1
SDL, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
as Rights Agent
FIRST AMENDED AND RESTATED RIGHTS AGREEMENT
Dated as of February 11, 1999
2
TABLE OF CONTENTS
SECTION PAGE
------- ----
Section 1. Certain Definitions............................................................. 1
Section 2. Appointment of Rights Agent..................................................... 6
Section 3. Issue of Rights Certificates.................................................... 6
Section 4. Form of Rights Certificates..................................................... 7
Section 5. Countersignature and Registration............................................... 8
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates........................ 8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights................... 9
Section 8. Cancellation and Destruction of Rights Certificates.............................11
Section 9. Reservation and Availability of Capital Stock...................................11
Section 10. Preferred Stock Record Date.....................................................13
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights................................................................13
Section 12. Certificate of Adjusted Purchase Price or Number of Shares......................22
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power............22
Section 14. Fractional Rights and Fractional Shares.........................................25
Section 15. Rights of Action................................................................26
Section 16. Agreement of Rights Holders.....................................................26
Section 17. Rights Certificate Holder Not Deemed a Stockholder..............................27
Section 18. Concerning the Rights Agent.....................................................27
Section 19. Merger or Consolidation or Change of Name of Rights Agent.......................28
Section 20. Duties of Rights Agent..........................................................28
Section 21. Change of Rights Agent..........................................................31
i
3
SECTION PAGE
------- ----
Section 22. Issuance of New Rights Certificates.............................................31
Section 23. Redemption and Termination......................................................32
Section 24. Notice of Certain Events........................................................33
Section 25. Notices.........................................................................33
Section 26. Supplements and Amendments......................................................34
Section 27. Successors......................................................................35
Section 28. Determinations and Actions by the Board of Directors, etc.......................35
Section 29. Benefits of this Agreement......................................................35
Section 30. Severability....................................................................35
Section 31. Governing Law...................................................................36
Section 32. Counterparts....................................................................36
Section 33. Descriptive Headings............................................................36
Section 34. Exchange........................................................................36
Exhibit A Form of Rights Certificate.....................................................A-1
Exhibit B Form of Summary of Rights......................................................B-1
Exhibit C Certificate of Designation.....................................................C-1
ii
4
FIRST AMENDED AND RESTATED RIGHTS AGREEMENT
FIRST AMENDED AND RESTATED RIGHTS AGREEMENT, dated as of February 11,
1999 (the "Agreement"), hereby replaces and supersedes in its entirety that
certain Rights Agreement dated as of November 6, 1997 between SDL, Inc., a
Delaware corporation (the "Company"), and ChaseMellon Shareholder Services,
L.L.C., a New Jersey limited liability company (the "Rights Agent").
WHEREAS, effective November 6, 1997 (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company (the "Board of Directors") (i)
authorized and declared a dividend distribution of one Right for each share of
Common Stock, par value $.001 per share, of the Company (the "Company Common
Stock") outstanding at the Close of Business on November 17, 1997 (the "Record
Date"), and (ii) authorized the issuance of one Right (as such number may
hereinafter be adjusted pursuant hereto) for each share of Company Common Stock
issued between the Record Date (whether originally issued or delivered from the
Company's treasury) and, except as otherwise provided in Section 22, the
Distribution Date, each Right initially representing the right to purchase upon
the terms and subject to the conditions hereinafter set forth one Unit of Series
B Preferred Stock (the "Rights"); and
WHEREAS, the Board of Directors of the Company has determined that it is
in the best interest of the Company and the holders of the Company Common Stock
to amend the Agreement with respect to the provisions governing supplements and
amendments to the Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates or Associates of such Person, shall be the
Beneficial Owner of 15% or more of the shares of Company Common Stock
then outstanding. Notwithstanding the foregoing: (i) an "Acquiring
Person" shall not include: (A) the Company; (B) any Subsidiary of the
Company; (C) any employee benefit plan maintained by the Company or any
of its Subsidiaries; (D) any trustee or fiduciary with respect to such
employee benefit plan acting in such capacity or a trustee or fiduciary
holding shares of Company Common Stock for the purpose of funding any
such plan or employee benefits; (E) ▇▇▇▇ Investment Advisors ("KIA"),
not including any of its transferees or assignees, but only so long as
(x) KIA is not required to report such ownership on Schedule 13(D) under
the Exchange Act (or any comparable or successor report), and (y) KIA's
Beneficial Ownership of the shares of Company Common Stock does not
exceed the sum of KIA's Beneficial Ownership of Company Common Stock on
the date of this Agreement plus 1% of the shares of Company Common Stock
outstanding on such date; (F) any Person if the Board of Directors of
the Company determines in good faith that such Person who would
otherwise be an "Acquiring Person" became such inadvertently (including,
without
1
5
limitation, because (x) such Person was unaware that it beneficially
owned a percentage of Company Common Stock that would otherwise cause
such Person to be an "Acquiring Person" or (y) such Person was aware of
the extent of its Beneficial Ownership of Company Common Stock but had
no actual knowledge of the consequences of such Beneficial Ownership
under this Agreement) and without any intention of changing or
influencing control of the Company, and if such Person does not acquire
any additional shares of Company Common Stock and as promptly as
practicable divested or divests itself of Beneficial Ownership of a
sufficient number of shares of Company Common Stock so that such Person
would no longer be an "Acquiring Person;" or (G) any Person who becomes
the Beneficial Owner of 15% or more of the then outstanding shares of
Company Common Stock as a result of the acquisition of shares of Company
Common Stock directly from the Company in one or more transactions
approved by a majority of the Board of Directors, and (ii) no Person
shall be deemed an "Acquiring Person" as a result of the acquisition of
shares of Company Common Stock by the Company which, by reducing the
number of shares of Company Common Stock outstanding, increases the
proportional number of shares beneficially owned by such Person;
provided, however, that if (A) a Person would become an Acquiring Person
(but for the operation of this subclause (ii)) as a result of the
acquisition of shares of Company Common Stock by the Company and (B)
after such share acquisition by the Company, such Person becomes the
Beneficial Owner of any additional shares of Company Common Stock, then
such Person shall be deemed an Acquiring Person unless upon becoming the
Beneficial Owner of such additional shares such Person is the Beneficial
Owner of less than 15% of the then outstanding shares of Company Common
Stock. Each Person identified in subclauses (A), (B), (C) and (D) of
this Section (1)(a) is individually an "Exempt Person" and collectively
"Exempt Persons."
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date hereof.
(c) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to have "Beneficial Ownership" of and to "beneficially
own", any securities:
(i) of which such Person or any of such Person's
Affiliates or Associates is considered to be a "beneficial
owner" under Rule 13d-3 of the General Rules and Regulations
under the Exchange Act (the "Exchange Act Regulations") as in
effect on the date hereof; provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to
"beneficially own", any securities under this subparagraph (i)
as a result of an agreement, arrangement or understanding to
vote such securities if such agreement, arrangement or
understanding (A) arises solely from a revocable proxy or
consent given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable provisions of the Exchange Act and the Exchange Act
Regulations, and (B) is not reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or
successor report);
2
6
(ii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
of such other Person) with which such Person (or any of such
Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing), for
the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy or consent as described in the proviso to
subparagraph (i) of this paragraph (c)) or disposing of such
securities; or
(iii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right
to acquire (whether such right is exercisable immediately or
only after the passage of time or upon the satisfaction of
conditions) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise
of conversion rights, exchange rights, rights, warrants or
options, or otherwise;
provided, however, that under this paragraph (c) a Person shall not be
deemed the "Beneficial Owner" of, to have "Beneficial Ownership" of, or
to "beneficially own", (A) securities tendered pursuant to a tender or
exchange offer made in accordance with Exchange Act Regulations by such
Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange, (B)
securities that may be issued upon exercise of Rights at any time prior
to the occurrence of a Triggering Event, or (C) securities that may be
issued upon exercise of Rights from and after the occurrence of a
Triggering Event, which Rights were acquired by such Person or any of
such Person's Affiliates or Associates prior to the Distribution Date or
pursuant to Section 3(c) or Section 22 hereof (the "Original Rights") or
pursuant to Section 11(i) hereof in connection with an adjustment made
with respect to any Original Rights; and further provided, however, that
(x) nothing in this paragraph (c) shall cause a Person engaged in
business as an underwriter of securities to be the "Beneficial Owner"
of, or to "beneficially own," any securities acquired through such
Person's participation in good faith in a firm commitment underwriting
until the expiration of forty days after the date of such acquisition,
(y) no decision reached, or action taken, by the Board of Directors of
the Company or any committee thereof shall cause any Person (or any
Affiliate or Associate of such Person) who is a member of the Board of
Directors of the Company or such committee to be deemed, for the
purposes of this Agreement, to be a Beneficial Owner of any securities
beneficially owned by any other Person (or any Affiliate or Associate of
such Person) who is a member of the Board of Directors of the Company or
any committee thereof solely by reason of such membership of the Board
of Directors or any committee thereof or participation in the decisions
or actions thereof on the part of either or both of such Persons and (z)
no Person who is an officer, director or employee of an Exempt Person
shall be deemed, solely by reason of such Person's status or authority
as such, to be the "Beneficial Owner" of, to have "Beneficial Ownership"
of or to "beneficially own" any securities that are "beneficially owned"
(as defined in this paragraph (c)), including, without limitation, in a
fiduciary capacity, by an Exempt Person or by any other such officer,
director or employee of an Exempt Person.
