EXHIBIT 1
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RIGHTS AGREEMENT
by and between
VITALWORKS INC.
and
StockTrans, Inc.
as Rights Agent
Dated December 5, 2002
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TABLE OF CONTENTS
Section 1. Certain Definitions.............................................
Section 2. Appointment of Rights Agent.....................................
Section 3. Issuance of Rights Certificates.................................
Section 4. Form of Rights Certificates.....................................
Section 5. Countersignature and Registration...............................
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates.............................................
Section 7. Exercise of Rights; Exercise Price; Expiration Date of
Rights..........................................................
Section 8. Cancellation and Destruction of Rights Certificates.............
Section 9. Reservation and Availability of Shares of Preferred
Stock...........................................................
Section 10. Preferred Stock Record Date.....................................
Section 11. Adjustment of Exercise Price or Number of Shares................
Section 12. Certification of Adjusted Exercise Price or Number of
Shares..........................................................
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power...................................................
Section 14. Fractional Rights and Fractional Shares.........................
Section 15. Rights of Action................................................
Section 16. Agreement of Right Holders......................................
Section 17. Rights Certificate Holder Not Deemed a Stockholder..............
Section 18. Concerning the Rights Agent.....................................
Section 19. Merger or Consolidation of, or Change in Name of, the
Rights Agent....................................................
Section 20. Duties of Rights Agent..........................................
Section 21. Change of Rights Agent..........................................
Section 22. Issuance of New Rights Certificates.............................
Section 23. Redemption......................................................
Section 24. Notice of Proposed Actions......................................
Section 25. Notices.........................................................
Section 26. Supplements and Amendments......................................
Section 27. Exchange........................................................
Section 28. Successors......................................................
Section 29. Benefits of this Rights Agreement...............................
Section 30. Delaware Contract...............................................
Section 31. Counterparts....................................................
Section 32. Descriptive Headings............................................
Section 33. Severability....................................................
Section 34. Determinations And Actions By The Board Of Directors, Etc.......
Exhibit A Summary of Rights
Exhibit B Form of Rights Certificate
Exhibit C Form of Certificate of Designation Relating to the Terms of
the Series B Preferred Stock
RIGHTS AGREEMENT
Agreement, dated as of December 5, 2002, by and between VitalWorks
Inc., a Delaware corporation (the "Corporation"), and StockTrans, Inc. (the
"Rights Agent") (the "Rights Agreement").
W I T N E S S E T H:
WHEREAS, on December 5, 2002, the Board of Directors of the
Corporation authorized the issuance of, and declared a dividend payable in, one
right (a "Right") for each share of Common Stock, $0.001 par value per share, of
the Corporation outstanding as of the close of business on December 27, 2002
(the "Record Date"), each such Right representing the right to purchase one
one-thousandth of a share of Series B Preferred Stock of the Corporation (the
"Preferred Stock") having the rights and preferences set forth in the
Certificate of Designation attached hereto as Exhibit C, authorized by the Board
of Directors on December 5, 2002, upon the terms and subject to the conditions
hereinafter set forth; and
WHEREAS, the Board of Directors of the Corporation further
authorized the issuance of one Right (subject to adjustment) with respect to
each share of Common Stock which may be issued between the Record Date and the
earlier to occur of the Distribution Date or the Expiration Date (as such terms
are hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Rights
Agreement, the following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, is the Beneficial Owner (as such term is hereinafter defined) of
15% or more of the Voting Stock (as such term is hereinafter defined) of the
Corporation then outstanding; provided, that, an Acquiring Person shall not
include (i) an Exempt Person (as such term is hereinafter defined) or (ii) any
Person, together with all Affiliates and Associates of such Person, who or which
would be an Acquiring Person solely by reason of (A) being the Beneficial Owner
of shares of Voting Stock of the Corporation, the Beneficial Ownership of which
was acquired by such Person (or his or its predecessor through merger,
consolidation, amalgamation or other similar legal succession) pursuant to any
action or transaction or series of related actions or transactions approved by
the Board of Directors before such Person otherwise became an Acquiring Person
or (B) a reduction in the number of outstanding shares of Voting Stock of the
Corporation pursuant to a transaction or a series of related transactions
approved by the Board of Directors of the Corporation; provided, further, that
in the event such Person described in this clause (ii) does not become an
Acquiring Person by reason of subclause (A) or (B) of this clause (ii), such
Person nonetheless shall become an Acquiring Person in the event such Person
thereafter acquires Beneficial Ownership of an additional 1% or more of the then
outstanding Voting Stock of the Corporation then outstanding, unless the
acquisition of such additional Voting Stock would not result in such Person
becoming an Acquiring Person by reason of subclause (A) or (B) of this clause
(ii). Notwithstanding the foregoing, if the Board of Directors of the
Corporation determines in good faith that a Person who would otherwise be an
"Acquiring Person" as defined pursuant to the foregoing provisions of this
paragraph (a) has become such inadvertently, and such Person divests as promptly
as practicable (as determined in good faith by the Board of Directors) a
sufficient number of shares of Common Stock so that such Person would no longer
be an "Acquiring Person" as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed an "Acquiring Person" for
any purposes of this Rights Agreement.
(b) "Affiliate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended ("Exchange Act"), as in effect on the date of this Rights
Agreement.
(c) "Associate" of a Person (as such term is hereinafter defined)
shall mean (i) with respect to a corporation, any officer or director thereof or
of any Subsidiary (as such term is hereinafter defined) thereof, or any
Beneficial Owner (as such term is hereinafter defined) of 10% or more of any
class of equity security thereof, (ii) with respect to an association, joint
venture or other unincorporated organization, any officer or director thereof or
of a Subsidiary thereof or any Beneficial Owner of 10% or more ownership
interest therein, (iii) with respect to a partnership, any general partner
thereof or any limited partner thereof who is, directly or indirectly, the
Beneficial Owner of a 10% or greater ownership interest therein, (iv) with
respect to a limited liability company, any officer, director or manager thereof
or of a Subsidiary thereof or any member thereof who is, directly or indirectly,
the Beneficial Owner of a 10% or greater ownership interest therein, (v) with
respect to a business trust, any officer or trustee thereof or of any Subsidiary
thereof, (vi) with respect to any other trust or an estate, any trustee,
executor or similar fiduciary or any Person who has a 10% or greater interest as
a beneficiary in the income from or principal of such trust or estate, (vii)
with respect to a natural person, any relative or spouse of such person, or any
relative of such spouse, who has the same home as such person, and (viii) any
Affiliate of such Person.
(d) A person shall be deemed the "Beneficial Owner" of, or to
"Beneficially Own," any securities (and correlative terms shall have correlative
meanings):
(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 and Regulations 13D and 13G thereunder,
in each case as in effect on the date hereof; or
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time or the fulfillment of a
condition or both) pursuant to any agreement, arrangement or understanding
(whether or not in writing), or upon the exercise of conversion rights,
exchange rights, other rights (other than these 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 accepted for purchase or exchange or (B) the right
to vote, alone or in concert with others, pursuant to any agreement,
arrangement or understanding (whether or not in writing); provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or
to "Beneficially Own," any securities if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable
proxy or consent given in response to a proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations
under the Exchange Act and (2) is not at that time reportable by such
Person on a Schedule 13D report under the Exchange Act (or any comparable
or successor report), other than by reference to a proxy or consent
solicitation being conducted by such Person; or
(iii) which are Beneficially Owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (whether or not
in writing) for the purpose of acquiring, holding, voting (except as
described in the proviso in clause (B) of subparagraph (ii) of this
paragraph (d)) or disposing of any securities of the Corporation;
provided, however, that for purposes of determining Beneficial Ownership
of securities under this Rights Agreement, officers and directors of the
Corporation solely by reason of their status as such shall not constitute
a group (notwithstanding that they may be Associates of one another or may
be deemed to constitute a group for purposes of Section 13(d) of the
Exchange Act) and shall not be deemed to own shares owned by another
officer or director of the Corporation.
Notwithstanding anything in this paragraph (d) to the contrary, a
Person engaged in the business of underwriting securities shall not be deemed
the "Beneficial Owner" of, or to "Beneficially Own," any securities acquired in
good faith in a firm commitment underwriting, until the expiration of forty days
after the date of such acquisition.
(e) "Book-Entry" shall mean an uncertificated book-entry for the
Corporation's Common Stock.
(f) "Business Day" shall mean any day other than a Saturday, Sunday,
or day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean 5:00 P.M., New
York City time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York City time, on the next succeeding
Business Day.
(h) "Common Stock," when used with reference to the Corporation,
shall mean the common stock, presently $0.001 par value, of the Corporation.
