Exhibit 4.1
RIGHTS AGREEMENT
This Rights Agreement, dated as of November 25, 1997 (the "Agreement"), is
between INTELLIGENT SYSTEMS CORPORATION, a Georgia corporation (the "Company"),
and AMERICAN STOCK TRANSFER & TRUST COMPANY, a New York corporation, as Rights
Agent (the "Rights Agent").
The Board of Directors has authorized and declared a dividend distribution
of one Preferred Share purchase right (a "Right") for each Common Share of the
Company outstanding as of the Close of Business on December 8, 1997 (the
"Record Date"), each Right initially representing the right to purchase one
one-hundredth of a Preferred Share (as hereinafter defined), upon the terms and
subject to the conditions herein set forth, and has further authorized and
directed (i) the issuance of one Right with respect to each Common Share that
shall become outstanding between the Record Date and the earliest of the
Distribution Date (as such term is defined in Section 3), the Redemption Date
and the Final Expiration Date (as such terms are defined in Section 7) and (ii)
in certain circumstances provided in Section 22 and in accordance thereof, the
issuance of one Right with respect to each Common Share that shall become
outstanding after the Distribution Date and prior to the earlier of the
Redemption Date and the Final Expiration Date.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, and intending to be legally bound hereby, 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 Adverse Person or 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 Common Shares then outstanding (other
than as a result of a Permitted Offer (as hereinafter defined)) or was such
Beneficial Owner at any time after the date hereof, whether or not such person
continues to be the Beneficial Owner of 20% or more of the then outstanding
Common Shares, but shall not include any Exempt Person or a Grandfathered
Shareholder (as such terms are hereinafter defined). Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" as the result of the
acquisition of Common Shares by the Company which, by reducing the number of
Common Shares (or securities convertible into or exchangeable for Common
Shares) outstanding, increases the percentage of Common Shares beneficially
owned by such Person (together with all Affiliates and Associates of such
Person); provided, however, that if any Person (other than Exempt Persons)
shall become an Acquiring Person by reason of share purchases by the Company
and such Person or an Affiliate or Associate of such Person shall, after such
share purchases by the Company, become the Beneficial Owner of any additional
Common Shares, then such Person shall be an "Acquiring Person."
Notwithstanding the foregoing, "Acquiring Person" shall not include any such
Person who has reported or is required to report such ownership (but less than
25% of the then outstanding Common Shares) on schedule 13G under the Exchange
Act (or any comparable or successor report) or on Schedule 13D under the
Exchange Act (or any comparable or successor report) which Schedule does not
state any intention to or reserve the right to control or influence the
management or policies of the Company or engage in any of the actions specified
in Item 4 of such Schedule (other than the disposition of the Common Shares)
and within 10 Business Days of being requested by the Company to advise it
regarding the same, certifies to the Company that such Person acquired 20% or
more of the then outstanding Common Shares inadvertently or without knowledge
of the terms of the Rights and who, together with all Affiliates and
Associates, thereafter does not acquire additional Common Shares while the
Beneficial Owner of 20% or more of the Common Shares then outstanding;
provided, however, that if any Person requested to so certify fails to do so
within 10 Business Days, then such Person shall become an Acquiring Person
immediately after such 10 Business Day Period.
(b) "Act" means the Securities Act of 1933, as amended from time to time.
(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) apply to such Person; provided, however, that the Board
of Directors shall not declare any Person and to be an Adverse Person if, prior
to the time that such Person acquired 10% or more of the Common Shares, such
Person provided to the Board of Directors in writing a statement of such
Person's acquisition of Common Shares, together with any other information
reasonably requested of such Person by the Board of Directors, and the Board of
Directors, based on such statement and reasonable inquiry and investigation,
including such consultation, if any, with such persons as the directors shall
deem appropriate, determines to notify and notifies such Person in writing that
it will not declare such Person to be an Adverse Person; provided, further,
that the Board of Directors may expressly condition in any manner a
determination not to declare a Person an Adverse Person on such conditions as
the Board of Directors may select, including, without limitation, such Person's
not acquiring more than a specified amount of stock and/or on such Person's not
taking actions inconsistent with the purposes and intentions disclosed by such
Person in the statement provided to the Board of Directors; and provided,
however, that the Board of Directors shall not declare any Person (an "Existing
10% Holder") an Adverse Person who, on November 25, 1997, together with all
Affiliates and Associates of such Existing 10% Holder, is the Beneficial Owner
of 10% or more of the Common Shares then outstanding so long as: (1) such
Existing 10% Holder together with its Affiliates and Associates, continues to
be (i) the Beneficial Owner of 10% or more of the Common Shares then
outstanding, and (ii) entitled, pursuant to Section 13(d) of the Exchange Act
and the Rules thereunder, to report its ownership of Common Shares on
Schedule 13G; and (2) neither such Existing 10% Holder nor any of its
Affiliates or Associates becomes the Beneficial Owner of any additional Common
Shares or becomes Affiliate or Associate of a Person, such that, after giving
effect to such additional shares or any shares beneficially owned by such other
Person, such Existing 10% Holder, together with all Affiliates and Associates
of such Existing 10% Holder, is the Beneficial Owner of 20% or more of the
Common Shares then outstanding. No delay or failure by the Board of Directors
to declare a Person to be an Adverse Person shall in any way waive or otherwise
affect the power of the Board of Directors subsequently to declare a Person to
be an Adverse Person. In the event that the Board of Directors should at any
time determine, upon reasonable inquiry and investigation, including
consultation with such persons as the directors shall deem appropriate, that
such Person has not met or complied with any condition specified by the Board
of Directors, the Board of Directors may at any time thereafter declare such
Person to be an Adverse Person.
(d) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
promulgated under the Securities Exchange Act of 1934, as amended from time to
time (the "Exchange Act").
(e) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own", and shall be deemed to have "beneficial
ownership" of, any securities:
(i) that such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) that such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing), or upon the
exercise of conversion rights, exchange rights, rights (other than the
Rights), warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially own
(1) securities tendered pursuant to a tender or exchange offer made by or
on behalf of such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or exchange, (2)
securities issuable upon exercise of Rights at any time prior to the
occurrence of a Triggering Event, or (3) securities issuable upon exercise
of Rights from and after the occurrence of a Triggering Event, if such
Rights were acquired by such Person or such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(a) or
Section 22 or pursuant to Section 11(a)(i) in connection with an
adjustment made with respect to any of the Rights heretofore specified in
this clause (3); or (B) the right to vote or otherwise has "beneficial
ownership" (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, pursuant to this subparagraph (B), any security if the
agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given to such Person in response
to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations promulgated under
the Exchange Act and (2) is not also then reportable on Schedule 13D under
the Exchange Act (or any comparable or successor report); or
(iii) that are beneficially owned, including pursuant to
subparagraphs (ii)(A) and (B) of this subsection (d), 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) (other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public offering of
securities) relating to the acquisition, holding, voting (except pursuant
to a revocable proxy or consent as described in the provision in
subparagraph (ii)(B) of this subsection (d)) or disposing of any
securities of the Company;
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding" when used with reference to a Person's
Beneficial Ownership of securities of the Company shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to own beneficially hereunder.
(f) "Business Day" shall mean any day other than a Saturday, Sunday, or
U.S. federal holiday.
(g) "Close of Business" on any given date shall mean 5:00 P.M., Atlanta,
Georgia time, on such date; provided, however, that if such date is not a
Business Day, it shall mean 5:00 P.M., Atlanta, Georgia time, on the next
succeeding Business Day.
(h) "Common Shares" when used with reference to the Company shall mean
the shares of common stock, $0.01 par value per share, of the Company, or in
the event of a subdivision, combination, merger or share exchange with respect
to such shares of common stock, the shares of common stock resulting from such
subdivision, combination or consolidation. "Common Shares" when used with
reference to any Person other than the Company shall mean the capital stock (or
equity interest) with the greatest voting power of such Person or, if such
Person is a Subsidiary of another Person, the Person or Persons that ultimately
control such first-mentioned Person.
(i) "Continuing Director" shall mean any member of the Company's Board of
Directors while such person is a member of the Board of Directors who is not an
Acquiring Person or an Affiliate or an Associate of an Acquiring Person or a
representative or nominee of an Acquiring Person or of any such Affiliate or
Associate, and who either (i) was a member of the Company's Board of Directors
prior to the time that any Person became an Acquiring Person, as the case may
be, or (ii) subsequently became a member of the Board of Directors, and whose
nomination for election or election to the Board of Directors was recommended
or approved by a majority of the Continuing Directors then on the Board of
Directors.
(j) "Continuing Director Effective Date" shall mean the occurrence of any
one of the following: (i) the Company's Board of Directors is no longer
classified into three classes and the Directors are no longer serving staggered
terms, (ii) more than one director of the Company has been removed by action of
the shareholders of the Company prior to the expiration of the term of such
director, or (iii) the number of directors of the Company as of the date hereof
is increased by action of the shareholders of the Company.
(k) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(l) "Exempt Person" shall mean (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 or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan, or
(v) any Person who or which together with all Affiliates and Associates of such
Person becomes the Beneficial Owner of 20% or more of the then outstanding
Common Shares as a result of the acquisition of Common Shares directly from the
Company.
(m) "Final Expiration Date" shall mean November 25, 2007.
(n) "Grandfathered Shareholder" shall mean at any time J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
who is the Beneficial Owner of 1,283,340 Common Shares on the date of this
Agreement; provided that J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall not be a Grandfathered
Shareholder if he makes an acquisition of Common Shares that would increase his
beneficial ownership to 45% or more of the outstanding Common Shares. For
purposes of this Section 1(n), an acquisition of shares shall include the
exercise of stock options, but shall not include the grant of stock options.
(o) "Interested Shareholder" shall mean any Acquiring Person or any
Affiliate or Associate of an Acquiring Person or any other Person in which any
such Acquiring Person, such Affiliate, or Associate has an interest, or any
other Person acting directly or indirectly on behalf of or in concert with any
such Acquiring Person, such Affiliate or Associate.
(p) "Permitted Offer" shall mean a tender or exchange offer which is for
all outstanding Common Shares 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 Interested Shareholders, nominees or representatives of
an Interested Shareholder to be at a price which is fair to shareholder
s(taking into account all factors that such Directors 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
otherwise in the best interests of the Company and its shareholders (other than
the Person or any Affiliate or Associate thereof on whose behalf the offer is
being made) taking into account all factors that such Directors may deem
relevant.
