EXHIBIT 4.1
INTEGRATED MEASUREMENT SYSTEMS, INC.
AND
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
(RIGHTS AGENT)
RIGHTS AGREEMENT
DATED AS OF MARCH 25, 1998
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of March 25, 1998 (the "Agreement"), between
Integrated Measurement Systems, Inc., an Oregon corporation (the "Company"),
and ChaseMellon Shareholder Services, L.L.C., a New Jersey limited liability
company (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on March 25, 1998, (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company authorized and declared a dividend
distribution of one Right for each share of Common Stock (as hereinafter
defined) of the Company outstanding at the close of business on April 17,
1998 (the "Record Date"), and authorized the issuance of one Right (as such
number may hereafter be adjusted pursuant to the provisions of Section 11(i)
hereof) for each share of Common Stock of the Company issued between the
Record Date (whether originally issued or delivered from the Company's
treasury) and the Distribution Date (as hereinafter defined), each Right
initially representing the right to purchase one one-hundredth of a share of
Series A Participating Preferred Stock of the Company having the rights,
powers and preferences set forth in Exhibit A attached hereto, upon the terms
and subject to the conditions hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who, together with
all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 20% or more of the shares of Common Stock then outstanding, but shall not
include:
(i) the Company,
(ii) any Subsidiary of the Company,
(iii) any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for
or pursuant to the terms of any such plan,
(iv) any Person who becomes the Beneficial Owner of 20% or
more of the shares of Common Stock then outstanding
solely as a result of a reduction in the number of
shares of Common Stock outstanding due to the
repurchase of shares of Common Stock by the
Company, unless and until such Person shall thereafter
purchase or otherwise become the Beneficial Owner of
additional shares of Common Stock constituting 1% or
more of the shares of Common Stock outstanding at the
time that such Person becomes the Beneficial Owner of
20% or more of the then outstanding shares of Common
Stock,
(v) any Person described in Rule 13d-1(b)(1) under the
Exchange Act who is eligible to report beneficial
ownership of Common Stock on Schedule 13G, unless such
Person (1) becomes required to file a Statement on
Schedule 13D with respect to its Beneficial Ownership
of Common Stock or (2) acquires Beneficial Ownership
(whether or not required to be reported on Schedule 13D
or Schedule 13G) of 25% or more of the then outstanding
shares of Common Stock,
(vi) any Person who (1) within eight days after such Person
would otherwise have become an Acquiring Person (but
for the operation of this subclause 1(a)(vi)), notifies
the Board of Directors of the Company that such Person
did so inadvertently and (2) within two days after such
notification, such Person is the Beneficial Owner of
less than 20% of the outstanding shares of Common
Stock, or
(vii) except as otherwise provided in Section 35 hereof,
Cadence Design Systems, Inc. ("Cadence"), or any member
of the Cadence Group (as defined in Section 35 hereof).
Notwithstanding the foregoing, Acquiring Person shall not include any Person
whose Beneficial Ownership of 20% or more of the shares of Common Stock then
outstanding results from any action, transaction or series of transactions
approved in advance by the Board of Directors of the Company (provided that
such Person shall become an Acquiring Person if such Person shall thereafter
purchase or otherwise become the Beneficial Owner of additional shares of
Common Stock); PROVIDED however, (A) any transfer of shares by such Person to
a third party (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any trustee in respect thereof acting
in such capacity) who after such transfer owns 20% or more of the shares then
outstanding will cause the Rights to become exercisable at the time and in
the manner provided for herein, and (B) any institution of a tender or
exchange offer by any holder of shares will trigger the exercisability of the
Rights, notwithstanding the above.
(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 Exchange Act.
(c) A Person shall be deemed the "Beneficial Owner" of, and shall
be deemed to "Beneficially Own," any securities:
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(i) 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) pursuant
to any agreement, arrangement or understanding (whether or not in writing) or
upon the exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise; provided, however, that a Person shall not be deemed
the "Beneficial Owner" of, or to "Beneficially Own," (A) securities tendered
pursuant to a tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange, or (B) securities issuable upon exercise of Rights
at any time prior to the occurrence of a Triggering Event, or (C) securities
issuable upon exercise of Rights from and after the occurrence of a
Triggering Event which Rights were acquired by such Person or any of such
Person's Affiliates or Associates prior to the Distribution Date or pursuant
to Section 3(a) or Section 22 hereof (the "Original Rights") or pursuant to
Section 11(i) hereof in connection with an adjustment made with respect to
any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or
has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act), including pursuant to
any agreement, arrangement or understanding (whether or not in writing);
PROVIDED, however, that a Person shall not be deemed the "Beneficial Owner"
of, or to "Beneficially Own," any security under this subparagraph (ii) as a
result of an agreement, arrangement or understanding to vote such security if
such agreement, arrangement or understanding: (A) arises solely from a
revocable proxy given in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable provisions of the
General Rules and Regulations under the Exchange Act, and (B) is not also
then reportable by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described
in the proviso to subparagraph (ii) of this paragraph (c)) or disposing of
any voting securities of the Company; PROVIDED, however, that nothing in this
paragraph (c) shall cause a Person engaged in the business as an underwriter
of securities to be deemed 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.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday, a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close, or a United
States Federal holiday.
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(e) "Close of Business" on any given date shall mean 5:00 p.m.,
Oregon time, on such date; PROVIDED, however, that if such date is not a
Business Day it shall mean 5:00 p.m., Oregon time, on the next succeeding
Business Day.
(f) "Common Stock" shall mean the common stock, par value $.01 per
share, of the Company, except that "Common Stock" when used with reference to
any Person other than the Company shall mean the capital stock of such Person
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person.
(g) "Distribution Date" shall mean the earlier of (i) the Close of
Business on the Stock Acquisition Date and (ii) the Close of Business on the
tenth business day (or such later date as the Board of Directors of the
Company shall determine) after the date that a tender or exchange offer by
any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company, or
any Person or entity organized, appointed or established by the Company for
or pursuant to the terms of any such plan) is first published or sent or
given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if upon consummation thereof, such Person
would be the Beneficial Owner of 20% or more of the shares of Common Stock
then outstanding.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(i) "Exchange Ratio" shall have the meaning set forth in Section
23 hereof.
(j) "Expiration Date" shall mean the earlier of (i) the Final
Expiration Date, or (ii) the time at which the Rights are redeemed as
provided in Section 24 hereof.
(k) "Final Expiration Date" shall mean the Close of Business on
March 25, 2008.
(l) "Original Rights" shall have the meaning set forth in Section
1(c) hereof.
(m) "Principal Party" shall have the meaning set forth in Section
13 hereof.
(n) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company or other entity.
(o) "Preferred Stock" shall mean shares of Series A Participating
Preferred Stock, par value $0.01 per share, of the Company and, to the extent
that there are not a sufficient number of shares of Series A Participating
Preferred Stock authorized to permit the full exercise of the Rights, any
other series of preferred stock, par value $0.01 per share, of the Company
designated for such purpose containing terms substantially similar to the
terms of the Series A Participating Preferred Stock.
(p) "Purchase Price" shall have the meaning set forth in Section 4.
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(q) "Record Date" shall have the meaning set forth in the recitals
at the beginning of this Agreement.
(r) "Rights" shall have the meaning set forth in the recitals at
the beginning of this Agreement.
(s) "Rights Certificates" shall mean one or more rights
certificates, in substantially the form of Exhibit B hereto.
(t) "Rights Dividend Declaration Date" shall have the meaning set
forth in the recitals at the beginning of this Agreement.
(u) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii)(A) or (B) hereof.
(v) "Section 13 Event" shall mean any event described in clauses
(x), (y) or (z) of Section 13(a) hereof.
(w) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(x) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act)
by the Company or an Acquiring Person that an Acquiring Person has become
such; provided, however, if such Person has first been determined by the
Board of Directors of the Company not to have become an Acquiring Person
pursuant to Section 1(a) hereof, then no Stock Acquisition Date shall be
deemed to have occurred.
(y) "Subsidiary" shall mean, with reference to any Person, any
corporation of which an amount of voting securities sufficient to elect at
least a majority of the directors of such corporation is beneficially owned,
directly or indirectly, by such Person, or otherwise controlled by such
Person.
(z) "Summary of Rights" shall mean the summary of rights to
purchase Preferred Stock, in substantially the form of Exhibit C hereto.
(aa) "Trading Day" shall have the meaning set forth in Section
11(d) hereof.
(bb) "Triggering Event" shall mean any Section 11(a)(ii) Event or
any Section 13 Event.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such concurrent Rights Agents as it
may deem necessary or desirable. Contemporaneously with any such appointment
the Company shall notify the Rights Agent thereof.
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Section 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the Distribution Date, (i) the Rights will be evidenced
(subject to the provisions of 3(b) hereof) by the certificates for Common
Stock registered in the names of the holders of Common Stock (which
certificates for Common Stock shall be deemed also to be certificates for the
Rights) and not by separate certificates, and (ii) the Rights will be
transferable only in connection with the transfer of the underlying shares of
Common Stock (including a transfer to the Company). The Company shall
promptly notify the Rights Agent upon the occurrence of a Distribution Date,
and shall request that the Company's transfer agent deliver to the Rights
Agent a list of holders of Common Stock. As soon as practicable after the
Rights Agent receives such notice and list, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each record holder of the
Common Stock as of the Close of Business on the Distribution Date, at the
address of such holder shown on the records of the Company, one or more
Rights Certificates, evidencing one Right for each share of Common Stock so
held, subject to adjustment as provided herein. In the event that an
adjustment in the number of Rights per share of Common Stock has been made
pursuant to Section 11(i) hereof, at the time of distribution of the Right
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and
cash is paid in lieu of any fractional Rights. As of and after the
Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights, by first-class,
postage-prepaid mail, to each record holder of shares of 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.
(c) Certificates issued for shares of Common Stock (including,
without limitation, certificates issued upon transfer, exchange or
replacement of shares of Common Stock) after the Record Date but before the
earliest of the Distribution Date, the Redemption Date and the Final
Expiration 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 Integrated Measurement Systems, Inc. and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent, dated as of March
25, 1998 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at
the principal offices of Integrated Measurement Systems, Inc.
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. Integrated Measurement
Systems, Inc. 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
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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.
