EXHIBIT 4.1
RIGHTS AGREEMENT
BY AND BETWEEN
MOBILITY ELECTRONICS, INC.
AND
COMPUTERSHARE TRUST COMPANY,
AS RIGHTS AGENT
JUNE 11, 2003
TABLE OF CONTENTS
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PAGE
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Section 1. Definitions and Interpretation.................................................1
Section 2. Appointment of Rights Agent....................................................6
Section 3. Issue of Rights Certificates...................................................6
Section 4. Form of Rights Certificates....................................................8
Section 5. Countersignature and Registration..............................................9
Section 6. Transfer, Split-Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates.......................9
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.................10
Section 8. Cancellation and Destruction of Rights Certificates...........................12
Section 9. Reservation and Availability of Preferred Stock...............................12
Section 10. Preferred Stock Record Date..................................................14
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights...........14
Section 12. Certificate of Adjusted Purchase Price or Number of Shares...................23
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.........23
Section 14. Fractional Rights and Fractional Shares......................................26
Section 15. Rights of Action.............................................................27
(i)
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Section 16. Agreement of Rights Holders..................................................27
Section 17. Rights Certificate Holder Not Deemed a Stockholder...........................28
Section 18. Concerning the Rights Agent..................................................28
Section 19. Merger or Consolidation or Change of Name of Rights Agent....................29
Section 20. Rights and Duties of Rights Agent............................................29
Section 21. Change of Rights Agent.......................................................32
Section 22. Issuance of New Rights Certificates..........................................32
Section 23. Redemption and Termination...................................................33
Section 24. Exchange.....................................................................34
Section 25. Notice of Certain Events.....................................................35
Section 26. Notices......................................................................36
Section 27. Supplements and Amendments...................................................36
Section 28. Successors...................................................................37
Section 29. Determinations and Actions by the Board of Directors.........................37
Section 30. Benefits of This Agreement...................................................37
Section 31. Severability.................................................................38
Section 32. Governing Law................................................................38
(ii)
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Section 33. Counterparts.................................................................38
Section 34. Descriptive Headings.........................................................38
(iii)
RIGHTS AGREEMENT
This
Rights Agreement, dated as of June 11, 2003 (the "Agreement"), is
by and between Mobility Electronics, Inc., a
Delaware corporation (the
"Company"), and Computershare Trust Company, a Colorado corporation (the "Rights
Agent").
WHEREAS, effective June 11, 2003 (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company (the "Board") authorized and
declared a distribution of one Right (each, a "Right") for each share of Common
Stock (as hereinafter defined) outstanding as of the Close of Business (as
hereinafter defined) on June 23, 2003 (the "Record Date"), each Right initially
representing the right to purchase one one-thousandth of a share (a "Unit") of
Preferred Stock (as hereinafter defined) upon the terms and subject to the
conditions in this Agreement, and has further authorized and directed the
issuance of one Right with respect to each share of Common Stock of the Company
that shall become outstanding between the Record date and the earliest of the
Distribution Date, the Redemption Date and the Final Expiration Date (as such
terms are hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements in set forth, the parties hereto, intending to be legally bound,
hereby agree as follows:
Section 1. Definitions and Interpretation.
(a) For purposes of this Agreement, the following terms have
the meanings indicated:
"Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 15% or more of the shares of
Common Stock then outstanding, but shall not include the Company, any Subsidiary
(as such term is hereinafter defined) of the Company, any employee benefit plan
of the Company or any Subsidiary of the Company, or any entity holding shares of
Common Stock for or pursuant to the terms of any such plan.
Notwithstanding the foregoing:
(i) no Person shall become an "Acquiring Person" as the
result of an acquisition of shares of Common Stock by the
Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned
by such Person to 15% or more of the shares of Common Stock
then outstanding; provided, however, that if a Person shall
become the Beneficial Owner of 15% or more of the shares of
Common Stock then outstanding as a result of any such
acquisition of shares of Common Stock by the Company and shall,
after such acquisition of shares by the Company, become the
Beneficial Owner of any additional shares of Common Stock
(other than as a result of a stock dividend, stock split or
similar transaction effected by the
1
Company in which all holders of Common Stock are treated
equally), then such Person shall be deemed to be an "Acquiring
Person" hereunder;
(ii) no Person who, alone or together with all Affiliates
and Associates of such Person, was, at the time of the public
announcement by the Company of the declaration by its Board of
Directors on June 11, 2003 of the dividend distribution of the
Rights, the Beneficial Owner of 15% or more of the Common Stock
then outstanding shall be deemed to have become an Acquiring
Person unless and until such time as such Person or any
Affiliate or Associate of such Person thereafter becomes the
Beneficial Owner of any additional Common Stock (other than as
a result of a stock dividend, stock split or similar
transaction effected by the Company in which all holders of
Common Stock are treated equally); and
(iii) if the Board determines in good faith that a Person
who would otherwise be an "Acquiring Person" (as defined above)
pursuant to the provisions of subparagraph (i) above, has
become such inadvertently, and such Person has divested or
divests as promptly as practicable a sufficient number of
shares of Common Stock so that such Person would no longer be
an "Acquiring Person," then such Person shall not be deemed to
be or to have become an "Acquiring Person" for any purpose of
this Agreement.
"Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii).
"Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the Exchange Act Regulations
(as hereinafter defined) as in effect on the date of this Agreement.
A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly, for
purposes of Section 13(d) of the Exchange Act (as hereinafter
defined) and Rule 13d-3 thereunder (or any comparable or
successor law or regulation); or
(ii) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has (A) the right to
acquire (whether such right is exercisable immediately,
contingently or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in
writing, other than customary agreements with and between
underwriters and selling group members with respect to a bona
fide public offering of securities), or upon the exercise of
conversion rights, exchange rights, rights (other than the
Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or
to beneficially own, securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such tendered
securities are
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accepted for purchase or exchange; or (B) the right to vote
pursuant to any agreement, arrangement or understanding;
provided further, 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 any
agreement, arrangement or understanding to vote such security
if such agreement, arrangement or understanding: (x) 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 Exchange Act
and the Exchange Act Regulations, and (y) is not 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 first mentioned Person (or any of such
first mentioned Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in
writing, other than customary agreements with and between
underwriters and selling group members with respect to a bona
fide public offering of securities), for the purpose of
acquiring, holding, voting (except to the extent contemplated
by the proviso to clause (B) of subparagraph (ii) above) or
disposing of any securities of the Company; provided, however,
that in no case shall any officer or director of the Company be
deemed (A) the Beneficial Owner of any securities beneficially
owned by another officer or director of the Company solely by
reason of actions undertaken by such persons in their capacity
as officers or directors of the Company or (B) the Beneficial
Owner of securities held of record by the trustee of any
employee benefit plan of the Company or any Subsidiary of the
Company for the benefit of any employee of the Company or any
Subsidiary of the Company, other than such officer or director,
by reason of any influence that such officer or director may
have over the voting of the securities held in the plan.
Notwithstanding anything in this definition of "Beneficial Owner" and
"beneficially own" to the contrary, the phrase "then outstanding," when used
with reference to a Person who is the Beneficial Owner of securities of the
Company, shall mean the number of such securities then issued and outstanding
together with the number of such securities not then actually issued and
outstanding which such Person would be deemed to beneficially own hereunder.
"Board" shall mean the Board of Directors of the Company.
"Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to close.
"Close of Business" on any given date shall mean 5:00
p.m., New York City time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 p.m., New York City time, on the next
succeeding Business Day.
"Common Stock" when used with reference to the Company
shall mean the shares of common stock, par value $0.01 per share, of the
Company; provided, however, that
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"Common Stock" when used with reference to any Person other than the Company
shall mean the capital stock (or other equity interest) with the greatest voting
power of such other Person or, if such other Person is a Subsidiary of another
Person, the Person or Persons which ultimately control such first-mentioned
Person.
"Company" shall have the meaning set forth in the forepart
of this Agreement.
"Current Per Share Market Price" shall have the meaning
set forth in Section 11(d)(i).
"Current Value" shall have the meaning set forth in
Section 11(a)(iii).
"Distribution Date" shall have the meaning set forth in
Section 3(a).
"Equivalent Preferred Stock" shall have the meaning set
forth in Section 11(b).
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any successor statute.
"Exchange Act Regulations" shall mean the Rules and
Regulations under the Exchange Act, as amended from time to time (including any
successor rules).
"Expiration Date" shall have the meaning set forth in
Section 7(a).
"Final Expiration Date" shall have the meaning set forth
in Section 7(a).
"Nasdaq" shall have the meaning set forth in Section
11(d).
"Person" shall mean any individual, firm, corporation,
limited liability company, partnership or trust or other entity, and shall
include any successor (by merger or otherwise) of such entity.
"Preferred Stock" shall mean shares of Series G Junior
Participating Preferred Stock, par value $0.01 per share, of the Company, having
the rights and preferences set forth in the Form of Certificate of Designation
attached to this Agreement as Exhibit A.
"Principal Party" shall have the meaning set forth in
Section 13.
"Purchase Price" shall have the meaning set forth in
Section 7(b).
"Record Date" shall have the meaning set forth in the
recitals to this Agreement.
"Redemption Date" shall have the meaning set forth in
Section 7(a).
"Redemption Price" shall have the meaning set forth in
Section 23(a).
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"Right" shall have the meaning set forth in the recitals
to this Agreement.
"Rights Agent" shall have the meaning set forth in the
forepart of this Agreement and shall include any Person that shall become a
successor Rights Agent pursuant to the terms of this Agreement.
"Rights Certificate" shall have the meaning set forth in
Section 3(a).
"Rights Dividend Declaration Date" shall have the meaning
set forth in the recitals to this Agreement.
"Section 11(a)(ii) Event" shall mean any event described
in Section 11(a)(ii)(A), (B) or (C).
"Section 11(a)(iii) Trigger Date" shall have the meaning
set forth in Section 11(a)(iii).
"Section 13 Event" shall have the meaning set forth in
Section 13.
"Section 24(a) Exchange Ratio" shall have the meaning set
forth in Section 24(a).
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor statute.
"Share 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) of the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has become
such.
"Spread" shall have the meaning set forth in Section
11(a)(iii).
"Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
"Summary of Rights" shall have the meaning set forth in Section 3(b).
"Trading Day" shall have the meaning set forth in Section
11(d)(i).
"Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
"Unit" shall have the meaning set forth in the recitals to
this Agreement.