"Common Stock," when used with reference to any Person other than the
Corporation which shall be organized in corporate form, shall mean the capital
stock or other equity security with the greatest voting power of such Person or,
if such other Person is a subsidiary of another Person, the Person or Persons
which ultimately control such first-mentioned Person. "Common Stock," when used
with reference to any Person other than the Corporation which shall not be
organized in corporate form, shall mean units of beneficial interest which shall
represent the right to participate in profits, losses, deductions and credits of
such Person and which shall be entitled to exercise the greatest voting power of
such Person.
(i) "Distribution Date" shall have the meaning set forth in Section
3(b) hereof.
(j) "Exchange Act" shall have the meaning set forth in Section 1(b)
hereof.
(k) "Exempt Person" shall mean (i) the Corporation, (ii) any
Subsidiary of the Corporation or (iii) any employee benefit plan or employee
stock plan of the Corporation or any Subsidiary of the Corporation, or any trust
or other entity organized, appointed, established or holding Common Stock for or
pursuant to the terms of any such plan.
(l) "Exercise Price" shall have the meaning set forth in Sections 4
and 7(b) hereof.
(m) "Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(n) "Fair Market Value" of any property shall mean the fair market
value of such property as determined in accordance with Section 11(b) hereof.
(o) "NASDAQ" shall mean the National Association of Securities
Dealers, Inc. Automated Quotation System or any successor thereto or other
comparable quotation system.
(p) "Person" shall mean any individual, firm, corporation or other
entity.
(q) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(r) "Record Date" shall have the meaning set forth in the first
Recital.
(s) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(t) "Rights Certificate" shall have the meaning set forth in Section
3(d) hereof.
(u) "Stock Acquisition Date" shall mean the first date on which
there shall be a public announcement by the Corporation or an Acquiring Person
that an Acquiring Person has become such (which, for purposes of this
definition, shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) or such earlier date as a majority of the
Board of Directors shall become aware of the existence of an Acquiring Person.
(v) "Subsidiary" of a Person shall mean any corporation or other
entity of which securities or other ownership interests having voting power
sufficient to elect a majority of the board of directors or other persons
performing similar functions are beneficially owned, directly or indirectly, by
such Person or by any corporation or other entity that is otherwise controlled
by such Person.
(w) "Summary of Rights" shall have the meaning set forth in Section
3(a) hereof.
(x) "Trading Day" shall have the meaning set forth in Section 11(b)
hereof.
(y) "Transfer Tax" shall mean any tax or charge, including any
documentary stamp tax, imposed or collected by any governmental or regulatory
authority in respect of any transfer of any security, instrument or right,
including Rights, shares of Common Stock and shares of Preferred Stock.
(z) "Voting Stock" shall mean (i) the Common Stock of the
Corporation and (ii) any other shares of capital stock of the Corporation
entitled to vote generally in the election of directors or entitled to vote
together with the Common Stock in respect of any merger, consolidation, sale of
all or substantially all of the Corporation's assets, liquidation, dissolution
or winding up. For purposes of this Rights Agreement, Voting Stock shall include
securities of the type referred to in clauses (i) and (ii) above that trade on a
"when issued" basis on a national securities exchange or on the NASDAQ. For
purposes of this Rights Agreement, a stated percentage of the Voting Stock shall
mean a number of shares of the Voting Stock as shall equal in voting power that
stated percentage of the total voting power of the then outstanding shares of
Voting Stock in the election of a majority of the Board of Directors or in
respect of any merger, consolidation, sale of all or substantially all of the
Corporation's assets, liquidation, dissolution or winding up.
Any determination required to be made by the Board of Directors of
the Corporation for purposes of applying the definitions contained in this
Section 1 shall be made by the Board of Directors in its good faith judgment,
and such determination shall be binding on the Rights Agent and the holders of
the Rights.
Section 2. Appointment of Rights Agent. The Corporation hereby
appoints the Rights Agent to act as agent for the Corporation in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Corporation may from time to time appoint such Co-Rights Agents
as it may deem necessary or desirable.
Section 3. Issuance of Rights Certificates.
(a) On the Record Date (or as soon as practicable thereafter), the
Corporation or the Rights Agent shall send a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit A (the "Summary of Rights"),
by first class mail, postage prepaid, to each record holder of the Common Stock
as of the Close of Business on the Record Date, at the address of such holder
shown on the records of the Corporation.
(b) Until the Close of Business on the day which is the earlier of
(i) the tenth day after the Stock Acquisition Date or such earlier or later date
(not beyond the thirtieth day after the Stock Acquisition Date) as the Board of
Directors may from time to time fix by resolution adopted prior to the
Distribution Date that otherwise would have occurred or (ii) the tenth business
day (or such later date as may be determined by action of the Board of Directors
prior to such time as any Person becomes an Acquiring Person) after the date of
the commencement by any Person (other than an Exempt Person) of, or the first
public announcement of the intent of any Person (other than an Exempt Person) to
commence, a tender or exchange offer upon the successful consummation of which
such Person, together with its Affiliates and Associates, would be the
Beneficial Owner of 15% or more of the then outstanding shares of Voting Stock
of the Corporation (irrespective of whether any shares are actually purchased
pursuant to any such offer) (the earlier of such dates being herein referred to
as the "Distribution Date"), (x) the Rights shall be evidenced by the
Book-Entries, or certificates for, Common Stock registered in the name of the
holders of Common Stock (together with, in the case of Book-Entries
representing, or the certificates for, Common Stock outstanding as of the Record
Date, the Summary of Rights) and not by separate Book-Entries or Rights
Certificates and the record holders of the Common Stock represented by such
Book-Entries or certificates shall be the record holders of the Rights
represented thereby and (y) each Right shall be transferable only simultaneously
and together with the transfer of a share of Common Stock (subject to adjustment
as hereinafter provided). Until the Distribution Date (or, if earlier, the
Expiration Date), transfer on the Corporation's Direct Registration System of
any Common Stock represented by a Book-Entry or the surrender for transfer of
any certificate for Common Stock shall constitute the surrender for transfer of
the Right or Rights associated with the Common Stock evidenced thereby, whether
or not accompanied by a copy of the Summary of Rights.
(c) Rights shall be issued in respect of all shares of Common Stock
that become outstanding after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date and, in certain circumstances provided
in Section 3(e) hereof and Section 22 hereof, may be issued in respect of shares
of Common Stock that become outstanding after the Distribution Date.
Certificates for Common Stock (including, without limitation, certificates
issued upon original issuance, disposition from the Corporation's treasury or
transfer or exchange of Common Stock) after the Record Date but prior to the
earlier of the Distribution Date or the Expiration Date (or, in certain
circumstances as provided in Section 3(e) hereof and Section 22 hereof, after
the Distribution Date) shall have impressed, printed, written or stamped thereon
or otherwise affixed thereto the following legend:
This certificate also evidences and entitles the holder hereof to
the same number of Rights (subject to adjustment) as the number of
shares of Common Stock represented by this certificate, such Rights
being on the terms provided under the Rights Agreement between
VitalWorks Inc. (the "Corporation") and StockTrans, Inc. (the
"Rights Agent"), dated as of December 5, 2002, as it may be amended
from time to time (the "Rights Agreement"), the terms of which are
incorporated herein by reference and a copy of which is on file at
the principal executive offices of the Corporation. Under certain
circumstances, as set forth in the Rights Agreement, such Rights
shall be evidenced by separate certificates and shall no longer be
evidenced by this certificate. The Corporation shall mail to the
registered holder of this certificate a copy of the Rights Agreement
without charge within five days after receipt of a written request
therefor. UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN SECTION 7(e) OF
THE RIGHTS AGREEMENT, RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY
ACQUIRING PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS SHALL BE NULL AND VOID AND MAY NOT BE TRANSFERRED TO ANY
PERSON.
(d) As soon as practicable after the Distribution Date, the
Corporation will prepare and execute, the Rights Agent will countersign, and the
Corporation will send or cause to be sent (and the Rights Agent will, if
requested, send), by first class mail, postage prepaid, to each record holder of
the Common Stock as of the Close of Business on the Distribution Date, as shown
by the records of the Corporation, at the address of such holder shown on such
records, a certificate substantially in the form provided by Section 4 hereof (a
"Rights Certificate"), evidencing one Right (subject to adjustment as provided
herein) for each share of Common Stock so held. As of and after the Distribution
Date, the Rights shall be evidenced solely by such Rights Certificates and may
be transferred by the transfer of the Rights Certificate as permitted hereby,
separately and apart from any transfer of one or more shares of Common Stock.