If the Company purchases or acquires any Common Stock after the Record Date
but before the Distribution Date, any Rights associated with that Common
Stock shall be deemed canceled so that the Company shall not be entitled to
exercise any Rights associated with shares of Common Stock which are no
longer outstanding.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date and (ii) the Expiration Date, the Rights
associated with shares of Common Stock represented by such certificates shall
be evidenced by such certificates alone and the registered holders of shares
of Common Stock shall also be the registered holders of the associated
Rights, and the transfer of any of such certificates shall also constitute
the transfer of the Rights associated with shares of Common Stock represented
by such certificates.
Section 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to purchase
and of assignment to be printed on the reverse thereof) may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate (which may not affect the
duties and responsibilities of the Rights Agent) and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with
any applicable law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange on which the Rights may
from time to time be listed, or to conform to usage. Subject to the
provisions of Section 11 and Section 22 hereof, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date and on their face
shall entitle the holders thereof to purchase such number of one-hundredths
of a share of Preferred Stock as shall be set forth therein at the price set
forth therein (such exercise price per one one-hundredth of a share, the
"Purchase Price"), but the amount and type of securities purchasable upon the
exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificates issued pursuant to Section 3(a) or
Section 22 hereof that represent Rights beneficially owned by: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Persons with whom such
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of
Directors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect
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avoidance of Section 7(e) hereof, and, provided that the Company shall have
notified the Rights Agent that this Section 4(b) applies, any Rights
Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Rights Certificate referred
to in this sentence, shall contain (to the extent feasible) the following
legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as such
terms are defined in the Rights Agreement). Accordingly, this
Rights Certificate and the Rights represented hereby may become
null and void in the circumstances specified in Section 7(e) of
such Agreement.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the
Company by its President or any Vice President, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The
Rights Certificates shall be countersigned by the Rights Agent, either
manually or by facsimile signature, and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery
by the Company, such Rights Certificates, nevertheless, may be countersigned
by the Rights Agent and issued and delivered by the Company with the same
force and effect as though the Person who signed such Rights Certificates had
not ceased to be such officer of the Company; and any Rights Certificates may
be signed on behalf of the Company by any Person who, at the actual date of
the execution of such Rights Certificate, shall be a proper officer of the
Company to sign such Rights Certificate, although at the date of the
execution of this Rights Agreement any such Person was not such an officer.
(b) Following the Distribution Date and receipt by the Rights
Agent of the notice and list of record holders of Rights referred to in
Section 3(a) hereof, the Rights Agent will keep or cause to be kept, at its
office designated pursuant to Section 26 hereof, books for registration and
transfer of the Rights Certificates issued hereunder. Such books shall show
the names and addresses of the respective holders of the Rights Certificates,
the number of Rights evidenced on its face by each of the Rights Certificates
and the date of each of the Rights Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of Section 4(b), Section 7(e),
Section 13 and Section 14 hereof, at any time after the Close of Business on
the Distribution Date, and at or prior to the Close of Business on the
Expiration Date, any Rights Certificate or Certificates may be transferred,
split up, combined or exchanged for another Rights Certificate or
Certificates,
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entitling the registered holder to purchase a like number of one
one-hundredths of a share of Preferred Stock (or, following a Triggering
Event, Common Stock, other securities, cash or other assets, as the case may
be) as the Rights Certificate or Certificates surrendered then entitled such
holder (or former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any
Rights Certificate or Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the Rights Certificate or
Certificates to be transferred, split up, combined or exchanged at the 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 signed the certificate contained in the form
of assignment on the reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
or the Rights Agent shall reasonably request. Thereupon the Rights Agent
shall, subject to Section 4(b), Section 7(e) and Section 14 hereof,
countersign and deliver to the Person entitled thereto a Rights Certificate
or Rights Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates. The Rights Agent may in its sole discretion
require the Company or the Person entitled to such Right Certificate to
provide evidence that such payment has been made prior to countersigning and
delivering any Right Certificate pursuant to this Section 6(a).
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Rights Certificate, and, in case of loss, theft or destruction, of
indemnity or security satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of
like tenor to the Rights Agent for countersignature and delivery to the
registered owner in lieu of the Rights Certificate so lost, stolen, destroyed
or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to Section 7(e) hereof, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii), Section 13 and
Section 24(a) hereof) in whole or in part at any time after the Distribution
Date upon surrender of the Rights Certificate, with the form of election to
purchase and the certificate on the reverse side thereof duly executed, to
the Rights Agent at the office of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with respect
to the total number of one one-hundredths of a share of Preferred Stock (or
other securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable, at or prior to the earlier of (i)
the Final Expiration Date, or (ii) the Expiration Date.
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(b) The Purchase Price for each one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be
$70.00, and shall be subject to adjustment from time to time as provided in
Sections 11 and 13(a) hereof and shall be payable in accordance with
paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly
executed, accompanied by payment, with respect to each Right so exercised, of
the Purchase Price per one one-hundredth of a share of Preferred Stock (or
other securities, cash or other assets, as the case may be) to be purchased
as set forth below and an amount equal to any applicable tax or governmental
charge, the Rights Agent shall, subject to Section 20(k) hereof, thereupon
promptly (i) (A) requisition from any transfer agent of the shares of
Preferred Stock (or make available, if the Rights Agent is the transfer agent
for such shares) certificates for the total number of one one-hundredths of a
share of Preferred Stock to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B) if the
Company shall have elected to deposit the total number of shares of Preferred
Stock issuable upon exercise of the Rights hereunder with a depository agent,
requisition from the depository agent depository receipts representing such
number of one one-hundredths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with
the depository agent) and the Company will direct the depository agent to
comply with such request, (ii) requisition from the Company the amount of
cash, if any, to be paid in lieu of fractional shares in accordance with
Section 14 hereof, (iii) after receipt of such certificates or depository
receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate registered in such name or names
as may be designated by such holder, and (iv) after receipt thereof, deliver
such cash, if any, to or upon the order of the registered holder of such
Rights Certificate. The payment of the Purchase Price (as such amount may be
reduced pursuant to Section 11(a)(iii) hereof) may be made (x) in cash or by
certified bank check or bank draft payable to the order of the Company, or
(y) by delivery of a certificate or certificates (with appropriate stock
powers executed in blank attached thereto) evidencing a number of shares of
Common Stock equal to the then Purchase Price divided by the closing price
(as determined pursuant to Section 11(d) hereof) per share of Common Stock on
the Trading Day immediately preceding the date of such exercise. In the
event that the Company is obligated to issue other securities (including
Common Stock) of the Company, pay cash and/or distribute other property
pursuant to Section 11(a) hereof, the Company will make all arrangements
necessary so that such other securities, cash and/or other property are
available for distribution by the Rights Agent, if and when necessary to
comply with this Agreement. The Company reserves the right to require prior
to the occurrence of a Triggering Event that upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of Preferred Stock
would be issued.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent and delivered to, or upon
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the order of, the registered holder of such Rights Certificates, registered
in such name or names as may be designated by such holder, subject to the
provisions of Section 6 and Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Section 11(a)(ii) Event, any Rights
Beneficially Owned by (i) an Acquiring Person or an Associate or Affiliate of
an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any
Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a
transfer which the Board of Directors of the Company has determined is part
of a plan, arrangement or understanding which has as a primary purpose or
effect the avoidance of this Section 7(e), shall become null and void without
any further action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall notify the Rights Agent when this
Section 7(e) applies and shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with,
but neither the Company nor the Rights Agent shall have any liability to any
holder of Rights Certificates or other Person as a result of the Company's
failure to make any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) properly completed and signed the certificate contained
in the form of election to purchase set forth on the reverse side of the
Rights Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) and Affiliates or Associates thereof as the Company or the
Rights Agent 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 canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement, and the Rights
Agent shall so cancel and retire, any other Rights Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all canceled Rights Certificates to the Company, or
shall, at the written request of the Company, destroy such canceled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
11
Section 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the occurrence of a Triggering Event, out of
its authorized and unissued shares of Common Stock and/or other securities or
out of its authorized and issued shares held in its treasury), the number of
shares of Preferred Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities) that, as provided in this
Agreement including Section 11(a)(iii) hereof, will be sufficient to permit
the exercise in full of all outstanding Rights.
(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities)
issuable and deliverable upon the exercise of the Rights may be listed on any
stock exchange or quoted on an automated quotation system, the Company shall
use its best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such
exchange or quoted on such automated quotation system upon official notice of
issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) hereof, or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement under the
Securities Act, with respect to the securities purchasable upon exercise of
the Rights on an appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing, and (iii) cause
such registration statement to remain effective (with a prospectus at all
times meeting the requirements of such Act) until the earlier of (A) the date
as of which the Rights are no longer exercisable for such securities, and (B)
the date of the expiration of the Rights. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the
securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a
period of time not to exceed ninety (90) days after the date set forth in
clause (i) of the first sentence of this Section 9(c), the exercisability of
the Rights in order to prepare and file such registration statement and
permit it to become effective. Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. The Company shall notify the Rights
Agent whenever it makes a public announcement pursuant to this Section 9(c),
and shall deliver to the Rights Agent a copy of any such announcement.
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 the registration required by such
jurisdiction shall not have been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all one one-hundredths of a share
of Preferred Stock (and, following the occurrence of a Triggering Event,
Common Stock and/or other securities) delivered upon
12
exercise of Rights shall, at the time of delivery of the certificates for
such shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all taxes and governmental charges which may be
payable in respect of the issuance or delivery of the Rights Certificates and
of any certificates for a number of one one-hundredths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be)
upon the exercise of Rights. The Company shall not, however, be required to
pay any tax or governmental charge which may be payable in respect of any
transfer or delivery of Rights Certificates to a Person other than, or the
issuance or delivery of a number of one one-hundredths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be)
in respect of a name other than that of, the registered holder of the Rights
Certificates evidencing Rights surrendered for exercise or to issue or
deliver any certificates for a number of one one-hundredths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be)
in a name other than that of the registered holder upon the exercise of any
Rights until such tax or governmental charge shall have been paid (any such
tax or governmental charge being payable by the holder of such Rights
Certificates at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax or governmental charge is due.