(q) "Person" shall mean any individual, firm, partnership, corporation,
limited liability company, trust, association, joint venture or other entity,
and shall include any successor (by merger or otherwise) of such entity.
(r) "Preferred Shares" shall mean shares of Series A Preferred Stock,
with a par value of $0.10 per share, of the Company, having the relative
rights, preferences and limitations set forth in the Form of Articles of
Amendment attached to this Agreement as Exhibit A.
(s) "Purchase Price shall have the meaning set forth in Section 7(b)
hereof, as adjusted pursuant to Section 11(a)(ii) or Section 13(a)(i), and the
initial Purchase Price shall be $20.00.
(t) "Redemption Date" shall have the meaning set forth in Section 7(a)
hereof.
(u) "Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii)(A) or (B) hereof.
(v) "Section 13 Event" shall mean any event described in clauses (x), (y)
or (z) of Section 13(a) hereof.
(w) "Shares 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;
provided, that, if such Person is determined not to have become an Acquiring
Person pursuant to of Section 1(a) hereof, then no Shares Acquisition Date
shall be deemed to have occurred.
(x) "Subsidiary" of any Person shall mean any corporation or other entity
of which a majority of the voting power of the voting equity securities or
equity interests is owned, directly or indirectly, by such Person.
(y) "Triggering Event" shall mean any Section 11(a)(ii) Event or Section
13 Event.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution Date
also be the holders of Common Shares) 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. In the event the Company appoints one or more co-
Rights Agents, the respective duties of the Rights Agent and any co-Rights
Agents shall be as the Company shall determine.
SECTION 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the Close of Business on the tenth calendar
day after the Shares Acquisition Date or (ii) at such time as the Company's
Board of Directors may designate after the date that a tender or exchange
offer by any Person (other than an Exempt Person) is first published or sent or
given within the meaning of Rule 14d-2(a) of the General Rules and Regulations
under the Exchange Act, if upon consummation thereof, such Person would be the
Beneficial Owner of 20% or more of the Common Shares then outstanding
(including, in the case of both (i) and (ii), any date which is after the date
of this Rights Agreement and prior to the issuance of the Rights), the earlier
of (i) and (ii) being herein referred to as the "Distribution Date", the Rights
will be evidenced (subject to the provisions of paragraph (b) of this Section
3) by the certificates for Common Shares registered in the names of the holders
thereof (which certificates shall also be deemed to be Right Certificates) and
not by separate Right Certificates, and the right to receive Right Certificates
will be transferable only in connection with the transfer of Common Shares
(including transfers to the Company); provided, however, that if a tender offer
is terminated prior to the occurrence of a Distribution Date, then no
Distribution Date shall occur as a result of such tender offer. As soon as
practicable after the Distribution Date, Company will prepare and execute, the
Rights Agent will countersign, and the Company will send, by first-class,
postage-prepaid mail, to each record holder of Common Shares as of the Close of
Business on the Distribution Date, or, with respect to Common Shares so issued
on or after the Distribution Date, to the record holder of such Common Shares
on the date of issuance, at the address of such holder shown on the records of
the Company, a Right Certificate, substantially in the form of Exhibit B,
evidencing one Right for each Common Share so held, subject to adjustments as
provided herein. As of and after the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(b) As promptly as practicable following the Record Date, the Company
will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form attached hereto as Exhibit C (the "Summary of Rights"),
by first-class, postage prepaid mail, to each record holder of Common Shares as
of the Close of Business on the Record Date, at the address of such holder
shown on the records of the Company. With respect to certificates for Common
Shares outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates for Common Shares registered in
the names of the holders thereof (together with a copy of the Summary of
Rights). Until the earlier of the Distribution Date (or the earlier of the
Redemption Date or the Final Expiration Date), the surrender for transfer of
any certificate for Common Shares outstanding on the Record Date, with or
without a copy of the Summary of Rights attached thereto, shall also constitute
the transfer of the Rights associated with the Common Shares represented
thereby.
(c) Rights shall be issued in respect of all Common Shares which are
issued after the Record Date but prior to the earlier of the Distribution Date
or Final Expiration Date, or in certain circumstances provided in Section 22,
after the Distribution Date. Certificates for Common Shares which become
outstanding (including, without limitation, reacquired Common Shares referred
to in the last sentence of this paragraph (c)) after the Record Date but prior
to the earlier of the Distribution Date, the Redemption Date or the Final
Expiration Date, shall be deemed also to be certificates for Rights and shall
bear the following legend:
This certificate also evidences and entitles the holder hereof
to certain rights as set forth in a Rights Agreement between
Intelligent Systems Corporation (the "Company") and American
Stock Transfer & Trust Company as Rights Agent, dated as of
November 25, 1997 (the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy of which
is on file at the principal executive 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 following receipt of a
written request therefor.
Under certain circumstances set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was, or becomes an
Acquiring Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement) and certain related persons, whether currently
held by or on behalf of such Person or by any subsequent holder, may
become null and void.
With respect to such certificates bearing the foregoing legend, until the
Distribution Date the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone and the holders
of record of Common Shares shall also be the holders of record of the
associated Rights, and the transfer of any of such certificates shall also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificates. In the event that the Company purchases or
acquires any Common Shares after the Record Date but prior to the earlier of
the Distribution Date or the Final Expiration Date, any Rights associated with
such Common Shares shall be deemed canceled and retired so that the Company
shall not be entitled to exercise any Rights associated with the Common Shares
which are no longer outstanding.
(d) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Common Shares payable in Common Shares,
(B) subdivide the outstanding Common Shares, (C) combine the outstanding Common
Shares into a smaller number of Common Shares or (D) issue any shares of its
capital stock in a reclassification of the Common Shares (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
outstanding and the Purchase Price in effect at the time of the record date for
such event shall be proportionately adjusted so that the number of Rights
outstanding after such event shall equal the number of Common Shares
outstanding after such event, and the Purchase Price of the Rights shall be
adjusted so that the product of the number of Rights (adjusted in accord with
this Section 3(d)) and the Purchase Price shall equal the product of the number
of Rights and the Purchase Price before such event; provided, however, that in
no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. If an event occurs that would require an
adjustment under both this Section 3(d) and Section 11(a)(ii), the adjustment
provided for in this Section 3(d) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section 11(a)(ii). Any
adjustment made pursuant to this Section 3(d) shall not be deemed a redemption
pursuant to Section 23 of this Rights Agreement and shall not require the
payment or issuance of any money or property by the Company or the Rights Agent
to the holder of any Right except upon the exercise of the Rights as adjusted
by this Section 3(d).
SECTION 4. FORM OF RIGHT CERTIFICATES.
(a) The Right Certificates (and the forms of election to purchase and of
assignment to be printed on the reverse thereof) shall be substantially in the
form of Exhibit B 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 any securities
association on whose interdealer quotation system the Rights may from time to
time be authorized for quotation, or to conform to usage. Subject to the
provisions of Section 22, the Right Certificates that are issued in respect of
Common Shares that were issued and outstanding as of the Record Date, shall be
dated as of the Record Date, and all Right Certificates that are issued in
respect of other Common Shares shall be dated as of the respective dates of
issuance of such Common Shares, and in both cases on their faces shall entitle
the holders thereof to purchase such number of one one-hundredth Preferred
Shares as shall be set forth therein for the Purchase Price per one one-
hundredth Preferred Share, but the number of such Preferred Shares and the
Purchase Price shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22
that represents Rights which are null and void pursuant to Section 7(e) of this
Agreement, and any Right Certificate issued pursuant to Section 6 or Section 11
upon transfer, exchange, replacement or adjustment of any other Right
Certificate referred to above in this sentence, shall contain (to the extent
feasible) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or an Associate thereof (as such terms are defined in
the Rights Agreement). Accordingly, this Rights Certificate and the
Rights represented hereby are null and void.
The absence of the foregoing legend on any Right Certificate shall in no
way affect any of the other provisions of this Agreement, including, without
limitation, the provisions of Section 7(e). The Company shall instruct the
Rights Agent in writing of the Rights which should be so legended and shall
supply the Rights Agent with such legended Right Certificates.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board of Directors, its Chief Executive Officer, its
President or any of its Vice Presidents, either manually or by facsimile
signature, and may but need not have affixed thereto the Company's seal or a
facsimile thereof. The Right Certificates shall be countersigned by the Rights
Agent (manually or by facsimile signature) and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery
by the Company, such Right 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 Right Certificates had not
ceased to be such officer of the Company; and any Right Certificate may be
signed on behalf of the Company by any person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer of the Company
to sign such Right 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 the office of the Rights Agent designated for such purposes,
books for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the
Right Certificates, the number of Rights as evidenced on the face of each of
the Right Certificates and the date and certificate number of each of the Right
Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Section 4(b), Section 7(e), Section 11
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 earlier of
the Redemption Date or the Final Expiration Date, any Right Certificate or
Right Certificates may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates, entitling the registered
holder to purchase a like number of Preferred Shares (or other securities or
other assets, as the case may be) as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Right
Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any
such surrendered Right Certificate until the registered holder shall have
completed and signed the certificate contained in the form of assignment on the
reverse side of such Right Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e),
Section 11 and Section 14, countersign and deliver to the Person entitled
thereto a Right Certificate or Right 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 Right 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 Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and, at the Company's
request, 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 Right Certificate if mutilated, the Company will make and
deliver a new Right Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to Section 7(e), the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right 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 of the Rights Agent designated for such purpose, together
with payment of the Purchase Price for the total number of one one-hundredth
Preferred Shares (or other securities, cash or other assets, as the case may
be) as to which surrendered Rights are exercised, at or prior to the earliest
of (i) the Close of Business on Final Expiration Date, (ii) the time at which
the Rights are redeemed as provided in Section 23 (the "Redemption Date"), or
(iii) the time at which such Rights are exchanged as provided in Section 24
hereof.