(b) Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
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(c) The words "hereof," "herein" and "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole and not to any particular provision of this Agreement, and article,
section, paragraph, exhibit and schedule references are to the articles,
sections, paragraphs, exhibits and schedules of and to this Agreement unless
otherwise specified.
(d) The plural of any defined term shall have a meaning correlative to
such defined term, and words denoting any gender shall include both genders and
the neuter. Where a word or phrase is defined herein, each of its other
grammatical forms shall have a corresponding meaning.
(e) A reference to any party to this Agreement or any other agreement
or document shall include such party's successors and permitted assigns.
(f) A reference to any legislation or to any provision of any
legislation shall include any modification, amendment or re-enactment thereof,
any legislative provision substituted therefor and all rules, regulations and
statutory instruments issued thereunder or pursuant thereto.
(g) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
(h) No prior draft nor any course of performance or course of dealing
shall be used in the interpretation or construction of this Agreement.
(i) The descriptive headings in this Agreement are intended for
reference purposes only and shall not be used in the interpretation or
construction of this Agreement.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as rights agent for the Company in accordance with the terms
and conditions of this Agreement, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint co-Rights Agents as it
may deem necessary or desirable upon ten days' prior written notice to the
Rights Agent and any co-Rights Agents. The Rights Agent shall have no duty to
supervise, and in no event shall be liable for, the acts or omissions of any
such co-Rights Agent.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the Close of Business on the tenth day
after the Share Acquisition Date or (ii) the Close of Business on the tenth day
(or such later date as may be determined by action of the Board prior to such
time as any Person becomes an Acquiring Person and of which later date the
Company will give the Rights Agent prompt written notice) 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 holding shares of Common Stock for or pursuant to the
terms of any
6
such plan) is commenced within the meaning of Rule 14d-2(a) of the Exchange Act
Regulations or of the first public announcement of the intention of 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 entity holding
shares of Common Stock for or pursuant to the terms of any such plan) to
commence a tender or exchange offer, if upon consummation thereof such Person
would be the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding (the earlier of the events described in (i) and (ii) above being the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of Section 3(b)) by the certificates for shares of Common Stock
registered in the names of the holders thereof (which certificates shall also be
deemed to be Rights Certificates) and not by separate Rights Certificates, and
(y) the right to receive Rights Certificates will be transferable only in
connection with the transfer of shares of Common Stock. As soon as practicable
after the Distribution Date, the Company will notify the Rights Agent of the
occurrence of the Distribution Date and the Company will prepare and execute,
the Rights Agent will countersign, and the Company will send or cause to be sent
(and the Rights Agent will, if requested and provided with all necessary
information, send) by first-class, insured, postage-prepaid mail, to each record
holder of shares of 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, a
Rights Certificate, in substantially the form of Exhibit B (a "Rights
Certificate"), evidencing one Right for each share of Common Stock so held. From
and after the Distribution Date, the Rights will be evidenced solely by such
Rights Certificates. The Rights Agent shall have no duty or obligation to take
any action under any section of this Agreement which requires the payment by a
Rights holder of applicable taxes and governmental charges unless and until the
Rights Agent is satisfied that all such taxes and/or charges have been paid.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send, or cause to be sent, a copy of a Summary of Rights to
Purchase Preferred Stock, in substantially the form of Exhibit C (the "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. Until the earlier of
the Distribution Date or the Expiration Date, the surrender for transfer of any
certificate for shares of Common Stock shall also constitute the transfer of the
Rights associated with the shares of Common Stock represented thereby.
(c) Certificates evidencing shares of Common Stock which become
outstanding (whether originally issued or delivered from the Company's treasury)
or are otherwise transferred after the Record Date but prior to the earlier of
the Distribution Date and the Expiration Date shall have impressed on, printed
on, written on or otherwise affixed to them the following legend (or such other
legend as the Company may deem appropriate that is not inconsistent with the
provisions of this Agreement but which does not affect the rights, duties or
indemnities of the Rights Agent):
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN
RIGHTS AS SET FORTH IN A
RIGHTS AGREEMENT BETWEEN MOBILITY ELECTRONICS,
INC., AND COMPUTERSHARE TRUST COMPANY, DATED AS OF JUNE 11, 2003 (THE
"
RIGHTS AGREEMENT"), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY
REFERENCE AND A COPY OF WHICH IS
7
ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF MOBILITY ELECTRONICS, 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. MOBILITY ELECTRONICS, INC. WILL MAIL TO THE
HOLDER OF THIS CERTIFICATE A COPY OF THE
RIGHTS AGREEMENT WITHOUT CHARGE
AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES, AS
SET FORTH IN THE
RIGHTS AGREEMENT, RIGHTS ISSUED TO ANY PERSON WHO BECOMES
AN ACQUIRING PERSON (AS 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 shares of Common Stock prior to the
Distribution Date, any Rights associated with such shares of Common Stock shall
be deemed cancelled and retired so that the Company shall not be entitled to
exercise any Rights associated with any shares of Common Stock of the Company
which are no longer outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase
Units and of assignment to be printed on the reverse thereof) shall be
substantially the same as Exhibit B and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate (but which do not affect the rights, duties,
responsibilities or immunities 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 or transaction reporting system on
which the Rights may from time to time be listed or traded, or to conform to
usage. Subject to the provisions of Sections 11 and 22, the Rights Certificates
shall entitle the holders thereof to purchase the number of Units as shall be
set forth therein at the price per Unit set forth therein, but the number of
such Units and the Purchase Price shall be subject to adjustment as provided
herein.
(b) Any Rights Certificate issued pursuant to this Agreement that
represents 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) that 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 such Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect avoidance of Section 7(e); shall in
each case contain (to the extent the Rights Agent has notice thereof and to the
extent feasible) the following legend:
8
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 BY AND BETWEEN MOBILITY ELECTRONICS, INC. AND COMPUTERSHARE TRUST
COMPANY, AS RIGHTS AGENT, DATED AS OF MAY 21, 2003 (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 THE RIGHTS AGREEMENT.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the Company
by any officer of the Company, either manually or by facsimile signature, shall
have affixed thereto the Company's seal or a facsimile thereof, and 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 and shall not be valid for any purpose unless
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. Any Rights Certificate 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 this Agreement any such person was not such an officer.
(b) Following the Distribution Date and receipt by the Rights Agent of
notice thereof, the Rights Agent will keep or cause to be kept, at its office
designated for such purpose, books for registration and transfer of the Rights
Certificates issued under this Agreement. 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 Sections 4(b), 7(e) and 14, 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 Rights
Certificates (other than Rights Certificates representing Rights that are not
exercisable pursuant to Section 7(e) or that have been exchanged pursuant to
Section 24) may be transferred, split up, combined or
9
exchanged for another Rights Certificate or Rights Certificates evidencing
exercisable Rights, entitling the registered holder to purchase a like number of
Units (or, following a Triggering Event, other securities, cash or other assets,
as the case may be) as the Rights Certificate or Rights Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Rights Certificate or Rights
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Rights Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such purpose. The Rights Certificates are transferable only on
the registry books of the Rights Agent. 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 or Rights Certificates until the
registered holder shall have properly completed and signed the certificate
contained in the form of assignment on the reverse side of such Rights
Certificate or Rights Certificates and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof, and the Rights evidenced thereby, as the
Company or the Rights Agent shall reasonably request. Thereupon the Rights Agent
shall, subject to Sections 4(b), 7(e) and 14, countersign and deliver to the
Person entitled thereto a Rights Certificate or Rights Certificates, as the case
may be, as so requested registered in such name or names as may be designated by
the surrendering registered holder. The Company may require payment from holders
of Rights Certificates 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 shall promptly
forward any such sum collected by it to the Company or to such Person as the
Company shall specify by written notice. The Rights Agent shall have no duty or
obligation to take any action under any section of this Agreement which requires
the payment by a Rights holder of applicable taxes and governmental charges
unless and until the Rights Agent is satisfied that all such taxes and/or
charges have been paid.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
Rights Certificate, and of indemnity or security satisfactory to them, and, at
the Company's request, reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Rights Certificate if mutilated, the Company will make
and deliver a new Rights Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered holder in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) The registered holder of any Rights Certificate evidencing
exercisable Rights may exercise the Rights evidenced thereby (except as
otherwise provided in this Agreement) 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 related certification properly completed and duly
executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, together with payment of the Purchase Price for each Right being
exercised (as such amount may be reduced (including to zero) pursuant to Section
11(a)(iii)) and an amount equal to any applicable tax or charge required to be
paid by the holder of such Rights Certificate in accordance with Section 9(e) in
cash, certified check, cashier's check, wire transfer, bank draft or money order
payable to the order of the Company), at or prior to the earliest of (i) the
Close of Business on the tenth anniversary of the Record Date (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as provided in
Section 23 (the "Redemption Date"), or (iii) the
10
time at which such Rights are exchanged as provided in Section 24 (the earliest
of (i), (ii) and (iii) being the "Expiration Date").
(b) The Purchase Price for each Unit pursuant to the exercise of a
Right shall initially be $38.00 and, shall be subject to adjustment from time to
time as provided in Sections 11 and 13 and shall be payable in lawful money of
the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate evidencing exercisable Rights
(with the form of election to purchase and certification properly completed and
duly executed) accompanied by payment as provided in Section 7(a) and an amount
equal to any applicable tax or charge required to be paid under Section 9(e) in
cash, certified check, cashier's check, wire transfer, bank draft, or money
order payable to the order of the Company, the Rights Agent shall, subject to
Section 20(k), thereupon promptly (i) (A) requisition from any transfer agent of
the Preferred Stock a certificate or certificates for the number of Units 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 Units issuable upon exercise of the Rights hereunder
with a depositary agent, requisition from the depositary agent of a depositary
receipt or depositary receipts representing such number of Units as are to be
purchased (in which case certificates for the Units represented by such receipt
or receipts shall be deposited by the transfer agent with the depositary agent)
and the Company hereby directs the depositary agent to comply with such
requests; (ii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional shares in accordance with Section
14; (iii) after receipt of such certificates or depositary receipts, cause the
same to be delivered to or upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be designated by
such holder; and (iv) when appropriate, after receipt thereof, deliver such cash
to or upon the order of the registered holder of such Rights Certificate. If the
Company is obligated to issue other securities of the Company, pay cash and/or
distribute other property pursuant to Section 11(a), 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 the terms of this Agreement.