Section 10. PREFERRED STOCK RECORD DATE. Each Person in whose name any
certificate for a number of one one-hundredths of a share of Preferred Stock
(or Common Stock and/or other securities, as the case may be) is issued upon
the exercise of Rights shall for all purposes be deemed to have become the
holder of record of such fractional shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) represented thereby on,
and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and all applicable taxes and governmental charges) was made;
PROVIDED, however, that if the date of such surrender and payment is a date
upon which the Preferred Stock (or Common Stock and/or other securities, as
the case may be) transfer books of the Company are closed, such Person shall
be deemed to have become the record holder of such shares (fractional or
otherwise) on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a Rights
Certificate shall not be entitled to any rights of a stockholder of the
Company with respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or
other distributions or to exercise any preemptive rights, and shall not be
entitled to receive any notice of any proceedings of the Company, except as
provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
13
(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) and Section
7(e) hereof, the Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of Preferred Stock or
capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive, upon payment of the Purchase Price then in
effect, the aggregate number and kind of shares of Preferred Stock or capital
stock, as the case may be, which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred Stock
transfer books of the Company were open, such holder would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and 11(a)(ii) and
hereof, the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.
(ii) In the event
(A) (1) any Acquiring Person or any Associate or Affiliate of
any Acquiring Person, at any time after the date of this Agreement,
directly or indirectly, shall merge into the Company or otherwise
combine with the Company and the Company shall be the continuing or
surviving corporation of such merger or combination and the Common Stock
of the Company shall remain outstanding and unchanged, or (2) (x) any
Person shall, at any time after the Rights Dividend Declaration Date,
become an Acquiring Person, other than pursuant to any transaction set
forth in Section 13(a) hereof or pursuant to an offer for all
outstanding shares of Common Stock at a price and upon such terms and
conditions as a majority of the Board of Directors of the Company
determines to be in the best interests of the Company and its
stockholders, other than such Acquiring Person, its Affiliates and its
Associates, and (y) the redemption right contained in Section 24 shall
have expired, or
(B) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any reverse stock
split), or recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or any other
transaction or series of transactions involving the Company or any of
its Subsidiaries, other than a transaction or transactions to which the
provisions of Section 13(a) apply (whether or not with or into or
otherwise involving an Acquiring Person) which has the effect, directly
or indirectly, of increasing by more than 1% the proportionate share of
the outstanding shares of any class of equity securities of the Company
or any of its Subsidiaries which is directly or indirectly beneficially
owned by any Acquiring Person or any Associate or Affiliate of any
Acquiring Person,
14
then, promptly following the occurrence of a Section 11(a)(ii) Event, the
Company and, to the extent necessary or appropriate, the Acquiring Person and
its Affiliates and Associates, shall make proper provision so that each
holder of a Right (except as provided below and in Section 7(e) hereof) shall
thereafter have the right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement, in
lieu of a number of one one-hundredths of a share of Preferred Stock, such
number of shares of Common Stock of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then
number of one one-hundredths of a share of Preferred Stock for which a Right
was exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event, and (y) dividing that product (which, following such first
occurrence, shall thereafter be referred to as the "Purchase Price" for each
Right and for all purposes of this Agreement) by 50% of the current market
price (determined pursuant to Section 11(d) hereof) per share of Common Stock
on the date of such first occurrence (such number of shares, the "Adjustment
Shares").
(iii) In the event that the number of shares of Common
Stock which are authorized by the Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section 11(a), the
Company shall: (A) determine the excess of (1) the value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current Value") over (2)
the Purchase Price (such excess, the "Spread"), and (B) with respect to each
Right (subject to Section 7(e) hereof), make adequate provision to substitute
for the Adjustment Shares, upon payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the Purchase Price, (3) Common Stock or other equity
securities of the Company (including, without limitation, shares, or units of
shares, of preferred stock which the Board of Directors of the Company has
deemed to have the same value as shares of Common Stock (such shares of
preferred stock, "common stock equivalents")), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the foregoing, having an
aggregate value equal to the Current Value, where such aggregate value has
been determined by the Board of Directors of the Company based upon the
advice of a nationally recognized investment banking firm selected by the
Board of Directors of the Company; PROVIDED, however, if the Company shall
not have made adequate provision to deliver the value pursuant to clause (B)
above within thirty (30) days following the later of (x) the first occurrence
of a Section 11(a)(ii) Event and (y) the date on which the Company's right of
redemption pursuant to Section 24(a) expires (the later of (x) and (y) being
referred to herein as the "Section 11(a)(ii) Trigger Date"), then the Company
shall be obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares of Common Stock (to
the extent available) and then, if necessary, cash, which shares and/or cash
have an aggregate value equal to the Spread. If the Board of Directors of
the Company shall determine in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance upon
exercise in full of the Rights, the thirty (30) day period set forth above
may be extended to the extent necessary, but not more than ninety (90) days
after the Section 11(a)(ii) Trigger Date, in order that the Company may seek
stockholder approval for the authorization of such additional shares (such
period, as it may be extended, the "Substitution Period"). To the extent
that the Company determines that some action need be taken pursuant to the
first and/or second sentences
15
of this Section 11(a)(iii), the Company (x) shall provide, subject to Section
7(e) hereof, that such action shall apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value thereof. In
the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect, and shall deliver a copy of such
announcement to the Rights Agent. For purposes of this Section 11(a)(iii),
the value of the Common Stock shall be the current market price (as
determined pursuant to Section 11(d) hereof) per share of the Common Stock on
the Section 11(a)(ii) Trigger Date and the value of any "common stock
equivalent" shall be deemed to have the same value as the Common Stock on
such date.
(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Stock entitling
them to subscribe for or purchase (for a period expiring within forty-five
(45) calendar days after such record date) Preferred Stock (or shares having
the same rights, privileges and preferences as the shares of Preferred Stock
("equivalent preferred stock")) or securities convertible into Preferred
Stock or equivalent preferred stock at a price per share of Preferred Stock
or 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
11(d) hereof) per share of Preferred Stock on such record date, the Purchase
Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the number of shares of
Preferred Stock outstanding on such record date, plus the number of shares of
Preferred Stock 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 the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on
the Rights Agent and the holders of the Rights. Shares of Preferred Stock
owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall
be made successively whenever such a record date is fixed, and in the event
that such rights 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 Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash
16
(other than a regular quarterly cash dividend out of the earnings or retained
earnings of the Company), assets (other than a dividend payable in Preferred
Stock, but including any dividend payable in stock other than Preferred
Stock) or subscription rights or warrants (excluding those referred to in
Section 11(b) hereof), the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price (as determined pursuant to Section 11(d)
hereof) per share of Preferred Stock on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders of the
Rights) of the portion of the cash, assets or evidences of indebtedness so to
be distributed or of such subscription rights or warrants applicable to a
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, other than
computations made pursuant to Section 11(a)(iii) hereof, the "current market
price" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the
thirty (30) consecutive Trading Days (as such term is hereinafter defined)
immediately prior to and not including such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the "current market
price" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the
ten (10) consecutive Trading Days immediately following and not including
such date; PROVIDED, however, that in the event that the current market price
per share of the Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (A) a dividend or
distribution on such Common Stock payable in shares of such Common Stock of
securities convertible into shares of such Common Stock (other than the
Rights), or (B) any subdivision, combination or reclassification of such
Common Stock, and prior to the expiration of the requisite thirty (30)
Trading Day or ten (10) Trading Day period, as set forth above, after the
ex-dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification, then, and in each such
case, the "current market price" shall be properly adjusted to take into
account ex-dividend trading. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading by the New York
Stock Exchange or, if the shares of Common Stock are not listed or admitted
to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed
on the principal national securities exchange on which the shares of Common
Stock are listed or admitted to trading or, if the shares of Common Stock are
not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated
17
Quotation System ("Nasdaq") or such other system then in use, or, if on any
such date the shares of Common Stock are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock selected by the
Board of Directors of the Company. If on any such date no market maker is
making a market in the Common Stock, the fair value of such shares on such
date as determined in good faith by the Board of Directors of the Company
shall be used. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the shares of Common Stock
are listed or admitted to trading is open for the transaction of business or,
if the shares of Common Stock are not listed or admitted to trading on any
national securities exchange, a Business Day. If the Common Stock is not
publicly held or not so listed or traded, "current market price" per share
shall mean the fair value per share as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all
purposes and shall be binding on the Rights Agent and the holders of the
Rights.
(ii) For the purpose of any computation hereunder, the
"current market price" per share of Preferred Stock shall be determined in
the same manner as set forth above for the Common Stock in clause (i) of this
Section 11(d) (other than the last sentence thereof). If the current market
price per share of Preferred Stock cannot be determined in the manner
provided above or if the Preferred Stock is not 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 number may be appropriately
adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring after the date
of this Agreement) multiplied by the current market price per share of the
Common Stock. If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, "current market price" per share of the
Preferred Stock shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive
for all purposes. For all purposes of this Agreement, the "current market
price" of one one-hundredth of a share 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 one percent (1%) in the Purchase Price;
PROVIDED, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 11 shall
be made to the nearest cent or to the nearest ten-thousandth of a share of
Common Stock or other share or one-millionth of a share of Preferred Stock,
as the case may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made no later than
the earlier of (i) three (3) years from the date of the transaction which
mandates such adjustment, or (ii) or the Expiration Date.
18
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock other
than Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Right and the Purchase Price thereof shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred
Stock contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and
(m), and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect
to the Preferred Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of
a share of Preferred Stock purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have 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 one one-hundredths of a share of Preferred Stock (calculated
to the nearest one-millionth) obtained by (i) multiplying (x) the number of
one one-hundredths of a share covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained
by the Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of one one-hundredths of a share of Preferred Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding
after the adjustment in the number of Rights shall be exercisable for the
number of one one-hundredths of a share of Preferred Stock for which a Right
was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that
number of Rights (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 and shall deliver a copy of such public announcement to the Rights
Agent. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Rights Certificates have been
issued, shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment
of the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of
Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be
19
distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein (and may bear,
at the option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Rights Certificates on
the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of one one-hundredths of a share of Preferred Stock issuable
upon the exercise of the Rights, the Rights Certificates issued may continue
to express the Purchase Price per one one-hundredth of a share and the number
of one one-hundredths of a share 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 stated value, if any, of the
number of one one-hundredths of a share 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 fully paid and nonassessable such number of one
one-hundredths of a share of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record
date the number of one one-hundredths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of one one-hundredths of a share of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; PROVIDED, however, that the Company shall deliver
to such holder a due ββββ 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 and
shall deliver to the Rights Agent a notice describing the terms of such due
ββββ or other appropriate instrument.