(b) The Purchase Price for each one one-hundredth of a Preferred Share
pursuant to the exercise of a Right shall initially be $20.00, shall be subject
to adjustment from time to time as provided herein, including but not limited
to Sections 11 and 13(a) hereof, and shall be payable in accordance with
paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase duly executed, accompanied by payment of
the Purchase Price for the Preferred Shares (or other securities or other
assets, as the case may be) to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Sections 6(a) and 9(e) (as determined by the
Rights Agent) by certified check, cashier's check, or money order payable to
the order of the Company, the Rights Agent shall thereupon promptly (i) (A)
requisition from any transfer agent of the Preferred Shares certificates for
the number of Preferred Shares to be purchased, and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests, or
(B) if the Company, in its sole discretion, shall have elected to deposit the
total number of Preferred Shares issuable upon exercise of the Rights hereunder
with a depository agent, requisition from the depository agent depository
receipts representing such number of Preferred Shares (or fractions thereof) to
be purchased (in which case certificates for the Preferred Shares represented
by such receipts shall be deposited by the transfer agent with the depository
agent) and the Company hereby directs the depository agent to comply with such
request, (ii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional interests in shares in accordance
with Section 14 hereof, (iii) after receipt of such certificates or depository
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificates registered in such name or names as may be
designated by such holder, and (iv) when appropriate, after receipt, deliver
such cash to or upon the order of the registered holder of such Right
Certificate. In the event the Company is obligated to issue other securities
(including Common Shares) of the Company or distribute other property pursuant
to Section 11(a) hereof, the Company will make all arrangements necessary so
that such other securities or property are available for distribution by the
Rights Agent, if and when appropriate. The Company reserves the right to
require, prior to the occurrence of a Triggering Event, that upon any exercise
of Rights, a number of Rights be exercised so that only whole Preferred Shares
would be issued. In addition, in the case of an exercise of the Rights by a
holder pursuant to Section 11(a)(ii), the Rights Agent shall return such Right
Certificate to the registered holder thereof after imprinting, stamping or
otherwise indicating thereon that the rights represented by such Right
Certificate no longer include the rights provided by Section 11(a)(ii) of the
Rights Agreement and if less than all the Rights represented by such Right
Certificate were so exercised, the Rights Agent shall indicate on the Right
Certificate the number of Rights represented thereby which continue to include
the rights provided by Section 11(a)(ii).
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to the registered holder of such Right Certificate
or to his duly authorized assigns, subject to the provisions of Section 14, or
the Rights Agent shall place an appropriate notation on the Right Certificate
with respect to those Rights exercised, in accordance with the last sentence of
Section 7(c).
(e) Notwithstanding anything to the contrary in this Agreement, from and
after the first occurrence of any Section 11(a)(ii) Event, any Rights
beneficially owned by (i) any Acquiring Person (or any Associate or Affiliate
of an Acquiring Person), (ii) a transferee of an Acquiring Person (or any
Associate or Affiliate of an Acquiring Person) who or which becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or any Associate or Affiliate of an Acquiring Person) who or
which becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person (or any Associate
or Affiliate of such Acquiring Person) to holders of equity interests in such
Acquiring Person (or of such Associate or Affiliate) or to any Person with whom
the Acquiring Person has any agreement, arrangement or understanding regarding
the transferred Rights, or (B) a transfer that the Board of Directors has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall be null and
void without any further action, and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 7(e) and Section 4(b) are complied
with, but shall have no liability to any holder of Rights or any other Person
as a result of its failure to make any determination under this Section 7(e) or
such Section 4(b) with respect to any Acquiring Person or an Associate or
Affiliate of an Acquiring Person or their transferees.
(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
transfer or exercise unless such registered holder shall have (i) completed and
signed the certificate contained in the form of assignment or election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such assignment or exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement, including but not limited to
Section 7(c), Section 7(d), and Section 11(p). The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Right Certificates to the Company, or shall, at the
written request of the Company, destroy such canceled Right Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES.
(a) The Company covenants and agrees that at all times prior to a Section
11(a)(ii) Event, it will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares, the number of Preferred Shares that
will be sufficient to permit the exercise in full of all outstanding Rights
pursuant to the terms of this Agreement and, after the occurrence of a Section
11(a)(ii) Event, shall, to the extent reasonably practicable, so reserve and
keep available a sufficient number of Common Shares (and/or other securities)
which may be required to permit the exercise in full of the Rights pursuant to
this Agreement; provided, however, that such action need not be taken with
respect to Preferred Shares (or other securities) issuable upon exercise of the
Rights until after such time as the Rights become exercisable, and with respect
to Preferred Shares (or other securities) issuable upon occurrence of a
Triggering Event, until the occurrence of such event.
(b) So long as the Preferred Shares (and, after the occurrence of a
Section 11(a)(ii) Event, Common Shares or any other securities) issuable upon
the exercise of Rights may be listed on any national securities exchange or
authorized for quotation on any interdealer quotation system of any securities
association, the Company shall use its best efforts to cause, from and after
such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as is
practicable following the Shares Acquisition Date, a registration statement
under the Act with respect to the Rights and the Preferred Shares or other
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statements to become effective as soon as practicable
after such filing and (iii) cause such registration statements to remain
effective (with a prospectus at all times meeting the requirements of the Act
and the rules and regulations thereunder) until the earlier of (A) the date as
of which the Rights are no longer exercisable for such securities or (B) the
Final Expiration Date. The Company will also take such action as may be
appropriate under the blue sky laws of the various states. 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 paragraph, the
exercisability of the Rights in order to prepare and file such registration
statements and permit them to become effective and to take such actions under
such other securities or blue sky laws and permit them 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.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction if the requisite qualification in
such jurisdiction shall not have been obtained or the exercise thereof shall
not be permitted under applicable law or a registration statement shall not
have been declared effective.
(d) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Shares 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 non-assessable shares
or securities.
(e) The Company further covenants and agrees that, subject to Sections
6(a) and 7(c), it will pay when due and payable any and all foreign, federal
and state transfer taxes and charges that may be payable in respect of the
issuance or delivery of the Right Certificates or of any Preferred Shares (or
other securities or property) upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax that may be payable in
respect of any transfer or delivery of Right Certificates to a Person other
than, or the issuance or delivery of certificates or depository receipts for
the Preferred Shares (or other securities or property) in a name other than
that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise, or to issue or deliver any certificates or depository
receipts for Preferred Shares (or other securities or property) upon the
exercise of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Right 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 SHARES RECORD DATE. Each person in whose name
any certificate for Preferred Shares (or other securities) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder
of record of the Preferred Shares (or other securities) represented thereby on,
and such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Shares
(or other securities) transfer books of the Company are closed or a date on
which the exercisability of the Rights is suspended pursuant to Section 9(c),
such person shall be deemed to have become the record holder of such shares on,
and such certificate shall be dated, as applicable, the next succeeding
Business Day on which the Preferred Shares (or other securities) transfer books
of the Company are open, or the next succeeding Business Day on which such
suspension is no longer in effect, as the case may be.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of securities
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C)
combine the outstanding Preferred Shares into a smaller number of
Preferred Shares or (D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (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 capital stock issuable on such date,
shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the aggregate
number and kind of shares of capital stock which, if such Right had been
exercised immediately prior to such date and at a time when the Preferred
Shares transfer books (or other capital stock transfer books, as the case
may be) of the Company were open, such holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however, that in
no event shall the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right. If an event occurs that
would require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii).
(ii) In the event (A) any Person shall, at any time after the
Record Date, become an Acquiring Person, unless the event causing the
person to become an Acquiring Person is a transaction set forth in
Section 13(a) hereof, or is an acquisition of Common Shares pursuant to a
Permitted Offer, or (B) the Board of Directors shall declare any Person to
be an Adverse Person, upon a determination that such Person, alone or
together with its Affiliates and Associates, has, at any time after this
Agreement has been filed with the Securities and Exchange Commission as an
exhibit to a filing under the Exchange Act, become the Beneficial Owner of
a number of Common Shares which the Board of Directors determines to be
substantial (which number of shares shall in no event represent less than
10% of the outstanding Common Shares) and a determination by the Board of
Directors, after reasonable inquiry and investigation, including such
consultation, if any, with such persons as such directors shall deem
appropriate and consideration of such factors as are permitted by
applicable law, that (a) such Beneficial Ownership by such Person is
intended to cause the Company to repurchase the Common Shares 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 would not be served by taking such action or entering into such
transaction or series of transactions at the 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
customers or impairment of the Company's ability to maintain its
competitive position) on the business or prospects of the Company to the
detriment of the Company's shareholders, then, promptly following the
occurrence of such 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, for a period of 60 days after the later of the
occurrence of any such event or the effective date of an appropriate
registration statement under the Act pursuant to Section 9 hereof, have a
right to receive, upon exercise thereof at the then current Purchase
Price, in accordance with the terms of this Agreement, such number of one
one-hundredths of a Preferred Share as shall equal the result obtained by
(x) multiplying the then current Purchase Price by the number of one one-
hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event,
and dividing that product (y) by 50% of the then current per share market
price of the Company's Common Shares (determined pursuant to Section 11(d)
hereof) on the date of such first occurrence (such number of shares is
herein called the "Adjustment Shares"); provided, however, that the
Purchase Price and number of Adjustment Shares shall be further adjusted
as provided in this Agreement to reflect any event occurring after the
date of such first occurrence; and further provided that if the
transaction that would otherwise give rise to the foregoing adjustment is
also subject to the provisions of Section 13 hereof, then only the
provisions of Section 13 hereof shall apply and no adjustment shall be
made pursuant to this Section 11(a)(ii).