(d) If the registered holder of any Rights Certificate shall exercise
less than all the Rights evidenced thereby, a new Rights Certificate evidencing
a number of Rights equivalent to the number of Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Rights
Certificate or to such registered holder's duly authorized assigns, subject to
Section 14.
(e) Notwithstanding anything in this Agreement to the contrary and
without any further action, from and after the first occurrence of a Triggering
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 thereof) who becomes a transferee after
the Acquiring Person becomes such; (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate 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 to holders of
11
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 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); or (iv) any
subsequent transferee; shall, in any of the above cases, not be exercisable
without any further action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights or any Rights Certificate which formerly
evidenced such Rights, and neither the Company nor the Rights Agent shall have
any obligations whatsoever with respect to such Rights or any Rights
Certificate, whether under any provision of this Agreement or otherwise. The
Company shall use all commercially reasonable efforts to ensure that the
provisions of Section 4(b) and this Section 7(e) are complied with, but neither
the Company nor the Rights Agent shall have any liability to any holder of
Rights Certificates or to any other Person as a result of its making or failing
to make any determinations with respect to an Acquiring Person or any of such
Acquiring Person's Affiliates, Associates or transferees or taking or failing to
take any actions with respect any Rights or Rights Certificates of any such
Person.
(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 duly executed the certificate contained in the form of
election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof, and of the Rights evidenced thereby, 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 to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other
Rights Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Rights
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Stock.
(a) The Company covenants and agrees that it will use its best efforts
to cause to be reserved and kept available out of, and to the extent of, its
authorized and unissued Preferred Stock not reserved for another purpose a
number of shares that will be sufficient to permit the exercise in full of all
outstanding Rights pursuant to this Agreement and, after the occurrence of a
Section 11(a)(ii) Event, shall, to the extent reasonably practicable, so reserve
and keep available a sufficient number of shares of Common Stock of the Company
(and/or other
12
securities) which may be required to permit an exercise in full of the Rights
pursuant to this Agreement.
(b) If the Units to be issued and delivered upon the exercise of the
Rights are at any time listed on a national securities exchange, or quoted on
Nasdaq, the Company shall during the period from the Distribution Date to the
Expiration Date use its best efforts to cause all shares reserved for such
issuance to be listed on such exchange, or quoted on Nasdaq, 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 in which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section
11(a)(iii), 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
reasonably practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities and (B) the
Expiration Date. 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.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction, unless the requisite qualification
of the offering made upon exercise of the Rights in such jurisdiction shall have
been obtained, or an exemption therefrom shall be available and until a
registration statement has been declared effective.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Units (and, following the occurrence of a
Triggering Event, Common Stock and/or (i)any other securities that may be
delivered upon exercise of Rights) shall, at the time of delivery of the
certificates for such Units or other securities subject to payment of the
Purchase Price, be duly and validly authorized and issued and fully paid and
non-assessable.
(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 or of any Units
(and, following the occurrence of a Triggering Event, any other securities that
may be delivered upon exercise of Rights) upon the exercise of Rights. The
Company shall not, however, be required to pay any tax or charge which may be
payable in respect of any transfer or delivery of Rights Certificates to a
Person other than, or issue or deliver certificates or depositary receipts for
Units in a name other than that of, the registered holder of the Rights
Certificate evidencing Rights surrendered for exercise or to issue or to deliver
any certificates or depositary receipts for Units (or other securities that may
be delivered upon the exercise of any Rights) until any such tax or charge shall
have been paid (any such tax or charge being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been established to
the Company's or the Rights Agent's reasonable satisfaction that no such tax or
charge is due.
13
Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for Units (or, following the occurrence of a Triggering Event, other
securities that may be delivered upon exercise of Rights) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of the Units (or, following the occurrence of a Triggering Event other
securities that may be delivered upon the exercise of the Rights) represented
thereby on, and such certificate shall be dated, at the Close of Business on the
date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer taxes
or charges) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock (or, following the occurrence
of a Triggering Event, other securities that may be delivered upon the exercise
of the Rights) transfer books of the Company are closed, such person shall be
deemed to have become the record holder of such shares at the Close of Business
on, and such certificate shall be dated, the next succeeding Business Day on
which such transfer books are open; provided further, however, that if delivery
of Units (or following the occurrence of a Triggering Event, other securities
that may be delivered upon the exercise of the Rights) is delayed pursuant to
Section 9(c), such Persons shall be deemed to have become the record holders of
such Units (or following the occurrence of a Triggering Event, other securities
that may be delivered upon the exercise of the Rights) only when such Units
first become deliverable. Prior to the exercise of the Rights evidenced thereby,
the holder of a Rights Certificate shall not be entitled to any rights of a
stockholder of the Company with respect to securities for which the Rights shall
be exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as expressly provided in this Agreement.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number and kinds of securities covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable in shares
of Preferred Stock, (B) subdivide the outstanding shares of Preferred Stock, (C)
combine the outstanding Preferred Stock into a smaller number of shares
Preferred Stock, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), except as otherwise provided in this Section 11(a),
the Purchase Price in effect at the time of the record date for such dividend or
of the effective date of such subdivision, combination or reclassification, and
the number and kind of shares of capital stock for which the Rights shall be
exercisable, shall be proportionately adjusted so that the holder of any Rights
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
capital stock which, if such Rights had been exercised immediately prior to such
date and at a time when the applicable transfer books were open, such holder
would have owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification; provided, however,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock
issuable upon exercise of one Right. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii), the
adjustment
14
provided for in this Section 11(a)(i) shall be in addition, and shall be made
prior, to any adjustment required pursuant to Section 11(a)(ii).
(i) Subject to Section 24, if:
(A) any Person shall become an Acquiring Person, unless
the event causing the Person to become an Acquiring
Person is a transaction to which the provisions of
Section 13(a) apply;
(B) 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 (1)
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 shares of Common Stock shall remain outstanding
and unchanged, (2) in one transaction or a series of
transactions, transfer any assets to the Company or
any of its Subsidiaries in exchange (in whole or in
part) for shares of Common Stock, for other equity
securities of the Company or any of its Subsidiaries,
or for securities exercisable for or convertible into
shares of equity securities of the Company or any of
its Subsidiaries (whether shares of Common Stock or
otherwise) or otherwise obtain from the Company or
any of its Subsidiaries, with or without
consideration, any additional shares of such equity
securities or securities exercisable for or
convertible into such equity securities (other than
pursuant to a pro rata distribution to all holders of
shares of Common Stock), (3) sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise
acquire or dispose of, in one transaction or a series
of transactions, to, from or with the Company or any
of its Subsidiaries or any employee benefit plan
maintained by the Company or any of its Subsidiaries
or any trustee or fiduciary with respect to such plan
acting in such capacity, assets (including
securities) on terms and conditions less favorable to
the Company or such Subsidiary, plan, trustee or
fiduciary than those that could have been obtained in
arm's-length negotiations with an unaffiliated third
party, other than pursuant to a transaction set forth
in Section 13(a), (4) sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise
acquire or dispose of, in one transaction or a series
of transactions, to, from or with the Company or any
of its Subsidiaries or any employee benefit plan
maintained by the Company or any of its Subsidiaries
or any trustee or fiduciary with respect to such plan
acting in such capacity
15
(other than transactions, if any, consistent with
those engaged in, as of the date hereof, by the
Company and such Acquiring Person or such Associate
or Affiliate thereof), assets (including securities
or intangible assets) having an aggregate fair market
value of more than $5,000,000, other than pursuant to
a transaction set forth in Section 13(a), (5)
receive, or any designee, agent or representative of
such Acquiring Person or any Affiliate or Associate
of such Acquiring Person shall receive, any
compensation from the Company or any of its
Subsidiaries other than compensation for full-time
employment as a regular employee at rates in
accordance with the Company's (or its Subsidiaries')
past practices, or (6) receive the benefit, directly
or indirectly (except proportionately as a holder of
shares of Common Stock or as required by law or
governmental regulation), of any loans, advances,
guarantees, pledges or other financial assistance or
any tax credits or other tax advantages provided by
the Company or any of its Subsidiaries or any
employee benefit plan maintained by the Company or
any of its Subsidiaries or any trustee or fiduciary
with respect to such plan acting in such capacity; or
(C) 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
one percent the proportionate share of the
outstanding shares of any class of equity securities
of the Company or any of its Subsidiaries that is
directly or indirectly beneficially owned by any
Acquiring Person or any Person or any Associate or
Affiliate of any Acquiring Person;
then promptly following the occurrence of an event described in Section
11(a)(ii)(A), (B) or (C) (each being a "Section 11(a)(ii) Event"), the
Company and the Rights Agent shall make proper provision so that each
holder of a Right, except as otherwise provided in Section 7(e), shall
thereafter have the right to receive for each Right, upon exercise
thereof in accordance with the terms of this Agreement and payment of
the then-current Purchase Price, shares of Common Stock of the Company
(or at the discretion of the Board, such number of Units)
16
obtained by multiplying the then-current Purchase Price by the then
number of Units for which a Right was exercisable (or would have been
exercisable if the Distribution Date had occurred) immediately prior to
the first occurrence of a Triggering Event, and dividing that product
by 50% of the Current Per Share Market Price for shares of Common Stock
of the Company on the date of occurrence of the most recent Triggering
Event (such number of shares of the Company being hereinafter referred
to as the "Adjustment Shares"). Upon the occurrence of a Section 13
Event, any Rights that shall not have been previously exercised
pursuant to this Section 11(a)(ii) shall thereafter be exercisable only
pursuant to Section 13 and not pursuant to this Section 11(a)(ii). The
Company shall notify the Rights Agent when this Section 11(a)(ii)
applies and shall use all commercially reasonable efforts to ensure
that the provisions of this Section 11(a)(ii) 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 any
Acquiring Person or its Affiliates, Associates or transferees
hereunder.