3
7
(d) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the city of San
Francisco, California is authorized or obligated by law or executive
order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M.,
California time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., California time, on the next
succeeding Business Day.
(f) "Common Stock" of any Person other than the Company shall
mean the capital stock of such Person with the greatest voting power,
or, if such Person shall have no capital stock, the equity securities or
other equity interest having power to control or direct the management
of such Person.
(g) "Company" means SDL, Inc., a Delaware corporation, and also
means a Principal Party to the extent provided in Section 13(a).
(h) "Company Common Stock" has the meaning set forth in the
Whereas Clause.
(i) "Distribution Date" has the meaning set forth in Section
3(a).
(j) "Expiration Date" has the meaning set forth in Section 7(a).
(k) "Person" shall mean any individual, partnership, firm,
corporation, association, trust, unincorporated organization or other
entity, as well as any syndicate or group deemed to be a person under
Section 14(d)(2) of the Exchange Act as in effect on the date hereof.
(l) "Preferred Stock" shall mean the Series B Preferred Stock,
par value $.001 per share, of the Company having the voting powers,
designation, preferences and relative, participating, optional or other
special rights and qualifications, limitations and restrictions
described in the Certificate of Designation set forth as Exhibit C
hereto and as amended from time to time.
(m) "Purchase Price" has the meaning set forth in Section 7(b).
(n) "Record Date" has the meaning set forth in the Whereas
Clause.
(o) "Right" has the meaning set forth in the Whereas Clause.
(p) "Rights Certificate" has the meaning set forth in Section
3(a).
(q) "Rights Dividend Declaration Date" has the meaning set forth
in the Whereas Clause.
(r) "Section 11(a)(ii) Event" shall mean the event described in
Section 11(a)(ii) hereof.
4
8
(s) "Section 13 Event" shall mean any event described in clause
(x), (y) or (z) of Section 13(a) hereof.
(t) "Stock Acquisition Date" shall mean the first date of public
announcement (including, without limitation, the filing of any report
pursuant to Section 13(d) of the Exchange Act (or any comparable or
successor report)) by the Company or an Acquiring Person that an
Acquiring Person has become such.
(u) "Subsidiary" shall mean, with reference to any Person, any
other Person of which an amount of voting securities or equity interests
sufficient to elect at least a majority of the directors or equivalent
governing body of such other Person is beneficially owned, directly or
indirectly, by such Person, or otherwise controlled by such
first-mentioned Person.
(v) "Summary of Rights" has the meaning set forth in Section
3(b).
(w) "Triggering Event" shall mean any Section 11(a)(ii) Event or
any Section 13 Event.
(x) "Unit" has the meaning set forth in Section 7(b).
In addition, the following terms are defined in the Sections
indicated below:
Defined Term Section Number
------------ --------------
Adjustment Shares 11(a)(ii)
Adjustment Spread 34(a)
common stock equivalents 11(a)(iii)
Current Value 11(a)(iii)
Depositary Agent 7(c)
Distribution Date 3(a)
Equivalent Preferred Stock 11(b)
Exchange Act 1(b)
Exchange Act Regulations 1(c)
Exchange Ratio 34(a)
Exempt Person 1(a)
Expiration Date 7(a)
Final Expiration Date 7(a)
Nasdaq 11(d)(i)
Original Rights 1(c)
Purchase Price 7(b)
Redemption Price 23(a)
Registered Common Stock 13(b)(ii)
Registration Date 9(c)
Registration Statement 9(c)
Rights Certificates 3(a)
Section 11(a)(ii) Event 11(a)(ii)(C)
Section 11(a)(iii) Trigger Date 11(a)(iii)
Section 13 Event 13(a)
Securities Act 9(c)
5
9
Defined Term Section Number
------------ --------------
Spread 11(a)(iii)
Summary of Rights 3(b)
Trading Day 11(d)(i)
Unit 7(b)
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. With
the consent of the Rights Agent, the Company may from time to time appoint such
co-rights agents as it may deem necessary or desirable.
Section 3. Issue of Rights Certificates. (a) Until the earlier of (i)
the Close of Business on the tenth Business Day after the Stock Acquisition
Date, and (ii) the Close of Business on the tenth Business Day (or such later
date as may be determined by action of a majority of the Board of Directors of
the Company prior to the occurrence of a Section 11(a)(ii) Event) 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-4(a) of the
Exchange Act Regulations or any successor rule, if upon consummation thereof
such Person would be an Acquiring Person (including, in the case of both clause
(i) and (ii), any such date which is after the date of this Agreement and prior
to the issuance of the Rights)(the earlier of (i) and (ii) above being the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for shares of
Company Common Stock registered in the names of the holders of shares of Company
Common Stock as of and subsequent to the Record Date (which certificates for
shares of Company Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the underlying shares of
Company Common Stock including a transfer to the Company; provided, however,
that if a tender or exchange offer is terminated prior to the occurrence of a
Distribution Date, then no Distribution Date shall occur as a result of such
tender or exchange offer. As soon as practicable after the Distribution Date,
the Rights Agent will send by first-class, insured, postage prepaid mail, to
each record holder of shares of Company Common Stock as of the Close of Business
on the Distribution Date, at the address of such holder shown on the records of
the Company, one or more rights certificates, in substantially the form of
Exhibit A hereto (the "Rights Certificates"), evidencing one Right for each
share of Company Common Stock so held, subject to adjustment as provided herein.
In the event that an adjustment in the number of Rights per share of
Company Common Stock has been made pursuant to Section 11(p) hereof, at the time
of distribution of the Rights Certificates, the Company may make the necessary
and appropriate rounding adjustments (in accordance with Section 14(a) hereof)
so that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of and after
the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form attached
6
10
hereto as Exhibit B (the "Summary of Rights"), by first-class, postage prepaid
mail, to each record holder of shares of Company Common Stock as of the Close of
Business on the Record Date, at the address of such holder shown on the records
of the Company. With respect to certificates for Company Common Stock
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates registered in the names of the holders thereof
together with the Summary of Rights. Until the Distribution Date (or, if
earlier, the Expiration Date), the surrender for transfer of any such
certificate for Company Common Stock outstanding as of the Record Date, with or
without a copy of the Summary of Rights, shall also constitute the transfer of
the Rights associated with the Company Common Stock represented thereby.
(c) Rights shall, without any further action, be issued in
respect of all shares of Company Common Stock which are issued (including any
shares of Company Common Stock held in treasury) after the Record Date but prior
to the earlier of the Distribution Date and the Expiration Date. Certificates,
representing such shares of Company Common Stock, issued after the Record Date
shall bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between SDL, Inc.
(the "Company") and ChaseMellon Shareholder Services, L.L.C. (the
"Rights Agent") dated as of November 6, 1997, as amended from time to
time (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal office of the stock transfer administration office of the
Rights Agent. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. The Company will mail
to the holder of this certificate a copy of the Rights Agreement, as in
effect on the date of mailing, without charge promptly after receipt of
a written request therefor. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE
RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS
OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD
BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME
NULL AND VOID.
With respect to certificates representing shares of Company Common Stock that
bear the foregoing legend until the earlier of the Distribution Date and the
Expiration Date, the Rights associated with the shares of Company Common Stock
represented by such certificates shall be evidenced by such certificates alone
and registered holders of the shares of Company Common Stock shall also be the
registered holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the shares of Company Common Stock represented by such certificates.