(e) In addition, in connection with the issuance or sale of shares
of Common Stock following the Distribution Date and prior to the Expiration
Date, the Corporation (i) shall, with respect to shares of Common Stock so
issued or sold (x) pursuant to the exercise of stock options or under any
employee plan or arrangement or (y) upon the exercise, conversion or exchange of
other securities issued by the Corporation prior to the Distribution Date and
(ii) may, in any other case, if deemed necessary or appropriate by the Board of
Directors of the Corporation, issue Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided
that no such Rights Certificate shall be issued if, and to the extent that, (i)
the Corporation shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Corporation or the
Person to whom such Rights Certificate would be issued or (ii) appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase
shares, certificate and assignment to be printed on the reverse thereof), when,
as and if issued, shall be substantially in the form set forth in Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as may be required to comply
with any law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Common Stock or the Rights
may from time to time be listed or as the Corporation may deem appropriate to
conform to usage or otherwise and as are not inconsistent with the provisions of
this Rights Agreement. Subject to the provisions of Section 22 hereof, Rights
Certificates evidencing Rights whenever issued, (i) shall be dated as of the
date of issuance of the Rights they represent and (ii) subject to adjustment
from time to time as provided herein, on their face shall entitle the holders
thereof to purchase such number of shares (including fractional shares which are
integral multiples of one one-thousandth of a share) of Preferred Stock as shall
be set forth therein at the price payable upon exercise of a Right provided by
Section 7(b) hereof as the same may from time to time be adjusted as provided
herein (the "Exercise Price").
(b) Notwithstanding any other provision of this Rights Agreement,
any Rights Certificate that represents Rights Beneficially Owned by an Acquiring
Person or any Affiliate or Associate thereof or any other Person whose Rights
shall become void pursuant to Section 7(e) shall have impressed on, printed on,
written on or otherwise affixed to it (if the Corporation or the Rights Agent
has knowledge that such Person is an Acquiring Person or an Associate or
Affiliate or a nominee of any of the foregoing) the following legend:
The Beneficial Owner of the Rights represented by this Rights
Certificate is an Acquiring Person or an Affiliate or an Associate
of an Acquiring Person. Accordingly, this Rights Certificate and the
Rights represented hereby shall become void in the circumstances
specified in Section 7(e) of the Rights Agreement.
Section 5. Countersignature and Registration.
(a) Each Rights Certificate shall be executed on behalf of the
Corporation by its Chairman of the Board, any President or any Senior or
Executive Vice President, either manually or by facsimile signature, and have
affixed thereto the Corporation's seal or a facsimile thereof which shall be
attested to by the Secretary or an Assistant Secretary of the Corporation,
either manually or by facsimile signature. Each Rights Certificate shall be
countersigned by the Rights Agent either manually or by facsimile signature and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Corporation who shall have signed any Rights Certificate shall cease to
be such officer of the Corporation before countersignature by the Rights Agent
and issuance and delivery of the certificate by the Corporation, such Rights
Certificate, nevertheless, may be countersigned by the Rights Agent and issued
and delivered with the same force and effect as though the person who signed
such Rights Certificates had not ceased to be such officer of the Corporation.
Any Rights Certificate may be signed on behalf of the Corporation by any person
who, on the date of the execution of such Rights Certificate, shall be a proper
officer of the Corporation to sign such Rights Certificate, although at the date
of the execution of this Rights Agreement any such person was not such an
officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or one or more offices designated as
the appropriate place for the surrender of Rights Certificates upon exercise or
transfer, and in such other locations as may be required by law, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates and any Rights
Certificates that have a legend printed thereon pursuant to Section 4(b).
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 7(e), 7(f) and 14 hereof,
at any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the Expiration Date, any Rights Certificate,
may be (i) transferred or (ii) split up, combined or exchanged for one or more
other Rights Certificates, entitling the registered holder to purchase a like
number of shares of Preferred Stock as the Rights Certificate or Rights
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer any Rights Certificate shall surrender the Rights
Certificate at the office of the Rights Agent designated for the surrender of
Rights Certificates with the form of certificate and assignment on the reverse
side thereof duly endorsed (or, enclosed with such Rights Certificate, a written
instrument of transfer in a form satisfactory to the Corporation and the Rights
Agent), duly executed by the registered holder thereof or his attorney duly
authorized in writing, and with such signature duly guaranteed. Any registered
holder desiring to split up, combine or exchange any Rights Certificate shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Rights Certificate to be split up, combined or exchanged at the office of
the Rights Agent. Thereupon, the Rights Agent shall countersign and deliver to
the person entitled thereto a Rights Certificate or Rights Certificates, as the
case may be, as so requested. The Corporation may require payment of a sum
sufficient to cover any Transfer Tax that may be imposed in connection with any
transfer, split up, combination or exchange of any Rights Certificates.
(b) Subject to the provisions of Sections 7(e), 7(f) and 14 hereof,
upon receipt by the Corporation and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them and, if requested by the Corporation,
reimbursement to the Corporation and the Rights Agent of all reasonable expenses
incidental thereto, or upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Corporation shall issue and deliver a
new Rights Certificate of like tenor to the Rights Agent for delivery to the
registered owner in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Exercise Price; Expiration Date of
Rights.
(a) The Rights shall not be exercisable until, and shall become
exercisable on, the Distribution Date (unless otherwise provided herein,
including, without limitation, the restrictions on exercisability set forth in
Sections 7(e) and 23(a) hereof). Except as otherwise provided herein, the Rights
may be exercised, in whole or in part, at any time commencing with the
Distribution Date upon surrender of the Rights Certificate, with the form of
election to purchase and certificate on the reverse side thereof duly executed
(with signatures duly guaranteed), to the Rights Agent at the principal office
of the Rights Agent located at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇, together with payment of the Exercise Price for each Right exercised,
subject to adjustment as hereinafter provided, at or prior to the Close of
Business on the earlier of (i) December 5, 2012 (or if the Distribution Date
shall have occurred before December 5, 2012, at the Close of Business on the
90th day following the Distribution Date) or (ii) the date on which the Rights
are redeemed as provided in Section 23 hereof (such earlier date being herein
referred to as the "Expiration Date").
(b) The Exercise Price shall initially be $20.00 for each one
one-thousandth (1/1,000) of a share of Preferred Stock issued pursuant to the
exercise of a Right. The Exercise Price and the number of shares of Preferred
Stock or other securities to be acquired upon exercise of a Right shall be
subject to adjustment from time to time as provided in Sections 11 and 13
hereof. The Exercise Price shall be payable in lawful money of the United States
of America, in accordance with paragraph (c) below.
(c) Except as otherwise provided herein, upon receipt of a Rights
Certificate representing exercisable Rights with the form of election to
purchase duly executed, accompanied by payment by certified check, cashier's
check, bank draft or money order payable to the Corporation or the Rights Agent
of the Exercise Price for the shares to be purchased and an amount equal to any
applicable Transfer Tax required to be paid by the holder of the Rights
Certificate in accordance with Section 9(e) hereof, the Rights Agent shall
thereupon promptly (i) requisition from any registrar or transfer agent (as may
be appropriate) of the Preferred Stock of the Corporation one or more
certificates representing the number of shares of Preferred Stock to be so
purchased, and the Corporation hereby authorizes and directs such registrar or
transfer agent (as may be appropriate) to comply with all such requests, (ii) as
provided in Section 14(b), at the election of the Corporation, cause depositary
receipts to be issued in lieu of fractional shares of Preferred Stock, (iii) if
the election provided for in the immediately preceding clause (ii) has not been
made, requisition from the Corporation the amount of cash to be paid in lieu of
the issuance of fractional shares in accordance with Section 14(b) hereof, (iv)
after receipt of such Preferred Stock certificates and, if applicable,
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 (v) when appropriate, after receipt,
promptly deliver such cash to or upon the order of the registered holder of such
Rights Certificate; provided, however, that in the case of a purchase of
securities, other than Preferred Stock, pursuant to Section 13 hereof, the
Rights Agent shall promptly take the appropriate actions corresponding in such
case to that referred to in the foregoing clauses (i) through (v) of this
Section 7(c). Notwithstanding the foregoing provisions of this Section 7(c), the
Corporation may suspend the issuance of shares of Preferred Stock upon exercise
of a Right for a reasonable period, not in excess of 120 days, during which the
Corporation seeks to register under the Securities Act of 1933, as amended (the
"Act"), and any applicable securities law of any other jurisdiction, the shares
of Preferred Stock to be issued pursuant to the Rights; provided, however, that
nothing contained in this Section 7(c) shall relieve the Corporation of its
obligations under Section 9(c) hereof.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Rights Certificate or his
assignee, subject to the provisions of Section 14(b) hereof.