(iii) In the event that there shall not be sufficient authorized
but unissued (and unreserved) Preferred Shares to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii) and
the Rights become so exercisable, notwithstanding any other provision of
this Agreement, to the extent necessary and permitted by applicable law,
each Right shall thereafter represent the right to receive, upon exercise
thereof at the then current Purchase Price in accordance with the terms of
this Agreement, (x) a number of (or fractions of) Common Shares (up to the
maximum number of Common Shares which may permissibly be issued) and (y) a
number of (or fractions of) other equity securities of the Company (or, in
the discretion of the Board of Directors, debt) including but not limited
to one one-hundredths of a Preferred Share, which the Board of Directors
has determined to have the same aggregate current market value (determined
pursuant to Section 11(d)(i) and (ii) hereof, to the extent applicable) as
one Preferred Share (such number of, or fractions of, equity securities or
debt of the Company) being referred to as a "capital stock equivalent"),
equal in the aggregate to the number of Adjustment Shares; provided,
however, if there are unavailable sufficient Preferred Shares, Common
Shares and/or capital stock equivalents, and the Board of Directors has
determined not to cover such shortfall by having the Company issue debt in
the amount of such shortfall, then the Company shall, to the extent
permitted by applicable law, take all such action as may be necessary to
authorize additional Preferred Shares, Common Shares or capital stock
equivalents for issuance upon exercise of the Rights, including the
calling of a meeting of shareholders; and provided, further, that if the
Company is unable to cause sufficient Preferred Shares, Common Shares
and/or capital stock equivalents to be available for issuance upon
exercise in full of the Rights, then each Right shall thereafter represent
the right to receive the Adjusted Number of Shares upon exercise at the
Adjusted Purchase Price (as such term is hereinafter defined). As used
herein, the term "Adjusted Number of Shares" shall be equal to that number
of (or fractions of) Preferred Shares (and/or capital stock equivalents)
equal to the product of (x) the number of Adjustment Shares and (y) a
fraction, the numerator of which is the number of Preferred Shares (and/or
capital stock equivalents) available for issuance upon the exercise of the
Rights and the denominator of which is the aggregate number of Adjustment
Shares otherwise issuable upon exercise in full of all Rights (assuming
there were a sufficient number of Preferred Shares available)(such
fraction being referred to as the "Proration Factor"). The "Adjusted
Purchase Price shall mean the product of the Purchase Price and the
Proration Factor. The Board of Directors may, but shall not be required
to, establish procedures to allocate the right to receive Preferred
Shares, Common Shares and capital stock equivalents upon exercise of the
Rights among holders of Rights.
(b) In case the Company shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Preferred Shares (or shares having
the same rights, privileges and preferences as Preferred Shares, ("equivalent
preferred shares")), or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or per equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
current per share market price of the Preferred Shares (as determined pursuant
to Section 11(d)) 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 Preferred Shares outstanding on such record date
plus the number of Preferred Shares which the aggregate offering price of the
total number of Preferred Shares and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current per share market
price and the denominator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of additional Preferred Shares
and/or equivalent preferred shares to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially
convertible); provided, however, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one Right. In
case such subscription price may be paid in consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors, 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 Rights. Preferred Shares owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made successively whenever
such a record date is fixed; and in the event that such rights or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
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 the making of a
distribution to all holders of Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular scheduled cash dividend or a
dividend payable in Preferred Shares but including a dividend payable in stock
other than Preferred Shares) 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 per share market price of the Preferred Shares (as
determined pursuant to Section 11(d) hereof) on such record date less the fair
market value (as determined in good faith by the Board of Directors, 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) 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 Preferred Share and
the denominator of which shall be such current per share market price of the
Preferred Shares (as determined pursuant to Section 11(d) hereof); provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital
stock of the Company to be issued upon exercise of the Right. Such adjustments
shall be made successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price that would then be in effect if such record
date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current
per share market price" of any security (a "Security" for the purpose of
this Section 11(d)(i)) on any date shall be deemed to be the average of
the daily closing prices per share of such Security 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 per share market price" of
Preferred Shares on any date shall be deemed to be the average of the
daily closing prices per share of such Preferred Shares for the ten (10)
consecutive Trading Days immediately following such date; provided,
however, that in the event that the current per share market price of the
Security is determined during a period following the announcement by the
issuer of such Security of (A) a dividend or distribution on such Security
payable in shares of such Security or securities convertible into such
shares (other than the Rights), or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration of thirty
(30) Trading Days, or ten (10) Trading Days, as set forth above, after the
ex-dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification, then, and in each such
case, the current per share market price shall be appropriately 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 American Stock Exchange or, if the Security is not
listed or admitted to trading on the American Stock Exchange, as reported
in the principal consolidated transaction reporting system with respect to
securities listed on the principal United States national securities
exchange on which the Security is listed or admitted to trading or, if the
Security is not listed or admitted to trading on any United States
national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the United States
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such
other system then in use, or, if on any such date the Security is not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a United States professional market maker making a
market in the Security selected by the Board of Directors. If on any such
date no such market maker is making a market in the Security, the fair
value of the Security on such date as determined in good faith by the
Board of Directors shall be used. The term "Trading Day" shall mean a day
on which the principal United States national securities exchange on which
the Security is listed or admitted to trading is open for the transaction
of business or, if the Security is not listed or admitted to trading on
any United States national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the "current per
share market price" of the Preferred Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the
Preferred Shares are not publicly traded, the "current per share market
price" of the Preferred Shares shall be conclusively deemed to be the
current per share market price of the Common Shares as determined pursuant
to Section 11(d)(i), (appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof),
multiplied by one hundred (100). If neither the Common Shares nor the
Preferred Shares are publicly held or so listed or traded, "current per
share market price" shall mean the fair value per share as determined in
good faith by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be
conclusive for all purposes and binding on the holders of Rights. For all
purposes of this Agreement, the "current per share market price" of one
one-hundredth of a Preferred Share shall be equal to the "current per
share market price" of one Preferred Share divided by 100.
(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 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 one ten-thousandth of a Preferred Share or other
share, as the case may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made no later than
the earlier of (i) three (3) years from the date of the transaction which
mandates such adjustment or (ii) the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii) or
Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Preferred Shares, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the shares contained in Section 11(a), (b), (c), (e), (g), (h), (i),
(j), (k) and (m) and the provisions of Sections 7, 9, 10, 13 and 14 with
respect to the Preferred Shares shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in the
number of one one-hundredths of a Preferred Share purchasable upon the exercise
of a Right. Each of the Rights outstanding after such adjustment of the number
of Rights shall be exercisable for the number of one one-hundredths of a
Preferred Share for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record immediately prior to such adjustment of
the number of Rights shall become that number of Rights (calculated to the
nearest one ten-thousandth) obtained by (i) first multiplying (x) the number of
one-one hundredths of a share covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) then dividing the product so
obtained by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of its election
to adjust the number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made. This
record date may be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued, shall be at least
ten (10) days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(h), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights on such record date
Right Certificates evidencing, subject to Section 14, 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 Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein and 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 Right
Certificates on the record date specified in the public announcement.
(i) Irrespective of any adjustment or change in the Purchase Price or the
number of Preferred Shares issuable upon exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Purchase Price and the number of Preferred Shares that were expressed in the
initial Right Certificates issued hereunder.
(j) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value of the Preferred Shares issuable upon
exercise of the Rights, the Company shall take any corporate action that may,
in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Preferred Shares, Common
Shares or other securities at such adjusted Purchase Price.
(k) 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
issuing, to the holder of any Right exercised after such record date, of the
Preferred Shares or other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon 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 ▇▇▇▇ or other
appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
(l) 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 its sole discretion the Board of Directors shall determine
to be advisable in order that any (i) consolidation or subdivision of the
Preferred Shares, (ii) issuance wholly for cash of any Preferred Shares at less
than the current market price, (iii) issuance wholly for cash of Preferred
Shares or other securities that by their terms are convertible into or
exchangeable for Preferred Shares, (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 Shares shall not be taxable to such
shareholders.
(m) 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 which complies with Section 11(n)
hereof), (ii) merge with or into or engage in a share exchange with any other
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(n) hereof), or (iii) sell or transfer (or permit any Subsidiary
to sell or transfer), in one transaction or a series of related transactions,
assets or earning power aggregating more than 25% 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(n) hereto), if (x)
at the time of or immediately after such consolidation, merger, share exchange
or sale there are any rights, warrants, or other instruments or securities
outstanding or agreements in effect which would materially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or immediately after such consolidation, merger,
share exchange or sale, the shareholders of the Person who constitutes, or
would constitute, the "Principal Party" for purposes of Section 13(a) hereof
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates or Associates. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company and
such other Person shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with this Section 11(m).
(n) The Company covenants and agrees that, after the Distribution Date,
it shall not, except as permitted by Section 23, Section 24 or Section 27
hereof, take (or permit any Subsidiary to take) any action, the purpose of
which is, or if at the time such action is taken it is reasonably foreseeable
that the effect of such action will be, to materially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights.
(o) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the date of this Agreement and
prior to the Distribution Date consolidate with, or merge with or into, any
other Person for the primary purpose of a change of domicile of the Company,
and, in connection with such consolidation or merger, all of the outstanding
Common Shares shall be changed into or exchanged for Common Shares of the
surviving corporation of such consolidation or merger (the "Surviving
Corporation"), then proper provision shall be made so that Rights shall be
associated with each Common Share of the Surviving Corporation, except as
provided in Section 7(e) hereof, such that the number of Rights associated with
each Common Share of the Surviving Corporation following any such event shall
equal the result obtained by multiplying the number of Rights associated with
each Common Share immediately prior to such event by a fraction the numerator
of which shall be the total number of Common Shares outstanding immediately
prior to the occurrence of the event and the denominator of which shall be the
total number of Common Shares of the Surviving Corporation which the Common
Shares were changed into or exchanged for pursuant to the consolidation or
merger. Following such a consolidation or merger, this Agreement shall remain
in effect and all references to the Company shall be deemed to be references to
the Surviving Corporation.
