 11(a)(ii)(A), (B), (C), or (D)
hereof.
(aa) "Section 11(a)(ii) Trigger Date" shall
have the meaning set forth in Section 11(a)(iii) hereof.
(bb) "Section 13 Event" shall mean any event
described in clause (x), (y) or (z) of Section 13(a) hereof.
(cc) "Spread" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(dd) "Stock Acquisition Date" shall mean the
first date of public announcement (which, for purposes of
this definition, shall include, without limitation, a report
filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person
has become such.
(ee) "Subsidiary" shall mean, with reference
to any Person, any corporation of which an amount of voting
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securities sufficient to elect at least a majority of the
directors of such corporation is beneficially owned,
directly or indirectly, by such Person, or otherwise
controlled by such Person.
(ff) "Substitution Period" shall have the
meaning set forth in Section 11(a)(iii) hereof.
(gg) "Trading Day" shall have the meaning set
forth in Section 11(d)(i) hereof.
(hh) "Triggering Event" shall mean any
Section 11(a)(ii) Event or any Section 13 Event.
(ii) "Unit" shall have the meaning set forth
in the WHEREAS clause at the beginning of this Agreement.
Section 2. Appointment of Rights Agent. The
Company hereby appoints the Rights Agent to act as agent for
the Company and in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the close of
business on the fifteenth day after the Stock Acquisition
Date (or, if the fifteenth day after the Stock Acquisition
Date occurs before the Record Date, the close of business on
the Record Date) or (ii) the close of business on the tenth
business day after the date that a tender or exchange offer
by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any Person organized, appointed
or established by the Company for or pursuant to the terms
of any such plan) is first published or sent or given within
the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if upon the consummation
thereof, such Person would be the Beneficial Owner of 30% or
more of the shares of Common Stock then outstanding (the
earlier of (i) and (ii) being referred to herein as the
"Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section
3) by the certificates for the Common Stock registered in
the names of the holders of the Common Stock (which
certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates,
and (y) the Rights will be transferable only in connection
with the transfer of the underlying shares of Common Stock
(including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent
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will send by first-class, insured, postage prepaid mail, to
each record holder of the Common Stock as of the close of
business on the Distribution Date, at the address of such
holder shown on the records of the Company, one or more
Rights certificates prepared and supplied by the Company, in
substantially the form of Exhibit B hereto (the "Rights
Certificates"), evidencing one Right for each share of
Common Stock so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of
Rights per share of Common Stock has been made pursuant to
Section 11(p) hereof, at the time of distribution of the
Rights Certificates, the Company shall make the necessary
and appropriate rounding adjustments (in accordance with
Section 14(a) hereof) so that Rights Certificates
representing only whole numbers of Rights are distributed
and cash is paid in lieu of any fractional Rights. As of
and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates. As promptly
as practicable following the Record Date, the Company will
send a copy of a Summary of Rights, in substantially the
form attached hereto as Exhibit C (the "Summary of Rights"),
by first-class, postage prepaid mail, to each record holder
of the Common Stock as of the close of business on the
Record Date, at the address of such holder shown on the
records of the Company.
(b) Rights shall be issued in respect of all
shares of Common Stock issued (as an original issue or from
the treasury) after the Record Date but prior to the earlier
of the Distribution Date or the Expiration Date. Until the
Distribution Date, all Rights issued during the period
referred to in the preceding sentence will be evidenced by
certificates representing the Common Stock respecting which
such Rights were issued, and the registered holders of the
Common Stock shall also be the registered holders of the
associated Rights. Until the earlier of the Distribution
Date or the Expiration Date, the transfer of any
certificates representing shares of Common Stock in respect
of which Rights have been issued shall also constitute the
transfer of the Rights associated with such shares of Common
Stock.
(c) Certificates representing Common Stock
also deemed to be certificates representing Rights shall, to
the extent feasible, bear the following legend:
This certificate also evidences and entitles
the holder hereof to certain Rights as set forth
in the Rights Agreement between Standard
Microsystems Corporation (the "Company") and
ChaseMellon Shareholder Services, L.L.C. (the
"Rights Agent") dated as of [the date of this
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Agreement] (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference
and a copy of which is on file at the principal
offices of the Company. Under certain
circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by
separate certificates and will no longer be
evidenced by this certificate. The Company will
mail to the holder of this certificate a copy of
the Rights Agreement, as in effect on the date of
mailing, without charge, promptly after receipt of
a written request therefor. Under certain
circumstances set forth in the Rights Agreement,
Rights beneficially owned by any Person who is,
was or becomes an Acquiring Person or Adverse
Person or any Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement),
whether currently held by or on behalf of such
Person or by any subsequent holder, may become
null and void. The Rights shall not be
exercisable, and shall be void so long as held, by
a holder in any jurisdiction where the requisite
qualification to the issuance to such holder, or
the exercise by such holder, of the Rights in such
jurisdiction shall not have been obtained or be
obtainable.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms
of election to purchase and of assignment to be printed on
the reverse thereof) shall each be substantially in the form
set forth in Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions
of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange
on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section 11
and Section 22 hereof, the Rights Certificates, whenever
distributed, shall be dated as of the Record Date and on
their face shall entitle the holders thereof to purchase
such number of Units of Preferred Stock as shall be set
forth therein at the price set forth therein (such exercise
price per Unit, the "Purchase Price"), but the amount and
type of securities purchasable upon the exercise of each
Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
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(b) Any Rights Certificate issued pursuant
to Section 3(a) or 3(b) or Section 22 hereof that represents
Rights beneficially owned by Persons known by the Company to
be: (i) an Acquiring Person, an Adverse Person, or any
Associate or Affiliate of an Acquiring Person or an Adverse
Person, (ii) a transferee of an Acquiring Person or Adverse
Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person or Adverse Person
becomes such, or (iii) a transferee of an Acquiring Person
or an Adverse Person (or of any such Associate or Affiliate)
who becomes a transferee prior to or concurrently with the
Acquiring Person or Adverse Person becoming such and
receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person
or Adverse Person to holders of equity interests in such
Acquiring Person or Adverse Person or to any Person with
whom such Acquiring Person or Adverse Person has any
continuing agreement, arrangement, or understanding
regarding the transferred Rights or (B) a transfer that the
Board of Directors of the Company has determined is part of
a plan, arrangement, or understanding that has as a primary
purpose or effect the avoidance of Section 7(e) hereof, and
any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in
this sentence, shall bear (to the extent feasible and
specified by the Company) the following legend:
The Rights represented by this Rights Certificate
are or were beneficially owned by a Person who was
or became an [Acquiring] [Adverse] Person or an
Affiliate or Associate of an [Acquiring] [Adverse]
Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null
and void in the circumstances specified in Section
7(e) of such Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be
executed on behalf of the Company by its Chairman of the
Board, its President or any Vice President, either manually
or by facsimile signature, and shall have affixed thereto
the Company's seal or a facsimile thereof which shall be
attested by the Secretary or an Assistant Secretary of the
Company, either manually or by facsimile signature. The
Rights Certificates shall be manually countersigned by the
Rights Agent and shall not be valid for any purpose unless
so countersigned. In case any officer of the Company who
shall have signed any of the Rights Certificates shall cease
to be such officer of the Company before countersignature by
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the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned
by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the person who
signed such Rights Certificates had not ceased to be such
officer of the Company; and any Rights Certificates may be
signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate,
shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the
Rights Agent will keep or cause to be kept, at its principal
office or offices designated as the appropriate place for
surrender of Rights Certificates upon exercise or transfer,
books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by
each of the Rights Certificates and the date of each of the
Rights Certificates.
Section 6. Transfer, Split Up, Combination, and
Exchange of Rights Certificates; Mutilated, Destroyed, Lost
or Stolen Rights Certificates.
(a) Subject to the provisions of Section
4(b), Section 7(e) and Section 14 hereof, at any time after
the close of business on the Distribution Date, and at or
prior to the close of business on the Expiration Date, any
Rights Certificate or Certificates may be transferred, split
up, combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a
like number of Units of Preferred Stock (or, following a
Triggering Event, Common Stock, other securities, cash or
other assets, as the case may be) as the Rights Certificate
or Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate or Certificates shall make
such request in writing delivered to the Rights Agent, and
shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the
principal office or offices of the Rights Agent designated
for such purpose. Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed
and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate
and shall have provided such additional evidence of the
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identity of the Beneficial Owner (or former Beneficial
Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall,
subject to Section 4(b), Section 7(e), and Section 14
hereof, countersign and deliver to the Person entitled
thereto a Rights Certificate or Rights Certificates, as the
case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer,
split up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the
Rights Agent of evidence reasonably satisfactory to them of
the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft, or destruction, of
indemnity or security reasonably satisfactory to them, and
reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender
to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will execute and
deliver a new Rights Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the
registered holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided
herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section
11(a)(iii), and Section 23(a) hereof) in whole or in part at
any time after the Distribution Date upon surrender of the
Rights Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office or offices of
the Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price with respect to the
total number of Units of Preferred Stock (or Common Stock,
other securities, cash or other assets, as the case may be)
as to which such surrendered Rights are then exercisable,
and prior to the earlier of (i) the close of business on the
Final Expiration Date or (ii) the time at which the Rights
are redeemed as provided in Section 23 hereof (the earlier
of (i) and (ii) being herein referred to as the "Expiration
Date").
(b) The Purchase Price for each Unit
pursuant to the exercise of a Right shall initially be $50,
and shall be subject to adjustment from time to time as
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provided in Sections 11 and 13(a) hereof and shall be
payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of election
to purchase and the certificate duly executed, accompanied
by payment, with respect to each Right so exercised, of the
Purchase Price per Unit of Preferred Stock (or Common Stock,
other securities, cash or other assets, as the case may be)
to be purchased as set forth below and an amount in cash
equal to any applicable transfer tax, the Rights Agent
shall, subject to Section 20(k) hereof, thereupon promptly
(i) (A) requisition from any transfer agent of the shares of
Preferred Stock (or make available, if the Rights Agent is
the transfer agent for such shares) certificates for the
total number of Units of Preferred Stock to be purchased,
and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests, or (B) if the
Company shall have elected to deposit shares of Preferred
Stock issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent
depositary receipts representing such number of Units of
Preferred Stock as are to be purchased (in which case
certificates for the shares of Preferred Stock represented
by such receipts shall be deposited by the transfer agent
with the depositary agent), and the Company will direct the
depositary agent to comply with such request, (ii)
requisition from the Company the amount of cash, if any, to
be paid in lieu of fractional shares in accordance with
Section 14 hereof, (iii) after receipt of such certificates
or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be
designated by such holder, and (iv) after receipt thereof,
deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. The payment
of the Purchase Price (as such amount may be reduced
pursuant to Section 11(a)(iii) hereof) may be made in cash
or by certified bank check or bank draft payable to the
order of the Company. In the event that the Company is
obligated to issue other securities (including Common Stock)
of the Company, pay cash and/or distribute other property
pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities, cash
and/or other property are available for distribution by the
Rights Agent, if and when appropriate.