(e) Notwithstanding any provision of this Rights Agreement to the
contrary, from and after the time (the "Invalidation Time") when any Person
first becomes an Acquiring Person, any Rights that are Beneficially Owned by (x)
such Acquiring Person (or any Associate or Affiliate of such Acquiring Person),
(y) a transferee of such Acquiring Person (or any such Associate or Affiliate)
who becomes a transferee after the Invalidation Time or (z) a transferee of such
Acquiring Person (or any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the Invalidation Time pursuant to either (I) a
transfer from the Acquiring Person to holders of its equity securities or to any
Person with whom it has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (II) a transfer which the Board of Directors
has determined is part of a plan, arrangement or understanding which has the
purpose or effect of avoiding the provisions of this Section 7(e), and
subsequent transferees of such Persons referred to in either clause (y) or (z)
above, shall be void without any further action and any holder of such Rights
shall thereafter have no rights whatsoever with respect to such Rights under any
provision of this Rights Agreement. The Corporation shall use all reasonable
efforts to ensure that the provisions of this Section 7(e) are complied with,
but shall have no liability to any holder of Rights Certificates or any other
Person as a result of its failure to make any determination with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder. No
Rights Certificate shall be issued pursuant to Section 3 hereof that represents
Rights Beneficially Owned by an Acquiring Person or any other Person whose
Rights would be void pursuant to the provisions of this Section 7(e) or any
Associate, Affiliate or nominee thereof; no Rights Certificate shall be issued
at any time upon the transfer of any Rights to an Acquiring Person or any other
Person whose Rights would be void pursuant to the provisions of this Section
7(e) or any Associate, Affiliate or nominee thereof; and any Rights Certificate
delivered to the Rights Agent for transfer to an Acquiring Person whose Rights
would be void pursuant to the provisions of this Section 7(e) shall be canceled.
(f) Notwithstanding anything in this Rights Agreement to the
contrary, neither the Rights Agent nor the Corporation shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate following the form of
election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof or a Person referred to in clause (y) or (z) of Section 7(e)
and such other information as the Corporation 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 Corporation 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 any of the provisions of this Rights Agreement. The Corporation
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall cancel and retire, any Rights Certificate purchased or
acquired by the Corporation otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to the Corporation, or
shall, at the written request of the Corporation, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Corporation.
Section 9. Reservation and Availability of Shares of Preferred
Stock.
(a) The Corporation covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or out of authorized and issued shares of Preferred Stock held
in its treasury, such number of shares of Preferred Stock as will from time to
time be sufficient to permit the exercise in full of all outstanding Rights. The
Corporation shall take such action as may be required for it to comply with the
foregoing sentence of this Section 9(a).
(b) The Corporation shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares of Preferred Stock
issued or reserved for issuance in accordance with this Rights Agreement to be
listed, upon official notice of issuance, upon the principal national securities
exchange, if any, upon which the Common Stock is listed or, if the principal
market for the Common Stock is not on any national securities exchange, to be
eligible for quotation on NASDAQ or any successor thereto or other comparable
quotation system.
(c) The Corporation covenants and agrees that it will take all such
action as may be necessary to insure that all shares of Preferred Stock
delivered upon exercise of Rights shall, at the time of delivery of the
certificates, for such shares (subject to payment of the Exercise Price in
respect thereof), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(d) The Corporation shall use its best efforts to (i) file, as soon
as practicable following the occurrence of the event described in Section
11(a)(ii), or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Act, with respect to the
shares of Preferred Stock purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become effective as
soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for Preferred Stock, or (B) the Expiration
Date. The Corporation may temporarily suspend, for a period of time not to
exceed 120 days, the issuance of shares of Preferred Stock upon exercise of a
Right in order to prepare and file a registration statement under the Act and
permit it to become effective. The Corporation 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 Rights Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained and until a
registration statement under the Act (if required) shall have been declared
effective.
(e) The Corporation covenants and agrees that it will pay when due
and payable any and all federal and state Transfer Taxes which may be payable in
respect of the issuance or delivery of the Rights Certificates or of any shares
of Preferred Stock issued or delivered upon the exercise of Rights. The
Corporation shall not, however, be required to pay any Transfer Tax which may be
payable in respect of any transfer or delivery of a Rights Certificate to a
Person other than, or the issuance or delivery of certificates for Preferred
Stock upon exercise of Rights in a name other than that of, the registered
holder of the Rights Certificate, and the Corporation shall not be required to
or issue or deliver a Rights Certificate or certificate for Preferred Stock to a
Person other than such registered holder until any such Transfer Tax shall have
been paid (any such Transfer Tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to the
Corporation's satisfaction that no such Transfer Tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose name
any certificate for shares of Preferred Stock is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
the Preferred Stock represented thereby on, and such certificate shall be dated
as of, the date upon which the Rights Certificate evidencing such Rights was
duly surrendered and payment of the Exercise Price (and any applicable Transfer
Taxes) was made; provided, however, that, if the date of such surrender and
payment is a date upon which the Preferred Stock transfer books of the
Corporation are closed, such Person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated as of, the next
succeeding Business Day on which the Preferred Stock transfer books of the
Corporation are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate, as such, shall not be entitled to any rights of
a stockholder of the Corporation with respect to shares for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Corporation, except as provided herein.
Section 11. Adjustment of Exercise Price or Number of Shares. The
Exercise Price and the number of shares of Preferred Stock which may be
purchased upon exercise of a 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 Corporation shall at any time after the
date of this Rights Agreement (A) declare or pay any dividend on Common Stock
payable in shares of Common Stock, (B) subdivide or split the outstanding shares
of Common Stock into a greater number of shares, (C) combine or consolidate the
outstanding shares of Common Stock into a smaller number of shares or effect a
reverse split of the outstanding shares of Common Stock, or (D) issue any shares
of its capital stock in a reclassification of the Common Stock (including any
such reclassification in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation) then and in each such
event the number of shares of Preferred Stock issuable upon the exercise of a
Right after the record date for such event (if one shall have been established
or, if not, after the date of such event) shall be the number of shares of
Preferred Stock issuable immediately prior to such event multiplied by a
fraction the numerator of which is the number of Rights outstanding immediately
prior to such event and the denominator of which is the number of Rights
outstanding immediately after such event and the Exercise Price after such event
shall be the Exercise Price in effect immediately prior to such event multiplied
by such fraction. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 27 of this Rights Agreement, in the event
that any Person (other than an Exempt Person), alone or together with its
Affiliates and Associates, shall become an Acquiring Person, then, subject
to the last sentence of Section 23(a) and except as otherwise provided in
this Section 11, each holder of a Right, except as provided in Section
7(e) hereof, shall thereafter have the right to receive upon exercise of
such Right in accordance with the terms of this Rights Agreement and
payment of the Exercise Price, the greater of (1) the number of one
one-thousandths of a share of Preferred Stock for which such Right was
exercisable immediately prior to the first occurrence of the event
described in this Section 11(a)(ii) or (2) such number of one
one-thousandths of a share of Preferred Stock as shall equal the result
obtained by dividing the Exercise Price by 50% of the Fair Market Value of
one one-thousandth of a share of Preferred Stock (determined pursuant to
Section 11(b) hereof) on the date of such first occurrence; provided,
however, that if the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of Section 13
hereof, then only the provisions of Section 13 hereof shall apply and no
adjustment shall be made pursuant to this Section 11(a)(ii).
(iii) In the event that the Corporation does not have available
sufficient authorized but unissued Preferred Stock to permit the
adjustments required pursuant to the foregoing subparagraph (i) or the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Corporation shall take all such actions as may be
necessary to authorize and reserve for issuance such number of additional
shares of Preferred Stock as may from time to time be required to be
issued upon the exercise in full of all Rights from time to time
outstanding and, if necessary, shall use its best efforts to obtain
stockholder approval thereof. In lieu of issuing shares of Preferred Stock
in accordance with the foregoing subparagraphs (i) and (ii), the
Corporation may, if the Board of Directors determines that such action is
necessary or appropriate and not contrary to the interests of holders of
Rights, elect to issue or pay, upon the exercise of the Rights, cash,
property, shares of Preferred or Common Stock, debt or other equity
securities or any combination of the foregoing, in each case, having an
aggregate Fair Market Value equal to the Fair Market Value of the shares
of Preferred Stock which otherwise would have been issuable pursuant to
Section 11(a)(ii), which Fair Market Value shall be determined by an
investment banking firm selected by the Board of Directors. For purposes
of the preceding sentence, the Fair Market Value of the Preferred Stock
shall be as determined pursuant to Section 11(b). Subject to Section 23
hereof, any such election by the Board of Directors of the Corporation
must be made and publicly announced within thirty (30) days after the date
on which the event described in Section 11(a)(ii) occurs.