Section 4. Form of Rights Certificates. (a) The Rights Certificates (and
the forms of election to purchase, assignment and certificate to be printed on
the reverse thereof) shall each be substantially in the form set forth in
Exhibit A hereto and may have such marks of identification
7
11
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
any rule or regulation thereunder or with any rule or regulation of any stock
exchange or automated quotation system on which the Rights may from time to time
be listed or to conform to usage. Subject to the provisions of Section 11 and
Section 22 hereof, the Rights Certificates, whenever distributed, shall be dated
as of the Record Date and on their face shall entitle the holders thereof to
purchase such number of Units of Preferred Stock as shall be set forth therein
at the price set forth therein, but the amount and type of securities, cash or
other assets that may be acquired upon the exercise of each Right and the
Purchase Price thereof shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration . (a) Rights Certificates
shall be executed on behalf of the Company by its Chairman, the President or one
of its Vice Presidents under its corporate seal reproduced thereon attested by
its Secretary, Treasurer or one of its Assistant Secretaries. The signature of
any of these officers on the Rights Certificates may be manual or facsimile.
Rights Certificates bearing the manual or facsimile signatures of the
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the countersignature of such Rights Certificates or
did not hold such offices at the date of such Rights Certificates. No Rights
Certificate shall be entitled to any benefit under this Agreement or be valid
for any purpose unless there appears on such Rights Certificate a
countersignature duly executed by the Rights Agent by manual signature of an
authorized signatory, and such countersignature upon any Rights Certificate
shall be conclusive evidence, and the only evidence, that such Rights
Certificate has been duly countersigned as required hereunder.
(b) Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its office designated for surrender of Rights
Certificates upon exercise or transfer, books for registration and transfer of
the Rights Certificates issued hereunder. Such books shall show the name and
address of each holder of the Rights Certificates, the number of Rights
evidenced on its face by each Rights Certificate and the date of each Rights
Certificate.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates. (a)
Subject to the provisions of Sections 4, 7(e) and 14 hereof, at any time after
the Close of Business on the Distribution Date, and at or prior to the Close of
Business on the Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a like number of Units
of Preferred Stock (or, following a Triggering Event, other securities, cash or
other assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate or
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Certificates to be transferred,
split up, combined or exchanged at the office of the Rights Agent designated for
such purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder shall have completed and executed
8
12
the certificate set forth in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) of the Rights
represented by such Rights Certificate or Affiliates or Associates thereof as
the Company shall reasonably request; whereupon the Rights Agent shall, subject
to the provisions of Section 7(e) and Section 14 hereof, countersign and deliver
to the Person entitled thereto a Rights Certificate or Rights Certificates, as
the case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights
Certificates.
(b) Subject to Section 7(e) hereof, if a Rights Certificate
shall be mutilated, lost, stolen or destroyed, upon request by the registered
holder of the Rights represented thereby and upon payment to the Company and the
Rights Agent of all reasonable expenses incident thereto, there shall be issued,
in exchange for and upon cancellation of the mutilated Rights Certificate, or in
substitution for the lost, stolen or destroyed Rights Certificate, a new Rights
Certificate, in substantially the form of the prior Rights Certificate, of like
tenor and representing the equivalent number of Rights, but, in the case of
loss, theft or destruction, only upon receipt of evidence satisfactory to the
Company and the Rights Agent of such loss, theft or destruction of such Rights
Certificate and, if requested by the Company or the Rights Agent, indemnity also
satisfactory to it.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) Prior to the earlier of (i) the Close of Business on the tenth
anniversary of the Rights Dividend Declaration Date (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as provided in Section 23
hereof and (iii) the time at which the Rights are exchanged as provided in
Section 34 hereof (the earlier of (i), (ii) and (iii) being the "Expiration
Date"), the registered holder of any Rights Certificate may, subject to the
provisions of Sections 7(e) and 9(c) hereof, exercise the Rights evidenced
thereby, in whole or in part, at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly executed, to the Rights Agent
at the office of the Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price (as hereinafter defined) for the number
of Units of Preferred Stock (or, following a Triggering Event, other securities,
cash or other assets, as the case may be) for which such surrendered Rights are
then exercisable.
(b) The purchase price for each one one-hundredth of a share
(each such one one-hundredth of a share being a "Unit") of Preferred Stock upon
exercise of Rights shall be $110, subject to adjustment from time to time as
provided in Sections 11 and 13(a) hereof (such purchase price, as so adjusted,
being the "Purchase Price"), and shall be payable in accordance with paragraph
(c) below.
(c) As promptly as practicable following the occurrence of the
Distribution Date, the Company shall deposit with the Rights Agent or other
corporation in good standing organized under the laws of the United States or
any State of the United States, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority (such institution being the
"Depositary Agent"),
9
13
certificates representing the shares of Preferred Stock that may be acquired
upon exercise of the Rights and shall cause such Depositary Agent to enter into
an agreement pursuant to which the Depositary Agent shall issue receipts
representing interests in the shares of Preferred Stock so deposited. Upon
receipt of a Rights Certificate representing exercisable Rights, with the form
of election to purchase and the certificate duly executed, accompanied by
payment, with respect to each Right so exercised, of the Purchase Price for the
Units of Preferred Stock (or, following a Triggering Event, other securities,
cash or other assets, as the case may be) to be purchased thereby as set forth
below and an amount equal to any applicable transfer tax or evidence
satisfactory to the Company of payment of such tax, the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly (i) requisition from the
Depositary Agent depositary receipts representing such number of Units of
Preferred Stock as are to be purchased and the Company will direct the
Depositary Agent to comply with such request, (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, and (iv) after receipt thereof, deliver such cash, if
any, to or upon the order of the registered holder of such Rights Certificate.
In the event that the Company is obligated to issue Company Common Stock, other
securities of the Company, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so that
such Company Common Stock, other securities, cash and/or other property are
available for distribution by the Rights Agent, if and when appropriate. The
payment of the Purchase Price (as such amount may be reduced pursuant to Section
11(a)(iii) hereof) may be made in cash or by certified or bank check or money
order payable to the order of the Company.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to, or upon the order of, the registered holder of
such Rights Certificate, registered in such name or names as may be designated
by such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of any Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) which becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) which becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and which receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person (or any such Associate or Affiliate) to holders of equity interests in
such Acquiring Person (or any such Associate or Affiliate) or to any Person with
whom the Acquiring Person (or such Associate or Affiliate) has any continuing
agreement, arrangement or understanding regarding the transferred Rights, shares
of Company Common Stock or the Company or (B) a transfer which the Board of
Directors has determined to be 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
10
14
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) hereof 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) with
respect to an Acquiring Person or its Affiliates, Associates or transferees.
(f) Notwithstanding anything in this Agreement or any Rights
Certificate to the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise by such registered holder unless such
registered holder shall have (i) completed and executed the certificate
following the form of election to purchase set forth on the reverse side of the
Rights Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) of the Rights represented by such Rights Certificate or
Affiliates or Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any Rights
Certificates acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all cancelled Rights Certificates to the Company,
or shall, at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Reservation and Availability of Capital Stock. (a) The
Company shall at all times prior to the Expiration Date cause to be reserved and
kept available, out of its authorized and unissued shares of preferred stock,
the number of shares of Preferred Stock that, as provided in this Agreement,
will be sufficient to permit the exercise in full of all outstanding Rights.
Upon the occurrence of any events resulting in an increase in the aggregate
number of shares of Preferred Stock (or other equity securities of the Company)
issuable upon exercise of all outstanding Rights above the number then reserved,
the Company shall make appropriate increases in the number of shares so reserved
to the extent practicable.