(d) In case the registered holder of any
Rights Certificate shall exercise less than all the rights
evidenced thereby, a new Rights Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall
be issued by the Rights Agent and delivered to, or upon the
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order of, the registered holder of such Rights Certificate,
registered in such name or names as may be designated by
such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this
Agreement to the contrary, from and after the first
occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person, an Adverse
Person, or an Associate or Affiliate of an Acquiring Person
or an Adverse Person, (ii) a transferee of an Acquiring
Person or an Adverse Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring
Person or Adverse Person becomes such, or (iii) a transferee
of an Acquiring Person or an Adverse Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person or Adverse Person
becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the
Acquiring Person or Adverse Person (or any such Associate or
Affiliate) to holders of equity interests in such Acquiring
Person or Adverse Person (or any such Associate or
Affiliate) or to any Person with whom the Acquiring Person
or Adverse Person (or any such Associate or Affiliate) has
any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the
Board of Directors of the Company has determined is part of
a plan, arrangement or understanding that has as a primary
purpose or effect the avoidance of this Section 7(e), shall
become null and void without any further action, and no
holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use reasonable
efforts to effect compliance with the provisions of this
Section 7(e) and Section 4(b) hereof, but shall have no
liability to any holder of Rights Certificates or other
Person as a result of its failure to make any determinations
with respect to an Acquiring Person, an Adverse Person, or
its Affiliates, Associates, or transferees hereunder.
(f) Notwithstanding anything in this
Agreement to the contrary, neither the Rights Agent nor the
Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless
such registered holder shall have (i) completed and signed
the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise, and (ii) provided
such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
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Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the
purpose of exercise, transfer, split up, combination or
exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or
in cancelled form, or, if surrendered to the Rights Agent,
shall be cancelled by it, and no Rights Certificates shall
be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any other
Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent
shall deliver all cancelled Rights Certificates to the
Company, or shall, at the written request of the Company,
destroy such cancelled Rights Certificates, and in such case
shall deliver a certificate of destruction thereof to the
Company.
Section 9. Reservation and Availability of
Capital Stock.
(a) The Company covenants and agrees that it
will cause to be reserved and kept available out of its
authorized and unissued shares of Preferred Stock (and,
following the occurrence of a Triggering Event, out of its
authorized and unissued shares of Common Stock and/or other
securities or out of its authorized and issued shares held
in its treasury), the number of shares of Preferred Stock
(and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) that, as provided in this
Agreement including Section 11(a)(iii) hereof, will be
sufficient to permit the exercise in full of all outstanding
Rights.
(b) So long as the shares of Preferred Stock
(and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) issuable and deliverable upon
the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts
to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be
listed on such exchange upon official notice of issuance
upon such exercise.
(c) The Company shall use its best efforts
to (i) file, as soon as practicable following the earliest
date after the first occurrence of a Section 11(a)(ii) Event
on which the consideration to be delivered by the Company
upon exercise of the Rights has been determined in
accordance with Section 11(a)(iii) hereof, a registration
statement under the Act on an appropriate form, with respect
14
to the securities purchasable upon exercise of the Rights,
(ii) cause such registration statement to become effective
as soon as practicable after such filing, and (iii) cause
such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act)
until the earlier of (A) the date as of which the Rights are
no longer exercisable for such securities, and (B) the date
of the expiration of the Rights. The Company will also use
its best efforts to take such action as may be appropriate
under, or to ensure compliance with, the securities or "blue
sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days
after the date set forth in clause (i) of the first sentence
of this Section 9(c), the exercisability of the Rights in
order to prepare and file such registration statement and
permit it to become effective. Upon any such suspension,
the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as
the suspension is no longer in effect. In addition, if the
Company shall determine that a registration statement is
required following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights until
such time as a registration statement has been declared
effective. Notwithstanding anything contained herein to the
contrary, following the Distribution Date and prior to the
occurrence of a Triggering Event, the Company may delay
registration of the Preferred Stock and exercisability of
the Rights until such time as it is likely, in the good
faith judgment of the Board of Directors, that a reasonably
sophisticated investor might desire to exercise the Rights.
Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable, and shall be
void so long as held, by a holder in any jurisdiction where
the requisite qualification to the issuance to such holder,
or the exercise by such holder, of the Rights in such
jurisdiction shall not have been obtained or be obtainable.
(d) The Company covenants and agrees that it
will take all such action as may be necessary to ensure that
all Units of Preferred Stock (and, following the occurrence
of a Triggering Event, Common Stock and/or other securities)
delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares (subject to
payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees
that it will pay when due and payable any and all federal
and state transfer taxes and charges which may be payable in
respect of the issuance or delivery of the Rights
15
Certificates and of any certificates for a number of Units
of Preferred Stock (or Common Stock and/or other securities,
as the case may be) upon the exercise of Rights. The
Company shall not, however, be required (i) to pay any
transfer tax that may be payable in respect of any transfer
or delivery of Rights Certificates to a Person other than,
or the issuance or delivery of a number of Units of
Preferred Stock (or Common Stock and/or other securities, as
the case may be) in respect of a name other than that, of
the registered holder of the Rights Certificates evidencing
Rights surrendered for exercise or (ii) to issue or deliver
any certificates for a number of Units of Preferred Stock
(or Common Stock and/or other securities, as the case may
be) in a name other than that of the registered holder upon
the exercise of any Rights until such tax shall have been
paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such
tax is due.
Section 10. Preferred Stock Record Date. Each
person in whose name any certificate for Units of Preferred
Stock (or Common Stock and/or other securities, as the case
may be) is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of
such Units represented thereby on, and such certificate
shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of
the Purchase Price (and all applicable transfer taxes) was
made; provided, however, that if the date of such surrender
and payment is a date upon which the Preferred Stock (or
Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall
be deemed to have become the record holder of such shares
(fractional or otherwise) on, and such certificate shall be
dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock and/or other securities, as
the case may be) transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate shall not be entitled to any
rights of a stockholder of the Company with respect to
shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends
or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number
and Kind of Shares or Number of Rights. The Purchase Price,
the number and kind of shares covered by each Right and the
number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
16
(a) (i) In the event that Company shall at
any time after the date of this Agreement (A)
declare a dividend on the Preferred Stock payable
in shares of Preferred Stock, (B) subdivide the
outstanding Preferred Stock, (C) combine the
outstanding Preferred Stock into a smaller number
of shares, or (D) issue any shares of its capital
stock in a reclassification of the Preferred Stock
(including any such reclassification in connection
with a consolidation or merger in which the
Company is the continuing or surviving
corporation), except as otherwise provided in this
Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record
date for such dividend or of the effective date of
such subdivision, combination, or
reclassification, and the number and kind of
shares of Preferred Stock or capital stock, as the
case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled
to receive, upon payment of the Purchase Price
then in effect and compliance with any other
applicable conditions, the aggregate number and
kind of shares of Preferred Stock or capital
stock, as the case may be, which, if such Right
had been exercised immediately prior to such date
and at a time when the Preferred Stock transfer
books of the Company were open, he would have
owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision,
combination, or reclassification. If an event
occurs that would require an adjustment under both
this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.