(p) The exercise of Rights under Section 11(a)(ii) shall only result in
the loss of rights under Section 11(a)(ii) to the extent so exercised and shall
not otherwise affect the rights represented by the Rights under this Rights
Agreement, including the rights represented by Section 13.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Sections 11 or 13, the Company
shall promptly (a) prepare a certificate setting forth such adjustment, and a
brief statement of the facts accounting for such adjustment, (b) file with the
Rights Agent and with each transfer agent for the Common Shares and the
Preferred Shares a copy of such certificate, and (c) mail a brief summary
thereof to each holder of record of a Right Certificate (or, if prior to the
Distribution Date, to each holder of record of a certificate representing
Common Shares) in accordance with Section 26 hereof. The Rights Agent shall be
fully protected in relying on such certificate and on any adjustment contained
therein and shall not be deemed to have knowledge of any adjustment unless and
until it shall have received such certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event that, on or following the Shares Acquisition Date,
directly or indirectly, (x) the Company shall engage in a share exchange with,
consolidate with, or merge with and into, any Interested Shareholder or, if in
such merger, share exchange or consolidation all holders of Common Share are
not treated alike (and the holders of Preferred Shares do not receive at least
as much per one one-hundredth of a Preferred Share as holders of Common Shares
receive for each Common Share so held), any other Person, (y) the Company shall
engage in a share exchange with, consolidate with, or merge with, any
Interested Shareholder or, if in such merger, share exchange or consolidation
all holders of Common Shares and are not treated alike (and the holders of
Preferred Shares do not receive at least as much per one one-hundredth of a
Preferred Share as holders of Common Shares receive for each Common Share so
held), any other Person, and the Company shall be the continuing or surviving
corporation of such share exchange, consolidation or merger (other than, in a
case of any transaction described in (x) or (y), a share exchange,
consolidation or merger which would result in all of the securities generally
entitled to vote in the election of directors ("voting securities") of the
Company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into securities of the surviving
entity) all of the voting securities of the Company or such surviving entity
outstanding immediately after such share exchange, consolidation or merger and
the holders of such securities not having changed as a result of such share
exchange, consolidation or merger), or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer),
in one transaction or a series of related transactions, assets or earning power
aggregating 25% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Interested Shareholder or Shareholders
or, if in such transaction all holders of Common Shares are not treated alike
(and the holders of Preferred Shares do not receive at least as much per one
one-hundredth of a Preferred Share as holders of Common Shares receive for each
Common Share so held), any other 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(n) hereof), then, and in each such case (except as
provided in Section 13(d) hereof) proper provision shall be made so that
(i) each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the terms of
this Agreement and in lieu of Preferred Shares, such number of validly
authorized and issued, fully paid, nonassessable and freely tradable
Common Shares of the Principal Party (as such term is hereinafter
defined), not subject to any liens, encumbrances, rights of call, rights
of first refusal or other adverse claims, as shall be equal to the result
obtained by (A) multiplying the then current Purchase Price by the number
of one one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a Section 13
Event (or, if a Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the Purchase Price in effect
immediately prior to the first occurrence of a Section 11(a)(ii) Event by
the number of one one-hundredths of a Preferred Share for which a Right
was exercisable immediately prior to such first occurrence of a Section
11(a)(ii) Event), and (B) dividing that product by 50% of the current per
share market price of the Common Shares of such Principal Party
(determined pursuant to Section 11(d) hereof) 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 its Common Shares)
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 the Common
Shares thereafter deliverable upon the exercise of the Rights; and
If, in the case of a transaction of the kind described in clause (z) of
the first sentence of this Section 13(a), the Person or Persons to whom assets
or earning power are sold or otherwise transferred are individuals, then the
preceding sentences of this Section 13(a) shall be inapplicable, and the
Company shall require as a condition to such sale of transfer that such Person
or Persons pay to each holder of a Right Certificate, upon its surrender to the
Rights Agent and in exchange therefor (without requiring payment by such
holder), cash in the amount determined by multiplying the then current Purchase
Price by the number of one one-hundredths of a Preferred Share for which a
Right is then exercisable.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), the Person that is the issuer of any
securities for or into which Common Shares of the Company are converted in
such share exchange, merger or consolidation, and if no securities are so
issued, the Person that is the other party to such merger or consolidation
(including, if applicable, the Company, if it is the surviving
corporation); 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;
provided, however, that in any such case, (1) if the Common Shares of such
Person are not at such time and have not been continuously over the preceding
twelve (12) month period registered under Section 12 of the Exchange Act, and
such Person is a direct or indirect Subsidiary of another Person the Common
Shares of which are and have been so registered, then "Principal Party" shall
refer to such other Person; (2) in case such Person is a Subsidiary, directly
or indirectly, of more than one Person, the Common Shares of two or more of
which are and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common Shares having the
greatest aggregate market value; and (3) in case such Person is owned, directly
or indirectly, by the same Person, the rules set forth in (1) and (2) above
shall apply to each of the chains of ownership having an interest in such joint
venture as if such party were a "Subsidiary" of both or all of such joint
venturers and the Principal Party in each such chain shall bear the obligations
set forth in this Section 13 in the same ratio as their direct and indirect
interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any Section 13 Event unless the
Principal Party shall have a sufficient number of authorized shares of Common
Shares which have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13 and unless
prior thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the terms
set forth in paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable after the date of any such Section 13 Event, the
Principal Party will
(i) prepare and file a registration statement under the Securities
Act, with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A) become effective as
soon as practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Securities Act)
until the Final Expiration Date;
(ii) use its best efforts to qualify or register the Rights and the
securities purchasable upon exercise of the Rights under the securities or
blue sky laws of such jurisdictions as may be necessary or appropriate and
(iii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply
in all respects with the requirements for registration on Form 10 under
the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
share exchanges, mergers or consolidations or sales or other transfers. The
rights under this Section 13 shall be in addition to the rights to exercise
Rights and adjustments under Section 11(a)(ii) and shall survive any exercise
thereof.
(d) Notwithstanding anything in this Agreement to the contrary, Section
13 shall not be applicable to a transaction described in subparagraphs (x) and
(y) of Section 13(a) if: (i) such transaction is consummated with a Person or
Persons who acquired Common Shares pursuant to a Permitted Offer (or a wholly
owned Subsidiary of any such Person or Persons); (ii) the price per Common
Share offered in such transaction is not less than the price per Common Share
paid to all holders of Common Shares whose shares were purchased pursuant to
such Permitted Offer; and (iii) the form of consideration offered in such
transaction is the same as the form of consideration paid pursuant to such
Permitted Offer. Upon consummation of any such transaction contemplated by
this Section 13(d), all Rights hereunder shall expire.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates that evidence fractional Rights unless the
required by Section 11(h) hereof and the Company made the election described in
Section 11(h) hereof. In lieu of any adjustment in the number of Rights, the
Purchase Price and the number of Preferred Shares or other securities to be
issued upon the exercise of the Rights shall be adjusted as provided in this
Rights Agreement.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are one one-hundredth or integral multiples
of one one-hundredth of a Preferred Share) upon exercise of the Rights or to
distribute certificates that evidence fractions of Preferred Shares (other than
fractions which are one one-hundredth or integral multiples of one one-
hundredth of a Preferred Share). Fractions of Preferred Shares in integral
multiples of one one-hundredth of a Preferred Share may, at the election of the
Company, be evidenced by depository receipts, pursuant to an appropriate
agreement between the Company and a depository selected by it; provided, that
such agreement shall provide that the holders of such depository receipts shall
have the rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such depository
receipts. In lieu of fractional interests in Preferred Shares that are not one
one-hundredth or integral multiples of one one-hundredth of a Preferred Share,
the Company shall pay to the holders of record of Right Certificates at the
time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current per share market price of one one-hundredth of
a Preferred Share (determined pursuant to Section 11(d) hereof).
(c) Following the occurrence of one of the transactions or events
specified in Section 11 giving rise to the right to receive Common Shares,
capital stock equivalents (other than Preferred Shares) or other securities
upon the exercise of a Right, the Company shall not be required to issue
fractions of shares or units of such Common Shares, capital stock equivalents
or other securities upon exercise of the Rights or to distribute certificates
which evidence fractions of such Common Shares, capital stock equivalents or
other securities. In lieu of fractional shares or units of such Common Shares,
capital stock equivalents or other securities, the Company may pay to the
registered holders of Right Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
per share market price of a share or unit of such Common Shares, capital stock
equivalents or other securities (determined pursuant to Section 11(d) hereof).
(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 (except as
provided by this Section 14) upon exercise of a Right.
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the holder of any other Right Certificate (or, prior to
the Distribution Date, of the Common Shares), may, in his own behalf and for
his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this
Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the office of
the Rights Agent designated for such purpose, duly endorsed or accompanied by a
proper instrument of transfer and with the appropriate forms and certificates
fully completed and duly executed;
(c) subject to Section 6 and Section 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name the Right Certificate
(or, prior to the Distribution Date, the associated Common Shares certificate)
is registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right
Certificates or the associated Common Shares 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 Section 7(e), shall be affected by
any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or
any other securities of the Company that may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right 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 other
disbursements incurred in the administration and execution of this Agreement
and the exercise and performance of its duties hereunder. The Company also
agrees to indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability, or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability arising therefrom.
(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 Right
Certificate or certificate for Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
stock transfer or all or substantially all of the corporate trust 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. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in
its changed name, and in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity or existence of any Acquiring
Person and the determination of "current per share market price" of any
security) 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 any one of the Chairman of
the Board of Directors, the President, any Vice President, the Secretary, an
Assistant Secretary or the Treasurer 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 to the Company and any
other Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right 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 Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including
the Rights becoming void pursuant to Section 7(e) hereof) or for any adjustment
required under the provisions of Section 11 or Section 13 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 change or adjustment (except
with respect to the exercise of Rights evidenced by Right Certificates after
actual notice that such change or adjustment is required); nor shall it by any
act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares or Common Shares to be
issued pursuant to this Agreement or any Right Certificate or as to whether any
Preferred Shares or Common Shares will, when 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 any
one of the Chairman of the Board of Directors, the President, any Vice
President, the Secretary or the 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 shareholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction
in which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other Person.
(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 reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Right 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 or 2 thereof,
the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Company.
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 60 days' notice in writing mailed to the Company and to each transfer
agent of the Common Shares and the Preferred Shares by registered or certified
mail, and to the holders of the Right Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon 30 days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Shares and the Preferred
Shares by registered or certified mail, and to the holders of the Right
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 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 Right
Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the holder of record of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or
by such a court, shall be a corporation organized and doing business under the
laws of the United States or any state of the United States so long as such
corporation is authorized to do business as a banking institution, is in good
standing, is authorized under such laws to exercise corporate trust powers, and
is subject to supervision or examination by federal or state authority, and has
at the time of its appointment as Rights Agent a combined capital and surplus
of at least $50 million. After appointment, the successor Rights Agent shall
be vested with the same powers, rights, duties and responsibilities as if it
had been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment the Company shall file
notice with the predecessor Rights Agent and each transfer agent of the Common
Shares and the Preferred Shares, and mail a notice thereof in writing to the
holders of record of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares following the Distribution Date and
prior to the redemption or expiration of the Rights, the Company (a) shall with
respect to Common Shares so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereinafter issued by the Company, and (b)
may, in any other case, if deemed necessary or appropriate by the Board of
Directors, issue Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i)
the Company shall not be obligated to issue any such Right Certificate 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 to the Person to whom such Right Certificate would be issued, and
(ii) no such Right Certificate shall be issued if, and to the extent that,
appropriate adjustments shall otherwise have been made in lieu of the issuance
thereof.