(ii) In the event that the number of shares of Common Stock of
the Company which are authorized by the Company's Certificate of
Incorporation but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights are not sufficient to permit the
exercise in full of the Rights, or if any necessary regulatory approval
for such issuance has not been obtained by the Company, the Company
shall, in lieu of issuing Adjustment Shares in accordance with Section
11(a)(ii): (A) determine the excess of (1) the value of the Adjustment
Shares issuable upon the exercise of a Right, as determined by the
Board in good faith, which determination shall be conclusive (the
"Current Value") over (2) the Purchase Price (such excess being
referred to as the "Spread") and (B) with respect to each Right, make
adequate provision to substitute for such Adjustment Shares, upon
exercise of the Rights: (1) cash, (2) a reduction in the Purchase
Price, (3) other equity securities of the Company (including, without
limitation, Preferred Stock), (4) debt securities of the Company,
except to the extent that the Company has not obtained any necessary
regulatory approval for such issuance, (5) other assets, or (6) any
combination of the foregoing, having an aggregate value equal to the
Current Value, as determined by the Board based upon the advice of a
nationally recognized investment banking firm selected by the Board
(which determination shall be described in a statement filed with the
Rights Agent and shall be conclusive and binding on the Rights Agent,
the holders of the Rights and all other persons); provided, however, if
the Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within 30 days following the later of (x)
occurrence of a Section 11(a)(ii) Event, and (y) the date on which the
Company's right of redemption pursuant to Section 23(a) expires (the
later of (x) and (y) being referred to herein as the "Section
11(a)(iii) Trigger Date"), then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, Common Stock of the Company
(to the extent available), except to the extent that the Company has
not obtained any necessary regulatory approval for such issuance, and
then, if necessary, cash or Preferred Stock, having an aggregate
17
value equal to the Spread. If the Board shall determine in good faith
that it is likely that sufficient additional Common Stock of the
Company could be authorized for issuance upon exercise in full of the
Rights, the 30-day period set forth above may be extended to the extent
necessary, but not more than 120 days following the date of the
occurrence of the earliest of the events described in clauses (A), (B)
and (C) of Section 11(a)(ii) above, in order that the Company may seek
stockholder approval for the authorization of such additional shares
(such period, as it may be extended, hereinafter referred to as the
"Substitution Period"). To the extent that the Company determines that
action need be taken pursuant to the first and/or second sentences this
Section 11(a)(iii), the Company (x) shall provide, subject to Section
11(a)(ii) 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 temporary suspended, as well as a
public announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of the
Common Stock of the Company shall be the Current Per Share Market Price
as determined pursuant to Section 11(d) below.
(b) If the Company shall fix a record date for the issuance of rights,
options or warrants to all holders of Preferred Stock entitling them (for a
period expiring within forty five calendar days after such record date) to
subscribe for or purchase Preferred Stock (or shares having the same rights,
privileges and preferences as the Preferred Stock ("Equivalent Preferred
Stock")) or securities convertible into Preferred Stock or Equivalent Preferred
Stock at a price per Unit of Preferred Stock or Equivalent Preferred Stock (or
having a conversion price per Unit, if a security convertible into Units or
Equivalent Preferred Stock) less than the then Current Per Share Market Price
(as determined pursuant to Section 11(d)) of a Unit 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 sum of the number of Units
outstanding on such record date plus the number of Units which the aggregate
offering price of the total number of Units 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 Per Share Market
Price and the denominator of which shall be the sum of the number of Units
outstanding on such record date plus the number of additional Units 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). If
such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive and binding on
the Rights Agent and the holders of the Rights. Units 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 if such rights, options or warrants are not so issued,
the Purchase Price
18
shall be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) If the Company shall fix a record date for a distribution to all
holders of Units (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend), assets (other than a dividend payable in Units or Equivalent
Preferred Stock but including any dividend payable in equity securities other
than Preferred Stock or Equivalent Preferred Stock) or subscription rights or
warrants (excluding those referred to in Section 11(d)), 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 then Current Per Share Market Price of the
Preferred Stock on such record date, less the fair market value (as determined
in good faith by the Board, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive and binding on the
Rights Agent and the holders of the Rights) of the cash, assets or evidences of
indebtedness to be distributed or of such subscription rights or warrants
distributable in respect of a share of Preferred Stock, and the denominator of
which shall be such Current Per Share Market Price of a 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 again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) For the purpose of any computation hereunder, the "Current Per
Share Market Price" of any security on any date shall be deemed to be the
average of the daily closing prices per share of such security for the thirty
consecutive Trading Days (as such term is hereinafter defined) ending on and
including the Trading Day immediately prior to such date; provided, however,
that in the event that the Current Per Share Market Price of the security is
determined during a period following the announcement by the issuer of such
security of (A) a dividend or distribution on such security payable in shares of
such security or securities convertible into such security, or (B) any
subdivision, combination or reclassification of such security and prior to the
expiration of thirty Trading Days after and not including the ex-dividend date
for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the Current Per
Share Market Price shall be appropriately adjusted to reflect the current market
price per share equivalent of such security. The closing price for each day
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the Nasdaq
Stock Market ("Nasdaq") or, if the security is not listed or admitted to trading
on the Nasdaq, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the security is listed or admitted to trading or, if the
security is not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
Nasdaq or such other system then in use, or, if on any such date the security is
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
security selected by the Board. If on any such date no market maker is making a
market in the security, the Current Per Share Market Price of
19
such security on such date shall mean the fair value per share or other trading
unit as determined in good faith by the Board as provided for above (which
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive and binding on the Rights Agent, the holders of the Rights
and all other Persons). The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the security is listed or
admitted to trading is open for the transaction of business or, if the security
is not listed or admitted to trading on any national securities exchange, a
Business Day.
(i) For the purpose of any computation hereunder, the Current
Per Share Market Price of the Preferred Stock shall be determined in
accordance with the method set forth in Section 11(d)(i). If the
Current Per Share Market Price of the 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 Section
11(d)(i), the Current Per Share Market Price of the Preferred Stock
shall be conclusively deemed to be an amount equal to the product of
$1,000 (as such amount may be appropriately adjusted for such events as
stock splits, stock dividends and recapitalizations with respect to
shares of Common Stock occurring after the date of this Agreement)
multiplied by the Current Per Share Market Price of Common Stock of the
Company. If no shares of the Common Stock or Preferred Stock are
publicly held or so listed or traded, "Current Per Share Market Price"
of the Preferred Stock shall mean the fair value per share as
determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be
conclusive and binding on the Rights Agent and the holders of the
Rights for all purposes.
(e) No adjustment in the Purchase Price under this Section 11 shall be
required unless such adjustment would require an increase or decrease of at
least one percent in the Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(e) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest cent or to the
nearest one-hundred-thousandth (1/100,000) of a share of Preferred Stock or
one-hundredth (1/100) of any other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which requires such adjustment or (ii)
the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii),
the holder of any Rights thereafter exercised shall become entitled to receive
any shares of capital stock of the Company other than Units, thereafter the
number of such other shares so receivable upon exercise of any Rights and the
Purchase Price thereof shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Stock contained in Sections 11(a), (b), (c), (d), (e),
(g), (h), (i), (j), (k), (l) and (m), and the provisions of Sections 7, 9, 10,
13 and 14 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 shall evidence the right to purchase, at
the adjusted Purchase Price,
20
the number of Units purchasable from time to time upon exercise of the Rights,
all subject to further adjustment as provided in this Agreement.
(h) Unless the Company shall have exercised its election under Section
11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of Units (calculated to
the nearest one-millionth of a share of Preferred Stock) obtained by dividing
(i) the product obtained by multiplying (x) the number of Units 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, by (ii) 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 substitution for any
adjustment in the number of Units purchasable upon the exercise of a Right. Each
of the Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of Units 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-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. The Company shall give the Rights
Agent a copy of such announcement. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten days later than the date of
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, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates to be so distributed shall
be issued, executed and countersigned in the manner provided for herein and
shall be registered in the names of the holders of record of Rights Certificates
on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Units issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per Unit and the number of Units which were expressed in the
initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value of the number of Units issuable upon
exercise of the Rights, the Company shall take any corporate action which may,
in the opinion of its counsel, be
21
necessary in order that the Company may validly and legally issue fully paid and
nonassessable number of Units 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, issuing to the holder of any Rights exercised after such record date that
number of Units and other capital stock or securities of the Company, if any,
issuable upon such exercise that is over and above the Units 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) upon the occurrence of the event requiring such
adjustment. The Company shall give the Rights Agent prompt written notice of its
election under this Section 11(l).
(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 it in its sole discretion shall determine to be advisable in
order that any (i) consolidation or subdivision of the Preferred Stock, (ii)
issuance wholly for cash of any Unit at less than the Current Per Share Market
Price, (iii) issuance wholly for cash of Preferred Stock or securities which by
their terms are convertible into or exchangeable for Preferred Stock, (iv)
dividends on Preferred Stock payable in Preferred Stock, or (v) issuance of
rights, options or warrants referred to in this Section 11, hereafter made by
the Company to holders of Units of its Preferred Stock, shall not be taxable to
such stockholders.
(n) The Company 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)), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o)), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(o)), if (x)
at the time of or immediately after such consolidation, merger or sale there are
any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale, the
Person which constitutes, or would constitute, the Principal Party shall have
distributed or otherwise transferred to its stockholders or other persons
holding an equity interest in such Person, Rights previously owned by such
Person or any of its Affiliates and Associates; provided, however, this Section
11(n) shall not affect the ability of any Subsidiary of the Company to
consolidate with, merge with or into, or sell or transfer assets or earning
power to, any other Subsidiary of the Company.