(ii) In the event:
(A) any Person (other than the Company,
any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary
of the Company, or any Person or entity organized,
appointed or established by the Company for or
pursuant to the terms of any such plan), alone or
together with its Affiliates and Associates,
shall, at any time after the Rights Dividend
Declaration Date, become the Beneficial Owner of
30% or more of the shares of Common Stock then
outstanding, unless (x) pursuant to Section 1(a),
17
clause (v), such person shall not be an Acquiring
Person or (y) the event causing the 30% threshold
to be crossed is a transaction set forth in
Section 13(a) hereof, or is an acquisition of
shares of Common Stock pursuant to a tender offer
or an exchange offer for all outstanding shares of
Common Stock at a price and on terms determined by
at least a majority of the members of the Board of
Directors who are not officers of the Company, and
who are not representatives, nominees, Affiliates
or Associates of an Acquiring Person, after
receiving advice from one or more nationally
recognized investment banking firms, to be (a) at
a price that is fair to Company's stockholders
(taking into account all factors that such members
of the Board deem relevant including, without
limitation, prices that could reasonably be
achieved if the Company or its assets were sold on
an orderly basis designed to realize maximum
value) and (b) otherwise in the best interests of
the Company and its stockholders, or
(B) the Board of Directors of the
Company shall declare any Person to be an Adverse
Person, upon a determination that such Person,
alone or together with its Affiliates and
Associates, has, at any time after the Rights
Dividend Declaration Date, become the Beneficial
Owner of an amount of Common Stock that the Board
of Directors determines to be substantial (which
amount shall in no event be less than 20% of the
shares of Common Stock then outstanding) and a
determination by at least a majority of the Board
of Directors who are not officers of the Company,
after reasonable inquiry and investigation,
including consultation with such persons as such
directors shall deem appropriate, that (a) such
Beneficial Ownership by such Person is intended to
cause the Company to repurchase the Common Stock
beneficially owned by such Person or to cause
pressure on the Company to take action or enter
into a transaction or series of transactions
intended to provide such Person with short-term
financial gain under circumstances where the Board
of Directors determines that the best long-term
interests of the Company and its stockholders
would not be served by taking such action or
entering into such transactions or series of
transactions at that time or (b) such Beneficial
Ownership is causing or reasonably likely to cause
a material adverse impact (including, but not
limited to, impairment of relationships with
18
customers or major investors in the Company's
Subsidiaries or with licensors to the Company of
patent rights or technology or impairment of the
Company's ability to maintain its competitive
position) on the business or prospects of the
Company, or
(C) any Acquiring Person or any
Associate or Affiliate of any Acquiring Person, at
any time after the date of this Agreement,
directly or indirectly, (1) shall merge into the
Company or otherwise combine with the Company and
the Company shall be the continuing or surviving
corporation of such merger or combination and the
Common Stock of the Company shall remain
outstanding and unchanged, (2) shall, in one
transaction or a series of transactions, transfer
any assets to the Company or to any of its
Subsidiaries in exchange (in whole or in part) for
shares of Common Stock, for shares of other equity
securities of the Company, or for securities
exercisable for or convertible into shares of
equity securities of the Company (Common Stock or
otherwise) or otherwise obtain from the Company,
with or without consideration, any additional
shares of such equity securities or securities
exercisable for or convertible into shares of such
equity securities (other than pursuant to a pro
rata distribution to all holders of Common Stock),
(3) shall sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise acquire or
dispose of, in one transaction or a series of
transactions, to, from or with (as the case may
be) the Company or any of its Subsidiaries, assets
on terms and conditions less favorable to the
Company than the Company would be able to obtain
in arm's-length negotiation with an unaffiliated
third party, other than pursuant to a transaction
set forth in Section 13(a) hereof, (4) shall sell,
purchase, lease, exchange, mortgage, pledge,
transfer or otherwise acquire or dispose of in one
transaction or a series of transactions, to, from
or with (as the case may be) the Company or any of
the Company's Subsidiaries (other than incidental
to the lines of business, if any, engaged in as of
the date hereof between the Company and such
Acquiring Person or Associate or Affiliate) assets
having an aggregate fair market value of more than
$1,000,000, other than pursuant to a transaction
set forth in Section 13(a) hereof, (5) shall
receive any compensation from the Company or any
of the Company's Subsidiaries other than
19
compensation for full time employment as a regular
employee at rates in accordance with the Company's
(or its Subsidiaries') past practices or for
actual services or other rights or value rendered
or given to the Company on terms less favorable to
the Company than the Company would be able to
obtain in arm's-length negotiation with an
unaffiliated third party, or (6) shall receive the
benefit, directly or indirectly (except
proportionately as a stockholder and except if
resulting from a requirement of law or
governmental regulation), of any loans, advances,
guarantees, pledges or other financial assistance
or any tax credits or other tax advantage provided
by the Company or any of its Subsidiaries, or
(D) during such time as there is an
Acquiring Person, there shall be any
reclassification of securities (including any
reverse stock split), or recapitalization of the
Company, or any merger or consolidation of the
Company with any of its Subsidiaries or any other
transaction or series of transactions involving
the Company or any of its Subsidiaries, other than
a transaction or transactions to which the
provisions of Section 13(a) apply (whether or not
with or into or otherwise involving an Acquiring
Person) which has the effect, directly or
indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of
any class of equity securities of the Company or
any of its Subsidiaries directly or indirectly
beneficially owned by any Acquiring Person or any
Associate or Affiliate of any Acquiring Person,
then, promptly following the first occurrence of a Section
11(a)(ii) Event, proper provision shall be made so that each
holder of a Right (except as provided below and in Section
7(e) hereof) shall thereafter have the right to receive,
upon exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, in lieu of a
number of Units of Preferred Stock, such number of shares of
Common Stock of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price
by the then number of Units of Preferred Stock for which a
Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event, and (y) dividing
that product (which, following such first occurrence, shall
thereafter be referred to as the "Purchase Price" for each
Right and for all purposes of this Agreement) by 50% of the
current market price (determined pursuant to Section 11(d)
20
hereof) per share of Common Stock on the date of such first
occurrence (such number of shares, the "Adjustment Shares").
(iii) In the event that the number of shares
of Common Stock that are authorized by the
Company's certificate of incorporation but not
outstanding or reserved for issuance for purposes
other than upon exercise of the Rights are not
sufficient to permit the exercise in full of the
Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the
Company shall: (A) determine the excess of (1)
the value of the Adjustment Shares issuable upon
the exercise of a Right (the "Current Value") over
(2) the Purchase Price (such excess, the
"Spread"), and (B) with respect to each Right,
make adequate provision to substitute for the
Adjustment Shares, upon payment of the applicable
Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Common Stock or other equity
securities of the Company (including, without
limitation, shares or Units of Preferred Stock
that the Board of Directors of the Company shall
deem to have the same value as shares of Common
Stock (such shares of Preferred Stock, "common
stock equivalents")), (4) debt securities of the
Company, (5) other assets, or (6) any combination
of the foregoing, having an aggregate value equal
to the Current Value, where such aggregate value
has been determined by the Board of Directors of
the Company based upon the advice of a nationally
recognized investment banking firm selected by the
Board of Directors of the Company; provided,
however, if the Company shall not have made
adequate provision to deliver value pursuant to
clause (B) above within thirty (30) days following
the later of (x) the first occurrence of a Section
11(a)(ii) Event and (y) the date on which the
Company's right of redemption pursuant to Section
23(a) expires (the later of (x) and (y) being
referred to herein as the "Section 11(a)(ii)
Trigger Date"), then the Company shall be
obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment
of the Purchase Price, shares of Common Stock (to
the extent available) and then, if necessary,
cash, which shares and/or cash have an aggregate
value equal to the Spread. If the Board of
Directors of the Company shall determine in good
faith that it is likely that sufficient additional
shares of Common Stock could be authorized for
issuance upon exercise in full of the Rights, the
21
thirty (30) day period set forth above may be
extended to the extent necessary, but not more
than ninety (90) days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek
shareholder approval for the authorization of such
additional shares (such period, as it may be
extended, the "Substitution Period"). To the
extent that the Company determines that some
action need be taken pursuant to the first and/or
second sentences of this Section 11(a)(iii), the
Company (x) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to
all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration
of the Substitution Period in order to seek any
authorization of additional shares and/or to
decide the appropriate form of distribution to be
made pursuant to such first sentence and to
determine the value thereof. In the event of any
such suspension, the Company shall issue a public
announcement stating that the exercisability of
the Rights has been temporarily suspended, as well
as a public announcement at such time as the
suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of the
Common Stock shall be the current market price (as
determined pursuant to Section 11(d) hereof) per
share of the Common Stock on the Section 11(a)(ii)
Trigger Date and the value of any "common stock
equivalent" shall be deemed to have the same value
as the Common Stock on such date.
(b) In case the Company shall fix a record
date for the issuance of rights, options, or warrants to all
holders of Preferred Stock entitling them to subscribe for
or purchase (for a period expiring within forty-five (45)
calendar days after such record date) Preferred Stock (or
shares having the same rights, privileges and preferences as
the shares of Preferred Stock ("equivalent preferred
stock")) or securities convertible into Preferred Stock or
equivalent preferred stock at a price per share of Preferred
Stock or equivalent preferred stock (or having a conversion
price per share, if a security convertible into Preferred
Stock or equivalent preferred stock) less than the current
market price (as determined pursuant to Section 11(d)
hereof) per share of Preferred Stock on such record date,
the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of shares of
Preferred Stock outstanding on such record date, plus the
number of shares of Preferred Stock that the aggregate
22
offering price of the total number of shares of Preferred
Stock and/or equivalent preferred stock so to be offered
(and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at
such current market price, and the denominator of which
shall be the number of shares of Preferred Stock outstanding
on such record date, plus the number of additional shares of
Preferred Stock and/or equivalent preferred stock to be
offered for subscription or purchase (or into which the
convertible securities so to be offered are initially
convertible). In case such subscription price may be paid
by delivery of consideration part or all of which may be in
a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of the
Rights. Shares of Preferred Stock owned by or held for the
account of the Company shall not be deemed outstanding for
the purpose of any such computation. Such adjustment shall
be made successively whenever such a record date is fixed,
and in the event that such rights, options, or warrants are
not so issued, the Purchase Price shall be adjusted to be
the Purchase Price that would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record
date for a distribution to all holders of Preferred Stock
(including any such distribution made in connection with a
consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash
(other than a regular quarterly cash dividend out of the
earnings or retained earnings of the Company), assets (other
than a dividend payable in Preferred Stock, but including
any dividend payable in stock other than Preferred Stock) or
subscription rights or warrants (excluding those referred to
in Section 11(b) hereof), the Purchase Price to be in effect
after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be
the current market price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on such
record date, less the fair market value (as determined in
good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with
the Rights Agent) of the portion of the cash, assets, or
evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to a share of
Preferred Stock, and the denominator of which shall be such
current market price (as determined pursuant to Section
11(d) hereof) per share of Preferred Stock. Such
adjustments shall be made successively whenever such a
23
record date is fixed, and in the event that such
distribution is not so made, the Purchase Price shall be
adjusted to be the Purchase Price that would have been in
effect if such record date had not been fixed.
(d) (i) For the purpose of any computation
hereunder, other than computations made pursuant
to Section 11(a)(iii) hereof, the "current market
price" per share of Common Stock on any date shall
be deemed to be the average of the daily closing
prices per share of such Common Stock for the
thirty (30) consecutive Trading Days (as such term
is hereinafter defined) immediately prior to such
date, and for purposes of computations made
pursuant to Section 11(a)(iii) hereof, the
"current market price" per share of Common Stock
on any date shall be deemed to be the average of
the daily closing prices per share of such Common
Stock for the ten (10) consecutive Trading Days
immediately following such date; provided,
however, that if prior to the expiration of the
requisite thirty (30) Trading Days or ten (10)
Trading Days period, the issuer of such Common
Stock shall announce (A) a dividend or
distribution on such Common Stock payable in
shares of such Common Stock or securities
convertible into shares of such Common Stock
(other than the Rights), or (B) any subdivision,
combination or reclassification of such Common
Stock, then, after the ex-dividend date for such
dividend or distribution, or the record date for
such subdivision, combination or reclassification,
the "current market price" shall be properly
adjusted to take into account ex-dividend trading.