SECTION 23. REDEMPTION AND TERMINATION.
(a) (i) The Board of Directors may, at its option, redeem all but not
less than all of the then outstanding Rights at a redemption price of $.01 per
Right, as such amount may be appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
redemption price being referred to as the "Redemption Price"), at any time
prior to the earlier of (x) the Close of Business on the tenth calendar day
following the Shares Acquisition Date or (y) the Close of Business on the
Final Expiration Date. Notwithstanding the foregoing, in the event payment of
the Redemption Price to a holder of Rights would result in the payment of an
amount not equal to $.01 or an integral multiple of $.01, the amount to be paid
shall be rounded upward to the next $.01. Notwithstanding anything contained
in this Agreement to the contrary, the Rights shall not be exercisable after
the first occurrence of a Section 11(a)(ii) Event until such time as the
Company's right of redemption set forth in the first sentence of this Section
23(a) has expired. The Company, may, at its option, pay the Redemption Price
in cash, Common Shares (based on the current market price per share at the time
of redemption) or any other form of consideration deemed appropriate by the
Board of Directors provided, that if the Company elects to pay the Redemption
Price in Common Shares, the Company shall not be required to issue any
fractional Common Shares and the number of Common Shares issuable to each
holder of Rights shall be rounded to the next whole share.
(ii) In addition, the Board of Directors may, at its option, at any time
following the occurrence of a Section 11(a)(ii) Event and the expiration of any
period during which the holder of Rights may exercise the rights under Section
11(a)(ii) but prior to any Section 13 Event redeem all but not less than all of
the then outstanding Rights at the Redemption Price (x) in connection with any
merger, consolidation or sale or other transfer (in one transaction or in a
series of related transactions) of assets or earning power aggregating 25% or
more of the earning power of the Company and its subsidiaries (taken as a
whole) in which all holders of Common Shares are treated alike and not
involving (other than as a holder of Common Shares being treated like all other
such holders) an Interested Shareholder or (y)(aa) if and for so long as the
Acquiring Person is not thereafter the Beneficial Owner of 20% of the Common
Shares, and (bb) at the time of redemption no other Persons are Acquiring
Persons.
(iii) Notwithstanding any other provisions of this Section 23, (i) on or
after the Continuing Directors Effective Date, the Rights may not be redeemed
on or after the time a Person becomes an Acquiring Person unless there are
Continuing Directors then in office and such redemption is approved by a
majority of such Continuing Directors, and (ii) the Board of Directors may not
redeem the Rights following the determination pursuant to Section 11(a)(ii)(B)
that any Person is an Adverse Person.
(b) In the case of a redemption permitted under Section 23(a),
immediately upon the date for redemption set forth or determined in the manner
specified in a resolution of the Board of Directors 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. In the case of a
redemption permitted only under Section 23(a)(ii), evidence of which shall have
been filed with the Rights Agent, the right to exercise the Rights will
terminate and represent only the right to receive the Redemption Price upon the
later of ten Business Days following giving of such notice or the expiration of
any period during which the rights under Section 11(a)(ii) may be exercised.
The Company shall promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such notice shall not
affect the validity of such redemption. Within ten (10) days after action of
the Board of Directors ordering the redemption of the Rights, the Company shall
give notice of such redemption to the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the Transfer Agent for the Common Shares. Any notice
that 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. Neither
the Company nor any of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23 and Section 24 hereof and other than
in connection with the purchase of Common Shares prior to the Distribution
Date.
(c) The Company may, at its option, discharge all of its obligations with
respect to the Rights by (i) issuing a press release announcing the manner of
redemption of the Rights in accordance with this Agreement, and (ii) mailing
payment of the Redemption price to the registered holders of the Rights at
their last addresses as they appear on the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the Transfer Agent
of the Common Shares, and upon such action, all outstanding Rights and Right
Certificates shall be null and void without any further action by the Company.
SECTION 24. EXCHANGE.
(a) The Board of Directors may, at its option, at any time after any
Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 7(e) hereof) for Common
Shares, at an exchange ratio of one Common Share per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such number of Common Shares issuable in
exchange for one Right being referred to herein as the "Exchange Shares").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than any Exempt
Person), together with all Affiliates and Associates of such Person, becomes
the Beneficial Owner of 50% or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors ordering the
exchange of any Rights pursuant to subsection (a) of this Section 24, without
any further action and without any notice the right to exercise such Rights
shall terminate and the only right thereafter of a holder of such Rights shall
be to receive the Exchange Shares. The Company shall promptly give public
notice of any such exchange; provided, however, that the failure to give, or
any defect in, such notice shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange to all of the holders
of such Rights at their last addresses as they appear upon the registry books
of the Rights Agent. Any notice that is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each
such notice of exchange will state the method by which the exchange of the
Common Shares for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(e) hereof) held
by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Shares (or equivalent preferred shares, as
such term is defined in Section 11(b) hereof) for some or all of the Common
Shares exchangeable for Rights, at the initial rate of one one-hundredth
Preferred Share (or equivalent preferred share) for each Common Share, as
appropriately adjusted to reflect adjustments in the voting rights of the
Preferred Shares pursuant to the terms thereof, so that the fractions of a
Preferred Share delivered in lieu of each Common Share shall have the same
voting rights as one Common Share.
(d) In the event that there shall not be sufficient Common Shares or
Preferred Shares issued but not outstanding, or authorized but unissued, to
permit any exchange of Rights as contemplated in accordance with this Section
24, the Company shall take all such action as may be necessary to authorize
additional Common Shares or Preferred Shares for issuance upon exchange of the
Rights , or shall take such other action specified in Section 11(a)(iii)
hereof.
SECTION 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, (i) to pay any dividend payable in
stock of any class to the holders of its Preferred Shares or to make any other
distribution to the holders of its Preferred Shares (other than a regularly
scheduled cash dividend), (ii) to offer to the holders of its Preferred Shares
rights or warrants to subscribe for or to purchase any additional Preferred
Shares or shares of stock of any class or any other securities, rights or
options, (iii) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares), (iv) to effect any consolidation or merger into or with any other
Person (other than a Subsidiary of the Company in a transaction that complies
with Section 11(n) 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 or more transactions, of 25% or more 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(n) hereof), or (v) to
effect the liquidation, dissolution or winding up of the Company, then, in each
such case, the Company shall give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of such proposed action to the
extent feasible that shall specify the record date for the purposes of such
stock dividend, or distribution of rights or warrants, or the date on which
such reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Preferred Shares, 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 Preferred Shares 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 Preferred Shares, whichever shall be the earlier.
(b) In case of a Triggering Event shall occur, then (i) the Company shall
as soon as practicable thereafter give to each holder of a Right Certificate,
in accordance with Section 26, a notice of the occurrence of such event, which
shall describe such event and the consequences of the event to holders of
Rights under Section 11(a)(ii) or Section 13 hereof, and (ii) all references in
the preceding paragraph to Preferred Shares shall be deemed thereafter to also
refer to Common Shares and/or other securities, if appropriate.
(c) The failure to give notice required by this Section 25 or any defect
therein shall not affect the legality or validity of the action taken by the
Company or the vote on any such action.
SECTION 26. NOTICES. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
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:
Intelligent Systems Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any Right
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:
American Stock Transfer & Trust Company
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Compliance Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to or on the holder of any Right Certificate (or,
if prior to the Distribution Date, to the holder of certificates representing
Common Shares) shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as
shown on the registry books of the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution
Date, the Company may and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement (including supplements or
amendments that may be deemed to affect the interests of the holders of Right
Certificates adversely) without the approval of any holders of certificates
representing Common Shares. From and after the Distribution Date, the Company
may and the Rights Agent shall, if the Company so directs, supplement or amend
this Agreement without the approval of any holders of Right Certificates in
order (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with the other
provisions contained herein, (iii) to shorten or lengthen any time period
hereunder, or (iv) to change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable and which shall not
adversely affect the interests of holders of Right Certificates (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person);
provided, however, that this Agreement shall not be supplemented or amended to
lengthen pursuant to clause (iii) of this sentence, (A) a time period relating
to when the Rights may be redeemed at such time as the Rights are not then
redeemable, or (B) any other time period unless such lengthening is for the
purpose of protecting, enhancing or clarifying the rights of, and/or, the
benefits to, the holders of Rights (other than an Acquiring Person or any
Affiliate or Associate of an Acquiring Person). Upon the delivery of a
certificate from an appropriate officer of the Company that states that the
proposed supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or amendment,
provided that the proposed supplement or amendment does not adversely affect
the rights or obligations of the Rights Agent under Section 18 or Section 20 of
this Agreement. Prior to the Distribution Date, the interests of the holders
of Rights shall be deemed coincident with the interests of the holders of
Common Shares. Notwithstanding anything in this Section 27 to the contrary, no
proposed supplement or amendment to this Agreement shall be effective on or
after the Continuing Director Effective Date unless there are Continuing
Directors then in office and such supplement or amendment is approved by a
majority of such Continuing Directors.
SECTION 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS. The
Board of Directors shall have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers specifically granted to
the Board of 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, without limitation, a determination to redeem or not
redeem the Rights or to amend the Agreement. For all purposes of this
Agreement, any calculation of the number of Common Shares or other securities
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding Common Shares 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. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board of Directors (with, where
specifically provided for herein, the concurrence of the Continuing Directors)
in good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other parties, and (y) not
subject the Board of Directors or any Continuing Director to any liability to
the holders of the Rights.
SECTION 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the Common Shares) 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 Right Certificates (and, prior to the Distribution
Date, the registered holders of the Common Shares).
SECTION 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors determines in its good faith judgment that severing the invalid
language of this Agreement would adversely affect the purpose or effect of this
Agreement, then the right of redemption set forth in Section 23 hereof shall be
reinstated and shall not expire until the close of business on the tenth day
following the date of such determination by the Board of Directors.