(o) After the Distribution Date, the Company shall not, except as
permitted by Section 23 or Section 27, take (or permit any of its Subsidiaries
to take) any action if at the time
22
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) If, at any time after the date of this Agreement and prior to the
Distribution Date, the Company shall (i) declare or pay any dividend on
outstanding shares of Common Stock payable in shares of Common Stock or (ii)
effect a subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in any
such case the number of Units purchasable after such event upon proper exercise
of each Right shall be determined by multiplying the number of Units so
purchasable immediately prior to such event by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
before such event and the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such event. The adjustments provided
for in this Section 11(p) shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
effected.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or 13, the Company
shall promptly (a) prepare a certificate setting forth such adjustment, and a
brief statement of the computations and facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the shares of
Common Stock or Units a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Rights Certificate in accordance with Section 25
hereof. Notwithstanding the foregoing sentence, the failure by the Company to
make such certification or give such notice shall not affect the validity of or
the force or effect of the requirement for such adjustment. The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment or statement contained therein and shall have no duty or liability
with respect to, shall not be deemed to have knowledge of, and adjustment or any
such event 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 a Share Acquisition Date, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o)), and the Company shall not be the continuing or
surviving corporation of such consolidation or merger, (y) any Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o)) shall consolidate with the Company, or merge with and 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 shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other Person or cash or any other property, or
(z) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer) to any Person or Persons (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o)), in one or more transactions, directly or indirectly, assets or earning
power aggregating 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole), (any such event being a "Section 13
Event"), then, and in each such case, the Company and the Rights Agent shall
make proper provision so that: (i) each holder of a Right, except as provided in
Section 7(e),
23
shall thereafter have the right to receive, upon the exercise thereof at the
then current Purchase Price, such number of validly authorized and issued, fully
paid and non-assessable shares of Common Stock of the Principal Party, which
shares shall not be subject to any liens, encumbrances, rights of first refusal,
transfer restrictions or other adverse claims, as shall be equal to the product
obtained by (1) multiplying the then current Purchase Price by the number of
Units for which a Right is exercisable immediately prior to the first occurrence
of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to
the first occurrence of a Section 13 Event, multiplying the number of such Units
for which a Right would be exercisable hereunder but for the occurrence of such
Section 11(a)(ii) Event by the Purchase Price which would be in effect hereunder
but for such first occurrence) and (2) dividing that product (which, following
the first occurrence of a Section 13 Event, shall be the "Purchase Price" for
all purposes of this Agreement) by 50% of the Current Per Share Market Price of
the shares of 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, for all purposes of this Agreement, thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of Section
11 shall apply only to such Principal Party following the first occurrence of a
Section 13 Event; (iv) such Principal Party shall take such steps (including,
but not limited to, the reservation of a sufficient number of shares of its
Common Stock) in connection with the consummation of any such transaction as may
be necessary to ensure that the provisions of this Agreement shall thereafter be
applicable to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) shall be of
no further effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a), (A) the Person that is the
issuer of any securities into which shares of Common Stock of the
Company are converted in such merger or consolidation, or, if there is
more than one such issuer, the issuer whose outstanding shares of
Common Stock have the greatest aggregate Current Per Share Market Price
and (B) if no securities are so issued, the Person that is the other
party to such merger or consolidation, or, if there is more than one
such Person, the Person whose outstanding shares of Common Stock have
the greatest aggregate Current Per Share Market Price; 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 largest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives the
same portion of the assets or earning power transferred pursuant to
such transaction or transactions or if the Person receiving the largest
portion of the assets or earning power cannot be determined, whichever
Person whose outstanding shares of Common Stock have the greatest
aggregate Current Per Share Market Price; 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
24
preceding twelve-month period registered under Section 12 of the
Exchange Act ("Registered Common Stock"), or such Person is not a
corporation, and such Person is a direct or indirect Subsidiary of
another Person that has Registered Common Stock outstanding, "Principal
Party" shall refer to such other Person; (2) if the Common Stock of
such Person is not Registered Common Stock or such Person is not a
corporation, and such Person is a direct or indirect Subsidiary of
another Person but is not a direct or indirect Subsidiary of another
Person which has Registered Common Stock outstanding, "Principal Party"
shall refer to the ultimate parent entity of such first-mentioned
Person; (3) if the Common Stock of such Person is not Registered Common
Stock or such Person is not a corporation, and such Person is directly
or indirectly controlled by more than one Person, and one or more of
such other Persons has Registered Common Stock outstanding, "Principal
Party" shall refer to whichever of such other Persons is the issuer of
the Registered Common Stock having the highest aggregate Current Per
Share Market Price; and (4) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and such
Person is directly or indirectly controlled by more than one Person,
and none of such other Persons has Registered Common Stock outstanding,
"Principal Party" shall refer to whichever ultimate parent entity is
the corporation having the greatest stockholders' equity or, if no such
ultimate parent entity is a corporation, shall refer to whichever
ultimate parent entity is the entity having the greatest net assets.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13, and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that the Principal Party will:
(i) (A) file on an appropriate form, as soon as practicable
following the execution of such agreement, a registration statement
under the Securities Act with respect to the shares of Common Stock of
such Principal Party that may be acquired upon exercise of the Rights,
(B) cause such registration statement to remain effective (and to
include a prospectus complying with the requirements of the Securities
Act) until the Expiration Date, and (C) as soon as practicable
following the execution of such agreement take such action as may be
required to ensure that any acquisition of such shares of Common Stock
of such Principal Party upon the exercise of the Rights complies with
any applicable state securities or "blue sky" laws; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form
10 (or any successor form) under the Exchange Act.
25
(d) In case the Principal Party which is to be a party to a transaction
referred to in this Section 13 has a provision in any of its authorized
securities or in its certificate of incorporation, bylaws or other instrument
governing its corporate affairs, which provision would have the effect of (i)
causing such Principal Party to issue, in connection with, or as a consequence
of, the consummation of a transaction referred to in this Section 13, shares of
Common Stock of such Principal Party at less than in the Current Per Share
Market Price or securities exercisable for, or convertible into, shares of
Common Stock of such Principal Party at less than in the Current Per Share
Market Price (other than to holders of Rights pursuant to this Section 13) or
(ii) providing for any special payment, tax or similar provisions in connection
with the issuance of the shares of Common Stock of such Principal Party pursuant
to the provisions of this Section 13, then, in such event, the Company shall not
consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
(e) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights that have not theretofore been exercised
shall thereafter be exercisable in any manner provided in Section 13(a).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Rights Certificates which evidence fractional Rights. In lieu of
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 Per
Share Market Price of a whole Right. For purposes of this Section 14(a), the
Current Per Share Market Price of a whole Right shall be the closing price per
share of a whole Right on the Trading Day immediately prior to the date on which
such fractional Rights would have been otherwise issuable.
(b) The Company shall not be required to issue fractions of Preferred
Stock (other than fractions which are integral multiples of one one-thousandth
of a share of Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Stock (other than fractions
which are integral multiples of one one-thousandth of a share of Preferred
Stock). Fractions of Preferred Stock in integral multiples of one one-thousandth
of a share of Preferred Stock may, at the election of the Company, be evidenced
by depositary receipts, pursuant to an appropriate agreement between the Company
and a depositary selected by it; provided, however, that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Stock represented by such depositary receipts. In lieu of
fractional shares of Preferred Stock that are not integral multiples of one
one-thousandth of a share of Preferred Stock, the Company shall pay to the
registered holders of Rights Certificates
26
at the time such Rights are exercised as herein provided an amount in cash equal
to the same fraction of the Current Per Share Market Price of one share of
Preferred Stock.
(c) The holder of a Right by the acceptance of the Right expressly
waives such holder's right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above).
(d) Whenever a payment for fractional Rights or fractional shares is to
be made by the Rights Agent, the Company shall (i) promptly prepare and deliver
to the Rights Agent a certificate setting forth in reasonable detail the facts
related to such payment and the prices and/or formulas utilized in calculating
such payments, and (ii) provide sufficient monies to the Rights Agent in the
form of fully collected funds to make such payments. The Rights Agent shall be
fully protected in relying upon such a certificate and shall have no duty with
respect to, and shall not be deemed to have knowledge of any payment for
fractional Rights or fractional shares under any section of this Agreement
relating to the payment of fractional Rights or fractional shares unless and
until the Rights Agent shall have received such a certificate and sufficient
monies.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
certificates representing shares of Common Stock); and any registered holder of
any Rights Certificate (or, prior to the Distribution Date, a certificate
representing shares of Common Stock of the Company), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of a certificate representing shares of Common Stock), may,
in such holder's own behalf and for such holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, such holder's right to exercise the
Rights evidenced by such Rights Certificate or, prior to the Distribution Date,
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 will be entitled to specific
performance of the obligations hereunder, and injunctive relief against actual
or threatened violations of the obligations of any Person subject to this
Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of shares 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 purpose, duly endorsed or
accompanied by a proper instrument of transfer with all required certificates
completed;
27
(c) subject to Sections 6(a) and 7(f), the Company and the Rights Agent
may deem and treat the Person in whose name the 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 shall be affected by any notice to the contrary;
(d) such holder expressly waives any right to receive any fractional
Rights and any fractional securities upon exercise or exchange of a Right,
except as otherwise provided in Section 14; and
(e) 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, judgment, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company shall use
commercially reasonable efforts to have any such order, decree or ruling lifted
or otherwise overturned as soon as practicable.
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 Units or any other securities of
the Company which may at any time be issuable upon the exercise of the Rights
represented thereby, nor shall anything contained in this Agreement or in any
Rights Certificate be construed (a) 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, (b) 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), (c) to receive dividends or
subscription rights, or (d) to confer any other rights as a stockholder
otherwise, until the Right or Rights evidenced by such Rights Certificate shall
have been exercised in accordance with this Agreement.
Section 18. Concerning the Rights Agent. The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it under this
Agreement and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the preparation,
negotiation, execution, delivery, amendment and administration 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, damage, judgment, fine, penalty, claim, demand, settlement, cost,
liability or expense (including, without limitation, the reasonable fees and
disbursements of counsel), incurred without gross negligence 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 execution, acceptance and
administration of this Agreement and the exercise and performance of its duties,
including, without limitation, the costs and expenses of defending against and
appealing any claim of
28
liability arising therefrom, directly or indirectly. This indemnity shall
survive the termination of this Agreement and the expiration of the Rights. The
costs and expenses incurred in enforcing this right of indemnification shall be
paid by the Company.
In the absence of gross negligence or willful misconduct, the Rights
Agent is authorized and shall be protected and shall incur no liability for, or
in respect of any action taken, suffered or omitted by it in connection with,
its administration of this Agreement and the exercise and performance of its
duties hereunder, in reliance upon any Rights Certificate or certificate for
Units 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, or otherwise upon the advice of
counsel as set forth in Section 20.
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 corporation succeeding to the
shareholder services, stock transfer or corporate trust business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto; provided, that such Person must be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such 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
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
Section 20. Rights and Duties of Rights Agent. The Rights Agent undertakes
to perform only the duties and obligations expressly imposed by this Agreement
upon the following terms and conditions, all of which the Company and the
holders of Rights Certificates, by their acceptance thereof, shall be bound, and
no implied duties or obligations shall be read into this Agreement against the
Rights Agent:
29
(a) Before the Rights Agent acts or refrains from acting, it may
consult with legal counsel of its choice (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 or in respect of, as to any action taken, suffered or
omitted by it in good faith and in accordance with such advice or opinion.