(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 the Board of Directors of
the Company shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Stock, (ii) issuance wholly for
cash of any shares of Preferred Stock at less than the current market price,
(iii) issuance wholly for cash of shares of Preferred Stock or securities
which by their terms are convertible into or exchangeable for shares of
Preferred Stock, (iv) stock dividends, or (v) issuance of rights, options or
warrants referred to in this Section 11, hereafter made by the Company to
holders of its Preferred Stock shall not be taxable to such stockholders.
20
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), (ii) merge with or into any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of related transactions, assets or
earning power aggregating more than 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 stockholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of its
Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 24 or Section 27 hereof,
take (or permit any Subsidiary to take) any action if at the time such action
is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded by
the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date (i) declare a dividend on
the outstanding shares of Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the
number of Rights associated with each share of Common Stock then outstanding,
or issued or delivered thereafter but prior to the Distribution Date, shall
be proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any such event shall
equal the result obtained by multiplying the number of Rights associated with
each share of Common Stock immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Section 11 or Section
13 hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment and a brief, reasonably detailed statement of the facts,
computations and methodology accounting for such adjustment, (b) promptly
file with the Rights Agent, and with each transfer agent for the Preferred
Stock and the Common Stock, a copy of such certificate, and (c) mail or cause
the Rights Agent to 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 Common Stock) in accordance with Section
21
26 hereof. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall have no duty
with respect to, and shall not be deemed to have knowledge of, 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 Stock Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or merge with
and into, any other Person, and the Company shall not be the continuing or
surviving corporation of such consolidation or merger, (y) any Person shall
consolidate with, or merge with or into, the Company, and the Company shall
be the continuing or surviving corporation of such consolidation or merger
and, in connection with such consolidation or merger, all or part of the
outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other Person or cash or any other property,
or (z) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one transaction or a
series of related 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 Person or Persons, then, and in each such case, the
Company and the Principal Party (as such term is herein defined) and its
Affiliates and Associates shall make proper provision so that: (i) each
holder of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid, nonassessable and freely
tradable shares of Common Stock of the Principal Party (as such term is
hereinafter defined), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall be equal to the result obtained by
(l) multiplying the then current Purchase Price by the number of one
one-hundredths of a share of Preferred Stock for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if a
Section 11(a)(ii) Event has occurred prior to the first occurrence of a
Section 13 Event, multiplying the number of such one one-hundredths of a
share for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and dividing that product
(which, following the first occurrence of a Section 13 Event, shall be
referred to as the "Purchase Price" for each Right and for all purposes of
this Agreement) by (2) 50% of the current market price (determined pursuant
to Section 11(d)(i) hereof) per share of the Common Stock of such Principal
Party on the date of consummation of such Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue
of such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall thereafter be
deemed to refer to such Principal Party, it being specifically intended that
the provisions of Section 11 hereof shall apply only to such Principal Party
following the first occurrence of a Section 13 Event; (iv) such Principal
Party shall take such steps (including, but not limited to, the reservation
of a sufficient number of shares of its Common Stock) in connection with the
consummation of any such transactions as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof
shall be of no effect following the first occurrence of any Section 13 Event.
22
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a), the Person that is the issuer of
any securities into which shares of Common Stock of the Company are converted
in such merger or consolidation, and if no securities are so issued, the
Person that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a), the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions;
PROVIDED, HOWEVER, that in any such case, (1) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding
twelve (12) month period registered under Section 12 of the Exchange Act, and
such Person is a direct or indirect Subsidiary of another Person the Common
Stock of which is and has been so registered, "Principal Party" shall refer
to such other Person; and (2) in case such Person is a Subsidiary, directly
or indirectly, of more than one Person, the Common Stocks of two or more of
which are and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common Stock having the
greatest aggregate market value.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs (a)
and (b) of this Section 13 and further providing that, as soon as practicable
after the date of any consolidation, merger or sale of assets mentioned in
paragraph (a) of this Section 13, the Principal Party will
(i) prepare and file a registration statement under the Act,
with respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, and will use its best efforts to cause
such registration statement to (A) become effective as soon as practicable
after such filing and (B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Expiration Date; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers
or consolidations or sales or other transfers. In the event that a Section
13 Event shall occur at any time after the occurrence of a Section 11(a)(ii)
Event, the Rights which have not been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
23
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(p)
hereof, or to distribute Rights Certificates which evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Rights Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Right. For purposes of
this Section 14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the date
on which such fractional Rights would have been otherwise issuable. The
closing price of the Rights for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading or, if the
Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by
Nasdaq or such other system then in use or, if on any such date the Rights
are not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in
the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights the fair value of
the Rights on such date as determined in good faith by the Board of Directors
of the Company shall be used.
(b) The Company shall not be required to issue fractions of shares
of Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock, which may, at the option of the
Company, be evidenced by depository receipts) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred
Stock (other than fractions which are integral multiples of one one-hundredth
of a share of Preferred Stock). In lieu of fractional shares of Preferred
Stock that are not integral multiples of one one-hundredth of a share of
Preferred Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of one
one-hundredth of a share of Preferred Stock. For purposes of this Section
14(b), the current market value of one one-hundredth of a share of Preferred
Stock shall be one one-hundredth of the closing price of a share of Preferred
Stock (as determined pursuant to Section 11(d)(ii) hereof) for the Trading
Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the Company
shall not be required to issue fractions of shares of Common Stock upon
exercise of the Rights or upon any exchange of Rights pursuant to Section 23
hereof, or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Company may
pay to the registered holders of Rights Certificates at the time such Rights
are exercised as
24
herein provided (or at the time such Rights are exchanged as provided in
Section 23 hereof, as the case may be) an amount in cash equal to the same
fraction of the current market value of one (1) share of Common Stock. For
purposes of this Section 14(c), the current market value of one share of
Common Stock shall be the closing price of one share of Common Stock (as
determined pursuant to Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the 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. The
Rights Agent shall not be deemed to have knowledge of, and shall have no duty
in respect of, the issuance of fractional Rights or fractional shares unless
and until it shall have received instructions from the Company concerning the
issuance of such fractional Rights or fractional shares, upon which
instructions the Rights Agent may conclusively rely.
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, except the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the
Rights Certificates (and, prior to the Distribution Date, the registered
holders of the Common Stock); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the 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 the Common Stock), may,
in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
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 (including, without limitation, the
Company) subject to this Agreement. Nothing in this Section 15 is intended to
modify or limit the authority of the Board of Directors under Section 29.
Section 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the 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 fully executed;
25
(c) subject to Section 6(a) and Section 7(f) hereof, the Company
and the Rights Agent may deem and treat the Person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on
the Rights Certificates or the associated Common Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent, subject to the last
sentence of Section 7(e) hereof, shall be required to be affected by any
notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or other Person as a result of its inability to perform any
of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree, judgment or ruling (whether
interlocutory or final) 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, judgment or ruling lifted or otherwise
overturned as soon as possible.
Section 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of one
one-hundredths of a share 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 to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder in accordance with a
fee schedule to be mutually agreed upon and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and disbursements
and other disbursements incurred in the preparation, delivery, amendment,
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability,
damage, judgment, time, penalty, claim, demand, settlement, cost or expense,
incurred without gross negligence, bad faith or willful misconduct on the
part of the Rights Agent, for any action taken, suffered or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including without limitation the costs and expenses of defending
against any claim of liability in the premises.
26
(b) In no case will the Rights Agent be liable for special,
indirect, incidental or consequential loss or damage of any kind whatsoever,
even if the Rights Agent has been advised of the likelihood of such loss or
damage.
(c) The Rights Agent shall be authorized and protected and shall
incur no liability for or in respect of any action taken, suffered or omitted
by it in connection with the acceptance and administration of this Agreement
in reliance upon any Rights Certificate or certificate for Common Stock or
for other securities of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by it to
be genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons. The Rights Agent shall not be
deemed to have knowledge of, and shall have no duty in respect of, any fact
contained in any such Right Certificate or certificate for shares of Common
Stock or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement or other paper or document until
it shall have received the same.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
shareholder services business of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part
of any of the parties hereto; PROVIDED, however, that such Person would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof.
(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 those
duties and obligations, and only the duties and obligations, expressly
imposed by this Agreement (and no implied duties or obligations) 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 advice or opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent,
and the Rights Agent shall incur no liability for
27
or in respect of any action taken, suffered or omitted by it in good faith
and in accordance with such advice or 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, suffering or omitting any action hereunder, such
fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary
of the Company and delivered to the Rights Agent; and such certificate shall
be full authorization and protection to the Rights Agent and the Rights Agent
shall incur no liability for or in respect of any action taken, suffered or
omitted in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any liability or
responsibility in respect of the validity of this Agreement or the execution
and delivery hereof (except the due execution hereof by the Rights Agent) or
in respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any adjustment required
under the provisions of Section 11, Section 13 or Section 23 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Rights
Certificates after actual notice of any such adjustment); nor shall it by any
act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock or Preferred Stock
to be issued pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Common Stock or Preferred Stock will, when so issued,
be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the President, any Vice
28
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 under this Agreement, and such
instructions shall be full authorization and protection of the Rights Agent
and the Rights Agent shall incur no liability for or in respect of any action
taken, suffered or omitted by it in good faith in accordance with
instructions of any such officer. The Rights Agent shall incur no liability
for or in respect of its reliance upon the most recent instructions received
by any such officer.
(h) The Rights Agent and any stockholder, affiliate, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for any
other Person or legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company or any other Person
resulting from any such act, default, neglect or misconduct, absent gross
negligence, bad faith or willful misconduct in the selection and continued
employment thereof.
(j) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its
rights if it believes that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to
it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to
such requested exercise of transfer without first consulting with the Company.