SECTION 32. GOVERNING LAW. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Georgia and for all purposes shall be governed by and
construed in accordance with the laws of such state applicable to contracts to
be made and performed entirely within such state.
SECTION 33. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
SECTION 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
SECTION 35. ESTABLISHMENT OF FUND FOR CONTINUING DIRECTORS. The Board
of Directors may, at any time it deems appropriate, establish or set aside one
or more funds, whether in trust, escrow or otherwise (and regardless of whether
such fund is combined with any other fund established or set aside by the
Company), for the purpose of assuring that adequate resources are available to
any Continuing Director in order to enable such Continuing Director to carry
out his or her prescribed functions under this Agreement and to fulfill his or
her fiduciary obligations to shareholders of the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
INTELLIGENT SYSTEMS CORPORATION
Attest: By:_________________________________
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief
Executive Officer
By:_________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President and Secretary
AMERICAN STOCK TRANSFER & TRUST COMPANY
Attest: By:_________________________________
Name:
Title:
By:_________________________________
Name:
Title:
Exhibit A
FORM OF
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
INTELLIGENT SYSTEMS CORPORATION
(Pursuant to Section 14-2-602
of the Georgia Business Corporation Code)
I. The name of the corporation is Intelligent Systems Corporation
(hereinafter called the "Corporation");
II. Article Two of the Articles of Incorporation of the Corporation (the
"Articles of Incorporation"), is hereby amended to designate the preferences,
limitations, and relative rights of a series of Special Stock to be known as
Series A Preferred Stock. Article Two of the Articles of Incorporation is
hereby replaced in its entirety with the following:
ARTICLE TWO
CAPITALIZATION
A. AUTHORIZED STOCK. The corporation shall have authority,
exercisable by its Board of Directors, to issue up to 20,000,000 shares of
common stock, $0.01 par value per share, ("Common Stock") and 2,000,000
shares of a special class of stock, $0.10 par value per share, ("Special
Stock"), any part or all of which shares of Special Stock may be
established and designated from time to time by the Board of Directors, in
such series and with such preferences, limitations, and relative rights as
may be determined by the Board of Directors.
B. Series A Preferred Stock
Section 1. Series A Preferred Stock. There shall be a series of
Special Stock referred to "Series A Preferred Stock."
Section 2. Designation, Par Value and Amount. The shares of Series
A Preferred Stock shall be with par value of $0.10 per share, and the
number of shares constituting such series shall be 200,000; provided,
however, that, if more than a total of 200,000 shares of Series A
Preferred Stock shall be issuable upon the exercise of Rights (the
"Rights") issued pursuant to the Rights Agreement, dated as of November
25, 1997, between the Corporation and American Stock Transfer Company, as
Rights Agent, as amended from time to time (the "Rights Agreement"), the
Board of Directors of the Corporation, pursuant to Section 602(e) of the
Georgia Business Corporation Code, shall direct by resolution or
resolutions that articles of amendment be properly executed and filed
providing for the total number of shares of Series A Preferred Stock
authorized to be issued to be increased (to the extent that the Articles
of Incorporation then permits) to the largest number of whole shares
(rounded up to the nearest whole number) issuable upon exercise of the
Rights.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Except as required by applicable law, the holders of shares of
Series A Preferred Stock and the holders of shares of Common Stock shall
vote together as one class on all matters submitted to a vote of
shareholders of the Corporation.
(B) Each share of Series A Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the
shareholders of the Corporation.
(C) The Articles of Incorporation of the Corporation shall not be
further amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Preferred Stock so
as to affect them adversely without the affirmative vote of the holders of
at least a majority of the outstanding shares of Series A Preferred Stock,
voting separately as a class.
(D) Except as set forth herein (or as otherwise required by
applicable law), holders of Series A Preferred Stock shall have no general
or special voting rights and their consent shall not be required for
taking any corporate action.
Section 4. Dividends. The holders of Series A Preferred Stock shall
share ratably in any dividend or distribution declared by the Corporation
on shares of Common Stock in a ratio of 100 to one (1) with respect to a
share of Series A Preferred Stock and a share of Common Stock,
respectively.
Section 5. Liquidation, Dissolution or Winding Up.
(A) Subject to the prior and superior rights of holders of any
shares of any series of Special Stock ranking prior and superior to the
shares of Series A Preferred Stock with respect to rights upon
liquidation, dissolution or winding up (voluntary or otherwise), no
distribution shall be made to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock unless prior thereto the holders of
shares of Series A Preferred Stock shall have received $0.10 per share,
plus an amount equal to accrued and unpaid dividends and distributions
thereon, if any, to the date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of the Series A
Liquidation Preference, no additional distributions shall be made to the
holders of shares of Series A Preferred Stock unless, prior thereto, the
holders of shares of Common Stock shall have received an amount per share
(the "Capital Adjustment") equal to the quotient obtained by dividing (i)
the Series A Liquidation Preference by (ii) 100. Following the payment of
the full amount of the Series A Liquidation Preference and the Capital
Adjustment in respect of all outstanding shares of Series A Preferred
Stock and Common Stock, respectively, holders of Series A Preferred Stock
and holders of Common Stock shall receive a ratable and proportionate
share of the remaining assets to be distributed in the ratio of 100 to one
(1) with respect to Series A Preferred Stock and Common Stock, on a per
share basis, respectively.
(B) If there are not sufficient assets available to permit payment
in full of the Series A Liquidation Preference and the liquidation
preferences of all other series of preferred stock, if any, which rank on
a parity with the Series A Preferred Stock, then such remaining assets
shall be distributed ratably to the holders of Series A Preferred Stock
and the holders of such parity shares in proportion to their respective
liquidation preferences. If there are not sufficient assets available to
permit payment in full of the Capital Adjustment, then such remaining
assets shall be distributed ratably to the holders of Common Stock.
Section 6. Consolidation, Merger, Etc. In case the Corporation
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other property,
then in any such case the shares of Series A Preferred Stock shall at the
same time be similarly exchanged or changed in an amount per share equal
to 100 times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for
which each share of Common Stock is changed or exchanged.
Section 7. No Redemption. The shares of Series A Preferred Stock
shall not be redeemable.
Section 8. Ranking. The Series A Preferred Stock shall rank junior
to all other series of the Corporation's Special Stock as to the payment
of dividends and the distribution of assets, unless the terms of any such
series shall provide otherwise.
Section 9. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized
but unissued shares of Special Stock and may be reissued as part of a new
series of Special Stock subject to the conditions and restrictions on
issuance set forth herein, in the Articles of Incorporation, in any other
Articles of Amendment creating a series of Special Stock or as otherwise
required by law.
III. The foregoing amendment to the Articles of Incorporation was duly adopted
by the Board of Directors of the Corporation, pursuant to Section 602 of the
Georgia Business Corporation Code without the approval of the shareholders, at
a meeting duly called and held on November 4, 1997.
IN WITNESS WHEREOF, these Articles of Amendment are executed on behalf of
the Corporation by its Chairman of the Board of Directors and this 25th day of
November, 1997.
____________________________________
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Chairman of the Board of
Directors, President & Chief
Executive Officer
Exhibit B
[FORM OF RIGHT CERTIFICATE]
Certificate No. R- _______________ Rights
NOT EXERCISABLE AFTER NOVEMBER 25, 2007 OR EARLIER IF NOTICE OF REDEMPTION IS
GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE
RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND
VOID. [THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON. THIS RIGHT CERTIFICATE AND
THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(E) OF THE RIGHTS AGREEMENT.]
RIGHT CERTIFICATE
INTELLIGENT SYSTEMS CORPORATION
THIS CERTIFIES THAT ____________________________, OR REGISTERED ASSIGNS,
IS THE REGISTERED OWNER OF THE NUMBER OF RIGHTS SET FORTH ABOVE, EACH OF WHICH
ENTITLES THE OWNER THEREOF, SUBJECT TO THE TERMS, PROVISIONS AND CONDITIONS OF
THE RIGHTS AGREEMENT, DATED AS OF NOVEMBER 25, 1997 (THE "RIGHTS AGREEMENT"),
BETWEEN INTELLIGENT SYSTEMS CORPORATION, A GEORGIA CORPORATION (THE "COMPANY"),
AND AMERICAN STOCK TRANSFER & TRUST COMPANY (THE "RIGHTS AGENT"), TO PURCHASE
FROM THE COMPANY AT ANY TIME AFTER THE DISTRIBUTION DATE (AS SUCH TERM IS
DEFINED IN THE RIGHTS AGREEMENT) AND PRIOR TO 5:00 P.M. (ATLANTA, GEORGIA TIME)
ON NOVEMBER 25, 2007, UNLESS THE RIGHTS EVIDENCED HEREBY SHALL HAVE BEEN
PREVIOUSLY REDEEMED BY THE COMPANY, AT THE OFFICE OF THE RIGHTS AGENT
DESIGNATED FOR SUCH PURPOSE, OR AT THE OFFICE OF ITS SUCCESSOR AS RIGHTS AGENT,
one one-hundredth of a fully-paid, non-assessable share of Series A Preferred
Share, $0.10 par value per share (the "Preferred Shares"), of the Company, (or
in certain circumstances, cash, property or other securities of the Company),
at a purchase price of $20.00 per one one-hundredth Preferred Share (the
"Purchase Price"), per Right represented by this Right Certificate, upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly executed. The number of Rights evidenced by this Right
Certificate and the number of one one-hundredths of a Preferred Share which may
be purchased upon exercise thereof set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of November 25, 1997 based on
the Preferred Shares as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
described in the Rights Agreement), if the Rights evidenced by this Right
[FN]
The portion of the legend shall be modified to apply to an Acquiring
Person as applicable and shall replace the preceding sentence.
/FN
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate
or Associate of any such Acquiring Person (as such terms are defined in the
Rights Agreement), (ii) a transferee of any such Acquiring Person, Associate or
Affiliate who becomes a transferee after the Acquiring Person becomes such, or
(iii) under certain circumstances specified in the Rights Agreement, a
transferee of any such Acquiring Person, Associate or Affiliate who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such,
such Rights shall become null and void and no holder hereof shall have any
right with respect to such Rights from and after the occurrence of such Section
11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number of
one one-hundredth Preferred Shares or other securities that may be purchased
upon the exercise of the Rights evidenced by this Right Certificate are subject
to modification and adjustment upon the happening of certain events, including
Triggering Events (as such term is defined in the Rights Agreement).