(b) For the purpose of this Rights Agreement, the "Fair Market
Value" of any share of Preferred Stock, Common Stock or any other stock or any
Right or other security or any other property on any date shall be determined as
provided in this Section 11(b). In the case of a publicly-traded stock or other
security, the Fair Market Value on any date shall be deemed to be the average of
the daily closing prices per share of such stock or per unit of such other
security for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that in the event
that the Fair Market Value per share of any share of Common Stock is determined
during a period which includes any date that is within 30 Trading Days after (i)
the ex-dividend date for a dividend or distribution on such stock payable in
shares of Common Stock or securities convertible into shares of Common Stock, or
(ii) the effective date of any subdivision, split, combination, consolidation,
reverse stock split or reclassification of such stock, then, and in each such
case, the Fair Market Value shall be appropriately adjusted by the Board of
Directors of the Corporation to take into account ex-dividend or post-effective
date trading. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way (in either case, as reported in
the applicable transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange), or, if the securities are
not listed or admitted to trading on the New York Stock Exchange, as reported in
the applicable transaction reporting system with respect to securities listed on
the principal national securities exchange on which such security is listed or
admitted to trading; or, if not listed or admitted to trading on any national
securities exchange, the last quoted price (or, if not so quoted, the average of
the high bid and low asked prices) in the over-the-counter market, as reported
by NASDAQ or such other system then in use; or, if no bids for such security are
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in such security
selected by the Board of Directors of the Corporation. The term "Trading Day"
shall mean a day on which the principal national securities exchange on which
such security is listed or admitted to trading is open for the transaction of
business or, if such security is not listed or admitted to trading on any
national securities exchange, a Business Day. If a security is not publicly held
or not so listed or traded, "Fair Market Value" shall mean the fair value per
share of stock or per other unit of such other security, as determined by an
independent investment banking firm experienced in the valuation of securities
selected in good faith by the Board of Directors of the Corporation, or, if no
such investment banking firm is, in the good faith judgment of the Board of
Directors, available to make such determination, in good faith by the Board of
Directors of the Corporation; provided, however, that for purposes of making the
adjustment provided for by Section 11(a)(ii) hereof, the Fair Market Value of a
share of Preferred Stock shall not be less than 100% of the product of the Fair
Market Value of a share of Common Stock multiplied by the higher of the then
Dividend Multiple or Vote Multiple applicable to the Preferred Stock (as defined
in the provisions of the Certificate of Designation relating to the Preferred
Stock) and shall not exceed 105% of the product of the then Fair Market Value of
a share of Common Stock multiplied by the higher of the then Dividend Multiple
or Vote Multiple applicable to the Preferred Stock. In the case of property
other than securities, the "Fair Market Value" thereof shall be determined in
good faith by the Board of Directors of the Corporation based upon such
appraisals or valuation reports of such independent experts as the Board of
Directors of the Corporation shall in good faith determine to be appropriate in
accordance with good business practices and the interests of the holders of
Rights. Any such determination of Fair Market Value shall be described in a
statement filed with the Rights Agent and shall be binding upon the Rights
Agent.
(c) All calculations under this Section 11 shall be made to the
nearest cent or to the nearest one one-thousandth of a share, as the case may
be.
(d) Irrespective of any adjustment or change in the Exercise Price
or the number of shares of Preferred Stock issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may continue
to express the Exercise Price and the number of shares to be issued upon
exercise of the Rights as in the initial Rights Certificates issued hereunder
but, nevertheless, shall represent the Rights as so adjusted.
(e) Before taking any action that would cause an adjustment reducing
the purchase price per whole share of Preferred Stock upon exercise of the
Rights below the then par value, if any, of the shares of Preferred Stock, the
Corporation shall use its best efforts to take any corporate action which may,
in the opinion of its counsel, be necessary in order that the Corporation may
validly and legally issue fully paid and non-assessable shares of such Preferred
Stock at such adjusted purchase price per share.
(f) Anything in this Section 11 to the contrary notwithstanding, in
the event of any reclassification of stock of the Corporation or any
recapitalization, reorganization or partial liquidation of the Corporation or
similar transaction, the Corporation shall be entitled to make such further
adjustments in the number of shares of Preferred Stock which may be acquired
upon exercise of the Rights, and such adjustments in the Exercise Price
therefor, in addition to those adjustments expressly required by the other
paragraphs of this Section 11, as the Board of Directors of the Corporation
shall determine to be necessary or appropriate in order for the holders of the
Rights in such event to be treated equitably and in accordance with the purpose
and intent of this Rights Agreement or in order that any such event shall not,
but for such adjustment, in the opinion of counsel to the Corporation, result in
the stockholders of the Corporation being subject to any United States federal
income tax liability by reason thereof.
(g) In the event the Corporation shall at any time after the Record
Date make any distribution on the shares of Common Stock of the Corporation,
whether by way of a dividend or a reclassification of stock, a recapitalization,
reorganization or partial liquidation of the Corporation or otherwise, in cash
or any debt security, debt instrument, real or personal property or any other
property (other than any shares of Common Stock or other capital stock of the
Corporation and other than any right or warrant to acquire any such shares,
including any debt security convertible into or exchangeable for any such share,
at less than the Fair Market Value of such shares) and the amount of such cash
dividend or the Fair Market Value of such debt security, debt instrument or
property exceeds 150% of the aggregate amount of the cash dividends declared or
paid on the Common Stock of the Corporation in the 15-month period immediately
preceding such distribution, then and in each such event, unless such
distribution is part of or is made in connection with a transaction to which
Section 11(a)(ii) or Section 13 hereof applies, the Exercise Price shall be
reduced by an amount equal to the cash or the Fair Market Value of such
distribution, as the case may be, per share of Common Stock of the Corporation.
For purposes hereof, the Fair Market Value of any property distributed to the
holders of shares of Common Stock of the Corporation shall be the Fair Market
Value of such property as determined by an independent investment banking firm
experienced in the valuation of securities or the other property so distributed,
as the case may be, selected in good faith by the Board of Directors of the
Corporation, or, if no such investment banking firm is in the good faith
judgment of the Board of Directors available to make such determination, in good
faith by the Board of Directors of the Corporation, whose determination shall be
final and binding on the Corporation, the Rights Agent and the holders of
Rights.
Section 12. Certification of Adjusted Exercise Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11, 13 or 23(c),
the Corporation shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts giving rise to such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Rights Certificate in accordance with Section 25.
Notwithstanding the foregoing sentence, the failure of the Corporation 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. Any adjustment to be
made pursuant to Section 11, 13 or 23(c) of this Rights Agreement shall be
effective as of the date of the event giving rise to such adjustment. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have knowledge of any
adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, at any time after the time that any Person
becomes an Acquiring Person, (x) the Corporation shall, directly or indirectly,
consolidate with, or merge with and into, any other Person or Persons (other
than an Exempt Person or Persons) and the Corporation shall not be the surviving
or continuing corporation of such consolidation or merger, or (y) any Person or
Persons (other than an Exempt Person) shall, directly or indirectly, consolidate
with, or merge with and into, the Corporation, and the Corporation shall be the
continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the outstanding
shares of Common Stock shall be changed into or exchanged for stock or other
securities of any other Person (other than an Exempt Person) or of the
Corporation or cash or any other property, or (z) the Corporation or one or more
of its Subsidiaries shall, directly or indirectly, sell or otherwise transfer to
any other Person or any Affiliate or Associate of such Person, in one or more
transactions, or the Corporation or one or more of its Subsidiaries shall sell
or otherwise transfer to any Persons in one or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Corporation and its Subsidiaries (taken as a whole), then, on the first
occurrence of any such event, proper provision shall be made so that (i) each
holder of record of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise thereof and payment of
the Exercise Price in accordance with the terms of this Rights Agreement, such
number of shares of validly issued, fully paid, non-assessable and freely
tradable Common Stock of the Principal Party (as defined herein), not subject to
any liens, encumbrances, rights of first refusal or other adverse claims, as
shall equal the result obtained by dividing the Exercise Price by 50% of the
Fair Market Value of the Common Stock of the Principal Party on the date of the
consummation of such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the obligations and duties of
the Corporation pursuant to this Rights Agreement; (iii) the term "Corporation"
for all purposes of this Rights Agreement shall thereafter be deemed to refer to
such Principal Party; (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of shares
of its Common Stock in accordance with the provisions of Section 9 hereof
applicable to the reservation of Preferred Stock) in connection with such
consummation as may be necessary to insure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of Common Stock thereafter deliverable upon the exercise of the Rights;
provided, however, that, upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all of the assets, recapitalization,
reclassification of shares, reorganization or other extraordinary transaction in
respect of such Principal Party, each holder of a Right shall thereupon be
entitled to receive, upon exercise of a Right and payment of the Exercise Price,
such cash, shares, rights, warrants and other property which such holder would
have been entitled to receive had it, at the time of such transaction, owned the
shares of Common Stock of the Principal Party purchasable upon the exercise of a
Right, and such Principal Party shall take such steps (including, but not
limited to, reservation of shares of stock) as may be necessary to permit the
subsequent exercise of the Rights in accordance with the terms hereof for such
cash, shares, rights, warrants and other property; and (v) the provisions of
Section 11(a)(ii) hereof shall be of no effect following the occurrence of any
event described in clause (x), (y) or (z) above of this Section 13(a).