The closing price for each day shall be the last
sale price, regular way, or, in case no such sale
takes place on such day, the average of the
closing bid and asked prices, regular way, in
either case as reported in the principal
consolidated transaction reporting system with
respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the
shares of Common Stock are not listed or admitted
to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction
reporting system with respect to securities listed
on the principal national securities exchange on
which the shares of Common Stock are listed or
admitted to trading or, if the shares of Common
Stock are not listed or admitted to trading on any
national securities exchange, the last quoted
price or, if not so quoted, the average of the
24
high bid and low asked prices in the over-the-
counter market, as reported by the Nasdaq Stock
Market ("Nasdaq") or such other system then in
use, or, if on any such date the shares of Common
Stock are not quoted by any such organization, the
average of the closing bid and asked prices as
furnished by a professional market maker making a
market in the Common Stock selected by the Board
of Directors of the Company. If on any such date
no market maker is making a market in the Common
Stock, the fair value of such shares on such date
as determined in good faith by the Board of
Directors of the Company shall be used. The term
"Trading Day" shall mean a day on which the
principal national securities exchange on which
the shares of Common Stock are listed or admitted
to trading is open for the transaction of business
or, if the shares of Common Stock are not listed
or admitted to trading on any national securities
exchange, a Business Day. If the Common Stock is
not so listed or traded, "current market price"
per share shall mean the fair value per share as
determined in good faith by the Board of Directors
of the Company, whose determination shall be
described in a statement filed with the Rights
25
Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation
hereunder, the "current market price" per share of
Preferred Stock shall be determined in the same
manner as set forth above for the Common Stock in
clause (i) of this Section 11(d) (other than the
last sentence thereof). If the current market
price per share of Preferred Stock cannot be
determined in the manner provided above or if the
Preferred Stock is not so listed or traded in a
manner described in clause (i) of this
Section 11(d), the "current market price" per
share of Preferred Stock shall be conclusively
deemed to be an amount equal to 1,000 (as such
number may be appropriately adjusted for such
events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock
occurring after the date of this Agreement)
multiplied by the current market price per share
of the Common Stock. If neither the Common Stock
nor the Preferred Stock is so listed or traded,
"current market price" per share of the Preferred
Stock shall mean the fair value per share as
determined in good faith by the Board of Directors
of the Company, whose determination shall be
described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
For all purposes of this Agreement, the "current
market price" of a Unit of Preferred Stock shall
be equal to the "current market price" of one
share of Preferred Stock divided by 1,000.
(e) Anything herein to the contrary
notwithstanding, no adjustment in the Purchase Price shall
be required unless such adjustment would require an increase
or decrease of at least one percent (1%) in the Purchase
Price; provided, however, that any adjustments that by
reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the
nearest ten-thousandth of a share of Common Stock or other
share or one ten-millionth of a share of Preferred Stock, as
the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three (3)
years from the date of the transaction that mandates such
adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made
pursuant to Section 11(a)(ii) or Section 13(a) hereof, the
holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than
Preferred Stock, thereafter the number of such other shares
so receivable upon exercise of any Right and the Purchase
Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred
Stock contained in Sections 11(a), (b), (c), (e), (g), (h),
(i), (j), (k) and (m), and the provisions of Sections 7, 9,
10, 13 and 14 hereof with respect to the Preferred Stock
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the
Company subsequent to any adjustment made to the Purchase
Price hereunder shall evidence the right to purchase, at the
adjusted Purchase Price, the number of Units of Preferred
Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided
herein.
(h) Unless the Company shall have exercised
its election as provided in Section 11(i), upon each
adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase,
at the adjusted Purchase Price, that number of Units of
26
Preferred Stock (calculated to the nearest ten-millionth)
obtained by (i) multiplying (x) the number of Units covered
by a Right immediately prior to such adjustment, by (y) the
Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the
product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the
date of any adjustment of the Purchase Price to adjust the
number of Rights, in lieu of any adjustment in the number of
Units of Preferred Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after the adjustment
in the number of Rights shall be exercisable for the number
of Units of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number
of Rights shall become that number of Rights (calculated to
the nearest hundred-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of
the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for
the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on
which the Purchase Price is adjusted or any date thereafter,
but, if the Rights Certificates have been issued, shall be
at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of
Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result
of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates
held by such holders prior to the date of adjustment and
upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Rights
Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may
bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders
of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change
in the Purchase Price or the number of Units of Preferred
27
Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue
to express the Purchase Price per Unit and the number of
Units that were expressed in the initial Rights Certificates
issued hereunder.
(k) Before taking any action that would
cause an adjustment reducing the Purchase Price below the
then stated value, if any, of the number of Units of
Preferred Stock issuable upon exercise of the Rights, the
Company shall take any corporate action that may, in the
opinion of its counsel, be necessary in order that the
Company may validly and legally issue such number of fully
paid and nonassessable Units of Preferred Stock at such
adjusted Purchase Price.
(l) In any case in which this Section 11
shall require that an adjustment in the Purchase Price be
made effective as of a record date for a specified event,
the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised
after such record date the number of Units of Preferred
Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the
number of Units of Preferred Stock and other capital stock
or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company
shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to
receive such additional shares (fractional or otherwise) or
securities upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the
contrary notwithstanding, the Company shall be entitled to
make such reductions in the Purchase Price, in addition to
those adjustments expressly required by this Section 11, as
and to the extent that in their good faith judgement the
Board of Directors of the Company shall determine to be
advisable in order that any (i) consolidation or subdivision
of the Preferred Stock, (ii) issuance wholly for cash of any
shares of Preferred Stock at less than the current market
price, (iii) issuance wholly for cash of shares of Preferred
Stock or securities that by their terms are convertible into
or exchangeable for shares of Preferred Stock, (iv) stock
dividends, or (v) issuance of rights, options, or warrants
referred to in this Section 11, hereafter made by the
Company to holders of its Preferred Stock shall not be
taxable to such holders or shall reduce the taxes payable by
such holders.
28
(n) The Company covenants and agrees that it
shall not, at any time after the Distribution Date,
(i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction that complies
with Section 11(o) hereof), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(o) hereof), or
(iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of transactions,
assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or
more transactions each of which complies with Section 11(o)
hereof), if (x) at the time of or immediately after such
consolidation, merger, or sale there are any rights,
warrants, or other instruments or securities outstanding or
agreements in effect that would substantially diminish or
eliminate the benefits intended to be afforded by the Rights
or (y) prior to, simultaneously with, or immediately after
such consolidation, merger, or sale, the shareholders of or
other persons having an equity interest in the Person that
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; provided, however, that
this Section 11(n) shall not affect the ability of any
Subsidiary of the Company to consolidate or merge with or
into or sell or transfer assets or earning power to the
Company or any other Subsidiary of the Company.
(o) The Company covenants and agrees that,
after the Distribution Date, it will not, except as
permitted by Section 23 or Section 26 hereof, take (or
permit any Subsidiary to take) any action if at the time
such action is taken it is reasonably foreseeable that such
action will diminish substantially or eliminate the benefits
intended to be afforded by the Rights.
(p) Anything in this Agreement to the
contrary notwithstanding, in the event that the Company
shall at any time after the Rights Dividend Declaration Date
and prior to the Distribution Date (i) declare a dividend on
the outstanding shares of Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding shares of
Common Stock, (iii) combine the outstanding shares of Common
Stock into a smaller number of shares, or (iv) issue any
shares of capital stock in a reclassification of Company
Common Stock (including any such reclassification in
connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), the
number of Rights associated with each share of Common Stock
29
then outstanding, or issued or delivered thereafter but
prior to the Distribution Date, shall be proportionately
adjusted so that the number of Rights thereafter associated
with each share of Common Stock following any such event
shall equal the result obtained by multiplying the number of
Rights associated with each share of Common Stock
immediately prior to such event by a fraction the numerator
of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event
and the denominator of which shall be the total number of
shares of Common Stock outstanding immediately following the
occurrence of such event.
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares. Whenever an adjustment is made
as provided in Section 11 or Section 13 hereof, the Company
shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for
such adjustment, (b) promptly file with the Rights Agent,
and with each transfer agent for the Preferred Stock and the
Common Stock, a copy of such certificate, and (c) mail a
brief summary thereof to each holder of a Rights Certificate
(or, if prior to the Distribution Date, to each holder of a
certificate representing Common Stock) in accordance with
Section 25 hereof. The Rights Agent shall be fully
protected in relying on any such certificate and on any
adjustment therein contained.
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power.
(a) In the event that, following the Stock
Acquisition Date, directly or indirectly, (x) the Company
shall consolidate with, or merge with and into, any other
Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(o) hereof), and
the Company shall not be the continuing or surviving
corporation of such consolidation or merger, (y) any Person
(other than a Subsidiary of the Company in a transaction
that complies with Section 11(o) hereof) shall consolidate
with or merge with or into, the Company, and the Company
shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding
shares of Common Stock shall be changed into or exchanged
for stock or other securities of any other Person or cash or
any other property, or (z) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall
sell or otherwise transfer) to any Person or Persons (other
than the Company or any Subsidiary of the Company in one or
more transactions each of which complies with Section 11(o)
hereof), in one transaction or a series of transactions,
30
assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries
(taken as a whole), then, and in each such case and except
as contemplated by Section 13(f) hereof, proper provision
shall be made so that: (i) each holder of a Right, except as
provided in Section 7(e) hereof, shall thereafter have the
right to receive, upon the exercise thereof at the then
current Purchase Price in accordance with the terms of this
Agreement, such number of validly authorized and issued,
fully paid, nonassessable and freely traceable shares of
Common Stock of the Principal Party (as such term is
hereinafter defined), which shares shall not be subject to
any liens, encumbrances, transfer restrictions, rights of
first refusal, or other adverse claims, as shall be equal to
the result obtained by (1) multiplying the then current
Purchase Price by the number of Units of Preferred Stock for
which a Right is exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11(a)(ii)
Event has occurred prior to the first occurrence of a
Section 13 Event, multiplying the number of such Units of
Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a
Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and dividing
that product (which, following the first occurrence of a
Section 13 Event, shall be referred to as the "Purchase
Price" for each Right and for all purposes of this
Agreement) by (2) 50% of the current market price
(determined pursuant to Section 11(d)(i) hereof) per share
of the Common Stock of such Principal Party on the date of
consummation of such Section 13 Event; (ii) such Principal
Party shall thereafter be liable for, and shall assume, by
virtue of such Section 13 Event, all the obligations and
duties of the Company pursuant to this Agreement; (iii) the
term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section
13 Event; (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) in
connection with the consummation of any such transaction as
may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in
relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) hereof shall be of no effect
following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
31
(i) in the case of any transaction
described in clause (x) or (y) of the first
sentence of Section 13(a), (A) the Person
that is the issuer of any securities into
which shares of Common Stock of the Company
are converted in such merger or
consolidation, or, if there is more than one
such issuer, the issuer of Common Stock that
has the highest aggregate current market
price (determined pursuant to Section 11(d)
hereof) and (B) if no securities are so
issued, the Person that is the other party to
such merger or consolidation, or, if there is
more than one such Person, the Person the
Common Stock of which has the highest
aggregate current market price (determined
pursuant to Section 11(d) hereof); and
(ii) in the case of any transaction
described in clause (z) of the first sentence
of Section 13(a), the Person that is the
party receiving the greatest portion of the
assets or earning power transferred pursuant
to such transaction or transactions, or, if
each Person that is a party to such
transaction or transactions receives the same
portion of the assets or earning power
transferred pursuant to such transaction or
transactions, or if the Person receiving the
largest portion of the assets or earning
power cannot be determined, whichever Person
the Common Stock of which has the highest
aggregate current market price (determined
pursuant to Section 11(d) hereof);
provided, however, that in such case, (1) if the Common
Stock of such Person is not at such time and has not been
continuously over the preceding twelve-month period
registered under Section 12 of the Exchange Act ("Registered
Common Stock"), or such Person is not a corporation, and
such Person is a direct or indirect Subsidiary of another
Person that has Registered Common Stock outstanding,
"Principal Party" shall refer to such other Person; (2) if
the Common Stock of such Person is not Registered Common
Stock or such Person is not a corporation, and such Person
is a direct or indirect Subsidiary of another Person but is
not a direct or indirect Subsidiary of another Person that
has Registered Common Stock outstanding, "Principal Party"
shall refer to the ultimate parent entity of such
first-mentioned Person; (3) if the Common Stock of such
Person is not Registered Common Stock or such Person is not
a corporation, and such Person is directly or indirectly
32
controlled by more than one Person, and one or more of such
other Persons has Registered Common Stock outstanding,
"Principal Party" shall refer to whichever of such other
Persons is the issuer of the Registered Common Stock having
the highest aggregate current market price (determined
pursuant to Section 11(d) hereof); and (4) if the Common
Stock of such Person is not Registered Common Stock or such
Person is not a corporation, and such Person is directly or
indirectly controlled by more than one Person, and none of
such other Persons have Registered Common Stock outstanding,
"Principal Party" shall refer to whichever ultimate parent
entity is the corporation having the greatest stockholders
equity or, if no such ultimate parent entity is a
corporation, shall refer to whichever ultimate parent entity
is the entity having the greatest net assets.