(l) At any time and from time to time after the Distribution Date,
upon the request of the Company, the Rights Agent shall promptly deliver to
the Company a list, as of the most recent practicable date (or as of such
earlier date as may be specified by the Company), of the holders of record of
Rights.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty (30) days' notice in writing mailed to the Company, and
to each transfer agent of the Common Stock and Preferred Stock, by registered
or certified mail, and to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty (30) days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Stock and Preferred Stock, by registered or
29
certified mail, and to the holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise
become incapable of acting, the resigning, removed, or incapacitated Rights
Agent shall remit to the Company, or to any successor Rights Agent designated
by the Company, all books, records, funds, certificates and other documents
and instruments of any kind then in its possession which were acquired or
created by such resigning, removed or incapacitated Rights Agent in
connection with its services as Rights Agent hereunder, and shall thereafter
be discharged from all further duties and obligations hereunder. Following
notice of such removal, resignation or incapacity, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of
a Rights Certificate (who shall, with such notice, submit his Rights
Certificate for inspection by the Company), then any registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be either (a) a Person
organized and doing business under the laws of the United States or of any
state of the United States, in good standing, 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 and which either has
or is an affiliate of a Person which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50,000,000, or (b)
an Affiliate of such corporation. 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. 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. Not later than the
effective date of any such appointment, the Company shall file notice thereof
in writing with the predecessor Rights Agent and each transfer agent of the
Common Stock and the Preferred Stock, and 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 registration or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case
may be.
Section 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights
in such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and/or the number or kind or
30
class of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the redemption or expiration of
the Rights, the Company (a) shall, with respect to shares of Common Stock so
issued or sold pursuant to the exercise of stock options or warrants or under
any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by the Board of Directors of
the Company, issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; PROVIDED, however, that (i)
no such Rights Certificate shall be issued if, and to the extent that, the
Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Rights Certificate would be issued, and (ii) no such
Rights Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
Section 23. EXCHANGE.
(a) The Board of Directors of the Company may, at their option, at
any time after any Person becomes an Acquiring Person, exchange all or part
of the then outstanding and exercisable Rights (which shall not include
Rights that have become null and void pursuant to the provisions of Section
7(e), Section 11(a)(ii) or Section 13(a) hereof) for shares of Common Stock
at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter
referred to as the "Exchange Ratio"). Notwithstanding the foregoing, the
Board of Directors of the Company shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or any such
Subsidiary or any Person organized, appointed or established by the Company
for or pursuant to the terms of any such plan or any trustee, administrator
or fiduciary of such a plan), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of Shares of Common Stock
aggregating 50% or more of the shares of Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 23 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of shares of Common
Stock equal to the number of such Rights held by such holder multiplied by
the Exchange Ratio. The Company shall promptly give public notice, and shall
promptly give notice to the Rights Agent, 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 shall mail promptly a
notice of any such exchange to all of the holders of such Rights at their
last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the shares of
31
Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become null and void pursuant to the provisions of Section 7(e)
hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit
any exchange of Rights as contemplated in accordance with this Section 23,
the Company shall take all such action as may be necessary to authorize
additional shares of Common Stock for issuance upon exchange of the Rights.
In the event the Company shall, after good faith effort, be unable to take
all such action as may be necessary to authorize such additional shares of
Common Stock, the Company shall substitute for each share of Common Stock
that would otherwise be issuable upon exchange of a Right, a number of shares
of Preferred Stock or fraction thereof such that the current per share market
price of one share of Preferred Stock multiplied by such number or fraction
is equal to the current per share market price of one share of Common Stock
as of the date of issuance of such share of Preferred Stock or fraction
thereof.
(d) The Company shall not be required to issue fractions of shares
of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock,
the Company shall pay to the registered holders of the Right Certificates
with regard to which such fractional shares of Common Stock would otherwise
be issuable an amount in cash equal to the same fraction of the current
market value of a whole share of Common Stock. For the purposes of this
paragraph (d), the current market value of a whole share of Common Stock
shall be the closing price of a share of Common Stock (as determined pursuant
to the second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 23.
Section 24. REDEMPTION AND TERMINATION.
(a) The Board of Directors of the Company may, at their option, at
any time prior to the earlier of (i) the Close of Business on the Stock
Acquisition Date or (ii) the Close of Business on the Final Expiration Date,
redeem all but not less than all the then outstanding Rights at a redemption
price of $0.001 per Right, as such amount may be appropriately adjusted to
reflect any stock split, reverse stock split, reclassification, stock
dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price");
PROVIDED, however, that if, following the occurrence of a Stock Acquisition
Date and following the expiration of the right of redemption hereunder but
prior to any Section 13 Event, (i) a Person who is an Acquiring Person shall
have transferred or otherwise disposed of a number of shares of Common Stock
in one transaction or series of transactions, not directly or indirectly
involving the Company or any of its Subsidiaries, which did not result in the
occurrence of a Triggering Event such that such Person is thereafter a
Beneficial Owner of 10% or less of the outstanding shares of Common Stock,
and (ii) there are no other Persons, immediately following the occurrence of
the event described in clause (i), who are Acquiring Persons, then the right
of redemption shall be reinstated and thereafter be subject to the provisions
of this Section 24. Notwithstanding anything contained in this Agreement to
the contrary, subject to Section 27
32
hereof, the Rights shall not be exercisable after the first occurrence of a
Section 11(a)(ii) Event until such time as the Company's right of redemption
hereunder has expired. The Company may, at its option, pay the Redemption
Price in cash, shares of Common Stock (based on the "current market price,"
as defined in Section 11(d)(i) hereof, of the Common Stock at the time of
redemption) or any other form of consideration deemed appropriate by the
Board of Directors.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, without any further action and
without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. Promptly after the action of the
Board of Directors ordering the redemption of the Rights, the Company shall
give notice of such redemption to the Rights Agent and the holders of the
then outstanding Rights by mailing such notice to all such holders at each
holder's last address as it appears upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the
Transfer Agent for the Common Stock. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made. Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that specifically set
forth in this Section 24, and other than in connection with the purchase of
Common Stock before the Distribution Date.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to
the holders of Preferred Stock or to make any other distribution to the
holders of Preferred Stock (other than a regular quarterly cash dividend out
of earnings or retained earnings of the Company), or (ii) to offer to the
holders of Preferred Stock rights or warrants to subscribe for or to purchase
any additional shares of Preferred Stock or shares of stock of any class or
any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision of outstanding shares of Preferred Stock), or
(iv) to effect any consolidation or merger into or with any other Person
(other than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale of other transfer), in one
transaction or a series of related transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company and/or any of
its Subsidiaries in one or more transactions each of which complies with
Section 11(o) hereof), or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
the Rights Agent and each holder of a Rights Certificate, in accordance with
Section 26 hereof, a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend, distribution of rights
or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to take
place and the date of participation therein by the holders of the shares of
Preferred Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any
33
action covered by clause (i) or (ii) above at least twenty (20) days prior to
the record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed action or
the date of participation therein by the holders of the shares of Preferred
Stock whichever shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii)
hereof shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26 hereof, a notice of the
occurrence of such event, which shall specify the event and the consequences
of the event to holders of Rights under Section 11(a)(ii) hereof, and (ii)
all references in the preceding paragraph to Preferred Stock shall be deemed
thereafter to refer to Common Stock and/or, if appropriate, other securities.
Section 26. NOTICES. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Integrated Measurement Systems, Inc.
ββββ β.β. ββββββ βββββ
βββββββββ, ββββββ βββββ
Attention: President
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
ββ ββββββββββ ββββ
ββββββββββ ββββ, βββ ββββββ βββββ-ββββ
Attention: General Counsel
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 27. SUPPLEMENTS AND AMENDMENTS. Before the Distribution Date,
the Company and the Rights Agent shall, if a majority of the Board of
Directors so directs, supplement or amend any provision of this Agreement
without the approval of any holders of certificates representing shares of
Common Stock. From and after the Distribution Date and subject to the
penultimate sentence of this Section 27, the Company and the Rights Agent
shall,
34
if a majority of the Board of Directors so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period hereunder for
any or all purposes (for example, the Company may shorten or lengthen the
period during which the Rights may be redeemed without changing the
Distribution Date), (iv) to change or supplement the provisions hereunder in
any manner which the Company may deem necessary or desirable, or (v) lower
the threshold set forth in Section 1(a) to not less than 10%.
Notwithstanding the previous sentence, in no event shall any such supplement
or amendment adopted after the Distribution Date adversely affect the
interests of the holders of Rights (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person). This Agreement shall not be
amended, without the prior written consent of the Rights Agent, in any manner
that changes or increases the duties or obligations of the Rights Agent. In
addition, this Agreement may not be supplemented or amended to lengthen,
pursuant to clause (iii) of the second sentence of this Section 27, (A) a
time period relating to when the Rights may be redeemed at such time as the
Rights are not then redeemable, or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person). Upon
the delivery of a certificate from an appropriate officer of the Company
which states that the proposed supplement or amendment is in compliance with
this Section 27, and, if requested by the Rights Agent, an opinion of
counsel, the Rights Agent shall sign such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price, the
Final Expiration Date, the Purchase Price or the number of shares of
Preferred Stock for which a Right is exercisable; PROVIDED, HOWEVER, that at
any time before the Distribution Date, the Board of Directors of the Company
may amend this Agreement to increase the Purchase Price or to extend the
Final Expiration Date. Before the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the
holders of Common Stock.
Section 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
For all purposes of this Agreement, any calculation of the number of shares
of Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common
Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act. The Board of Directors of the
Company shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement, and (ii) make
all determinations deemed necessary or advisable for the administration of
this Agreement (including a determination to
35
redeem or not redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done
or made by the Board in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other Persons, and (y) not subject the Board of Directors of the Company to
any liability to the holders of the Rights. The Rights Agent shall be fully
protected and shall incur no liability for or in respect of its reliance on
the good faith of the Board of Directors of the Company with respect to
actions done or made in connection with such calculation. Nothing in Section
15 hereof is intended to modify or limit this Section 29.
Section 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to
the Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent
and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock).
Section 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated; PROVIDED, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company determines in its
good faith judgment that severing the invalid language from this Agreement
would adversely affect the purpose or effect of this Agreement, the right of
redemption set forth in Section 24 hereof shall be reinstated and shall not
expire until the Close of Business on the tenth day following the date of
such determination by the Board of Directors.