(b) Whenever in the administration, exercise and performance of its
duties under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the Company prior
to taking, suffering or omitting to take any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any officer of the Company and delivered to the Rights
Agent; and such certificate shall be full and complete authorization and
protection to the Rights Agent 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 to the Company and any
other Person only for its own gross negligence 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 (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility or have any
liability in respect of the legality, validity or enforceability of this
Agreement or the execution and delivery hereof (except the due execution by the
Rights Agent) or in respect of the legality, validity or enforceability or the
execution of any Rights Certificate (except its countersignature); nor shall it
be liable or 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 change in the exercisability of the Rights (including the
Rights becoming un-exercisable pursuant to Section 7(a)(e) or Section 11(a)(ii))
or any change or adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for in Section 3, 11, 13, 23 or 24, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Rights
Certificates after receipt of the certificate described in Section 12, upon
which the Rights Agent may rely); nor shall it by any act hereunder be deemed to
make any representation or warranty as to the authorization or reservation of
any Units or other securities to be issued upon the exercise of any Rights or as
to whether any such security will, when issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
30
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the administration, exercise and performance of its
duties hereunder from any one officer 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 to
the Rights Agent and the Rights Agent shall not be responsible or liable for, or
in respect of, any action taken, suffered or omitted to be taken by it in good
faith in accordance with instructions of any such officer or for any delay in
acting while waiting for those instructions. The Rights Agent shall be fully
authorized and protected in relying upon the most recent instructions received
from such officers. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken, suffered or omitted by the Rights Agent under
this Agreement and the date on and/or after which such action shall be taken or
such omission shall be effective. The Rights Agent shall not be liable for any
action taken or suffered by, or omission of, the Rights Agent in accordance with
a proposal included in any such application on or after the date specified in
such application (which date shall not be less than five Business Days after the
date any officer of the Company actually received such application, unless any
such officer shall have consented in writing to an earlier date) unless, prior
to taking any such action (or the effective date in the case of an omission),
the Rights Agent shall have received written instructions in response to such
application specifying the action to be taken, suffered or omitted.
(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, or any such stockholder, affiliate, director, officer or employee from
acting in any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers vested in it or perform any duty under this Agreement either itself
(through its directors, officers and employees) or by or through its attorneys
or agents, and the Rights Agent shall not be answerable or accountable for any
act, omission, default, neglect or misconduct of any such attorneys or agents or
for any loss to the Company resulting from any such act, omission, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
the Rights Agent in good faith 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 Rights Certificate surrendered to the
Rights Agent for exercise, transfer, split up, combination or exchange, the
certification on the form of assignment or form of election to purchase, as the
case may be, that has been completed to certify the holder is an Acquiring
Person (or an Affiliate or Associate thereof) has either not been completed or
in any manner indicates any other response thereto, the Rights Agent shall not
take
31
any further action with respect to such requested exercise, transfer, split up,
combination or exchange, without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon
thirty days' notice in writing mailed to the Company and to each transfer agent
of the Common Stock or Preferred Stock (as to which the Rights Agent has
received prior written notice) by registered or certified mail, and the Company
shall mail notice thereof to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty days' 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 or Preferred Stock (as to which the Rights Agent has received prior
written notice) by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty 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 such holder's Rights
Certificate for inspection by the Company), then the registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a Person organized and doing
business under the laws of the United States or of any state of the United
States, in good standing, authorized under such laws to exercise corporate trust
or stock transfer powers, and subject to supervision or examination by federal
or state authority and which has at the time of its appointment as Rights Agent
a combined capital and surplus of at least $50 million. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock or Preferred Stock, and mail a
notice thereof in writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by the Board to reflect any adjustment or change in the Purchase
Price and the number or kind or class of shares or other securities or property
purchasable under the 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 of the Company following the Distribution Date and prior
to the Expiration Date, the Company (a) shall, with respect to shares of Common
Stock of the Company so issued or sold pursuant to the exercise of stock options
or under any employee benefit plan or arrangement or upon the exercise,
conversion or exchange of securities of the
32
Company currently outstanding or issued at any time in the future by the Company
and (b) may, in any other case, if deemed necessary or appropriate by the Board
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 and this sentence shall be un-exercisable ab
initio if, and to the extent that, such issuance or this sentence would create a
significant risk of or result in material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued or would
create a significant risk of or result in such options' or employee plans' or
arrangements' failing to qualify for otherwise available special tax treatment
and (ii) no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 23. Redemption and Termination.
(a) The Company may, at its option, upon approval by the Board, at any
time on or prior to the Close of Business (or such later date as may be
determined by the Board) on the earlier of (i) the Distribution Date or (ii) the
Final Expiration Date redeem all but not less than all of the then outstanding
Rights at a redemption price of $0.01 per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date of this Agreement (such redemption price being hereinafter referred to
as the "Redemption Price"), and the Company may, at its option, pay the
Redemption Price either in cash, shares of Common Stock (based on the Current
Per Share Market Price thereof at the time of redemption), or any other form of
consideration deemed appropriate by the Board. The redemption of the Rights by
the Board may be made effective at such time on such basis and with such
conditions as the Board in its sole discretion may establish. Any such
redemption will be effective immediately upon the action of the Board ordering
the same, unless such action of the Board expressly provides that such
redemption will be effective at a subsequent time or upon the occurrence or
nonoccurrence of one or more specified events (in which case such redemption
will be effective in accordance with the provisions of such action of the
Board).
(b) Immediately upon the effectiveness of the redemption of the Rights
pursuant to Section 23(a), without any further action or 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. The Company shall promptly
give public notice of any such redemption (with a copy to the Rights Agent);
provided, however, that the failure to give, or any defect in, any such notice
shall not affect the legality or validity of such redemption. Within 10 days
after the effectiveness of the redemption of the Rights, the Company shall give
notice of such redemption to the Rights Agent and shall mail a notice of
redemption to all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Stock. Any notice which is mailed in such manner shall be deemed given,
whether or not the holder receives the notice. Each notice of redemption will
state the method by which the payment of the Redemption Price will be made.
Neither the Company nor any of its Affiliates or Associates may redeem, acquire
or purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23 or in Section 24 or other than in
connection with the purchase of shares of Common Stock prior to the Distribution
Date.
33
(c) Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable pursuant to Section 7(a) at any
time when the Rights are redeemable hereunder.
Section 24. Exchange.
(a) The Company, at its option, upon approval by the Board, at any time
after any Person becomes an Acquiring Person, may exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights that
have become un-exercisable pursuant to the provisions of Section 7(e) hereof)
for Common Stock of the Company at an exchange ratio per Right equal to, subject
to adjustment to reflect stock splits, stock dividends and similar transactions
occurring after the date hereof, that number obtained by dividing the Purchase
Price by the then Current Per Share Market Price per share of Common Stock on
the earlier of (i) the date on which any Person becomes an Acquiring Person and
(ii) the date on which a tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan maintained by
the Company or any of its Subsidiaries or any trustee or fiduciary with respect
to such plan acting in such capacity) is commenced within the meaning of Rule
14d-2(a) of the Exchange Act Regulations or any successor rule, if upon
consummation thereof such Person would be the Beneficial Owner of 15% or more of
the shares of Common Stock of the Company then outstanding (such exchange ratio
being hereinafter referred to as the "Section 24(a) Exchange Ratio").
Notwithstanding the foregoing, the Company may not effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan maintained by the Company or any of its Subsidiaries,
or any trustee or fiduciary with respect to such plan acting in such capacity),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the shares of Common Stock of the Company
then outstanding.
(b) Immediately upon the action of the Board ordering the exchange of
any Rights pursuant to subsection (a) of this Section 24 without any further
action or 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 of the Company equal to the number of such Rights held by
such holder multiplied by the Section 24(a) Exchange Ratio. The Company shall
promptly give public notice of any such exchange (with a copy provided to the
Rights Agent); provided, however, that the failure to give, or any defect in,
such notice shall not affect the legality or validity of such exchange. The
Company promptly shall mail a notice of any such exchange to all of the holders
of such Rights at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner provided in this
Agreement shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the
shares of Common Stock of the Company 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 un-exercisable pursuant to the provisions of
Section 7(e)) held by each holder of Rights.
(c) In the event that the number of shares of Common Stock of the
Company authorized by the Company's Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights is not sufficient to permit any
34
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock of the Company for issuance upon exchange of the Rights
or make adequate provision to substitute (1) cash, (2) Preferred Stock or other
equity securities of the Company, (3) debt securities of the Company, (4) other
assets, or (5) any combination of the foregoing, having an aggregate value equal
to the aggregate Current Per Share Market Price of one share of Common Stock
(determined pursuant to Section 11(d) hereof) that would otherwise be issuable
in such exchange, all as determined by the Board (which determination shall be
described in a statement filed with the Rights Agent and shall be conclusive and
binding on the Rights Agent, the holders of the Rights and all other Persons).
To the extent that the Company determines that some action need be taken
pursuant to Section 24(a), the Board may temporarily suspend the exercisability
of the Rights for a period of up to sixty days following the date on which the
event described in Section 24(a) shall have occurred, in order to seek any
authorization of additional shares of Common Stock and/or to decide the
appropriate form of distribution to be made pursuant to the above provision and
to determine the value thereof. Upon any such suspension, the Company shall
notify the Rights Agent thereof and 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 supervision is no longer in effect (a copy of
which shall be provided to the Rights Agent).
Section 25. Notice of Certain Events.
(a) In case the Company shall propose (i) to pay any dividend payable
in stock of any class to the holders of its Preferred Stock or to make any other
distribution to the holders of its Preferred Stock (other than a regular cash
dividend), (ii) to offer to the holders of its Preferred Stock rights or
warrants to subscribe for or to purchase any additional Units or shares of stock
of any class or any other securities, rights or options, (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification involving
only the subdivision of outstanding Preferred Stock), (iv) to effect any
consolidation or merger into or with any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o)), or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of 50% or more
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person, (v) to effect the liquidation, dissolution or
winding up of the Company or (vi) to declare or pay any dividend on the Common
Stock payable in shares of Common Stock or to effect a subdivision, combination
or consolidation of the shares of Common Stock (by reclassification or otherwise
than by payment of dividends in shares of Common Stock), 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, a notice of such proposed action,
which shall specify the record date for the purposes of such stock dividend or
other 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 Common Stock and/or shares of Preferred
Stock, if any such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (i) or (ii) above at least ten 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 ten
days prior to the earlier of (x) the date of the
35
taking of such proposed action and (y) the date of participation therein by the
holders of the shares of Common Stock and/or shares of Preferred Stock.
(b) In case any of the events set forth in Section 11(a)(ii) shall
occur, then the Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, in accordance with Section 26, a notice of the
occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii). In the
event any Person becomes an Acquiring Person, the Company will promptly notify
the Rights Agent thereof.