(c) The Company shall not consummate any
such consolidation, merger, sale or transfer unless the
Principal Party shall have a sufficient number of authorized
shares of its Common Stock that have not been issued or
reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 13 and unless prior
thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in this Section
13 and further providing that, as soon as practicable, the
Principal Party will
(i) prepare and file on an appropriate
form a registration statement under the Act, with
respect to the Rights and the Common Stock
purchasable upon exercise of the Rights; use its
best efforts to cause such registration statement
to become effective as soon as practicable after
such filing and to remain effective (and to
contain a prospectus at all times meeting the
requirements of the Act) until the Expiration
Date; and take such action as may be required to
ensure to the extent legally possible that any
acquisition of such Common Stock upon the exercise
of the Rights complies with any applicable state
securities or "blue sky" laws, and
(ii) deliver to holders of the Rights
historical financial statements for the Principal
Party and each of its Affiliates that comply in
all respects with the requirements for
registration on Form 10 under the Exchange Act.
(d) In case the Principal Party which is to
be a party to a transaction referred to in this Section 13
has provision in any of its authorized securities or in its
33
Certificate of Incorporation or By-laws or other instrument
governing its corporate 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
current market price per share (determined pursuant to
Section 11(d) hereof) or securities exercisable for, or
convertible into, Common Stock of such Principal Party at
less than such then current market price (other than to
holders of Rights pursuant to this Section 13) or (ii)
providing for any special payment, tax or similar provisions
in connection with the issuance of the Common Stock of such
Principal Party pursuant to the provisions of Section 13;
then, in such event, the Company shall not consummate any
such transaction unless prior thereto the Company 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 cancelled, 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 provisions of this Section 13 shall
similarly apply to successive mergers or consolidations or
sales or other transfers. In the event that a Section 13
Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights that have not
theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13.
(f) Notwithstanding anything in this
Agreement to the contrary, Section 13 shall not be
applicable to a transaction described in subparagraph (x) or
(y) of Section 13(a) if (i) such transaction is consummated
with a Person or Persons that acquired shares of Common
Stock pursuant to a tender offer or exchange offer that
complies with the provisions of Section 11(a)(ii)(A) hereof
(or a wholly owned subsidiary of any such Person or
Persons), (ii) the price per share of Common Stock offered
in such transaction is not less than the price per share of
Common Stock paid to all holders of shares of Common Stock
whose shares were purchased pursuant to such tender offer or
exchange offer, and (iii) the form of consideration being
offered to the remaining holders of shares of Common Stock
pursuant to such transaction is the same as the form of
consideration paid pursuant to such tender offer or exchange
offer. Upon consummation of any such transaction
contemplated by this Section 13(f), all Rights hereunder
shall expire.
34
Section 14. Fractional Rights and Fractional
Shares.
(a) The Company shall not be required to
issue fractions of Rights, except prior to the Distribution
Date as provided in Section 11(p) hereof, or to distribute
Rights Certificates that evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the
registered holders of the Rights Certificates with regard to
which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current
market value of a whole Right. For purposes of this Section
14(a), the current market value of a whole Right shall be
the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional
Rights would have been otherwise issuable. The closing
price of the Rights for any day shall be the last sale
price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the consolidated
transaction reporting system with respect to securities
listed on the principal national securities exchange on
which the Rights are listed or admitted to trading or, if
the Rights are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if
not so quoted, the average of the high bid and low asked
prices in the Nasdaq Stock Market on the over-the-counter
market, as reported by Nasdaq or such other system then in
use or, if on any such date the Rights are not quoted by any
such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a
market in the Rights selected by the Board of Directors of
the Company. If on any such date no such market maker is
making a market in the Rights the fair value of the Rights
on such date as determined in good faith by the Board of
Directors of the Company shall be used.
(b) The Company shall not be required to
issue fractions of shares of Preferred Stock (other than
Units, including integral multiples of Units, of Preferred
Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred
Stock (other than Units, including integral multiples of
Units, of Preferred Stock). In lieu of fractional shares of
Preferred Stock that are not Units or integral multiples of
Units of Preferred Stock, the Company may pay to the
registered holders of Rights Certificates at the time such
Rights are exercised as herein provided an amount in cash
equal to the same fraction of the current market value of
one Unit of Preferred Stock. For purposes of this Section
14(b), the current market value of one Unit of a share of
Preferred Stock shall be one-thousandth of the closing price
35
of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately
prior to the date of such exercise.
(c) Following the occurrence of a Triggering
Event, the Company shall not be required to issue fractions
of shares of Common Stock upon exercise of the Rights or to
distribute certificates that evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock,
the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the
current market value of one (1) share of Common Stock. For
purposes of this Section 14(c), the current market value of
one share of Common Stock shall be the closing price of one
share of Common Stock (as determined pursuant to
Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of such exercise.
(d) The holder of a Right by the acceptance
of the Right expressly waives his right to receive any
fractional Rights or any fractional shares upon exercise of
a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of
action in respect of this Agreement (other than rights of
action vested in the Rights Agent pursuant to Section 18
hereof) are vested in the respective registered holders of
the Rights Certificates (and, prior to the Distribution
Date, the registered holders of the Common Stock); and any
registered holder of any Rights Certificate (or, prior to
the Distribution Date, of any certificate representing
Common Stock), without the consent of the Rights Agent or of
the holder of any other Rights Certificate (or, prior to the
Distribution Date, of any certificate representing Common
Stock), may, in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or
proceeding against the Company or any other Person to
enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in
the manner provided in such Rights Certificate and in this
Agreement. Without limiting the foregoing or any remedies
available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Agreement and
shall be entitled to specific performance of the obligations
hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person
subject to this Agreement.
Section 16. Agreement of Rights Holders. Every
holder of a Right by accepting the same consents and agrees
36
with the Company and the Rights Agent and with every other
holder of a Right that:
(a) prior to the Distribution Date, the
Rights will be transferable only in connection with the
transfer of Common Stock;
(b) after the Distribution Date, each Rights
Certificate is transferable only on the registry books of
the Rights Agent by surrender of such Rights Certificate at
the office or offices of the Rights Agent designated for
such purposes, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate forms and
certificates fully executed;
(c) subject to Section 6(a) and Section 7(f)
hereof, the Company and the Rights Agent may deem and treat
the person in whose name a Rights Certificate (or, prior to
the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificate
or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent,
subject to the last sentence of Section 7(e) hereof, shall
be required to be affected by any notice to the contrary;
and
(d) notwithstanding anything in this
Agreement to the contrary, neither the Company nor the
Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to
perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or other
order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the
Company must use its reasonable best efforts to have any
such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Rights Certificate Holder Not Deemed
a Stockholder. No holder, as such, of any Rights
Certificate shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of Units of Preferred
Stock or any other securities of the Company or any other
Person that may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained
37
herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of
the rights of a stockholder of the Company or any 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 to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 24
hereof), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such
Rights Certificate shall have been exercised in accordance
with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights
Agent reasonable compensation for all services rendered by
it hereunder and, from time to time, on demand of the Rights
Agent, its reasonable expenses and counsel fees and
disbursements and other expenses and disbursements incurred
in the administration and execution of this Agreement and
the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and
to hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything
done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of
liability in the premises. 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.
(b) The Rights Agent shall be protected and
shall incur no liability for or in respect of any action
taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for other
securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or the
paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons.
38
Section 19. Merger or Consolidation or Change of
Name of Rights Agent.
(a) Any corporation into which the Rights
Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any
corporation succeeding to the corporate trust or security
holder services business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing
of any paper or any further act on the part of any of the
parties hereto; provided, however, that such corporation
would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21 hereof. In case at
the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver
such Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign
such Rights Certificates either in the name of the
predecessor or in the name of the successor Rights Agent;
and in all such cases such Rights Certificates shall have
the full force provided in the Rights Certificates and in
this Agreement.
(b) In case at any time the name of the
Rights Agent shall be changed and at such time any of the
Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its
prior name or in its changed name; and in all such cases
such Rights Certificates shall have the full force provided
in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights
Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of
which the Company and the holders of Rights Certificates, by
their acceptance thereof, shall be bound;
(a) The Rights Agent may consult with legal
counsel (who may be legal counsel for the Company), and the
opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any
39
action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its
duties under this Agreement the Rights Agent shall deem it
necessary or desirable that any fact or matter (including,
without limitation, the identity of any Acquiring Person or
Adverse Person and the determination of "current market
price") be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the
Chairman of the Board, the President, any Vice President,
the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or
suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable
hereunder only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for
or by reason of any of the statements of fact or recitals
contained in this Agreement or the Rights Certificates or be
required to verify the same (except as to its
countersignature on such Rights Certificates), but all such
statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not have any
responsibility in respect of the validity of this Agreement
or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for
any breach by the Company of any covenant or condition
contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any adjustment or
determination required under the provisions of Section 11 or
Section 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by
Rights Certificates after receipt of the certificate
described in Section 12 hereof setting forth such
adjustment); nor shall it by any act hereunder be deemed to
make any representation or warranty as to the authorization
or reservation of any shares of Common Stock or Preferred
40
Stock to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Common Stock or
Preferred Stock will, when so issued, be validly authorized
and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further and
other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this
Agreement.