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in (x) or (y) of the
first sentence of Section 13(a) hereof: (A) the Person that is the issuer
of the securities into which shares of Common Stock of the Corporation are
changed or otherwise exchanged or converted in such merger or
consolidation, or, if there is more than one such issuer, the issuer of
the Common Stock of which has the greatest market value or (B) if no
securities are so issued, (x) the Person that is the other party to the
merger or consolidation and that survives such merger or consolidation,
or, if there is more than one such Person, the Person the Common Stock of
which has the greatest market value or (y) if the Person that is the other
party to the merger or consolidation does not survive the merger or
consolidation, the Person that does survive the merger or consolidation
(including the Corporation if it survives); and
(ii) in the case of any transaction described in (z) of the first
sentence in Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions, or, if each Person that is a party to
such transaction or transactions receives the same portion of the assets
or earning power so transferred or if the Person receiving the greatest
portion of the assets or earning power cannot be determined, whichever of
such Persons as is the issuer of Common Stock having the greatest market
value of shares outstanding; provided, however, that in any such case, if
the Common Stock of such Person is not at such time and has not been
continuously over the preceding 12-month period registered under Section
12 of the Exchange Act, and such Person is a direct or indirect Subsidiary
of another Person the Common Stock of which is and has been so registered,
the term "Principal Party" shall refer to such other Person, or if such
Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Stocks of all of which are and have been so registered, the
term "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest market value of shares
outstanding.
(c) The Corporation shall not consummate any consolidation, merger
or sale or transfer of assets or earning power referred to in Section 13(a)
unless the Principal Party shall have a sufficient number of authorized shares
of its Common Stock that have not been issued or reserved for issuance to permit
exercise in full of all Rights in accordance with this Section 13 and unless
prior thereto the Corporation and the Principal Party involved therein shall
have executed and delivered to the Rights Agent an agreement confirming that the
Principal Party shall, upon consummation of such consolidation, merger or sale
or transfer of assets or earning power, assume this Rights Agreement in
accordance with Section 13(a) hereof and that all rights of first refusal or
preemptive rights in respect of the issuance of shares of Common Stock of the
Principal Party upon exercise of outstanding Rights have been waived and that
such transaction shall not result in a default by the Principal Party under this
Rights Agreement, and further providing that, as soon as practicable after the
date of any consolidation, merger or sale or transfer of assets or earning power
referred to in Section 13(a) hereof, the Principal Party will:
(i) prepare and file a registration statement under the Act with
respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, use its best efforts to cause such
registration statement to become effective as soon as practicable after
such filing and use its best efforts to cause such registration statement
to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the date of expiration of the Rights, and
similarly comply with applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of) the
Rights and the securities purchasable upon exercise of the Rights on a
national securities exchange or to meet the eligibility requirements for
quotation on NASDAQ; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act. In the event that any of the transactions described in
Section 13(a) hereof shall occur at any time after the occurrence of a
transaction described in Section 11(a)(ii) hereof, the Rights which have
not theretofore been exercised shall, subject to the provisions of Section
7(e) hereof, thereafter be exercisable in the manner described in Section
13(a).
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or By-Laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, shares of Common Stock of such Principal Party at less than the then Fair
Market Value per share (determined pursuant to Section 11(b) hereof) or
securities exercisable for, or convertible into, Common Stock of such Principal
Party at less than such then Fair Market Value (other than to holders of Rights
pursuant to this Section 13) or (ii) providing for any special tax or similar
payment in connection with the issuance to any holder of a Right of Common Stock
of such Principal Party pursuant to the provisions of this Section 13, then, in
such event, the Corporation shall not consummate any such transaction unless
prior thereto the Corporation 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.
Section 14. Fractional Rights and Fractional Shares.
(a) The Corporation shall not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence fractional Rights
(i.e., Rights to acquire less than one one-thousandth of a share of Preferred
Stock), unless such fractional Rights result from a transaction referred to in
Section 11(a)(i) hereof. If the Corporation shall determine not to issue such
fractional Rights, then, in lieu of such fractional Rights, there shall be paid
to the holders of record 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 Fair Market Value of a whole Right.
(b) The Corporation shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one-thousandth of a share) upon exercise of the Rights or to distribute
certificates which evidence fractional shares (other than fractions which are
integral multiples of one-thousandth of a share). In lieu of issuing fractions
of shares of Preferred Stock, the Corporation may, at its election, issue
depositary receipts evidencing fractions of shares pursuant to an appropriate
agreement between the Corporation and a depositary selected by it, provided that
such agreement shall provide that the holders of such depositary receipts shall
have all of the rights, privileges and preferences to which they would be
entitled as owners of the Preferred Stock. With respect to fractional shares
that are not integral multiples of one-thousandth of a share, if the Corporation
does not issue such fractional shares or depositary receipts in lieu thereof,
there shall be paid to the holders of record of Rights Certificates at the time
such Rights Certificates are exercised as herein provided an amount in cash
equal to the same fraction of the Fair Market Value of a share of Preferred
Stock.
(c) The holder of a Right by the acceptance of a Right expressly
waives his right to receive any fractional Right or any fractional shares of
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share) upon exercise of a Right.
Section 15. Rights of Action. All rights of action in respect of
this Rights Agreement, except the rights of action given to the Rights Agent in
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the holders of record of the
Common Stock); and any holder of record of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Corporation to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and, in this Rights 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 Rights Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this Rights
Agreement.
Section 16. Agreement of Right Holders. Each holder of a Right, by
accepting the same, consents and agrees with the Corporation and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be evidenced by
the Book-Entries representing Common Stock registered in the name of the holders
of Common Stock (together, as applicable, with the Summary of Rights), which
Book-Entries representing Common Stock shall also constitute certificates for
Rights, and not by separate Rights Certificates, and each Right shall be
transferable only simultaneously and together 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;
(c) the Corporation 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 Corporation or the Rights Agent) for
all purposes whatsoever, and neither the Corporation nor the Rights Agent shall
be affected by any notice to the contrary.
(d) notwithstanding anything in this Rights Agreement to the
contrary, neither the Corporation nor the Rights Agent shall have any liability
to any holder of a Right or a beneficial interest in a Right or other Person as
a result of its inability to perform any of its obligations under this Rights
Agreement by reason of any preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Corporation must use its best efforts to have any such
order, decree or ruling lifted or otherwise overturned as soon as possible;
(e) rights Beneficially Owned by certain persons will under certain
circumstances set forth in this Rights Agreement become null and void pursuant
to Section 7(e) hereof; and
(f) this Rights Agreement may be supplemented or amended from time
to time pursuant to Section 26 hereof.
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 Preferred Stock or any
other securities which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Corporation or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof (except as provided in Section 7(f) hereof), or to give or
withhold consent to any corporate action (except as provided in Section 7(f)
hereof), or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Corporation agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this Rights
Agreement and the exercise and performance of its duties hereunder. The
Corporation also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or failed to be done by the Rights Agent in connection with the
acceptance and administration of this Rights Agreement, including the costs and
expenses of defending against any claim of liability relating to the Rights or
this Rights Agreement.
(b) The Rights Agent shall be protected against, 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 Rights Agreement in reliance upon any
Rights Certificate or certificate for Preferred Stock or for other securities of
the Corporation, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons.