(b) If the shares of Preferred Stock to be issued and delivered
upon the exercise of the Rights may be listed on any national securities
exchange or automated quotation system, the Company shall during the period from
the Distribution Date through the Expiration Date use its best efforts to cause
all securities 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 (i) as soon as
practicable following the occurrence of a Section 11(a)(ii) Event and a
determination by the Company in accordance with Section 11(a)(iii) hereof of the
consideration to be delivered by the Company upon exercise of
11
15
the Rights or, if so required by law, as soon as practicable following the
Distribution Date (such date being the "Registration Date"), to file a
registration statement on an appropriate form under the Securities Act of 1933,
as amended (the "Securities Act"), with respect to the securities that may be
acquired upon exercise of the Rights (the "Registration Statement"), (ii) to
cause the Registration Statement to become effective as soon as practicable
after such filing, (iii) to cause the Registration Statement to continue to be
effective (and to include a prospectus complying with the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for the securities covered by the Registration Statement, and
(B) the Expiration Date and (iv) to take as soon as practicable following the
Registration Date such action as may be required to ensure that any acquisition
of securities upon exercise of the Rights complies with any applicable state
securities or "blue sky" laws. The Company may temporarily suspend, for a period
of time not to exceed one hundred twenty (120) days after the date set forth in
clause (i) of the first sentence of this Section 9(c), the exercisability of the
Rights in order to prepare and file such registration statement and permit it to
become effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. In addition, if the Company shall determine that a
registration statement is required following the Distribution Date, the Company
may temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective. Notwithstanding 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, the exercise thereof shall not be permitted under
applicable law or a registration statement shall not have been declared
effective.
(d) The Company shall take such action as may be necessary to
ensure that all shares of Preferred Stock (and, following the occurrence of a
Triggering Event, any other securities that may be delivered upon exercise of
Rights) shall be, at the time of delivery of the certificates or depositary
receipts for such securities (subject to payment of the Purchase Price), duly
and validly authorized and issued and fully paid and non-assessable.
(e) The Company shall pay any documentary, stamp or transfer tax
imposed in connection with the issuance or delivery of the Rights Certificates
or upon the exercise of Rights; provided, however, the Company shall not be
required to pay any such tax imposed in connection with the issuance or delivery
of Units of Preferred Stock, or any certificates or depositary receipts for such
Units of Preferred Stock (or, following the occurrence of a Triggering Event,
any other securities, cash or assets, as the case may be) to any person other
than the registered holder of the Rights Certificates evidencing the Rights
surrendered for exercise. The Company shall not be required to issue or deliver
any certificates or depositary receipts for Units of Preferred Stock (or,
following the occurrence of a Triggering Event, any other securities, cash or
assets, as the case may be) to, or in a name other than that of, the registered
holder upon the exercise of any Rights until any such tax shall have been paid
(any such tax being payable by the holder of such Rights Certificate at the time
of surrender) or until it has been established to the Company's satisfaction
that no such tax is due.
12
16
Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate or depositary receipt for Units of Preferred Stock (or, following
the occurrence of a Triggering Event, other securities) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of the Units of Preferred Stock (or, following the occurrence of a
Triggering Event, other securities) represented thereby on, and such certificate
shall be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preferred Stock (or, following
the occurrence of a Triggering Event, other securities) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such securities on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or, following the occurrence of a
Triggering Event, other securities) transfer books of the Company are open and,
further provided, however, that if delivery of Units of Preferred Stock is
delayed pursuant to Section 9(c) hereof, such Persons shall be deemed to have
become the record holders of such Units of Preferred Stock only when such Units
first become deliverable. Prior to the exercise of the Rights evidenced thereby,
the holder of a Rights Certificate shall not be entitled to any rights of a
stockholder of the Company with respect to securities for which the Rights shall
be exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of securities
purchasable upon exercise of each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding
Preferred Stock, (C) combine the outstanding Preferred Stock into a
smaller number of shares, or (D) issue any shares of its capital stock
in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the
number and kind of shares of Preferred Stock or capital stock, as the
case may be, issuable on such date upon exercise of the Rights, shall be
proportionately adjusted so that the holder of any Right exercised after
such time shall be entitled to receive, upon payment of the Purchase
Price then in effect, the aggregate number and kind of shares of
Preferred Stock or capital stock, as the case may be, which, if such
Right had been exercised immediately prior to such date, 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 the exercise of
one Right. If an event occurs which would require an adjustment under
both
14
17
this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and shall
be made prior to, any adjustment required pursuant to Section 11(a)(ii)
hereof.
(ii) In the event any Person shall become an Acquiring Person,
other than pursuant to any transaction set forth in Section 13(a)
hereof, then, immediately upon the occurrence of such event (a "Section
11(a)(ii) Event"), proper provision shall be made so that each holder of
a Right (except as provided below and in Section 7(e) hereof) shall,
subject to Section 34 hereof, thereafter have the right to receive, upon
exercise of such Right at the then current Purchase Price in accordance
with the terms of this Agreement, in lieu of the number of Units of
Preferred Stock for which a Right was exercisable immediately prior to
the first occurrence of a Section 11(a)(ii) Event (whether or not such
Right was then exercisable), such number of Units of Preferred Stock as
shall equal the result obtained by (x) multiplying the then current
Purchase Price by the then number of Units of Preferred Stock for which
a Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event (whether or not such Right was then exercisable)
(such product thereafter being, for all purposes of this Agreement,
other than Section 13 hereof, the "Purchase Price"), and (y) dividing
that product by 50% of the then current market price (determined
pursuant to Section 11(d) hereof) per Unit of Preferred Stock on the
date of such first occurrence (such Units of Preferred Stock being the
"Adjustment Shares"); provided, however, that the Purchase Price and the
number of Units of Preferred Stock so receivable upon exercise of a
Right shall, following the Section 11(a)(ii) Event, be subject to
further adjustment as appropriate in accordance with Section 11 hereof.
Notwithstanding the foregoing, the Rights shall not be exercisable
pursuant to this Section 11(a)(ii) until the time period during which
the Rights may be redeemed pursuant to Section 23 hereof shall have
expired.
(iii) The Company, by the vote of a majority of the Board of
Directors, may at its option substitute for a Unit of Preferred Stock
issuable upon the exercise of Rights in accordance with the foregoing
subparagraph (ii), shares of Company Common Stock or fractions thereof
having a current market price (as determined by Section 11(d) hereof)
equal to the current market price of a Unit of Preferred Stock on the
date of the Section 11(a)(ii) Event. In the event that the number of
shares of Preferred Stock which are authorized by the Company's Restated
Certificate of Incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights is not
sufficient to permit the exercise in full of the Rights in accordance
with the foregoing subparagraph (ii) of this Section 11(a), the Company,
by the vote of a majority of the Board of Directors, shall to the extent
permitted by applicable law and any material agreements then in effect
to which the Company is a party or by which it is bound: (A) determine
the excess of (1) the value of the Adjustment Shares issuable upon the
exercise of a Right (the "Current Value") over (2) the Purchase Price
(such excess being the "Spread"), and (B) with respect to each Right
(other than Rights which have become void pursuant to Section 7(e)),
make adequate provision to substitute, in whole or in part, for such
Adjustment Shares, upon exercise of a Right and payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase
Price, (3) shares of Company Common
14
18
Stock or other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock (such other
shares being "common stock equivalents")), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the foregoing,
having an aggregate value which, when added to the value of the Units of
Preferred Stock actually issued upon exercise of such Right, shall have
an aggregate value equal to the Current Value (less the amount of any
reduction in such Purchase Price), where such aggregate value has been
determined by a majority of the Board of Directors, after receiving
advice from a nationally recognized investment banking firm; provided,
however, that if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within thirty days following
the later of (x) the first occurrence of a Section 11(a)(ii) Event and
(y) the date on which the Company's right of redemption pursuant to
Section 23(a) expires (the later of (x) and (y) being referred to herein
as the "Section 11(a)(iii) Trigger Date"), then, subject to Section 34
hereof, the Company shall be obligated (to the extent permitted by
applicable law and any material agreements then in effect to which the
Company is a party or by which it is bound) to deliver, upon the
surrender for exercise of a Right and without requiring payment of the
Purchase Price, Units of Preferred Stock (to the extent available) and
then, if necessary, shares (or fractions of shares, at the discretion of
the Board of Directors) of Company Common Stock, cash or a combination
thereof, which Units of Preferred Stock, shares (or fractions of shares)
of Company Common Stock and/or cash shall have an aggregate value equal
to the Spread; further provided, however, that if the Company is unable
to comply with the immediately foregoing provision within such thirty
day period, then the Company shall (to the extent permitted by law) take
all such action as may be necessary to comply with such provision,
including the calling of a meeting of stockholders to authorize
additional shares of Preferred Stock or Company Common Stock. To the
extent that the Company determines that some action need be taken
pursuant to the first sentence of this Section 11(a)(iii), the Company
shall provide, subject to Section 7(e) hereof, that such action shall
apply uniformly to all outstanding Rights. For purposes of this Section
11(a)(iii), the value of a Unit of Preferred Stock or share of Company
Common Stock shall be the current market price (as determined pursuant
to Section 11(d) hereof) per Unit of Preferred Stock or share of Company
Common Stock, as the case may be, on the Section 11(a)(iii) Trigger Date
and the value of any common stock equivalent shall be deemed to have the
same value as the Preferred Stock on such date.