Section 32. GOVERNING LAW. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Oregon and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts
made and to be performed entirely within such State; except that all
provisions regarding the rights, duties and obligations of the Rights Agent
shall be governed and construed in accordance with the laws of the State of
New York applicable to contracts made and to be performed entirely within
such State.
Section 33. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
36
Section 35. MATTERS CONCERNING CADENCE.
(a) The provisions of this Section 35 shall prevail over any
inconsistent provision of this Agreement.
(b) For purposes of this Section 35 and Section 1(a)(vii) hereof
only, the following terms shall have the following meanings:
(i) "Amended Shareholder Agreement" shall mean that certain
Amended and Restated Shareholder Agreement, dated as of March 25, 1998,
between the Company and Cadence.
(ii) The "Cadence Group" shall consist of (i) Cadence, (ii)
each Subsidiary (as defined below) of Cadence, (iii) each company or other
entity of which Cadence is a direct or indirect Subsidiary and (iv) each
Subsidiary of a Person described in the preceding clause (iii).
(iii) "Grandfathering Termination Date" shall have the meaning
set forth in Section 35(d)(ii) hereof.
(iv) "New Shares" shall mean Shares (as defined below),
Beneficial Ownership of which is acquired by a member of the Cadence Group
after the date of this Agreement (except Shares acquired from another member
of the Cadence Group or pursuant to a stock split, stock dividend,
recapitalization or similar transaction affecting all holders of the
applicable class or type of Common Stock equally). Reference is made to
Section 35(c) for certain rules used to determine the status of Shares as Old
Shares or New Shares.
(v) "Old Shares" shall mean all Shares that are not New
Shares.
(vi) "Shares" shall mean the shares of Common Stock
beneficially owned by any member of the Cadence Group.
(vii) "Subsidiary," when used with respect to a particular
person, shall mean any company or other entity with respect to which such
particular person Beneficially Owns, directly or through one or more
Subsidiaries, sufficient voting securities to elect at least a majority of
the Board of Directors (or comparable body).
(c) The following rules shall be used to determine whether Shares
are New Shares or Old Shares for purposes of this Section 35:
(i) Shares transferred from one member of the Cadence Group
to another member of the Cadence Group shall not change their status as
either New Shares or Old Shares as the result of such transfer.
(ii) Shares sold pursuant to a registration statement filed
pursuant to the Amended Shareholder Agreement shall be deemed to be Old
Shares for purposes of
37
determining the number of Shares deemed to be Old Shares and New Shares,
respectively, after such sale.
(iii) Shares, the Beneficial Ownership of which is sold,
assigned, conveyed or transferred by members of the Cadence Group to Persons
who are not members of the Cadence Group in any manner except pursuant to a
registration statement filed pursuant to the Amended Shareholder Agreement,
shall be deemed to be first New Shares, until there are no New Shares, and
then Old Shares for purposes of determining the number of Shares deemed to be
Old Shares and New Shares after such sale, assignment, conveyance or
transfer. The transferor and transferee of such shares may vary this rule
(i.e., may designate that the Shares transferred are Old Shares) by providing
written notice of such designation to the Company within five Business Days
after the effective date of the transfer.
(iv) Shares deemed Beneficially Owned by a member of the
Cadence Group as the result of the formation of a group with a Person or
Persons not a member or members of the Cadence Group shall be New Shares.
Disposition of such Shares (either as the result of a disposition by such
Persons or upon the termination of group status) shall be deemed to be the
disposition of New Shares.
(v) For purposes of illustration only, and without limiting
in any way the scope of this Section 35(b), attached hereto as Exhibit D are
examples of the calculation of the number of Shares deemed to be New Shares
and Old Shares, under certain circumstances specified therein, for all
purposes of this Agreement.
(d) Notwithstanding any other provisions of this Agreement,
Cadence, and each member of the Cadence Croup, shall be an Acquiring Person
at such time as either:
(i) Cadence, together with the Cadence Group, shall be the
Beneficial Owner of New Shares representing more than 7.5% of the shares of
Common Stock then outstanding; or
(ii) Cadence, together with the Cadence Group and all
Affiliates and Associates of Cadence and any member of the Cadence Group,
shall be the Beneficial Owner of 20% or more of the shares of Common Stock
then outstanding after the date (the "Grandfathering Termination Date") on
which Cadence, together with the Cadence Group and all Affiliates and
Associates of Cadence and the Cadence Group, first becomes the Beneficial
Owner of less than 20% of the shares of Common Stock then outstanding.
(e) Prior to the Grandfathering Termination Date, each Person who
is an Affiliate or Associate of any member of the Cadence Group, and each
Person as to which Person a member of the Cadence Group is an Affiliate or
Associate, shall be deemed, for all purposes of this Section 35 and Section
1(a)(viii) hereof, to be a member of the Cadence Group.
38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
INTEGRATED MEASUREMENT SYSTEMS, INC.
By: /s/ βββββ β. ββββββ
--------------------------------
Name: βββββ β. ββββββ
Title: President and CEO
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By: /s/ ββββββ βββββββ
--------------------------------
Name: ββββββ βββββββ
Title: Assistant Vice President
EXHIBIT A
ARTICLES OF AMENDMENT OF
THE RESTATED ARTICLES OF INCORPORATION OF
INTEGRATED MEASUREMENT SYSTEMS, INC.
SETTING FORTH THE PREFERENCES AND RIGHTS OF
SERIES A PARTICIPATING PREFERRED STOCK
Pursuant to Section 60.134 of the
Oregon Business Corporation Act
I. The name of the Corporation is Integrated Measurement Systems, Inc.
II. Pursuant to the authority conferred upon the Board of Directors by
Article II.B of the Restated Articles of Incorporation of Integrated
Measurement Systems, Inc. and Section 60.134 of the Oregon Business
Corporation Act, Article II of the Restated Articles of Incorporation of the
Corporation is hereby amended by inserting the following:
C. There shall be a series of preferred stock with the following
preferences and rights:
1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as Series A Participating Preferred Stock, par value $0.01 per
share (the "Series A Participating Preferred Stock"), and the number of
shares constituting such series shall be 150,000.
2. DIVIDENDS AND DISTRIBUTIONS.
(a) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Participating Preferred Stock with respect to dividends,
the holders of shares of Series A Participating Preferred Stock in preference
to the holders of Common Stock and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of Directors out
of funds legally available therefor, dividends payable quarterly on the first
day of January, April, July and October (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Participating Preferred Stock, in an amount
per share (rounded to the nearest cent) equal to the greater of (a) $70 or
(b) subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Participating Preferred Stock. In
the event the Corporation shall at any time after the record date for the
initial distribution of the Corporation's
"Preferred Stock Purchase Rights" pursuant to the Rights Agreement, dated as
of March 25, 1998, between the Corporation and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent (the "Rights Declaration Date"), (i)
declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such case the
amount to which holders of shares of Series A Participating Preferred Stock
were entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
(b) The Corporation shall declare a dividend or distribution on
the Series A Participating Preferred Stock as provided in paragraph (a) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in
the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $70 per share
on the Series A Participating Preferred Stock shall nevertheless be payable
on such subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such
shares of Series A Participating Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Participating
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid
on the shares of Series A Participating Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of Series A Participating
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 30 days prior to
the date fixed for the payment thereof.
3. VOTING RIGHTS. The holders of shares of Series A Participating
Preferred Stock shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Participating Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the stockholders
of the Corporation. In the event the Corporation shall at
2
any time after the Rights Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the number of votes per share to
which holders of shares of Series A Participating Preferred Stock were
entitled immediately prior to such event shall be adjusted by multiplying
such number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(b) Except as otherwise provided herein or under applicable law,
the holders of shares of Series A Participating Preferred Stock and the
holders of shares of Common Stock shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(i) If at any time dividends on any shares of Series A
Participating Preferred Stock shall be in arrears in an amount equal to six
quarterly dividends thereon, the occurrence of such contingency shall ββββ
the beginning of a period (a "default period") that shall extend until such
time when all accrued and unpaid dividends for all previous quarterly
dividends periods and for the current quarterly dividend period on all shares
of Series A Participating Preferred Stock then outstanding shall have been
declared and paid or set apart for payment. During each default period, all
holders of the outstanding shares of Series A Participating Preferred Stock
together with any other series of Preferred Stock then entitled to such a
vote under the terms of the Certificate of Incorporation, voting as a
separate class, shall be entitled to elect two (2) members of the Board of
Directors of the Corporation.
(ii) During any default period, such voting right of the
holders of Preferred Stock may be exercised initially at a special meeting
called pursuant to subparagraph (iii) of this Subsection 3(c) or at any
annual meeting of stockholders, and thereafter at annual meetings of
stockholders. The absence of a quorum of the holders of Common Stock shall
not affect the exercise by the holders of Preferred Stock of such voting
right. At any meeting at which the holders of Preferred Stock shall exercise
such voting right initially during an existing default period, they shall
have the right, voting as a separate class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two (2)
Directors, or if such right is exercised at an annual meeting, to elect two
(2) Directors. If the number that may be so elected at any special meeting
does not amount to the required number, the Board of Directors shall, at the
request of the holders of the Preferred Stock, make such increase in the
number of Directors as shall be necessary to permit the election by such
holders of the required number. After the holders of the Preferred Stock
shall have exercised their right to elect Directors in any default period and
during the continuance of such period, the number of Directors shall not be
increased or decreased except by vote of the holders of Preferred Stock as
herein provided or pursuant to the rights of any equity securities ranking
senior to or pari passu with the Series A Participating Preferred Stock.
3
(iii) Unless the holders of Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Preferred Stock outstanding, irrespective of
series, may request, the calling of a special meeting of the holders of
Preferred Stock, which meeting shall thereupon be called by the Chairman,
President, a Vice President or the Secretary of the Corporation. Notice of
such meeting and of any annual meeting at which holders of Preferred Stock
are entitled to vote pursuant to this Section 3(c)(iii) shall be given to
each holder of record of Preferred Stock by mailing a copy of such notice to
him at his last address as the same appears on the books of the Corporation.