Section 19. Merger or Consolidation of, or Change in Name of, the
Rights Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Rights 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 corporation would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Rights 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 Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; 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; in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Rights
Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Rights Agreement upon the following terms
and conditions, by all of which the Corporation and the holders of Rights
Certificates by their acceptance thereof shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Corporation), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Corporation prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the Chairman of the Board, any
President or any Senior or Executive Vice President and by the Treasurer or the
Secretary of the Corporation and delivered to the Rights Agent. Any such
certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Rights Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Corporation
and any other Person only for its own gross negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Rights 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 Corporation only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Corporation of any
covenant or condition contained in this Rights Agreement or in any Rights
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 or 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after receipt of a certificate describing any
such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Preferred Stock to be issued pursuant to this Rights Agreement or any Rights
Certificate or as to whether any shares of Preferred Stock will, when issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Corporation 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 the Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, any President or any Senior or Executive Vice President
or the Secretary or the Treasurer of the Corporation, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Corporation or become financially interested in any
transaction in which the Corporation may be interested, or contract with or lend
money to the Corporation or otherwise act as fully and freely as though it were
not the Rights Agent under this Rights Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Corporation or for
any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Corporation resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon 30 days notice in writing mailed to the Corporation and to
each transfer agent of the Common Stock and the Preferred Stock by registered or
certified mail. The Corporation may remove the Rights Agent or any successor
Rights Agent (with or without cause) upon 30 days notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and the Preferred Stock by registered or
certified mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Corporation shall appoint a successor
to the Rights Agent. Notwithstanding the foregoing provisions of this Section
21, in no event shall the resignation or removal of a Rights Agent be effective
until a successor Rights Agent shall have been appointed and have accepted such
appointment. If the Corporation shall fail to make such appointment within a
period of 30 days after such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Corporation), then the incumbent Rights
Agent or the holder of record 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 Corporation or by such a court,
shall be (a) a corporation organized and doing business under the laws of the
United States or of any state thereof, in good standing, which is authorized
under such laws to exercise corporate trust or stock transfer powers and is
subject to supervision or examination in the conduct of its corporate trust or
stock transfer business by federal or state authorities and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000 or (b) an Affiliate controlled by a corporation described in
clause (a) of this sentence. 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 Corporation shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock and 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. Notwithstanding the foregoing provisions, in the event of resignation,
removal or incapacity of the Rights Agent, the Corporation shall have the
authority to act as the Rights Agent until a successor Rights Agent shall have
assumed the duties of the Rights Agent hereunder.
Section 22. Issuance of New Rights Certificates. Notwithstanding any
of the provisions of this Rights Agreement or of the Rights to the contrary, the
Corporation may, at its option, issue new Rights Certificates evidencing Rights
in such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Exercise Price per share and the number or kind or
class of shares of stock or other securities or property purchasable under the
Rights Certificates made in accordance with the provisions of this Rights
Agreement.
Section 23. Redemption.
(a) The Corporation may, at its option, but only by the vote of a
majority of the Board of Directors, redeem all but not less than all of the then
outstanding Rights, at any time prior to the Close of Business on the earlier of
(i) the tenth day following the Stock Acquisition Date (subject to extension by
the Corporation as provided in Section 26 hereof) or (ii) the Expiration Date,
at a redemption price of $0.005 per Right, subject to adjustments as provided in
subsection (c) below (the "Redemption Price"). Notwithstanding anything
contained in this Rights Agreement to the contrary, the Rights shall not be
exercisable pursuant to Section 11(a)(ii) prior to the expiration of the
Corporation's right of redemption hereunder.
(b) Without any further action and without any notice, the right to
exercise the Rights will terminate effective at the time so designated by action
of the Board of Directors ordering the redemption of the Rights and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price. Within 10 days after the effective time of the action of the Board of
Directors ordering the redemption of the Rights, the Corporation shall give
notice of such redemption to the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Stock. Any notice
which is mailed in the manner herein provided 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. At the option
of the Board of Directors, the Redemption Price may be paid in cash to each
Rights holder or by the issuance of shares (and, at the Corporation's election
pursuant to Section 14(b) hereof, cash or depositary receipts in lieu of
fractions of shares other than fractions which are integral multiples of one
one-thousandth (1/1,000) of a share) of Preferred Stock or Common Stock having a
Fair Market Value equal to such cash payment.
(c) In the event the Corporation shall at any time after the date of
this Rights Agreement (A) pay any dividend on Common Stock in shares of Common
Stock, (B) subdivide or split the outstanding shares of Common Stock into a
greater number of shares or (C) combine or consolidate the outstanding shares of
Common Stock into a smaller number of shares or effect a reverse split of the
outstanding shares of Common Stock, or (D) combine or consolidate the
outstanding shares of Common Stock into a smaller number of shares of its
capital stock in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation), then, and in each such
event, the Redemption Price shall be appropriately adjusted to reflect the
foregoing.
Section 24. Notice of Proposed Actions.
(a) In case the Corporation, after the Distribution Date, shall
propose (i) to effect any of the transactions referred to in Section 11(a)(i) or
11(g) or (ii) to offer to the holders of record of its Common Stock options,
warrants, or other rights to subscribe for or to purchase shares of Common Stock
(including any security convertible into or exchangeable for Common Stock) or
shares of stock of any class or any other securities, options, warrants,
convertible or exchangeable securities or other rights, or (iii) to effect any
reclassification of its Preferred Stock or Common Stock or any recapitalization
or reorganization of the Corporation, or (iv) to effect any consolidation or
merger with or into, or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale or other transfer), in one or
more transactions, of more than 50% of the assets or earning power of the
Corporation and its Subsidiaries (taken as a whole) to, any other Person or
Persons, or (v) to effect the liquidation, dissolution or winding up of the
Corporation, then, in each such case, the Corporation shall give to each holder
of record of a Rights Certificate, in accordance with Section 25, notice of such
proposed action, which shall specify the record date for the purposes of such
transaction referred to in Section 11(a)(i) or such dividend or distribution, or
the date on which such reclassification, recapitalization, reorganization,
consolidation, merger, sale or transfer of assets, liquidation, dissolution, or
winding up is to take place and the record date for determining participation
therein by the holders of record of Common Stock or 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 10 days prior to the record date
for determining holders of record of the Preferred Stock for purposes of such
action, and in the case of any such other action, at least 10 days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of record of Common Stock or Preferred Stock, whichever shall be
the earlier. The failure to give notice required by this Section 24 or any
defect therein shall not affect the legality or validity of the action taken by
the Corporation or the vote upon any such action.
(b) In case any of the transactions referred to in Section 11(a)(i),
11(g) or 13 of this Rights Agreement are proposed, then, in any such case, the
Corporation shall give to each holder of Rights, in accordance with Section 25
hereof, notice of the proposal of such transaction at least 10 days prior to
consummating such transaction, which notice shall specify the proposed event and
the consequences of the event to holders of Rights under Section 11(a)(i), 11(g)
or 13 hereof, as the case may be, and, upon consummating such transaction, shall
similarly give notice thereof to each holder of Rights.
Section 25. Notices. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of record of
any Rights Certificate or Right to or on the Corporation shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Rights Agent) as follows:
VitalWorks Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand
authorized by this Rights Agreement to be given or made by the Corporation or by
the holder of record of any Rights Certificate or Right to or on the Rights
Agent shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the
Corporation) as follows:
Stock Trans, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Notices or demands authorized by this Rights Agreement to be given or made by
the Corporation or the Rights Agent to the holder of record of any Rights
Certificate or Right 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 Corporation.
Section 26. Supplements and Amendments. For as long as the Rights
are then redeemable, the Corporation may in its sole and absolute discretion,
and the Rights Agent shall if the Corporation so directs, supplement or amend
any provision of this Rights Agreement without the approval of any holders of
the Rights, provided that no such supplement or amendment pursuant to this
clause (iii) shall materially adversely affect the interest of the Rights Agent
or change or increase the duties hereunder of the Rights Agent. At any time when
the Rights are not then redeemable, the Corporation may, and the Rights Agent
shall if the Corporation so directs, supplement or amend this Rights Agreement
without the approval of any holders of Rights Certificates (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein or (iii) to
change or supplement the provisions hereunder in any manner which the
Corporation may deem necessary or desirable, provided that no such supplement or
amendment pursuant to this clause (iii) shall materially adversely affect the
interest of the holders of Rights Certificates. Upon the delivery of a
certificate from an appropriate officer of the Corporation which states that the
proposed supplement or amendment is in compliance with the terms of this Section
26, the Rights Agent shall execute such supplement or amendment.
Section 27. Exchange.
(a) The Board of Directors of the Corporation may, at its option, at
any time after any Person becomes an Acquiring Person, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 7(e) hereof) for shares
of Common Stock at an exchange ratio of one share per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any
Person (other than an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Voting Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Corporation ordering the exchange of any Rights pursuant to paragraph (a) of
this Section 27 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of shares of Common Stock
equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Corporation shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Corporation promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the shares of Common Stock for Rights
will be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become void pursuant to
the provisions of Section 7(e) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 27, the
Corporation shall take all such action as may be necessary to authorize
additional shares of Common Stock for issuance upon exchange of the Rights.
(d) The Corporation shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares. In lieu of such fractional shares, the Corporation shall pay to the
registered holders of the Rights Certificates with regard to which such
fractional shares of Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a whole share of
Common Stock. For the purposes of this paragraph (d), the current market value
of a whole share of Common Stock shall be the closing price of a share of Common
Stock for the Trading Day immediately prior to the date of exchange pursuant to
this Section 27.