(g) The Rights Agent is hereby authorized
and directed to accept instructions with respect to the
performance of its duties hereunder from the Chairman of the
Board, the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer, or any Assistant
Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with instructions of
any such officer.
(h) The Rights Agent and any stockholder,
director, officer, or employee of the Rights Agent may buy,
sell or deal in any of the Rights or other securities of the
Company or become pecuniarily interested in any transaction
in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and
freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent
from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and
exercise any of the rights or powers hereby vested in it or
perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect, or
misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, default, neglect
or misconduct; provided, however, reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall
require the Rights Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance
of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing
that repayment of such funds or adequate indemnification
41
against such risk or liability is not reasonably assured to
it.
(k) If, with respect to any Rights
Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate attached to the form of assignment
or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent
shall not take any further action with respect to such
requested exercise or transfer without first consulting with
the Company.
Section 21. Change of Rights Agent. The Rights
Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty
(30) days' notice in writing mailed to the Company, and to
each transfer agent of the Common Stock and Preferred Stock,
by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon
thirty (30) days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Stock and Preferred Stock,
by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor
to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving
notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning
or incapacitated Rights Agent or by the holder of a Rights
Certificate (who shall, with such notice, submit his Rights
Certificate for inspection by the Company), then any
registered holder of any Rights Certificate may apply to any
court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation
organized and doing business under the laws of the United
States or of the State of New York (or of any other state of
the United States so long as such corporation is authorized
to do business in the State of New York), in good standing
and may be the Company or a Subsidiary of the Company.
After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and
responsibilities as if it has 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
42
later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the
Common Stock and the Preferred Stock, and mail a notice
thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or
of the Rights to the contrary, the Company may, at its
option, issue new Rights Certificates evidencing Rights in
such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price or
the number or kind or class of shares or other securities or
property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares
of Common Stock following the Distribution Date and prior to
the redemption or expiration of the Rights, the Company (a)
shall, with respect to shares of Common Stock so issued or
sold upon the exercise, conversion, or exchange of
securities issued by the Company prior to the Distribution
Date and upon the vesting or payment of securities awarded
by the Company under any employer plan or arrangement prior
to the Distribution Date, and (b) may, in any other case, if
deemed necessary or appropriate by the Board of Directors of
the Company, issue Rights Certificates representing the
appropriate number of Rights in connection with such
issuance or sale; provided, however, that (i) no such Rights
Certificate shall be issued if, and to the extent that, the
Company shall be advised by counsel that such issuance would
create a significant risk of material adverse tax
consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights
Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company
may, at its option, at any time prior to the earlier of (i)
the close of business on the fifteenth day following the
Stock Acquisition Date and (ii) the Final Expiration Date,
redeem all but not less than all the then outstanding Rights
at a redemption price of $.01 per Right, as such amount may
be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date
43
hereof (such redemption price being hereinafter referred to
as the "Redemption Price"), and the Company may, at its
option, pay the Redemption Price either in cash, shares of
Common Stock (based on the "current market price", as
defined in Section 11(d)(i) hereof, of the shares of Common
Stock at the time of redemption), or any other form of
consideration deemed appropriate by the Board of Directors;
provided, however, if the Board of Directors of the Company
authorizes redemption of the Rights in either of the
circumstances set forth in clauses (i) and (ii) below, then
there must be Continuing Directors then in office and such
authorization shall require the concurrence in writing of a
majority of such Continuing Directors: (i) such
authorization occurs on or after the time a person becomes
an Acquiring Person or a Person referred to in Section l(a),
clause (v) hereof, or (ii) such authorization occurs on or
after the date of a change (resulting from a proxy or
consent solicitation) in a majority of the directors in
office at the commencement of such solicitation if any
Person who is a participant in such solicitation has stated
(or, if upon the commencement of such solicitation, a
majority of the Board of Directors of the Company has
determined in good faith) that such Person (or any of its
Affiliates or Associates) intends to take, or may consider
taking, any action that would result in such Person becoming
an Acquiring Person or that would cause the occurrence of a
Triggering Event unless, concurrent with such solicitation,
such Person (or one or more of its Affiliates or
Associates), is making a cash tender offer pursuant to a
Schedule 14D-1 (or any successor form) filed with the
Securities and Exchange Commission for all outstanding
shares of Common Stock not beneficially owned by such Person
(or by its Affiliates or Associates), and the obligation of
such Person (or its Affiliates or Associates) to purchase
such shares of Common Stock is not subject to the
satisfaction of any material condition. Notwithstanding the
foregoing, the Board of Directors of the Company may not
redeem any Rights following its declaration that any Person
is an Adverse Person if, following the occurrence of a Stock
Acquisition Date and following the expiration of the right
of redemption hereunder but prior to any Triggering Event,
(i) a Person who is an Acquiring Person shall have
transferred or otherwise disposed of a number of shares of
Common Stock in one transaction or series of transactions,
not directly or indirectly involving the Company or any of
its Subsidiaries, which did not result in the occurrence of
a Triggering Event such that such Person is thereafter a
Beneficial Owner of 10% or less of the outstanding shares of
Common Stock, and (ii) there are no other Persons,
immediately following the occurrence of the event described
in clause (i), who are Acquiring Persons, then the right of
redemption shall be reinstated and thereafter be subject to
44
the provisions of this Section 23. Notwithstanding anything
contained in this Agreement to the contrary, the Rights
shall not be exercisable in accordance with
Section 11(a)(ii)(A) until such time as the Company's right
of redemption hereunder has expired.
(b) Immediately upon the action of the Board
of Directors of the Company ordering the redemption of the
Rights, evidence of which shall be filed with the Rights
Agent and without any further action and without any notice,
the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to
receive the Redemption Price for each Right so held.
Promptly after the action of the Board of Directors ordering
the redemption of the Rights; the Company shall give notice
of such redemption to the Rights Agent and the holders of
the then outstanding Rights by mailing such notice to all
such holders at each holder's last address as it appears
upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer
Agent for the Common Stock. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the
Redemption Price will be made.
Section 24. Notice of Certain Events.
(a) In case the Company shall propose, at
any time after the Distribution Date, (i) to pay any
dividend payable in stock of any class to the holders of
Preferred Stock or to make any other distribution to the
holders of Preferred Stock (other than a regular quarterly
cash dividend out of earnings or retained earnings of the
Company), (ii) to offer to the holders of Preferred Stock
rights or warrants to subscribe for or to purchase any
additional shares of Preferred Stock or shares of stock of
any class or any other securities, rights or options, (iii)
to effect any reclassification of its Preferred Stock (other
than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), (iv) to effect any
consolidation or merger into or with any other Person (other
than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or to effect any sale
or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one
transaction or a series of transactions, of more than 50% of
the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), or (v) to effect the
45
liquidation, dissolution or winding up of the Company, then,
in each such case, the Company shall give to each holder of
a Rights Certificate, to the extent feasible and in
accordance with Section 25 hereof, a notice of such proposed
action, which shall specify the record date for the purposes
of such stock dividend, distribution of rights or warrants,
or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding
up is to take place and the date of participation therein by
the holders of the shares of Preferred Stock, if any such
date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii) above
at least twenty (20) days prior to the record date for
determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other
action, at least twenty (20) days prior to the date of the
taking of such proposed action or the date of participation
therein by the holders of the shares of Preferred Stock
whichever shall be the earlier; provided, however, that no
such notice shall be required pursuant to this Section 24,
if any Subsidiary of the Company effects a consolidation or
merger with or into, or effects a sale or other transfer of
assets or earnings power to, any other Subsidiary of the
Company.
(b) In case any of the events set forth in
Section 11(a)(ii) shall occur, then, in any such case, (i)
the Company shall as soon as practicable thereafter give to
each holder of a Rights Certificate, to the extent feasible
and in accordance with Section 25 hereof, a notice of the
occurrence of such event, which shall specify the event and
the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof, and (ii) all references in the
preceding paragraph to Preferred Stock shall be deemed
thereafter to refer to Common Stock and/or, if appropriate,
other securities.
Section 25. Notices. Notices or demands
authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights Certificate to
or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Rights Agent)
as follows:
Standard Microsystems Corporation
00 Xxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
Subject to the provisions of Section 21, any notice or
demand authorized by this Agreement to be given or made by
46
the Company or by the holder of any Rights Certificate to or
on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as
follows:
ChaseMellon Shareholder Services, L.L.C.
X.X. Xxx 000
Xxxxxxxxxx Xxxx, XX 00000
Attention: Mr. Xxxxx Xxxxx
Notices or demands authorized by this Agreement to be given
or made by the Company or the Rights Agent to the holder of
any Rights Certificate (or, if prior to the Distribution
Date, to any holder of certificates representing shares of
Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder
at the address of such holder as shown on the registry books
of the Company.
Section 26. Supplements and Amendments. Prior to
the Distribution Date and subject to the penultimate
sentence of this Section 26, the Company and the Rights
Agent shall, if the Company so directs, supplement or amend
any provision of this Agreement without the approval of any
holders of certificates representing shares of Common Stock.
From and after the Distribution Date and subject to the
penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any holders of
Rights Certificates in order (i) to cure any ambiguity, (ii)
to correct or supplement any provision contained herein
which may be defective or inconsistent with any other
provision herein, (iii) to shorten or lengthen any time
period hereunder (which lengthening of shortening, following
the first occurrence of an event set forth in clauses (i)
and (ii) of the proviso set forth in the first sentence of
Section 23(a), shall be effective only if there are
Continuing Directors and shall require the concurrence of a
majority of such Continuing Directors) or (iv) to change or
supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Rights
Certificates (other than an Acquiring Person, an Adverse
Person, or an Affiliate or Associate of an Acquiring
Person); provided, this Agreement may not be supplemented or
amended to lengthen, pursuant to clause (iii) of this
sentence, (A) a time period relating to when the Rights may
be redeemed at such time as the Rights are not then
redeemable, or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing, or
clarifying the rights of, and/or the benefits to, the
47
holders of Rights. Upon the delivery of a certificate from
an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the
terms of this Section 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 that changes the Redemption
Price, changes the Final Expiration Date to an earlier date,
increases the Purchase Price or reduces the number of Units
of Preferred Stock for which a Right is exercisable. Prior
to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the
holders of Common Stock.