This Right 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 Right 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 principal executive offices
of the Company and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder to purchase a like aggregate number
of Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may, but are not required to, be redeemed by the Company at a
redemption price of $.01 per Right (subject to adjustment as provided in the
Rights Agreement), payable in cash (or, in certain circumstances, Common Shares
or any other form of consideration deemed appropriate by the Company's Board of
Directors).
The Company shall not be required to issue any fractional Preferred Shares
will be issued upon the exercise of any Right or Rights evidenced hereby (other
than fractions which are one one-hundredth or integral multiples of one one-
hundredth of a Preferred Share, which may, at the election of the Company, be
evidenced by depository receipts), but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company 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 shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or other
distributions or to exercise any preemptive 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.
This Right 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.
Dated as of ______________ .
INTELLIGENT SYSTEMS CORPORATION
By: ______________________________
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: _________________________________
Authorized Officer
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Right Certificate.)
FOR VALUE RECEIVED _________________________________ hereby sells, assigns
and transfers unto __________________________________________________________
_____________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: _________________, _____
_____________________________________
Signature
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement), and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person or an Affiliate
or Associate of any such Acquiring Person.
Dated: _________________, _____
_____________________________________
Signature
Signature Guaranteed: ________________________
NOTICE
The signatures to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder desires to exercise
Rights represented by the Right Certificate.)
To: American Stock Transfer & Trust Company
The undersigned hereby irrevocably elects to exercise ________ Rights
represented by this Right Certificate to purchase the Preferred Shares (or such
other securities of the Company or of any other person which may be issuable
upon exercise of the Rights) issuable upon the exercise of such Rights and
requests that certificates for such securities be issued in the name of and
delivered to:
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
(Please insert social security or other identifying number)
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
(Please insert social security or other identifying number)
Dated: _________________, _____
_____________________________________
Signature
Signature Guaranteed: ________________________
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) Rights evidenced by this Rights Certificate are not being exercised
by or on behalf of a Person who is or was an Acquiring Person or an Affiliate
or Associate of any such Acquiring Person (as such terms are defined in the
Rights Agreement), and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is or was an Acquiring Person or an Affiliate
or Associate of any such Acquiring Person.
Dated: _________________, _____
_____________________________________
Signature
Signature Guaranteed: ________________________
NOTICE
The signatures in the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
____________________________________________________________________________
WARNING
In the event the Certificate set forth above in the Assignment and
Election to Purchase is not completed, the Company will deem the beneficial
owner of the Rights evidenced by this Right Certificate to be an Acquiring
Person or an Affiliate or Associate of such Acquiring Person (as defined in the
Rights Agreement), and such Assignment or Election to Purchase will not be
honored.
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
On November 25, 1997 the Board of Directors of Intelligent Systems
Corporation (the "Company") declared a dividend of one preferred share purchase
right (a "Right") for each outstanding share of common stock of the Company
(the "Common Shares"). The dividend is payable to shareholders of record at
the close of business on December 8, 1997 (the "Record Date"), and with respect
to Common Shares issued thereafter until the Distribution Date (defined below)
and, in certain circumstances, with respect to Common Shares issued after the
Distribution Date. Except as set forth below, each Right, when it becomes
exercisable, entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series A Preferred Stock (the "Preferred Shares")
at a purchase price of $20.00 per one one-hundredth of a Preferred Share (the
"Purchase Price"), subject to adjustment. Holders of Preferred Shares will
vote together with the holders of Common Shares on all matters, with each full
Preferred Share having one hundred votes; holders of Preferred Shares will
share proportionately in any dividend or distribution declared on the Common
Shares, on a 100-to-one basis; and if the Company is liquidated, the holders of
Preferred Shares will participate proportionately with the holders of Commons
Shares in any distributions, on a 100-to-one basis, with the holders of the
Preferred Shares receiving some preferential distributions before the holders
of Common Shares receive any distributions.
A description of and the terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and American Stock
Transfer & Trust Company (the "Rights Agent"), dated as of November 25, 1997.
Initially, the Rights will be attached to all certificates representing
Common Shares then outstanding and no separate Right Certificates will be
distributed. Also, the Rights initially will not be tradable separate from the
Common Shares. The Rights will become exercisable and will separate from the
Common Shares upon the earlier of (i) ten calendar days after a Person or group
of affiliated Persons acquire ownership of 20% or more of the outstanding
Common Shares (unless such acquisition is approved by the Board of Directors);
(ii) at such time as the Board of Directors may designate after a tender offer
or an announcement of an intention to make a tender offer that would result in
a Person or group owning 20% or more of the outstanding Common Shares; or (iii)
ten calendar days after a person owning at least 10% of the Common Shares then
outstanding is declared to be an "Adverse Person" based on specified criteria.
At such time, separate Rights Certificates shall be distributed (the
"Distribution Date"). A Person or group who acquires 20% or more of the Common
Shares without the approval of the Board of Directors is referred to as an
"Acquiring Person" (with the exception of one existing shareholder who
currently owns beneficially over 20% of the Common Shares; such shareholder
shall not be deemed an Acquiring Person until his beneficial ownership exceeds
45% of the outstanding Common Shares).
Until the Distribution Date (or until the Board of Directors redeems the
Rights or the Rights expire), (i) the Rights will be evidenced by the Common
Share certificates and will be transferred with and only with such Common Share
certificates, (ii) new Common Share certificates issued after the Record Date
will contain a notation referencing the Rights Agreement, and (iii) the
surrender or transfer of any certificates for Common Shares will also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificate. The Rights are not exercisable until the
Distribution Date and will expire at the close of business on November 25,
2007, unless earlier redeemed or exchanged by the Company as described below.
As soon as practicable after the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of
record of the Common Shares as of the close of business on the Distribution
Date, and thereafter the separate Right Certificates alone will evidence the
Rights. Except as otherwise provided by the Rights Agreement or determined by
the Board of Directors, only Common Shares issued prior to the Distribution
Date will be issued with Rights.
In the event any Person becomes an Acquiring Person (except with the
approval of the Board of Directors, and except (in certain circumstances) for
persons who inadvertently become Acquiring Persons), each holder of a Right
will thereafter have the right to receive, upon exercise, an amount of
Preferred Shares having a value equal to two times the Purchase Price.
Further, after any Person becomes an Acquiring Person, in the event (i) the
Company consolidates, or merges with the Acquiring Person or with any other
Person if the holders of Common Shares are not all treated equally (either
being referred to as an "Acquiring Company"), and the Company is not the
surviving corporation, (ii) an Acquiring Company engages in a share exchange,
consolidation or merger with the Company where the Company is the surviving
corporation and the outstanding Common Shares of the Company are exchanged for
securities, cash or property of the Acquiring Company, or (iii) 25% or more of
the Company's assets or earning power is sold or transferred to the Acquiring
Company, then each holder of a Right will thereafter have the right to receive,
upon exercise, common stock of the Acquiring Company having a value equal to
two times the Purchase Price. The events set forth in this paragraph are
referred to as the "Triggering Events." However, following the occurrence of
any Triggering Event, all Rights that are owned by any Acquiring Person will be
null and void, and the Acquiring Person will have no right to purchase
Preferred Shares thereunder or to receive any securities or other property of
an Acquiring Company; and any such Rights shall remain null and void, even if
transferred to a person who is not an Acquiring Person.
The number of Rights outstanding, the Purchase Price payable and the
amount of Preferred Shares issuable upon exercise of the Rights are subject to
adjustments from time to time to prevent dilution in the event of certain
changes in the shares of the Company, such as a stock split. The Company may
determine not to issue fractional shares, and in lieu thereof, an adjustment in
cash (or other property) will be made based on the market value of the shares.
In general, the Company may redeem the Rights in whole, but not in part,
at a price of $.01 per Right (subject to adjustment), at any time the earlier
to occur of (i) a person becoming an Acquiring Person or (ii) the expiration of
the Rights. Immediately after the Board of Directors redeems the Rights, the
Rights will terminate and the only right of the holders of Rights will be to
receive the redemption price. However, the power to redeem the Rights is
limited to certain continuing members of the Board of Directors. In other
words, only Directors who (i) became directors prior to the time a person first
became an Acquiring Person, and (ii) are not Acquiring Persons or Affiliates or
Associates of Acquiring Persons may redeem the Rights.
At any time after any Person becomes an Acquiring Person and prior to the
acquisition by any Person of 50% or more of the outstanding Common Shares, the
Board of Directors may exchange the then outstanding and exercisable Rights
(other than Rights owned by an Acquiring Person, which will have become null
and void), in whole or in part, for Common Shares, each Right being
exchangeable for one Common Share.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends.
Any of the provisions of the Rights Agreement may be amended by the Board
of Directors prior to the Distribution Date, with certain exceptions in the
event of changes to the Board of Directors. After the Distribution Date, the
provisions of the Rights Agreement may be amended in order to (i) cure any
ambiguity, (ii) correct or supplement any provision which may be defective or
inconsistent with other provisions contained in the Rights Agreement, (iii)
shorten or lengthen any time periods under the Rights Agreement (except to make
the Rights redeemable at a time when they are not then redeemable), but
generally only for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights (other than the
Acquiring Person and its Associates and Affiliates).
The Rights have certain anti-takeover effects. The Rights, if exercised,
would cause substantial dilution to a Person or group that attempts to acquire
the Company without conditioning the offer on a substantial number of Rights
being acquired. Accordingly, the existence of the Rights may deter certain
acquirors from making takeover proposals or tender offers. However, the Rights
Agreement is designed to help ensure that the Company's shareholders receive
fair and equal treatment in the event of any proposed takeover of the Company,
and that the Board of Directors has sufficient time to evaluate any proposed
transaction and, if in the best interests of the Company, to explore
alternative value-enhancing transactions. The dividend of the Rights is not in
response to any specific takeover threat or proposal.
Until separate Rights Certificates are issued, a copy of the Rights
Agreement will be available to registered holders of the Common Shares upon
written request free of charge from the Company or the Rights Agent. After the
Rights Certificates are issued, a copy of the Rights Agreement will be filed
with the Securities and Exchange Commission. 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.