(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Stock
entitling them to subscribe for or purchase (for a period expiring
within forty-five calendar days after such record date) shares of
Preferred Stock (or shares having substantially the same rights,
privileges and preferences as shares of Preferred Stock ("Equivalent
Preferred Stock")) or securities convertible into Preferred Stock or
Equivalent Preferred Stock at a price per share of Preferred Stock or
per share of Equivalent Preferred Stock (or having a conversion price
per share, if a security convertible into Preferred Stock or Equivalent
Preferred Stock) less than the current market price (as determined
pursuant to Section l1(d) hereof) per share of Preferred Stock on such
record date, the Purchase Price to be in effect after such record
15
19
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 sum of the number of shares of Preferred Stock
outstanding on such record date plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares
of Preferred Stock and/or Equivalent Preferred Stock so to be offered
(and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market
price, and the denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date plus the number of
additional shares of Preferred Stock and/or Equivalent Preferred Stock
to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In
case such subscription price may be paid by delivery of consideration
part or all of which may be in a form other than cash, the value of such
consideration shall be as determined in good faith by a majority of 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. Shares of Preferred Stock owned by
or held for the account of the Company or any Subsidiary shall not be
deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is
fixed, and in the event that such rights, options or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of shares of Preferred Stock (including any
such distribution made in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation) of
evidences of indebtedness, cash (other than a regular quarterly cash
dividend paid out of funds legally available therefor), assets (other
than a dividend payable in shares of Preferred Stock, but including any
dividend payable in stock other than Preferred Stock) or subscription
rights, options or warrants (excluding those referred to in Section
11(b) hereof), the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of
which shall be the current market price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on such record date
less the fair market value (as determined in good faith by a majority of
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 holder of the Rights) of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights,
options or warrants distributable in respect of a share of Preferred
Stock and the denominator of which shall be such current market price
(as determined pursuant to Section 11(d) hereof) per share of Preferred
Stock. Such adjustments shall be made successively whenever such a
record date is fixed, and in the event that such distribution is not so
made, the Purchase Price shall be adjusted to be the Purchase Price
which would have been in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current market price" per share of Company Common Stock or Common Stock
on any date shall be deemed to
16
20
be the average of the daily closing prices per share of such shares for
the ten consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, if prior to the
expiration of such requisite ten Trading Day period the issuer announces
either (A) a dividend or distribution on such shares payable in such
shares or securities convertible into such shares (other than the
Rights), or (B) any subdivision, combination or reclassification of such
shares, then, following the ex-dividend date for such dividend or the
record date for such subdivision, combination or reclassification, as
the case may be, the "current market price" shall be properly adjusted
to take into account such event. The closing price for each day shall
be, if the shares are listed and admitted to trading on a national
securities exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which such shares are listed
or admitted to trading or, if such shares are not listed or admitted to
trading on any national securities exchange, the last quoted price or,
if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the Nasdaq National Market
(" Nasdaq") or such other system then in use, or, if on any such date
such shares are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker
making a market in such shares selected by a majority of the Board of
Directors. If on any such date no market maker is making a market in
such shares, the fair value of such shares on such date as determined in
good faith by a majority of the Board of Directors shall be used. If
such shares are not publicly held or not so listed or traded, "current
market price" per share shall mean the fair value per share as
determined in good faith by a majority of the Board of Directors, whose
determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes. The term "Trading Day"
shall mean, if such shares are listed or admitted to trading on any
national securities exchange, a day on which the principal national
securities exchange on which such shares are listed or admitted to
trading is open for the transaction of business or, if such shares are
not so listed or admitted, a Business Day.
(ii) For the purpose of any computation hereunder, the "current
market price" per share of Preferred Stock shall be determined in the
same manner as set forth above for Company Common Stock in clause (i) of
this Section 11(d) (other than the fourth sentence thereof). If the
current market price per share of Preferred Stock cannot be determined
in the manner provided above or if the Preferred Stock is not publicly
held or listed or traded in a manner described in clause (i) of this
Section 11(d), the "current market price" per share of Preferred Stock
shall be conclusively deemed to be an amount equal to 100 (as such
amount may be appropriately adjusted for such events as stock splits,
stock dividends and recapitalizations with respect to Company Common
Stock occurring after the date of this Agreement) multiplied by the
current market price per share of Company Common Stock. If neither
Company Common Stock nor Preferred Stock is publicly held or so listed
or traded, "current market price" per share of the Preferred Stock shall
mean the fair value per share as determined in good faith by a majority
of 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
17
21
the Rights. For all purposes of this Agreement, the "current market
price" of a Unit of Preferred Stock shall be equal to the "current
market price" of one share of Preferred Stock divided by 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 which by reason
of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest cent or
to the nearest one-hundredth of a share of Company Common Stock or
Common Stock or other share or ten-thousandth of a share of Preferred
Stock, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made
no later than the earlier of (i) three years from the date of the
transaction which mandates such adjustment and (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than
Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Right and the Purchase Price thereof
shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect
to the Preferred Stock contained in Sections 11(a), (b), (c), (d), (e),
(g), (h), (i), (j), (k), (l) and (m), and the provisions of Sections 7,
9, 10, 13 and 14 hereof with respect to the Preferred Stock shall apply
on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of Units
of Preferred Stock (or other securities or amount of cash or combination
thereof) that may be acquired from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as
a result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase
Price, that number of Units of Preferred Stock (calculated to the
nearest one ten-thousandth of a Unit) obtained by (i) multiplying (x)
the number of Units of Preferred Stock covered by a Right immediately
prior to this adjustment by (y) the Purchase Price in effect immediately
prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after
such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of Units of
18
22
Preferred Stock that may be acquired upon the exercise of a Right. Each
of the Rights outstanding after the adjustment in the number of Rights
shall be exercisable for the number of Units of Preferred Stock for
which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record
date may be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Rights Certificates have been issued, shall be
at least ten days later than the date of such public announcement. If
Rights Certificates have been issued, upon each adjustment of the number
of Rights pursuant to this Section 11(i), the Company shall, as promptly
as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject
to Section 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the
Rights to which such holders shall be entitled after such adjustment.
Rights Certificates to be so distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the
option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Rights Certificates
on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of Units of Preferred Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the Purchase Price per Unit
and the number of Units of Preferred Stock which were expressed in the
Initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value of the number of
Units of Preferred Stock issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally
issue such fully paid and non-assessable number of Units of Preferred
Stock at such adjusted Purchase Price.
(1) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right
exercised after such record date of that number of Units of Preferred
Stock and shares of other
19
23
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of Units of Preferred Stock and
shares of other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the Company shall
deliver to such holder a due ▇▇▇▇ or other appropriate instrument
evidencing such holder's right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase
Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment a
majority of the Board of Directors shall determine to be advisable in
order that any (i) consolidation or subdivision of the Preferred Stock,
(ii) issuance wholly for cash of any shares of Preferred Stock at less
than the current market price, (iii) issuance wholly for cash of shares
of Preferred Stock or securities which by their terms are convertible
into or exchangeable for shares of Preferred Stock, (iv) stock dividends
or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Preferred
Stock, shall not be taxable to such holders or shall reduce the taxes
payable by such holders.
(n) The Company shall not, at any time after the Distribution
Date, (i) consolidate with any other Person (other than a wholly owned
Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), (ii) merge with or into any other Person (other than a
wholly owned Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of
transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company and/or any
of its Subsidiaries in one or more transactions each of which complies
with Section 11(o) hereof), if (x) at the time of or immediately after
such consolidation, merger or sale there are any rights, warrants or
other instruments or securities outstanding or agreements in effect
which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously
with or immediately after such consolidation, merger or sale, the Person
which constitutes, or would constitute, the "Principal Party" for
purposes of Section 13(a) hereof shall have distributed or otherwise
transferred to its shareholders or other persons holding an equity
interest in such Person Rights previously owned by such Person or any of
its Affiliates and Associates; provided, however, this Section 11(n)
shall not affect the ability of any wholly owned Subsidiary of the
Company to consolidate with, merge with or into, or sell or transfer
assets or earning power to, any other wholly owned Subsidiary of the
Company.