Such meeting shall be called for a time not earlier than 10 days and not
later than 60 days after such order or request. In the event such meeting is
not called within 60 days after such order or request, such meeting may be
called on a similar notice by any stockholder or stockholders owning in the
aggregate not less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding. Notwithstanding the provisions of this Section
3(c)(iii), no such special meeting shall be called during the period within
60 days immediately preceding the date fixed for the next annual meeting of
the stockholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of
Preferred Stock shall have exercised their right to elect two (2) Directors
voting as a separate class, after the exercise of which right (x) the
Directors so elected by the holders of Preferred Stock shall continue in
office until their successors shall have been elected by such holders or
until the expiration of the default period, and (y) any vacancy in the Board
of Directors may (except as provided in Section 3(c)(ii) be filled by vote of
a majority of the remaining Directors elected by the class which elected the
Director whose office shall have become vacant. References in this Section
3(c)(iv) to Directors elected by a particular class shall include Directors
elected by such Directors to fill vacancies as provided in clause (y) of the
foregoing sentence.
(c) Immediately upon the expiration of a default period, (x) the
right of the holders of Preferred Stock, as a separate class, to elect
Directors shall cease, (y) the term of any Directors elected by the holders
of Preferred Stock, as a separate class, shall terminate, and (z) the number
of Directors shall be such number as may be provided for in, or pursuant to,
the Certificate of Incorporation or By-Laws irrespective of any increase made
pursuant to the provisions of Section 3(c)(ii) (such number being subject,
however, to change thereafter in any manner provided by law or in the
Certificate of Incorporation or By-Laws). Any vacancies in the Board of
Directors effected by the provisions of clauses (y) and (z) in the preceding
sentence may be filled by a majority of the remaining Directors, even though
less than a quorum.
(d) Except as set forth herein or as otherwise provided in the
Certificate of Incorporation, holders of Series A Participating Preferred
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
4
4. CERTAIN RESTRICTIONS.
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Participating Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of
Series A Participating Preferred Stock outstanding shall have been paid in
full, the Corporation shall not:
(i) declare or pay or set apart for payment any dividends or
make any other distributions on, or redeem or purchase or otherwise acquire,
directly or indirectly, for consideration any shares of any class of stock of
the Corporation ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Participating Preferred Stock, except dividends paid ratably on the Series A
Participating Preferred Stock and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series A
Participating Preferred Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Corporation ranking junior (either as
to dividends or upon dissolution, liquidation or winding up) to the Series A
Participating Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Participating Preferred Stock, or any shares of stock
ranking on a parity with the Series A Participating Preferred Stock, except
in accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
classes, shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (a) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
5. REACQUIRED SHARES. Any shares of Series A Participating Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new
5
series of Preferred Stock to be created by resolution or resolutions of the
Board of Directors, subject to the conditions and restrictions on issuance
set forth herein.
6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, no distribution shall be made to the holders
of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Participating
Preferred Stock unless, prior thereto, the holders of shares of Series A
Participating Preferred Stock shall have received $70 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the "Series A
Participating Preferred Stock Liquidation Preference"). Following the
payment of the full amount of the Series A Participating Preferred Stock
Liquidation Preference, no additional distributions shall be made to the
holders of shares of Series A Participating Preferred Stock unless, prior
thereto, the holders of shares of Common Stock shall have received an amount
per share (the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Series A Participating Preferred Stock Liquidation
Preference by (ii) 100 (as appropriately adjusted as set forth in paragraph
(c) below to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in clause
(ii) being hereinafter referred to as the "Adjustment Number"). Following
the payment of the full amount of the Series A Participating Preferred Stock
Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series A Participating Preferred Stock and Common
Stock, respectively, holders of Series A Participating Preferred Stock and
holders of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of
the Adjustment Number to 1 with respect to such Series A Participating
Preferred Stock and Common Stock, on a per share basis, respectively.
(b) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Participating Preferred
Stock Liquidation Preference and the liquidation preferences of all other
series of Preferred Stock, if any, which rank on a parity with the Series A
Participating Preferred Stock, then such remaining assets shall be
distributed ratably to the holders of all such shares in proportion to their
respective liquidation preferences. In the event, however, that there are
not sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably to the
holders of Common Stock.
(c) In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment Number by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
6
7. CONSOLIDATION, MERGER, SHARE EXCHANGE, ETC. In case the
Corporation shall enter into any consolidation, merger, share exchange,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any
other property, then in any such case the shares of Series A Participating
Preferred Stock shall at the same time be similarly exchanged or changed in
an amount per share (subject to the provision for adjustment hereinafter set
forth) equal to 100 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which
or for which each share of Common Stock is changed or exchanged. In the
event the Corporation shall at any time after the Rights Declaration Date (i)
declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Participating Preferred Stock shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
8. NO REDEMPTION. The shares of Series A Participating Preferred
Stock shall not be redeemable.
9. RANKING. The Series A Participating Preferred Stock shall rank
junior to all other series of the Corporation's Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
10. AMENDMENT. The Restated Articles of Incorporation of the
Corporation shall not be amended in any manner which would materially alter
or change the powers, preferences or special rights of the Series A
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of two-thirds or more of the outstanding
shares of Series A Participating Preferred Stock, voting together as a single
voting group.
11. FRACTIONAL SHARES. Series A Participating Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in proportion
to such holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all other
rights of holders of Series A Participating Preferred Stock.
7
EXHIBIT B
[FORM OF RIGHTS CERTIFICATE]
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER MARCH 25, 2008 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY
AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT)
AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
[THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON
OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND
VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH
AGREEMENT.](1)
Rights Certificate
INTEGRATED MEASUREMENT SYSTEMS
This certifies that _________________, or his registered assigns,
is the registered owner of the number of Rights set forth above, each of
which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of March 25, 1998 (the "Rights
Agreement") between Integrated Measurement Systems, Inc., a Delaware
corporation (the "Company"), and ChaseMellon Shareholder Services, L.L.C., a
New Jersey limited liability Company, (the "Rights Agent"), to purchase from
the Company at any time prior to 5:00 P.M. (Oregon time) on March 25, 2008 at
the office of the Rights Agent designated for such purpose, or its successors
as Rights Agent, one one-hundredth of a fully paid, nonassessable share of
Series A Participating Preferred Stock (the "Preferred Stock") of the
Company, at a purchase price of $70.00 per one one-hundredth of a share (the
"Purchase Price"), upon presentation and surrender of this Rights Certificate
with the Form of Election to Purchase and related Certificate duly executed.
The Purchase Price shall be paid, at the election of the holder, in cash or
shares of Common Stock of the Company having an equivalent value. The number
of Rights evidenced by this Rights Certificate (and the number of shares
which may be purchased upon exercise
_______________________________
(1) The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
thereof) set forth above, and the Purchase Price per share set forth above,
are the number and Purchase Price as of March 25, 1998, based on the
Preferred Stock as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate
or Associate of an Acquiring Person, (ii) a transferee of an Acquiring
Person, (or an Affiliate or Associate thereof) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an Acquiring
Person (or an Affiliate or Associate thereof) who becomes a transferee prior
to or concurrently with the Acquiring Person becoming such, and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration)
from the Acquiring Person (or from an Affiliate or Associate thereof) to
holders of equity interests in such Acquiring Person which has a continuing
agreement, arrangement or understanding regarding the transferred Rights or
(B) a transfer that the Board of Directors of the Company has determined is
part of a plan, arrangement or understanding that has as a primary purpose or
effect the avoidance of Section 7(e) of the Rights Agreement, shall become
null and void without any further action and no holder hereof shall have any
rights whatsoever with respect to such Rights whether under any provision of
the Rights Agreement or otherwise.
As provided in the Rights Agreement, the Purchase Price and the
number and kind of shares of Preferred Stock or other securities, which may
be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events, including Triggering Events.
This Rights Certificate is subject to all of the terms, covenants
and restrictions of the Rights Agreement, which terms, covenants and
restrictions are hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of the
Rights Certificates, which limitations of rights include the temporary
suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement. Copies of the Rights
Agreement are on file at the above-mentioned office of the Rights Agent and
are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of one one-hundredths of a share of Preferred Stock as the
Rights evidenced by the Rights Certificate or Rights Certificates surrendered
shall have entitled such holder to purchase. If this Rights Certificate
shall be exercised in part, the holder shall be entitled to receive upon
surrender hereof another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at
a redemption price of $0.001 per Right at any time prior to the earlier of
the close of business on (i) the Stock Acquisition Date (as
2
such time period may be extended pursuant to the Rights Agreement), and (ii)
the Final Expiration Date. After the expiration of the redemption period, the
Company's right of redemption may be reinstated if an Acquiring Person
reduces his beneficial ownership to 10% or less of the outstanding shares of
Common Stock in a transaction or series of transactions not involving the
Company. Notwithstanding the foregoing, the Rights generally may not be
redeemed for ninety (90) days following a change in a majority of the Board
of Directors of the Company as a result of a proxy contest.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be exchanged in whole or in part for shares
of the Company's Common Stock (or shares of Preferred Stock of the Company
equal in market value to one share of Common Stock) at an exchange ratio of
one share of Common Stock per Right, subject to adjustment.
The Company is not required to issue fractional shares of Preferred
Stock upon the exercise of any Right or Rights evidenced hereby (other than
fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock, which may, at the election of the Company, be
evidenced by depository receipts), but in lieu thereof a cash payment may be
made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action,
or, to receive notice of meetings or other actions affecting stockholders
(except as provided in the Rights Agreement), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by
this Rights Certificate shall have been exercised as provided in the Rights
Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been counter-signed by the Rights Agent.
3
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of the ___ day of _________, ____.
INTEGRATED MEASUREMENT SYSTEMS
By:
-----------------------------------
Name:
Title:
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By:
-----------------------------------
Authorized Signature
4
[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Rights Certificate.)
FOR VALUE RECEIVED___________________________________________________________
hereby sells, assigns and transfers unto ____________________________________
_____________________________________________________________________________
(Please print name and address of transferee)
_____________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________ Attorney,
to transfer the within Rights Certificate on the books of the within-named
Company, with full power of substitution.
Date: ___________________
_______________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, broker, dealer, credit union or
savings association or other entity that is a member in good standing of a
signature guarantee medallion program approved by the Securities Transfer
Association, Inc.