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 or by telecopier, addressed (until another address is
filed in writing by the Company with the Rights Agent) as follows:
To the Company: Mobility Electronics, Inc.
βββββ β. βββββββββ βββββ, βββββ βββ
ββββββββββ, βββββββ βββββ
Attention: Chief Financial Officer
With a copy to: βββββββ ββββββ L.L.P.
(which shall not ββββ β. βββββββ ββββββββββ, βββββ βββ
constitute notice) ββββββββββ, βββββ βββββ
Attention: βββββββ β. βββββββ, Esq.
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 sent by registered
or certified mail and shall be deemed given upon receipt and addressed (until
another address is filed in writing by the Rights Agent with the Company) as
follows:
To the Rights Agent: Computershare Trust Company
βββ βββββββ ββββββ, βββββ βββ
ββββββ, ββββββββ βββββ
Attention: ββββ βββββββ
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 shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. Prior to the Distribution Date, the
Company may supplement or amend this Agreement in any respect, without the
approval of any holders of Rights, by action of the Board. From and after the
Distribution Date, the Company may from time to time supplement or amend this
Agreement without the approval of any holders of Rights, by action of the Board
in order (i) to cure any ambiguity, (ii) to correct or supplement
36
any provision contained herein which may be defective or inconsistent with any
other provisions herein, (iii) to shorten or lengthen any time period hereunder,
or (iv) to change or supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Rights Certificates (other than an Acquiring Person
or an Affiliate or Associate of an Acquiring Person), including, without
limitation, to change the Purchase Price, the Redemption Price, any time periods
herein specified, and any other term hereof, any such supplement or amendment to
be evidenced by a writing signed by the Company and the Rights Agent; provided,
however, that from and after such time as any Person becomes an Acquiring
Person, this Agreement shall not be amended in any manner which would adversely
affect the interests of the holders of Rights. Upon receipt of a certificate
from an appropriate officer of the Company that the proposed supplement or
amendment is consistent with this Section 27 and, after such time as any Person
has become an Acquiring Person, that the proposed supplement or amendment does
not adversely affect the interests of the holders of Rights, the Rights Agent
shall execute such supplement or amendment.
Section 28. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board. 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 Exchange Act Regulations (or if such Rule
is superseded, such provision of the rule, regulation or statute that replaces
such sentence). The Board shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board, or 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 or calculations deemed necessary or advisable for the
administration of this Agreement (including a determination to 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 Certificates and all other Persons
and (y) not subject the Board to any liability to the holders of the Rights. The
Rights Agent shall be entitled to assume that the Board acted in good faith and
shall be fully protected and incur no liability in reliance thereon.
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, shares of Common Stock of the Company) 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, shares
of Common Stock of the Company).
37
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 determines in its good faith
judgment that severing the invalid language from this Agreement would adversely
affect the purpose or effect of this Agreement and the right of redemption set
forth in Section 23 shall have expired, such right shall be reinstated and shall
not expire until the tenth Business Day following the date of such determination
by the Board.
Section 32. Governing Law. This Agreement and each Rights Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by and construed in accordance
with the internal laws of the State of
Delaware applicable to contracts to be
made and performed entirely within such state, without regard to the
choice-of-law or conflict-of-laws principles of any jurisdiction.
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 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 of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
MOBILITY ELECTRONICS, INC.
By: /s/ ββββ βββββββββ
-----------------------
ββββ βββββββββ,
Chief Financial Officer and
Executive Vice President
COMPUTERSHARE TRUST
COMPANY
By: /s/ ββββββ βββββ
--------------------------
Printed Name: ββββββ βββββ
----------------
Title: Vice President
-----------------------
By: /S/ βββββββ βββββββ
--------------------------
Printed Name: βββββββ βββββββ
----------------
Title: Trust Officer/
-----------------------
Operations Manager
-----------------------
38
CERTIFICATE OF THE DESIGNATIONS, PREFERENCES, RIGHTS
AND LIMITATIONS OF
SERIES G JUNIOR PARTICIPATING PREFERRED STOCK
OF
MOBILITY ELECTRONICS, INC.,
----------
Pursuant to Section 151 of the General
Corporation Law of the State Of
Delaware
----------
Mobility Electronics, Inc. (the "Corporation"), a corporation organized
and existing under the General Corporation Law of the State of
Delaware (the
"DGCL"),
DOES HEREBY CERTIFY:
That, pursuant to the authority expressly vested in the Board of
Directors by Article Fourth of the Certificate of Incorporation of the
Corporation, and pursuant to the provisions of Section 151 of the DGCL, the
Board of Directors duly adopted by unanimous consent dated as of June 11, 2003,
a resolution providing for the issuance of up to fifty thousand (50,000) shares
of Series G Junior Participating Preferred Stock, which resolution is as
follows:
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation by the provisions of Article
Fourth of the Certificate of Incorporation of the Corporation, this Board of
Directors hereby creates a series of the Preferred Stock, $0.01 par value, of
the Corporation to consist of fifty thousand (50,000) shares, and this Board of
Directors hereby fixes the designations and the powers, preferences and rights,
and the qualifications, limitations or restrictions thereon, of the shares of
such series (in addition to the powers, preferences and rights, and the
qualifications, limitations or restrictions thereon, set forth in the
Certificate of Incorporation, as amended, which are applicable to all series of
the Preferred Stock, $0.01 par value, of the Corporation, as follows:
Series G Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series G Junior Participating Preferred Stock" (the "Series G
Preferred Stock") and the number of shares constituting the Series G Preferred
Stock shall be fifty thousand (50,000). Such number of shares may be increased
or decreased by resolution of the Board of Directors of the Corporation (the
"Board"); provided, that no decrease shall reduce the number of shares of Series
G Preferred Stock to a number less than the number of shares then outstanding
plus the number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding securities
issued by the Corporation convertible into Series G Preferred Stock.
A-1
Section 2. Dividends and Distributions.
(a) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and superior to
the Series G Preferred Stock with respect to dividends, each holder of a share
of Series G Preferred Stock, in preference to the holders of shares of common
stock, par value $0.01 per share (the "Common Stock"), of the Corporation, and
of any other junior stock, shall be entitled to receive, when declared by the
Board out of funds legally available for the purpose, dividends in an amount per
share (rounded to the nearest cent) equal to, subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount of
all cash dividends, and 1,000 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.
In the event the Corporation shall, at any time after June 23, 2003 (the "Rights
Declaration Date"), declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock (and an equivalent dividend is not declared on
the Series G Preferred Stock or the Series G Preferred Stock is not similarly
subdivided or combined), then in each such case the amount to which holders of
shares of Series G Preferred Stock were entitled immediately prior to such event
under 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 shares of Series G Preferred Stock as provided in Section 2(a) immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided, however, that, in no
event shall a dividend or distribution be declared by the Board on the Common
Stock for which it does not declare and pay the dividend required to be declared
on the Preferred Stock pursuant to Section 2(a).
(c) Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series G 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 may fix a record date for the
determination of holders of shares of Series G Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than sixty days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights. The holders of shares of Series G Preferred
Stock shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set
forth, each share of Series G Preferred Stock shall entitle the holder thereof
to 1,000 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall, at any time
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after the Rights Declaration Date, declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock (and an equivalent dividend
is not declared on the Series G Preferred Stock or the Series G Preferred Stock
is not similarly subdivided or combined), then in each such case the number of
votes per share to which holders of shares of Series G 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, in the Certificate of
Incorporation, in any other Certificate of Designation creating a series of
Preferred Stock or any similar stock, or by law, the holders of shares of Series
G Preferred Stock and the holders of shares of Common Stock and any other
capital stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of stockholders of the
Corporation.
(c) Except as set forth herein, or as otherwise provided by law,
holders of Series G 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.
Section 4. Certain Restrictions.
(a) Whenever dividends or distributions payable on the Series G
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 G Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior
(either as to dividends or upon liquidation,
dissolution or winding up) to the Series G Preferred
Stock;
(ii) declare or pay dividends, 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 G
Preferred Stock, except dividends paid ratably on
the shares of Series G 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 junior
(either as to dividends or upon liquidation,
dissolution or winding up) to the Series G Preferred
Stock; provided, that the Corporation may at any
time redeem,
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purchase or otherwise acquire shares of any such
junior 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 G Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series G Preferred
Stock, or any shares of stock ranking on a parity
with the Series G Preferred Stock, except in
accordance with a purchase offer made in writing or
by publication (as determined by the Board) to all
holders of such shares upon such terms as the Board,
after consideration of the respective annual
dividend rates and other relative rights and
preferences of the respective series and 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 Section 4(a), purchase or
otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series G Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled 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 series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designation
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up.
(a) Upon any liquidation, dissolution or winding up of the Corporation,
no distribution shall be made (i) to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series G Preferred Stock unless, prior thereto, the holders of shares of
Series G Preferred Stock shall have received the greater of (x) $1,000 per
share, plus an amount equal to accrued and unpaid dividends and distributions
thereon to the date of such payment and (y) an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to the
product of 1,000 times the aggregate amount to be distributed per share to
holders of shares of Common Stock (the "Series G Liquidation Preference"), or
(ii) to the holders of shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series G
Preferred Stock, except distributions made ratably on the Series G Preferred
Stock and all such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution or
winding up. In the event the Corporation shall, at any time after the Rights
Declaration Date declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of
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Common Stock) into a greater or lesser number of shares of Common Stock (and an
equivalent dividend is not declared on the Series G Preferred Stock or the
Series G Preferred Stock is not similarly subdivided or combined), then in each
such case the aggregate amount to which holders of shares of Series G Preferred
Stock were entitled immediately prior to such event under the proviso in clause
(i) 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) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series G Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if any,
which rank on a parity with the Series G Preferred Stock, then such remaining
assets shall be distributed ratably to the holders of Series G Preferred Stock
and such parity shares in proportion to their respective liquidation
preferences.
Section 7. Consolidation, Merger, Etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or converted or changed into other
stock or securities, cash and/or any other property (or into the right to
receive any of the foregoing), then in any such case each share of Series G
Preferred Stock shall at the same time be similarly exchanged, converted or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 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 converted, changed or
exchanged. In the event the Corporation shall, at any time after the Rights
Declaration Date declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock (and an equivalent dividend is not declared on
the Series G Preferred Stock or the Series G Preferred Stock is not similarly
subdivided or combined), then in each such case the amount set forth in the
preceding sentence with respect to the conversion, exchange or change of shares
of Series G 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.