(o) After the Distribution Date, the Company shall not, except
as permitted by Section 23, Section 26 or Section 34 hereof, take (or
permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be
afforded by the Rights.
20
24
(p) Anything in this Agreement to the contrary notwithstanding,
in the event that the Company shall at any time after the Rights
Dividend Declaration Date and prior to the Distribution Date (i) declare
a dividend on the outstanding shares of Company Common Stock payable in
shares of Company Common Stock, (ii) subdivide the outstanding shares of
Company Common Stock, (iii) combine the outstanding shares of Company
Common Stock into a smaller number of shares, or (iv) issue any shares
of its capital stock in a reclassification of Company Common Stock
(including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving
corporation), the number of Rights associated with each share of Company
Common Stock then outstanding, or issued or delivered thereafter prior
to the Distribution Date or in accordance with Section 22 hereof, shall
be proportionately adjusted so that the number of Rights thereafter
associated with each share of Company Common Stock following any such
event shall equal the result obtained by multiplying the number of
Rights associated with each share of Company Common Stock immediately
prior to such event by a fraction the numerator of which shall be the
total number of shares of Company Common Stock outstanding immediately
prior to the occurrence of the event and the denominator of which shall
be the total number of shares of Company Common Stock outstanding
immediately following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Company Common Stock, a copy of such certificate, and
(c) mail a brief summary thereof to each holder of a Rights Certificate (or, if
prior to the Distribution Date, to each holder of a certificate representing
shares of Company Common Stock) in accordance with Section 25 hereof. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have knowledge of any
such 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, following the first occurrence of a
Section 11(a)(ii) Event, directly or indirectly, either (x) the Company shall
consolidate with, or merge with and into, any other Person (other than a wholly
owned Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), and the Company shall not be the continuing or surviving
corporation of such consolidation or merger, (y) any Person (other than a wholly
owned Subsidiary of the Company in a transaction which compiles with Section
11(o) hereof) shall consolidate with, or merge with or into, the Company, and
the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding shares of Company Common Stock shall be changed
into or exchanged for stock or other securities of the Company or any other
Person or cash or any other property, or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer)
to any Person or Persons (other than the Company or any of its wholly owned
Subsidiaries in one or more transactions each of which complies with Section
11(o) hereof), in
21
25
one or more transactions, assets or earning power aggregating 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
(any such event being a "Section 13 Event ), then, and in each such case, proper
provision shall be made so that: (i) each holder of a Right, (other than Rights
which have become void 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 this Agreement and in lieu of Units of
Preferred Stock or shares of Company Common Stock, such number of validly
authorized and issued, fully paid, non-assessable and freely tradeable shares of
Common Stock of the Principal Party (as such term is hereinafter defined), which
shares shall not be subject to any liens, encumbrances, rights of call or first
refusal, transfer restrictions or other adverse claims, as shall be equal to the
result obtained by (1) multiplying the then current Purchase Price by the number
of Units of Preferred Stock for which a Right is exercisable immediately prior
to the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event
has occurred prior to the first occurrence of a Section 13 Event, multiplying
the number of such Units for which a Right would be exercisable hereunder but
for the occurrence of such Section 11(a)(ii) Event by the Purchase Price which
would be in effect hereunder but for such first occurrence) and (2) dividing
that product (which, following the first occurrence of a Section 13 Event, shall
be the "Purchase Price" for all purposes of this Agreement) by 50% of the
current market price (determined pursuant to Section 11(d) hereof) per share of
the Common Stock of such Principal Party on the date of consummation of such
Section 13 Event, provided, however, that the Purchase Price (as theretofore
adjusted in accordance with Section 11(a)(ii) hereof) and the number of shares
of Common Stock of such Principal Party so receivable upon exercise of a Right
shall be subject to further adjustment as appropriate in accordance with Section
11(f) hereof to reflect any events occurring in respect of the Common Stock of
such Principal Party after the occurrence 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 in all respects; (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock in accordance with Section 9 hereof) in connection
with the consummation of any such transaction as may be necessary to assure that
the provisions of this Agreement shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights, to its shares of Common Stock;
provided, however, that, upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all of the assets, recapitalization,
reclassification of shares, reorganization or other extraordinary transaction in
respect of such Principal Party, each holder of a Right shall thereupon be
entitled to receive, upon exercise of a Right and payment of the Purchase Price,
such cash, shares, rights, warrants and other property which such holder would
have been entitled to receive had it, at the time of such transaction, owned the
shares of Common Stock of the Principal Party purchasable upon the exercise of a
Right, and such Principal Party shall take such steps (including, but not
limited to, reservation of shares of stock) as may be necessary to permit the
subsequent exercise of the Rights in accordance with the terms hereof for such
cash, shares, rights, warrants and other property; and (v) the provisions of
Section 11(a)(ii) hereof shall be of no further effect following the first
occurrence of any Section 13 Event.
22
26
(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), (A) the
Person that is the issuer of any securities into which shares of
Company Common Stock are converted in such merger or
consolidation, or, if there is more than one such issuer, the
issuer of Common Stock that has the highest aggregate current
market price (determined pursuant to Section 11(d) hereof) and
(B) if no securities are so issued, the Person that is the other
party to such merger or consolidation, or, if there is more than
one such Person, the Person the Common Stock of which has the
highest aggregate current market price (determined pursuant to
Section 11(d) hereof); and
(ii) in the case of any transaction described in clause
(z) of the first sentence of Section 13(a) hereof, the Person
that is the party receiving the largest portion of the assets or
earning power transferred pursuant to such transaction or
transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the
assets or earning power transferred pursuant to such transaction
or transactions or if the Person receiving the largest portion
of the assets or earning power cannot be determined, whichever
Person the Common Stock of which has the highest aggregate
current market price (determined pursuant to Section 11(d)
hereof); provided, however, that in any such case, (1) if the
Common Stock of such Person is not at such time and has not been
continuously over the preceding twelve-month period registered
under Section 12 of the Exchange Act ("Registered Common
Stock"), or such Person is not a corporation, and such Person is
a direct or indirect Subsidiary of another Person that has
Registered Common Stock outstanding, "Principal Party" shall
refer to such other Person; (2) if the Common Stock of such
Person is not Registered Common Stock or such Person is not a
corporation, and such Person is a direct or indirect Subsidiary
of another Person but is not a direct or indirect Subsidiary of
another Person which has Registered Common Stock outstanding,
"Principal Party" shall refer to the ultimate parent entity of
such first-mentioned Person; (3) if the Common Stock of such
Person is not Registered Common Stock or such Person is not a
corporation, and such Person is directly or indirectly
controlled by more than one Person, and one or more of such
other Persons has Registered Common Stock outstanding,
"Principal Party" shall refer to whichever of such other Persons
is the issuer of the Registered Common Stock having the highest
aggregate current market price (determined pursuant to Section
11(d) hereof); and (4) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and
such Person is directly or indirectly controlled by more than
one Person, and none of such other Persons have Registered
Common Stock outstanding, "Principal Party" shall refer to
whichever ultimate parent entity is the corporation having the
greatest shareholders equity or, if no such ultimate parent
entity is a corporation, shall refer to whichever ultimate
parent entity is the entity having the greatest net assets
23
27
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a
sufficient number of authorized shares of its Common Stock which have
not been issued or reserved for issuance to permit the exercise in full
of the Rights in accordance with this Section 13, and unless prior
thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the
terms set forth in paragraphs (a) and (b) of this Section 13 and further
providing that the Principal Party, at its own expense, shall:
(i) (A) file on an appropriate form, as soon as
practicable following the execution of such agreement, a
registration statement under the Securities Act with respect to
the Common Stock that may be acquired upon exercise of the
Rights, (B) cause such registration statement to remain
effective (and to include a prospectus complying with the
requirements of the Securities Act) until the Expiration Date,
and (C) as soon as practicable following the execution of such
agreement, take such action as may be required to assure that
any acquisition of such Common Stock upon the exercise of the
Rights complies with any applicable state securities or "blue
sky" laws; and
(ii) as soon as practicable following the execution of
such agreement, 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.