5
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate
[ ] is
[ ] is not
being sold, assigned and transferred by or on behalf
of a Person who is or was an Acquiring Person or an Affiliate
or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Date: ____________, ______
_______________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, broker, dealer, credit union or
savings association or other entity that is a member in good standing of
a signature guarantee medallion program approved by the Securities
Transfer Association, Inc.
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
6
FORM OF ELECTION TO PURCHASE
(f) (To be executed if holder desire to exercise Rights
represented by the Rights Certificate.)
To: INTEGRATED MEASUREMENT SYSTEMS, INC.
The undersigned hereby irrevocably elects to exercise __________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any Person which may be issuable upon the
exercise of the Rights) and requests that certificates for such shares be
issued in the name of and delivered to:
Please insert social security or other identifying number: ___________________
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by
this Rights Certificate, a new Rights Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
Please insert social security or other identifying number: ___________________
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
______________________________________________________________________________
Dated: ___________________, 19___.
_________________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, broker, dealer, credit union or
savings association or other entity that is a member in good standing of
a signature guarantee medallion program approved by the Securities Transfer
Association, Inc.
7
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate
[ ] are
[ ] are not
being exercised by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person (as such terms are defined pursuant
to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person.
Dated: _____________________.
________________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, broker, dealer, credit union or
savings association or other entity that is a member in good standing of
a signature guarantee medallion program approved by the Securities
Transfer Association, Inc.
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
8
EXHIBIT C
INTEGRATED MEASUREMENT SYSTEMS, INC.
ββββ ββ ββββββ βββββ
βββββββββ, ββββββ βββββ
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On March 25, 1998, the Board of Directors of Integrated Measurement
Systems, Inc. (the "Company") declared a dividend distribution of one Right
for each outstanding share of Company Common Stock to stockholders of record
at the close of business on April 17, 1998 and with respect to shares issued
thereafter until the Distribution Date or Expiration Date. Each Right
entitles the registered holder to purchase from the Company one one-hundredth
of a share of Series A Participating Preferred Stock, par value $0.001 per
share (the "Preferred Stock"), at a Purchase Price of $70.00 per one
one-hundredth of a share, subject to adjustment. The description and terms
of the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and ChaseMellon Shareholder Services, L.L.C. as Rights
Agent.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates
will be distributed. The Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) the first date of public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the outstanding shares of Common Stock
(the "Stock Acquisition Date"), except under certain limited circumstances,
or (ii) 10 business days (or such later date as the Board of Directors shall
determine) following the commencement of a tender or exchange offer that
would result in a person or group beneficially owning 20% or more of such
outstanding shares of Common Stock. Until the Distribution Date, (i) the
Rights will be evidenced by the Common Stock certificates and will be
transferred with and only with such Common Stock certificates, (ii) new
Common Stock certificates issued after April 17, 1998 will contain a notation
incorporating the Rights Agreement by reference, and (iii) the surrender for
transfer of any certificates for Common Stock outstanding will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificates. Pursuant to the Rights Agreement, the
Company reserves the right to require prior to the occurrence of a Triggering
Event (as defined below) that, upon any exercise of Rights, a number of
Rights be exercised so that only whole shares of Preferred Stock will be
issued.
The Rights Agreement includes grandfathering provisions that exempt
Cadence Design Systems, Inc. ("Cadence") at its level of Common Stock
ownership on the date of the execution of the Rights Agreement
(approximately 37%) and further permit Cadence and its subsidiaries to
acquire up to an additional 7.5% of the then outstanding IMS shares without
triggering the Rights. Thus, based on its level of ownership on the date of
the execution of the
Rights Agreement, Cadence may acquire up to an approximate 44.5% ownership
interest in Company Common Stock without triggering the Rights. However,
dispositions of its existing shares will reduce Cadence's maximum permissible
level of ownership share-for-share. In addition, the grandfathering
provisions terminate upon Cadence's ownership first falling below 20% of the
Company's Common Stock.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on March 25, 2008 (the "Expiration Date")
unless earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date, and thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined
by the Board of Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
In the event that (i) the Company is the surviving corporation in a
merger or other business combination with an Acquiring Person (or any
associate or affiliate thereof) and its Common Stock remains outstanding and
unchanged, (ii) any Acquiring Person shall acquire beneficial ownership of
more than 20% of the outstanding shares of Common Stock (except pursuant to
(A) certain consolidations or mergers involving the Company or sales or
transfers of the combined assets or earning power the Company and its
subsidiaries or (B) an offer for all outstanding shares of Common Stock at a
price and upon terms and conditions which a majority of the Board of
Directors determines to be in the best interests of the Company and its
stockholders) or (iii) there occurs a reclassification of securities, a
recapitalization of the Company or any of certain business combinations or
other transactions (other than certain consolidations and mergers involving
the Company and sales or transfers of the combined assets or earning power of
the Company and its subsidiaries) involving the Company or any of its
subsidiaries which has the effect of increasing by more than 1% the
proportionate share of any class of the outstanding equity securities of the
Company or any of its subsidiaries beneficially owned by an Acquiring Person
(or any associate or affiliate thereof), each holder of a Right (other than
the Acquiring Person and certain related parties) will thereafter have the
right to receive, upon exercise, Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to
two times the exercise price of the Right. However, Rights are not
exercisable following the occurrence of any of the events described above
until such time as the Rights are no longer redeemable by the Company as
described below. Notwithstanding any of the foregoing, following the
occurrence of any of the events described in this paragraph, all Rights that
are, or under certain circumstances specified in the Rights Agreement, were,
beneficially owned by any Acquiring Person (or an Affiliate or Associate
thereof) will be null and void.
For example, at an exercise price of $70.00 per Right, each Right not
owned by an Acquiring Person (or by certain related parties or transferees)
following an event set forth in the preceding paragraph would entitle its
holder to purchase $140.00 worth of Common Stock (or other consideration, as
noted above) for $70.00. Assuming that the Common Stock had a per
2
share market price of $14.00 at such time, the holder of each valid Right
would be entitled to purchase 10 shares of Common Stock for $70.00.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction
in which the Company is not the surviving corporation, (ii) the Company is
the surviving corporation in a consolidation or merger pursuant to which all
or part of the outstanding shares of Common Stock are changed into or
exchanged for stock or other securities of any other person or cash or any
other property or (iii) more than 50% of the combined assets of earning power
of the Company and its subsidiaries is sold or transferred (in each case
other than certain consolidations with, mergers with and into, or sales of
assets or earning power by or to subsidiaries of the Company as specified in
the Rights Agreement), each holder of a Right (except Rights which previously
have been voided as set forth above) shall thereafter have the right to
receive, upon exercise, common stock of the acquiring company (or, in certain
circumstances, its parent), having a value equal to two times the exercise
price of the Rights. The events described in this paragraph and in the
second preceding paragraph are referred to as the "Triggering Events."
The Purchase Price payable, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment
from time to time to prevent dilution (i) in the event of a stock dividend
on, or a subdivision, combination or reclassification of, the Preferred
Stock, (ii) if holders of the Preferred Stock are granted certain rights or
warrants to subscribe for Preferred Stock or securities convertible into
Preferred Stock at less than the current market price of the Preferred Stock,
or (iii) upon the distribution to holders of the Preferred Stock of evidences
of indebtedness, cash (excluding regular quarterly cash dividends), assets
(other than dividends payable in Preferred Stock) or of subscription rights
or warrants (other than those referred to in (ii) immediately above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional shares of Preferred Stock are required to be issued
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock) and, in lieu thereof, the Company may make an
adjustment in cash based on the market price of the Preferred Stock on the
trading data immediately prior to the date of exercise.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding shares of Common Stock, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such person or group, which
will become void), in whole or in part, for shares of Common Stock at an
exchange ratio of one share of Common Stock (or in certain circumstances
Preferred Stock) per Right (subject to adjustment).
At any time until the Stock Acquisition Date, the Company may redeem the
Rights in whole, but not in part, at a price of $0.001 per Right (payable in
cash, shares of Common Stock or other consideration deemed appropriate by the
Board of Directors). Immediately upon the
3
action of the Board of Directors ordering redemption of the Rights, the
Rights will terminate and the only right of the holders of Rights will be to
receive the $0.001 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that
the Rights become exercisable for Common Stock (or other consideration) of
the Company or for common stock of the acquiring company as set forth above
or in the event that the Rights are redeemed.
Other than those provisions relating to the rights, duties and
obligations of the Rights Agent and certain principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by
the Board of Directors of the Company in order to cure any ambiguity, to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interest of any Acquiring Person) or to shorten or lengthen
any time period under the Rights Agreement; PROVIDED, however, that no
amendment to adjust the time period governing redemption shall be made at
such time as the Rights are not redeemable.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A
dated March 26, 1998. A copy of the Rights Agreement is available free of
charge from the Rights Agent. This summary description of the Rights does
not purport to be complete and is qualified in its entirety by reference to
the Rights Agreement, which is incorporated herein by reference.
4
EXHIBIT D
SAMPLE CALCULATIONS
Start: 37.0%
Purchase: 3.0%
New Shares: 3.0%
Old Shares: 37.0%
Start: 37.0%
Purchase: 3.0%
Sell in the market: 2.0%
New Shares: 1.0%
Old Shares: 37.0%
Start: 37.0%
Purchase: 3.0%
Sell in registered offering: 2.0%
New Shares: 3.0%
Old Shares: 35.0%
Start: 37.0%
Purchase: 3.0%
Sell in the market: 5.0%
New Shares: 0.0%
Old Shares: 35.0%
Start: 37.0%
Purchase: 3.0%
Sell in registered offering: 5.0%
New Shares: 3.0%
Old Shares: 32.0%
Start: 37.0%
Sell: 5.0%
Purchase: 2.0%
New Shares: 2.0%
Old Shares: 32.0%
Start: 37.0%
Purchase: 2.0%
Sell in private transaction: 5.0%
New Shares: 0.0%
Old Shares: 34.0%
Start: 37.0%
Purchase: 2.0%
Sell in registered offering: 5.0%
New Shares: 2.0%
Old Shares: 32.0%
Start: 37.0%
Form Group with 5% Stockholder
New Shares: 5.0%
Old Shares: 37.0%
Start: 37.0%
Form Group with 5% Stockholder
Terminate Group with 5% Stockholder
New Shares: 0.0%
Old Shares: 37.0%