Section 8. No Redemption. The shares of Series G Preferred Stock shall not
be redeemable.
Section 9. Rank. The Series G Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets (including, without
limitation, any distribution pursuant to Section 6 above), junior to all series
of any other class of the Corporation's Preferred Stock.
Section 10. Amendment. The Certificate of Incorporation shall not be
amended, including any amendment through consolidation, merger, combination or
other transaction, in any manner which would materially alter or change the
powers, preferences or special rights of
A-5
the Series G Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least a majority of the outstanding shares
of Series G Preferred Stock, voting together as a single class.
Section 11. Fractional Shares. The Series G 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,
participant in distributions and to have the benefit of all other rights of
holders of Series G Preferred Stock.
IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf of
the Corporation as of the date first written above.
MOBILITY ELECTRONICS, INC.
By: /s/ ββββ βββββββββ
----------------------------
ββββ βββββββββ,
Chief Financial Officer
A-6
FORM OF RIGHTS CERTIFICATE
Certificate No. R-______ ________Rights
NOT EXERCISABLE AFTER JUNE 23, 2013 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT THE OPTION OF THE COMPANY AT $.01 PER
RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND
VOID AND WILL NO LONGER BE TRANSFERABLE.
RIGHTS CERTIFICATE
MOBILITY ELECTRONICS, INC.
This certifies that _____________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of June 11, 2003 (the "Rights Agreement"), between Mobility
Electronics, Inc., a
Delaware corporation (the "Company"), and Computershare
Trust Company, as Rights Agent (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 p.m., New York City time, on June 23, 2013
at the office of the Rights Agent designated for such purpose, or at the office
of its successor as Rights Agent, one one-thousandth (a "Unit") of a fully paid
non-assessable share of Series G Junior Participating Preferred Stock, par value
$0.01 per share (the "Series G Preferred Stock") of the Company, at a purchase
price of $______ per Unit of Series G Preferred Stock (the "Purchase Price"),
upon presentation and surrender of this Rights Certificate with the Form of
Election to Purchase and certification duly executed and properly completed. The
number of Rights evidenced by this Rights Certificate (and the number of Units
of Series G Preferred Stock which may be purchased upon exercise hereof) set
forth above, and the Purchase Price set forth above, are the number and Purchase
Price as of June 23, 2003 based on the Series G Preferred Stock as constituted
at such date. As provided in the Rights Agreement, the Purchase Price and the
number of Units of Series G Preferred Stock 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.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company.
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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 Units of Series G 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 (i) may be redeemed by the Company at a redemption price of
$.01 per Right or (ii) may be exchanged in whole or in part for shares of Series
G Preferred Stock or shares of Common Stock of the Company.
No fractional shares of Series G Preferred Stock will be issued upon
the exercise of any Rights or Rights evidenced hereby (other than fractions
which are integral multiples of one one-thousandth of a share of Series G
Preferred Stock, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Units of
Series G 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 Rights 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 countersigned by the Rights Agent.
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WITNESS the signature of the proper officers of the Company and its
corporate seal. Dated as of ____________.
MOBILITY ELECTRONICS, INC.
By:
-------------------------------
Title:
----------------------------
ATTEST:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
COUNTERSIGNED:
COMPUTERSHARE TRUST COMPANY,
as Rights Agent
By:
----------------------------------------
Authorized Signatory
Print Name:
--------------------------------
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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) ____ Rights represented by this Rights Certificate, together with
all right, title and interest therein, and does hereby irrevocably constitute
and appoint _________________ Attorney, to transfer the said Rights on the books
of the within-named Company, with full power of substitution.
DATED: ___________________
------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, trust company, broker, dealer
or other eligible institution participating in a recognized signature guarantee
medallion program.
-------------------------------------------------------
(To be completed)
CERTIFICATE
The undersigned hereby certifies that the Rights evidenced by this
Rights Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (each as defined in the Rights Agreement).
------------------------------------
Signature
NOTICE
The signature in the foregoing Form of Assignment must conform to the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment is not completed, the Company and the Rights Agent will deem the
beneficial owner of the Rights evidenced by this Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (each as defined in the
Rights Agreement) and such Assignment will not be honored.
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FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights represented by the
Rights Certificate.)
To Mobility Electronics, Inc.
The undersigned hereby irrevocably elects to exercise _____ Rights
represented by this Rights Certificate to purchase the Units of Series G
Preferred Stock issuable upon the exercise of such Rights and requests that
certificates for such Series G Preferred Stock be issued in the name of:
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 remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
-----------------------------------------------------------------
(Please print name and address)
Dated:_________________ ------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, trust company, broker, dealer
or other eligible institution participating in a recognized signature guarantee
medallion program.
B-5
CERTIFICATE
The undersigned hereby certifies that the Rights evidenced by this
Rights Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (each as defined in the Rights Agreement).
--------------------------------------
Signature
NOTICE
The signature in the foregoing Form of Election to Purchase must
conform to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Election
to Purchase, as the case may be, is not completed, the Company and the Rights
Agent will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (each
as defined in the Rights Agreement) and such Election to Purchase will not be
honored.
B-6
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE
RIGHTS AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY
PERSON WHO IS OR BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE
RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL NOT BE EXERCISABLE
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF SERIES G JUNIOR PARTICIPATING PREFERRED STOCK
OF MOBILITY ELECTRONICS, INC.
On June 11, 2003, the board of directors (the "Board") of Mobility
Electronics, Inc. (the "Company") declared a dividend of one right (a "Right")
for each outstanding share of the Company's common stock, par value $0.01 per
share (the "Common Stock"), to stockholders of record at the close of business
on June 23, 2003 (the "Record Date"). Each Right entitles the registered holder
to purchase from the Company one Unit consisting of one one-thousandth of a
share of the Company's Series G Junior Participating Preferred Stock, par value
$0.01 per share (the "Preferred Stock"), at a purchase price of $38.00, subject
to adjustment (the "Purchase Price"). The description and terms of the Rights
are set forth in a Rights Agreement, dated as of June 11, 2003 (the "Rights
Agreement"), between the Company and Computershare Trust Company, 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 "Distribution Date"). The Distribution Date will occur on
the earlier of (i) ten days following a public announcement that a person or
group of affiliated or associated persons (an "Acquiring Person") has (subject
to certain exceptions) acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding shares of our common stock (the
"Share Acquisition Date"), other than as a result of repurchases of stock by the
Company, or (ii) ten days (or a later date that the Board shall determine)
following the commencement of, or public announcement of an intention to make, a
tender offer or exchange offer that would result in a person or group
beneficially owning 15% or more of the outstanding shares of the 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 the Common
Stock certificates, (ii) new Common Stock certificates issued after the record
date will contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate.
The Rights can not be exercised until the Distribution Date and will
expire at the close of business on June 23, 2013, unless earlier redeemed by the
Company as described below.
Shortly after the Distribution Date, Rights certificates would be
mailed to record holders of Common Stock as of the close of business on the
Distribution Date and, thereafter, the
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separate Rights certificates alone will represent the Rights. Unless the Board
decides differently, only shares of Common Stock issued before the Distribution
Date will be issued with Rights.
Preferred Stock purchasable upon exercise of the Rights will not be
redeemable. Each share of Preferred Stock will be entitled to an aggregate
dividend of 1,000 times the dividend declared per share of Common Share. In the
event of liquidation, each share of Preferred Stock will be entitled to a
minimum aggregate payment of $1,000 per share, but will be entitled to an
aggregate payment of 1,000 times the payment made per share of Common Stock.
Each share of Preferred Stock will have 1,000 votes, voting together with the
Common Stock. Finally, in the event of any merger, consolidation or other
transaction in which Common Stock is exchanged, each share of Preferred Stock
will be entitled to receive 1,000 times the amount received per share of Common
Stock. These rights are protected by customary antidilution provisions.
Because of the nature of the dividend, liquidation and voting rights,
the value of each unit of Preferred Stock purchasable upon exercise of each
Right should approximate the value of one share of Common Stock.
If an Acquiring Person becomes (subject to certain exceptions) the
beneficial owner of 15% or more of the then outstanding shares of Common Stock
(other than pursuant to an offer for all the outstanding shares of Common Stock
that our Board determines to be fair to and otherwise in the best interests of
the Company and its stockholders), each holder of a Right will thereafter have
the right to receive, that number of shares of Common Stock (or, at the
discretion of the Board, Units 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. If, at any time after the Share Acquisition Date, (i) we are
acquired in a merger or other business combination transaction in which we are
not the surviving corporation, other than a merger that results from an offer
for all the outstanding shares of Common Stock that the Board decides is fair
and in the best interests of the Company and its stockholders, or (ii) 50% or
more of our assets or earning power is sold or transferred, each holder of a
Right, except Rights which previously have been voided, will have the right to
receive, after exercise of the Right, common stock of the company that acquires
us having a value equal to two times the exercise price of the Right. The events
described in this paragraph are "Triggering Events."
All Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person will not be
exercisable. At any time after a person becomes an Acquiring Person and prior to
the acquisition by such person or group of 50% or more of the outstanding Common
Stock, the Board may exchange the Rights (other than Rights owned by the person
or group which will not be exercisable), in whole or in part, for shares of
Common Stock at a per Right exchange ratio equal to that number obtained by
dividing the Purchase Price by the then current per share market price per share
of Common Stock on the earlier of (a) the date on which any person becomes an
acquiring person and (b) the date on which a tender or exchange offer is
announced that would result in the bidder's beneficial ownership of 15% or more
of the shares of Common Stock outstanding, subject to adjustment.
At any time until ten days following the Share Acquisition Date, the
Board may redeem the Rights in whole, but not in part, at a price of $0.01 per
Right (payable in cash, common stock or other consideration deemed appropriate
by the Board). Immediately upon the action of the
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Board ordering redemption of the Rights, the Rights will terminate and the only
right of the holders of Rights will be to receive the $0.01 redemption price.
Until a Right is exercised, the holder of a Right will have no rights
by virtue of ownership as a stockholder of the Company, such as the right to
vote or to receive dividends.
Any of the provisions of the Rights Agreement may be amended by the
Board prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board in order to cure
any ambiguity, to make changes which do not adversely affect the interests of
holders of Rights, or to shorten or lengthen any time period under the Rights
Agreement, but no amendment may 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 Current Report on Form 8-K. A copy of the
Rights Agreement is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is incorporated herein
by reference.
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