Section 27. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns
hereunder.
Section 28. Determinations and Actions by the
Board of Directors, etc. For all purposes of this
Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is
the Beneficial Owner, shall be made in accordance with the
last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act. The Board of
Directors of the Company (with, where provided herein, the
concurrence of the Continuing Directors) shall have the
exclusive power and authority to administer this Agreement
and to exercise all rights and powers specifically granted
to the Board (with, where provided herein, the concurrence
of the Continuing Directors) or to the Company, or as may be
necessary or advisable in the administration of this
Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement, and
(ii) make all determinations deemed necessary or advisable
for the administration of this Agreement (including a
determination to redeem or not redeem the Rights, to declare
a Person an Adverse Person, or to amend the Agreement). All
such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done
or made by the Board or the Concurring Directors in good
faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all
other parties, and (y) not subject the Board or the
Concurring Directors or any member thereof to any liability
to the holders of the Rights.
48
Section 29. Benefits of this Agreement. Nothing
in this Agreement shall be construed to give to any Person
other than the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock)
any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent, and the
registered holders of the Rights Certificates (and, prior to
the Distribution Date, registered holders of the Common
Stock).
Section 30. Severability. If any term,
provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction or other authority to
be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated; provided,
however, that notwithstanding anything in this Agreement to
the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of
the Company determines in its good faith judgment that
severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof
(subject to any required concurrence of the Continuing
Directors) shall be reinstated and shall not expire until
the close of business on the fifteenth day following the
date of such determination by the Board of Directors of the
Company.
Section 31. Governing Law. This Agreement, each
Right and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State
applicable to contracts made and to be performed entirely
within such State; except for Sections 18, 19, 20, and 21,
hereof, which for all purposes shall be governed by and
construed under the laws of the State of New York.
49
Section 32. 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 33. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed all as of the date first
above written.
STANDARD MICROSYSTEMS CORPORATION
By: /s/ Xxxx Xxxxxxx
Name: Xxxx Xxxxxxx
Title: Chairman and Chief
Executive Officer
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By: /s/ Xxxxx X. Xxxxx
Authorized Signatory
50
Exhibit A
COPY OF CERTIFICATE
OF
DESIGNATION, PREFERENCES AND RIGHTS
OF
SERIES A PARTICIPATING PREFERRED STOCK
OF
STANDARD MICROSYSTEMS CORPORATION
[As on File with the Secretary
of State of the State of
Delaware]
Exhibit B
(Form of Rights Certificate)
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER JANUARY 12, 2008 OR EARLIER IF
REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION,
AT THE OPTION OF THE COMPANY AT $.01 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT (AS SUCH TERMS ARE HEREINAFTER
DEFINED). UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED
BY AN ACQUIRING PERSON OR AN ADVERSE PERSON OR ANY AFFILIATE OR
ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
BECAME AN ACQUIRING [ADVERSE] PERSON OR AN AFFILIATE OR ASSOCIATE
OF AN ACQUIRING [ADVERSE] PERSON. ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND
VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS
AGREEMENT.] THE RIGHTS SHALL NOT BE EXERCISABLE, AND SHALL BE
VOID SO LONG AS HELD, BY A HOLDER IN ANY JURISDICTION WHERE THE
REQUISITE QUALIFICATION TO THE ISSUANCE TO SUCH HOLDER, OR THE
EXERCISE BY SUCH HOLDER, OF THE RIGHTS IN SUCH JURISDICTION SHALL
NOT HAVE BEEN OBTAINED OR BE OBTAINABLE.
Rights Certificate
STANDARD MICROSYSTEMS CORPORATION
This certifies that _______________, or registered
assigns, is the registered owner of the number of rights
("Rights") set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the
Rights Agreement, dated as of January 7, 1998 (the "Rights
Agreement"), between Standard Microsystems Corporation, a
Delaware corporation (the "Company"), and ChaseMellon Shareholder
Services, L.L.C., a New Jersey limited liability company (the
"Rights Agent"), to purchase from the Company at any time prior
to 5:00 P.M. (New York City time) on January 12, 2008 (or such
later Final Expiration Date as may be established as provided in
Section 26 of the Rights Agreement), unless earlier redeemed, at
the office or offices of the Rights Agent designated for such
purpose, or its successors as Rights Agent, one one-thousandth of
a fully paid, nonassessable share (a "Unit") of Series A
Participating Preferred Stock of the Company (the "Preferred
Stock"), at a purchase price of $50 per Unit (the "Purchase
Price"), upon presentation and surrender of this Rights
Certificate with the form of Election To Purchase and related
certificate duly executed. The Purchase Price shall be paid in
1
cash or by certified bank check or money order made payable to
the order of the Company. The number of Rights evidenced by this
Rights Certificate (and the number of shares which may be
purchased upon exercise thereof) set forth above, and the
Purchase Price per share set forth above, are subject to
adjustment in certain events as provided in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event (as
such term is defined in the Rights Agreement), if the Rights
evidenced by this Rights Certificate are beneficially owned by
(i) an Acquiring Person, an Adverse Person, or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement), (ii) a transferee of any such Acquiring
Person, an Adverse Person, or an Associate or Affiliate of any
such Person, or (iii) under certain circumstances specified in
the Rights Agreement, a transferee of a person who, after such
transfer, became an Acquiring Person, an Adverse Person, or an
Affiliate or Associate of any such Person, such Rights shall
become null and void, and no holder hereof shall have any right
with respect to such Rights from and after the occurrence of such
Section 11(a)(ii) Event.
The Rights evidenced by this Rights Certificate shall
not be exercisable, and shall be void so long as held, by a
holder in any jurisdiction where the requisite qualification to
the issuance to such holder, or the exercise by such holder, of
the Rights in such jurisdiction shall not have been obtained or
be obtainable.
As provided in the Rights Agreement, the Purchase Price
and the number and kind of shares of Preferred Stock or other
securities that may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification
and adjustment upon the happening of certain events, including
Triggering Events.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the
Rights Certificates, which limitations of rights include the
temporary suspension of the exercisability of such Rights under
the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the office of
above-mentioned the Rights Agent and are also available upon
written request to the Rights Agent.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office or offices
2
of the Rights Agent designated for such purpose, may be exchanged
for another Rights Certificate or Rights Certificates of like
tenor and date evidencing Rights entitling the holder to purchase
a like aggregate number of Units of Preferred Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Rights Certificate may be redeemed by
the Company at its option at a redemption price of $.01 per Right
at any time prior to the earlier of the close of business on (i)
the fifteenth day following the Stock Acquisition Date (as such
period may be extended pursuant to the Rights Agreement) and (ii)
the Final Expiration Date (as such date may be extended pursuant
to the Rights Agreement). After the expiration of the redemption
period, the Company's right of redemption may be reinstated if an
Acquiring Person reduces his beneficial ownership to 10% or less
of the outstanding shares of Common Stock in a transaction or
series of transaction not involving the Company. The rights may
not be redeemed after any Person has been declared an Adverse
Person.
No fractional shares of Preferred Stock will be issued
upon the exercise of any Right or Rights evidenced hereby (other
than fractions that are Units, including integral multiples of
Units, of a share of Preferred Stock, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any
purpose the holder of shares or Units of Preferred Stock or of
any other securities of the Company or any other Person that may
at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed
to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or 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, to receive notice of
meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or
subscription rights or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as
provided in the Rights Agreement.
3
This Rights Certificate shall not be valid or
obligatory for any purpose until it shall have been countersigned
by the Rights Agent.
WITNESS the facsimile signature of the proper officers
of the Company and its corporate seal.
Dated as of___________ ___, ____
ATTEST: STANDARD MICROSYSTEMS CORPORATION
-------------------------------- By
Secretary Title:
Countersigned:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By
--------------------------------
Authorized Signature
4
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint ____________________ Attorney, to transfer the within
Rights Certificate on the books of the within-named Company, with
full power of substitution.
Dated: ________________, ____
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being
sold, assigned and transferred by or on behalf of a Person who is
or was an Acquiring Person, an Adverse Person, or an Affiliate or
Associate of any such Person (as such terms are defined pursuant to
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Rights Certificate from any Person who is, was, or
1
subsequently became an Acquiring Person, an Adverse Person or an
Affiliate or Associate of any such Person.
Dated: _____________, _________________________________
Signature
Signature Guaranteed:
2
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: STANDARD MICROSYSTEMS CORPORATION:
The undersigned hereby irrevocably elects to exercise
___________________ Rights represented by this Rights Certificate
to purchase the shares of Preferred Stock issuable upon the
exercise of the Rights (or such other securities of the Company or
of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in
the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights
evidenced by this Rights Certificate, a new Rights Certificate for
the balance of such Rights shall be registered in the name of and
delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated: _______________, ____
___________________________________
Signature
Signature Guaranteed:
1
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ]
are [ ] are not being exercised by or on behalf of a Person who is
or was an Acquiring Person, an Adverse Person, or an Affiliate or
Associate of any such Person (as such terms are defined pursuant to
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Rights Certificate from any Person who is, was or became an
Acquiring Person, an Adverse Person, or an Affiliate or Associate
of any such Person.
Dated:_______________, ____ _________________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate
or Election to Purchase and Certificate must correspond to the name
as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change
whatsoever.
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United
States.
In the event a certification set forth above is not
completed, is completed in the affirmative, in whole or part, or
the Company believes that a negative certification is false, the
Company will deem the beneficial owner of the Rights evidenced by
this Rights Certificate to be an Acquiring Person or an Adverse
Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Rights Certificate issued in exchange
for this Rights Certificate.
2
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On January 7, 1998, the Board of Directors of Standard
Microsystems Corporation (the "Company") declared a dividend
distribution of one Right for each outstanding share of Company
Common Stock to stockholders of record at the close of business on
January 13, 1998. Each Right entitles the registered holder to
purchase from the Company one-thousandth of a share (a "Unit" of
Series A Participating Preferred Stock, $.10 par value (the
"Preferred Stock"), at a Purchase Price of $50 per Unit, subject to
adjustment. The description and terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement") between the Company
and ChaseMellon Shareholder Services, L.L.C., as Rights Agent.