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws
or other instrument governing its corporate affairs, which provision
would have the effect of (i) causing such Principal Party to issue, in
connection with, or as a consequence of, the consummation of a
transaction referred to in this Section 13, shares of Common Stock of
such Principal Party at less than the then current market price per
share (determined pursuant to Section 11(d) hereof) or securities
exercisable for, or convertible into, Common Stock of such Principal
Party at less than such then current market price (other than to holders
of Rights pursuant to this Section 13) or (ii) providing for any special
payment, tax or similar provisions in connection with the issuance of
the Common Stock of such Principal Party pursuant to the provisions of
this Section 13; then, in such event, the Company shall not consummate
any such transaction unless prior thereto the Company and such Principal
Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that
the authorized securities shall be redeemed, so that the applicable
provision will have no effect in connection with, or as a consequence
of, the consummation of the proposed transaction.
(e) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the
event that a Section 13 Event shall occur at any time after the
occurrence of a Section 11(a)(ii) Event, the Rights which have
24
28
not theretofore been exercised shall thereafter become exercisable, in
the manner and for the securities described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Rights
Certificates which evidence fractional Rights. In lieu of issuing such
fractional Rights, there shall be paid to the Persons to which such fractional
Rights would otherwise be issuable, an amount in cash equal to such fraction of
the market value of a whole Right. For purposes of this Section 14(a), the
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price of the Rights for any day shall
be, if the Rights are listed or admitted to trading on a national securities
exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by Nasdaq or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by a majority
of the Board of Directors. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by a majority of the Board of Directors shall be used and such
determination shall be described in a statement filed with the Rights Agent and
the holders of the Rights.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one one-hundredth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence such fractional shares of Preferred
Stock (other than fractions which are integral multiples of one one-hundredth of
a share of Preferred Stock); provided, however, that in lieu of fractions of
shares of Preferred Stock which are integral multiples of one one-hundredth of a
share of Preferred Stock, the Company may provide for the issuance of depositary
receipts pursuant to Section 7(c) hereof. In lieu of such fractional shares of
Preferred Stock that are not integral multiples of one one-hundredth of a share,
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the then current market price of a share of Preferred Stock on the
day of exercise, determined in accordance with Section 11(d) hereof.
(c) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, other than rights of action vested in the Rights Agent pursuant to
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
certificates representing shares of Company Common Stock); and any registered
holder of a Rights Certificate (or, prior to the Distribution Date, of a
certificate
25
29
representing shares of Company Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of a certificate representing shares of Company Common
Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company or any
other Person to enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Company Common
Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of
transfer and with the appropriate forms and certificates duly executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company
and the Rights Agent may deem and treat the person in whose name a
Rights Certificate (or, prior to the Distribution Date, the associated
Company Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificates or the
associated Company Common Stock certificate made by anyone other than
the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence
of Section 7 (e) hereof, shall be 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 any 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
promptly as practicable.
26
30
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of shares of
Preferred Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or, except as provided in Section 24 hereof, to
receive notice of meetings or other actions affecting stockholders, or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof. This Section 17 shall also apply to
holders, as such, of Rights prior to the issuance of Rights Certificates.
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, including reasonable fees and disbursements of its counsel, incurred
in connection with the execution and administration of this Agreement and the
exercise and performance of its duties hereunder. The Company shall indemnify
the Rights Agent for, and 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 reasonable costs and expenses of defending against any claim of liability
hereunder.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Preferred Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document believed by it to be genuine and to have been signed, executed
and, where necessary, verified or acknowledged by the proper Person or Persons.
(c) The indemnity provided herein shall survive the expiration
of the Rights and the termination of this Agreement. In no case will the Rights
Agent be liable for special, indirect, incidental or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even
if the Rights Agent has been advised of the possibility of such loss or damage.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the corporate
trust or shareholder services businesses 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 document or any further act on the part
of any of the parties hereto;
27
31
provided, however, that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of a
predecessor Rights Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with
such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any
Acquiring Person and the determination of "current market price") be
proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be specified herein) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant
Secretary of the Company and delivered to the Rights Agent; provided,
however, that so long as any Person is an Acquiring Person hereunder,
such certificate shall be signed and delivered by a majority of the
Board of Directors; and such certificate shall be full authorization to
the Rights Agent for any action taken or suffered in good faith by it
under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
28
32
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in
the Rights Certificates or be required to verify the same (except as to
its countersignature on such Rights Certificates), but all such
statements and recitals are and shall be deemed to have been made by the
Company only.
(e) The Rights Agent shall not have any responsibility for the
validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or for the validity or
execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of
any covenant or failure by the Company to satisfy conditions contained
in this Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment required under the provisions of Section
11 or Section 13 hereof or for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of
Rights evidenced by Rights Certificates after receipt by the Rights
Agent of the certificate describing any such adjustment contemplated by
Section 12); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
shares of Preferred Stock or any other securities to be issued pursuant
to this Agreement or any Rights Certificate or as to whether any shares
of Preferred Stock or any other securities will, when so issued, be
validly authorized and issued, fully paid and non-assessable.
(f) The Company shall perform, execute, acknowledge and deliver
or cause to be performed, executed, acknowledged and delivered all such
further acts, instruments and assurances as may reasonably be required
by the Rights Agent for the performance by the Rights Agent of its
duties under this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder
from the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Secretary, any Assistant Secretary,
the Treasurer or any Assistant Treasurer of the Company, and to apply to
such officers for advice or instructions in connection with its duties,
and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such officer;
provided, however, that so long as any Person is an Acquiring Person
hereunder, the Rights Agent shall accept such instructions and advice
only from a majority of the Board of Directors and shall not be liable
for any action taken or suffered to be taken by it in good faith in
accordance with such instructions of the majority of the Board of
Directors. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in
writing any action proposed to be taken or omitted by the Rights Agent
under this Rights Agreement and the date on and/or after which such
action shall be taken or such omission shall be effective. The Rights
Agent shall not be liable for any action taken by, or omission of, the
Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which
date shall not be less than five Business Days after the date any such
officer of the Company actually receives
29
33
such application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such action (or
the effective date in the case of an omission), the Rights Agent shall
have received written instructions in response to such application
specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Company or have a pecuniary interest in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though
it were not Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the
Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents.
(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 or in the exercise of
its rights hereunder if the Rights Agent shall have reasonable grounds
for believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to
the form of assignment or form of election to purchase, as the case may
be, has either not been completed, not signed or indicates an
affirmative response to clause 1 and/or 2 thereof, the Rights Agent
shall not take any further action with respect to such requested
exercise or transfer without first consulting with the Company. If such
certificate has been completed and signed and shows a negative response
to clauses 1 and 2 of such certificate, unless previously instructed
otherwise in writing by the Company (which instructions may impose on
the Rights Agent additional ministerial responsibilities, but no
discretionary responsibilities), the Rights Agent may assume without
further inquiry that the Rights Certificate is not owned by a Person
described in Section 7(e) hereof and shall not be charged with any
knowledge to the contrary.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty days' prior notice in writing mailed to the Company, and to each
transfer agent of the Preferred Stock and the Company Common Stock, by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty days' prior notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Preferred Stock and the Company Common Stock, by registered or certified
mail, and to the holders of the Rights Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise
30
34
become incapable of acting, the Company shall appoint a successor to the Rights
Agent. If the Company shall fail to make such appointment within a period of
thirty days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Rights Certificate (who shall, with such
notice, submit his Rights Certificate for inspection by the Company), then any
registered holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be (a) a
corporation organized and doing business under the laws of the United States or
any state of the United States in good standing, shall be authorized under
applicable laws to exercise corporate trust or stock transfer powers and shall
be subject to supervision or examination by federal or state authorities or (b)
an Affiliate of a corporation described in clause (a). After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Preferred Stock and the Company Common Stock, and
mail a notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by a majority of the Board of Directors to reflect any
adjustment or change made in accordance with the provisions of this Agreement in
the Purchase Price or the number or kind or class of shares or other securities
or property that may be acquired under the Rights Certificates. In addition, in
connection with the issuance or sale of shares of Company Common Stock following
the Distribution Date and prior to the Expiration Date, the Company (a) shall,
with respect to shares of Company Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by a
majority of the Board of Directors, issue Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided,
however, that (i) no such Rights Certificate shall be issued if, and to the
extent that, the Company shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to the Company or
the Person to whom such Rights Certificate would be issued, and (ii) no such
Rights Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination. (a) Subject to Section 30
hereof, the Company may, at its option, by action of a majority of the Board of
Directors, at any time prior to the earlier of (i) the Close of Business on the
tenth Business Day following the Stock
31
35
Acquisition Date or (ii) the Final Expiration Date, redeem all but not less than
all of the then outstanding Rights at a redemption price of $.01 per Right, as
such amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such redemption
price being the "Redemption Price"). The Company may, at its option, by action
of a majority of the Board of Directors, pay the Redemption Price either in
shares of Company Common Stock (based on the "current market price", as defined
in Section 11(d) hereof, of the shares of Company Common Stock at the time of
redemption) or cash and the redemption of the Rights shall be effective on the
basis and with such conditions as the Board of Directors may in its sole
discretion establish.