Initially, the Rights will be attached to all Common
Stock certificates representing shares then outstanding, and no
separate Rights Certificates will be distributed. The Rights will
separate from the Common Stock and a Distribution Date will occur
upon the earlier of (i) fifteen days following a public
announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 20% or more of the outstanding
shares of Common Stock (the "Stock Acquisition Date") (other than
a person that acquires the Common Stock directly from the Company
pursuant to a transaction that the Company's independent directors
determine is fair to, and in the best interests of, the Company's
stockholders generally (a "Direct Acquiror")), or (ii) 10 business
days following the commencement of a tender offer or an exchange
offer that would result in a person or group beneficially owning
30% or more of such outstanding shares of Common Stock.
Until the Distribution Date, (i) the Rights will be
evidenced by the Common Stock certificates and will be transferred
with and only with such Common Stock certificates, (ii) new Common
Stock certificates issued after January 13, 1998 will contain a
notation incorporating the Rights Agreement by reference, and (iii)
the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution
Date and will expire at the close of business on January 12, 2008,
unless earlier redeemed by the Company as described below. The
Rights shall not be exercisable, and shall be void so long as held,
by a holder (a "Nonqualified Holder") in any jurisdiction where the
requisite qualification to the issuance to such holder, or the
1
exercise by such holder, of the Rights in such jurisdiction shall
not have been obtained or be obtainable.
As soon as practicable after the Distribution Date,
Rights Certificates will be mailed to holders of record of the
Common Stock as of the close of business on the Distribution Date,
and, thereafter, the separate Rights Certificates alone will
represent the Rights. Except as otherwise determined by the Board
of Directors, and except in connection with the exercise,
conversion, or exchange of securities issued prior to the
Distribution Date and the vesting or payment of securities awarded
to employees prior to the Distribution Date, only shares of Common
Stock issued prior to the Distribution Date will be issued with the
Rights.
Each holder of a Right will have the right to receive,
upon exercise of a right, Common Stock (or, in certain
circumstances, cash, property or other securities of the Company)
having a value equal to two times the exercise price of the Right,
upon the occurrence of the following events: (i) a Person other
than a Direct Acquiror becomes the beneficial owner of more than
30% of the outstanding Common Stock (except pursuant to an offer
for all outstanding shares of Common Stock that the independent
directors determine to be fair to and otherwise in the best
interests of the Company and its stockholders); (ii) the Board of
Directors declares any Person an Adverse Person, upon a
determination that such person, has become the Beneficial Owner of
an amount of Common Stock that the Board of Directors determines to
be substantial (which amount shall in no event be less than 20% of
the outstanding Common Stock) and a determination by at least a
majority of the Board of Directors who are not officers of the
Company, after reasonable inquiry and investigation, that (A) such
beneficial ownership is intended to cause the Company to repurchase
such person's Common Stock or to pressure the Company to take
action intended to provide such person with short-term financial
gain under circumstances where the Board of Directors determines
that the best long-term interests of the Company and its
stockholders would not be served by taking such action or (B) such
beneficial ownership is reasonably likely to cause a material
adverse impact (including, but not limited to, impairment of
relationships with customers, investors in the Company's
subsidiaries, or licensors to the Company of the patent rights or
technology, or impairment of the Company's ability to maintain its
competitive position) on the business or prospects of the Company;
(iii) any Acquiring Person (A) merges into the Company and the
Company is the surviving corporation and the Common Stock of the
Company remains outstanding and unchanged, (B) transfers assets to
the Company in exchange for Common Stock or other equity securities
of the Company, (C) sells, purchases, leases, exchanges, mortgages,
pledges, transfers to, from or with the Company, assets having an
aggregate fair market value of more than $1,000,000 on terms less
favorable to the Company than the Company would be able to obtain
2
at arm's-length, (D) receives any compensation from the Company
other than for full-time employment as a regular employee at rates
in accordance with the Company's past practices or for other
services, rights, or value at less than arm's-length terms, or (E)
receives the benefit of any loans, guarantees, or other financial
assistance or any tax credits or other tax advantage provided by
the Company; or (iv) while there is an Acquiring Person, there is
any reclassification of securities (including any reverse stock
split), or recapitalization of the Company, or any merger or
consolidation of the Company that has the effect of increasing by
more than 1% the proportionate share of the outstanding shares of
any class of equity securities of the Company or any of its
Subsidiaries beneficially owned by any Acquiring Person.
For example, at an exercise price of $50 per Right, each
Right not owned by an Acquiring Person (or by certain related
parties) or a Nonqualified Holder following an event set forth in
the preceding paragraph would entitle its holder to purchase $100
worth of Common Stock (or other consideration, as noted above) for
$50. Assuming that the Common Stock had a per share value of
$12.50 at such time, the holder of each valid Right would be
entitled to purchase eight shares of Common Stock for $50.
Notwithstanding any of the foregoing, following the
occurrence of any of the events set forth in the second preceding
paragraph, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person or Adverse Person will be null and void. However,
Rights are not exercisable following the occurrence of any of the
events set forth above until such time as the Rights are no longer
redeemable by the Company as set forth below.
In the event that, at any time following the Stock
Acquisition Date or the consummation by a Direct Acquiror of a
tender offer, (i) the Company is acquired in a merger or other
business combination transaction in which the Company is not the
surviving corporation or (ii) 50% or more of the Company's assets
or earning power is sold or transferred, each holder of a Right
(except Rights which previously have been voided as set forth
above), other than a Nonqualified Holder, shall thereafter have the
right to receive, upon exercise, common stock of the acquiring
company having a value equal to two times the exercise price of the
Right. The events set forth in this paragraph and in the second
preceding paragraph are referred to as the "Triggering Events." If
the merger follows a tender offer described in clause (i) of the
second preceding paragraph, and pursuant to the merger the
Company's stockholders receive the same consideration for their
Common Stock as stockholders received pursuant to such tender
offer, the rights become unexercisable and expire.
The Purchase Price payable, and the number of Units of
Preferred Stock or other securities or property issuable, upon
3
exercise of the Rights are subject to adjustment from time to time
to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred
Stock, (ii) if holders of the Preferred Stock are granted certain
rights or warrants to subscribe for Preferred Stock or convertible
securities at less than the current market price of the Preferred
Stock, or (iii) upon the distribution to holders of the Preferred
Stock of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants
(other than those referred to above).
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments amount to at
least 1% of the Purchase Price. No fractional Units will be issued
and, in lieu thereof, an adjustment in cash will be made based on
the market price of the Preferred Stock on the last trading date
prior to the date of exercise.
In general, the Company may redeem the Rights in whole,
but not in part, at a price of $.01 per Right, at any time until
fifteen days following the Stock Acquisition Date. The Company may
not redeem the Rights if the Board of Directors has declared a
person to be an Adverse Person. After the redemption period has
expired, the Company's right of redemption may be reinstated if an
Acquiring Person reduces his beneficial ownership to 10% or less of
the outstanding shares of Common Stock in a transaction or series
of transactions not involving the Company. Immediately upon the
action of the Board of Directors ordering redemption of the Rights,
the Rights will terminate and the only right of the holders of
Rights will be to receive the $.01 redemption price.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including,
without limitation, the right to vote or to receive dividends.
While the distribution of the Rights will not be taxable to
stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Stock (or other consideration)
of the Company or for common stock of the acquiring company as set
forth above.
Other than those provisions relating to the principal
economic terms of the Rights, any of the provisions of the Rights
Agreement may be amended by the Board of Directors of the Company
prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board in
order to cure any ambiguity, to make changes that do not adversely
affect the interests of holders of Rights (excluding the interests
of any Acquiring Person or Adverse Person), or to shorten or
lengthen any time period under the Rights Agreement; provided,
however that no amendment to adjust the time period governing
4
redemption shall be made at such time as the Rights are not
redeemable.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration
Statement on Form 8-A dated January 13, 1998. A copy of the Rights
Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by reference.
5
STANDARD MICROSYSTEMS CORPORATION
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
Rights Agent
____________________
Rights Agreement
Dated as of January 7, 1998
TABLE OF CONTENTS
Page
Section 1. Certain Definitions . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . 6
Section 3. Issue of Rights Certificates. . . . . . . . . . 6
Section 4. Form of Rights Certificates . . . . . . . . . . 8
Section 5. Countersignature and Registration . . . . . . . 9
Section 6. Transfer, Split Up, Combination, and Exchange
of Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates. . . . . . . 10
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights . . . . . . . . . . . 11
Section 8. Cancellation and Destruction of Rights
Certificates. . . . . . . . . . . . . . . . . . 14
Section 9. Reservation and Availability of Capital
Stock . . . . . . . . . . . . . . . . . . . . . 14
Section 10. Preferred Stock Record Date . . . . . . . . . . 16
Section 11. Adjustment of Purchase Price, Number and Kind
of Shares or Number of Rights . . . . . . . . . 17
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. . . . . . . . . . . . . . . . 30
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power . . . . . . . . . . . . 30
Section 14. Fractional Rights and Fractional Shares . . . . 35
Section 15. Rights of Action. . . . . . . . . . . . . . . . 36
Section 16. Agreement of Rights Holders . . . . . . . . . . 37
Section 17. Rights Certificate Holder Not Deemed a
Stockholder . . . . . . . . . . . . . . . . . . 38
Section 18. Concerning the Rights Agent . . . . . . . . . . 38
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. . . . . . . . . . . . . . . . . . 39
(i)
Section 20. Duties of Rights Agent. . . . . . . . . . . . . 39
Section 21. Change of Rights Agent. . . . . . . . . . . . . 42
Section 22. Issuance of New Rights Certificates . . . . . . 43
Section 23. Redemption and Termination. . . . . . . . . . . 44
Section 24. Notice of Certain Events. . . . . . . . . . . . 45
Section 25. Notices . . . . . . . . . . . . . . . . . . . . 46
Section 26. Supplements and Amendments. . . . . . . . . . . 47
Section 27. Successors. . . . . . . . . . . . . . . . . . . 48
Section 28. Determinations and Actions by the Board of
Directors, etc. . . . . . . . . . . . . . . . . 48
Section 29. Benefits of this Agreement. . . . . . . . . . . 49
Section 30. Severability. . . . . . . . . . . . . . . . . . 49
Section 31. Governing Law . . . . . . . . . . . . . . . . . 49
Section 32. Counterparts. . . . . . . . . . . . . . . . . . 50
Section 33. Descriptive Headings. . . . . . . . . . . . . . 50
Exhibit A Copy of Certificate of Designation,
Preferences and Rights of Series A
Participating Preferred Stock of Standard
Microsystems Corporation
Exhibit B Form of Rights Certificate
Exhibit C Summary of Rights to Purchase Preferred Stock
(ii)