(b) Immediately upon the action of a majority 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. 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. Promptly after the
action of a majority of the Board of Directors ordering the redemption of the
Rights, the Company shall give notice of such redemption to the Rights Agent and
the holders of the then outstanding Rights by mailing such notice to all such
holders at each holder's last address as it appears upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry books of
the transfer agent for the Company Common Stock. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made.
Section 24. Notice of Certain Events. (a) In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend paid out of funds legally available therefor), (ii) to
offer to the holders of Preferred Stock rights or warrants to subscribe for or
to purchase any additional shares of Preferred Stock or shares of stock of any
class or any other securities, rights or options, (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification involving
only the subdivision of outstanding shares of Preferred Stock), (iv) to effect
any consolidation or merger into or with any other Person, or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person or Persons (other than a transfer by the Company and/or any
of its wholly owned Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Rights Certificate, to the extent feasible and in
accordance with Section 25 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to take place
and the date of participation therein by the holders of the shares of Preferred
Stock, if any such date is to be fixed, and such notice shall be so given in the
case of
32
36
any action covered by clause (i) or (ii) above at least twenty (20) days
prior to the record date for determining holders of the shares of Preferred
Stock for purposes of such action, and in the case of any such other action, at
least twenty (20) days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the shares of Preferred
Stock whichever shall be the earlier; provided, however, no such notice shall be
required pursuant to this Section 24, if any wholly owned Subsidiary of the
Company effects a consolidation or merger with or into, or effects a sale or
other transfer of assets or earnings power to, any other wholly owned Subsidiary
of the Company.
(b) In case any Triggering Event shall occur, then, in any such
case, (i) the Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, to the extent feasible and in accordance with
Section 25 hereof, a notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of Rights under Section
11(a)(ii) or Section 13 hereof, as the case may be.
Section 25. Notices. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including by
telex, telegram or cable) and mailed or sent or delivered, if to the Company, at
its address at:
SDL, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
and if to the Rights Agent, at its address at:
ChaseMellon Shareholder Services, L.L.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Relationship Manager
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Company Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 26. Supplements and Amendments. Prior to the Distribution Date
and subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement in any respect without the approval of any holders of
certificates representing shares of Company Common Stock. From and after the
Distribution Date and subject to the penultimate sentence of this Section 26,
the Company and the Rights Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any holders of Rights Certificates
in order (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be
33
37
defective or inconsistent with any other provisions herein, (iii) to shorten or
lengthen any time period hereunder, or (iv) to change or supplement the
provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Rights Certificates (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person); provided, however, that this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (iii) of this sentence,
(A) subject to Section 30 hereof, a time period relating to when the Rights may
be redeemed at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights. Upon
the delivery of a certificate from an appropriate officer of the Company or, so
long as any Person is an Acquiring Person hereunder, from the majority of the
Board of Directors which states that the proposed supplement or amendment is in
compliance with the terms of this Section 26, the Rights Agent shall execute
such supplement or amendment. Notwithstanding anything contained in this
Agreement to the contrary, (i) no supplement or amendment shall be made which
changes the Redemption Price, the Purchase Price, the Expiration Date or the
number of Units of Preferred Stock or other securities or assets for which a
Right is exercisable without the approval of a majority of the Board of
Directors, and (ii) following the occurrence of a Section 11(a)(ii) Event, no
supplement or amendment whatsoever shall be made without the approval of the
Board of Directors. Prior to the Distribution Date, the interests of the holders
of Rights shall be deemed coincident with the interests of the holders of
Company Common Stock.
Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of shares of
Company Common Stock outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding shares of Company
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Exchange Act
Regulations as in effect on the date hereof. Except as otherwise specifically
provided herein, 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 (i) to interpret the provisions of this
Agreement, and (ii) to make all determinations deemed necessary or advisable for
the administration of this Agreement. All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
of 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 member thereof to any liability to
the holders of the Rights.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the
34
38
Rights Certificates (and, prior to the Distribution Date, registered holders of
shares of Company Common Stock) any legal or equitable right, remedy or claim
under this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, registered holders of
shares of Company Common Stock).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and a majority of the
Board of Directors determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement and the Rights shall not then be redeemable, the right
of redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the Close of Business on the tenth Business Day following the date
of such determination by a majority of the Board of Directors.
Section 31. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be governed by, and construed in accordance
with, the laws of the State of Delaware applicable to contracts executed in and
to be performed entirely in such State.
Section 32. Counterparts. This Agreement may be executed (including by
facsimile) in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
instrument.
Section 33. Descriptive Headings. The headings contained in this
Agreement are for descriptive purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 34. Exchange. (a) The Company, upon resolution of a majority of
the Board of Directors may, at its option, at any time after the first
occurrence of a Section 11(a)(ii) Event, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to Section 7(e) hereof) for Units of Preferred Stock or
shares of Company Common Stock (at the election of the Board of Directors) at an
exchange ratio of one Unit of Preferred Stock or one share of Company Common
Stock, as the case may be, per Right, as appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such exchange
at any time after any Person (other than an Exempt Person), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of shares
of Company Common Stock aggregating 50% or more of the shares of Company Common
Stock then outstanding. From and after the occurrence of a Section 13(a) Event,
any Rights that theretofore have not been
35
39
exchanged pursuant to this Section 34(a) shall thereafter be exercisable only in
accordance with Section 13 and may not be exchanged pursuant to this Section
34(a). The exchange of the Rights by the Board of Directors may be made
effective at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish.
(b) Immediately upon the action of a majority of the Board of
Directors ordering the exchange of any Rights pursuant to Section 34(a) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of Units of Preferred Stock or shares of Company
Common Stock, as the case may be, equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange shall state the method by which the exchange of
Units of Preferred Stock or shares of Company Common Stock, as the case may be,
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 the event that the number of shares of Preferred Stock or
Company Common Stock, as the case may be, which are authorized by the Company's
Restated Certificate of Incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights are not sufficient
to permit any exchange of Rights as contemplated in accordance with this Section
34, the Company, upon a resolution of a majority of the Board of Directors,
shall take all such action as may be necessary to authorize additional shares of
Preferred Stock or Company Common Stock, as the case may be, for issuance upon
exchange of the Rights or make adequate provision to substitute, in whole or in
part, (1) cash, (2) other equity securities of the Company, (3) debt securities
of the Company, (4) other assets, or (5) any combination of the foregoing,
having an aggregate value for each Right to be exchanged equal to the per share
market price of one Unit of Preferred Stock or share of Company Common Stock, as
the case may be (determined pursuant to Section 11(d) hereof) as of the date of
a Section 11(a)(ii) Event, where such aggregate value has been determined by a
majority of the Board of Directors.
(d) The Company shall not be required to issue fractions of
Units of Preferred Stock or fractions of shares of Company Common Stock or to
distribute certificates which evidence fractional Units or fractional shares. In
lieu of issuing fractional Units or fractional shares, the Company may pay to
the registered holders of Rights Certificates at the time such Rights are
exchanged as herein provided an amount in cash equal to the same fraction of the
current market price (determined pursuant to Section 11(d) hereof) of one Unit
of Preferred Stock or one share of Company Common Stock, as the case may be, on
the Trading Day immediately prior to the date of exchange pursuant to this
Section 34.
36
40
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the date first above written.
SDL, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------- --------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President Title: Vice President, Finance
and Secretary
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------- --------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Assistant Vice President Title: Assistant Vice President
37