Section 28. Successors. All of the covenants and provisions of this
Rights Agreement by or for the benefit of the Corporation or the Rights Agent
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Benefits of this Rights Agreement. Nothing in this
Rights Agreement shall be construed to give to any Person or corporation other
than the Corporation, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the holders of Common Stock
in their capacity as holders of the Rights) any legal or equitable right, remedy
or claim under this Rights Agreement; but this Rights Agreement shall be for the
sole and exclusive benefit of the Corporation, the Rights Agent and the holders
of record of the Rights Certificates (and, prior to the Distribution Date, the
holders of Common Stock in their capacity as holders of the Rights).
Section 30. Delaware Contract. This Rights 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 and enforced in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state.
Section 31. Counterparts. This Rights Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 32. Descriptive Headings. Descriptive headings of the
several Sections of this Rights Agreement are inserted for convenience only
and shall not control or affect the meaning or construction of any of the
provisions hereof.
Section 33. Severability. If any term, provision, covenant or
restriction of this Rights 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 Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 34. Determinations And Actions By The Board Of Directors,
Etc.
(a) The Board of Directors of the Corporation shall have the
exclusive power and authority to administer this Rights Agreement and to
exercise all rights and powers specifically granted to the Board of Directors or
to the Corporation, or as may be necessary or advisable in the administration of
this Rights Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Rights Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Rights Agreement (including a determination to redeem or not redeem the Rights
or to amend the Rights Agreement and a determination of whether there is an
Acquiring Person). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board of Directors in
good faith shall (x) be final, conclusive and binding on the Corporation, the
Rights Agent, the holders of the Rights and all other parties, and (y) not
subject the Board of Directors to any liability to the holders of the Rights.
(b) It is understood that the Independent Directors Committee (as
defined below) of the Board of Directors shall review and evaluate this Rights
Agreement in order to consider whether the maintenance of this Rights Agreement
continues to be in the interests of the Corporation, its shareholders and any
other relevant constituencies of the Corporation, at least every three years, or
sooner if any Person shall have made a proposal to the Corporation, or taken any
other action, that, if effective, could cause such Person to become an Acquiring
Person hereunder, if a majority of the members of the Independent Directors
Committee shall deem such review and evaluation appropriate after giving due
regard to all relevant circumstances. Following each such review, the
Independent Directors Committee will communicate its conclusions to the full
Board of Directors, including any recommendation in light thereof as to whether
this Rights Agreement should be modified or the Rights should be redeemed. The
Independent Directors Committee shall be comprised of the Directors of the
Corporation who are not officers, employees or Affiliates of the Corporation.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, all as of the day and year first above written.
VITALWORKS INC.
Attest:_______________________ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
(SEAL) --------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
STOCK TRANS, INC.
Attest:_______________________ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
(SEAL) --------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
EXHIBIT A
TO RIGHTS AGREEMENT
UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE
RIGHTS AGREEMENT (AS REFERRED TO BELOW), RIGHTS ISSUED TO
OR BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR AFFILIATES
OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT)
OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND VOID AND
MAY NOT BE TRANSFERRED TO ANY PERSON.
VITALWORKS INC.
SUMMARY OF RIGHTS TO PURCHASE
SERIES B PREFERRED STOCK
On December 5, 2002, the Board of Directors of VitalWorks Inc. (the
"Corporation") declared a dividend distribution of one preferred stock purchase
right (a "Right") for each outstanding share of Common Stock, $0.001 par value
per share (the "Common Stock"), of the Corporation held by stockholders of
record on December 27, 2002 (the "Record Date"). Each Right entitles the
registered holder to purchase from the Corporation one one-thousandth (1/1,000)
of a share of preferred stock of the Corporation, designated as Series B
Preferred Stock (the "Preferred Stock") at a price of $20.00 per one
one-thousandth (1/1,000) of a share (the "Exercise Price"). The description and
terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement"), dated as of December 5, 2002, between the Corporation and Stock
Trans, Inc., as Rights Agent (the "Rights Agent").
As discussed below, initially the Rights will not be exercisable,
certificates will not be sent to stockholders and the Rights will automatically
trade with the Common Stock.
The Rights, unless earlier redeemed by the Board of Directors,
become exercisable upon the close of business on the day (the "Distribution
Date") which is the earlier of (i) the tenth day following the first date (the
"Stock Acquisition Date") on which there is a public announcement that a person
or group of affiliated or associated persons (an "Acquiring Person"), with
certain exceptions set forth below, has acquired beneficial ownership of 15% or
more of the outstanding voting stock of the Corporation or such earlier or later
date (not beyond the thirtieth day after the Stock Acquisition Date) as the
Board of Directors may determine or (ii) the tenth business day (or such later
date as may be determined by the Board of Directors prior to such time as any
person or group of affiliated or associated persons becomes an Acquiring Person)
after the date of the commencement or announcement of a person's or group's
intention to commence a tender or exchange offer the consummation of which would
result in the ownership of 15% or more of the Corporation's outstanding voting
stock (even if no shares are actually purchased pursuant to such offer); prior
thereto, the Rights will not be exercisable, will not be represented by a
separate certificate, and will not be transferable apart from the Common Stock,
but will instead be evidenced, (i) with respect to any of the shares of Common
Stock held in uncertificated book-entry form (a "Book-Entry") outstanding as of
the Record Date, by such Book-Entry and (ii) with respect to the shares of
Common Stock evidenced by Common Stock certificates outstanding as of the Record
Date, by such Common Stock certificate, together with a copy of this Summary of
Rights. An Acquiring Person does not include (A) the Corporation, (B) any
subsidiary of the Corporation, (C) any employee benefit plan or employee stock
plan of the Corporation or of any subsidiary of the Corporation, or any trust or
other entity organized, appointed, established or holding Common Stock for or
pursuant to the terms of any such plan or (D) any person or group whose
ownership of 15% or more of the shares of voting stock of the Corporation then
outstanding results solely from (i) any action or transaction or transactions
approved by the Board of Directors before such person or group became an
Acquiring Person or (ii) a reduction in the number of outstanding shares of
voting stock of the Corporation pursuant to a transaction or transactions
approved by the Board of Directors (provided that any person or group that does
not become an Acquiring Person by reason of clause (i) or (ii) above shall
become an Acquiring Person upon acquisition of an additional 1% or more of the
Corporation's voting stock then outstanding unless such acquisition of
additional voting stock will not result in such person or group becoming an
Acquiring Person by reason of such clause (i) or (ii). For purposes of the
foregoing, outstanding voting stock of the Corporation includes voting stock
that trades on a "when issued" basis on a national securities exchange or on the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ").
The Rights Agreement provides that until the Distribution Date, the
Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after December 5, 2002 will contain a legend
incorporating the Rights Agreement by reference. Until the Distribution Date (or
earlier redemption or expiration of the Rights), transfer on the Corporation's
Direct Registration System of any Common Stock represented by a Book-Entry or a
certificate outstanding as of December 5, 2002, and, in each case, with or
without a copy of this Summary of Rights attached thereto, will also constitute
the transfer of the Rights associated with the Common Stock represented by such
Book-Entry or certificate. As soon as practicable following the Distribution
Date, separate certificates evidencing the Rights ("Rights Certificates") will
be mailed to holders of record of the Common Stock as of the close of business
on the Distribution Date and such separate Rights Certificates alone will
evidence the Rights from and after the Distribution Date.
The Rights are not exercisable until the Distribution Date. Unless
earlier redeemed by the Corporation as described below, the Rights will expire
at the close of business on December 5, 2012 (the "Expiration Date") (or, if the
Distribution Date shall have occurred before December 5, 2012, at the close of
business on the 90th day following the Distribution Date).
The Preferred Stock is nonredeemable and, unless otherwise provided
in connection with the creation of a subsequent series of preferred stock (i)
subordinate to any other series of the Corporation's preferred stock and (ii)
senior to the Common Stock.. The Preferred Stock may not be issued except upon
exercise of Rights. Each share of Preferred Stock will be entitled to receive
when, as and if declared, a quarterly dividend in an amount equal to (i) 1,000
times the cash dividends declared on the Corporation's Common Stock, and (ii) a
preferential cash dividend, if any, in preference to holders of Common Stock in
an amount equal to $50.00 per share of Preferred Stock less the per share amount
of all cash dividends declared on the Preferred Stock pursuant to clause (i)
since the immediately preceding quarterly dividend payment date. In addition,
Preferred Stock is entitled to 1,000 times any noncash dividends (other than
dividends payable in equity securities) declared on the Common Stock, in like
kind. In the event of the liquidation of the Corporation, the holders of
Preferred Stock will be entitled to receive, for each share of Preferred Stock,
a payment in an amount equal to the greater of $1.00 per one one-thousandth of a
share plus accrued and unpaid dividends and distributions thereon or 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. 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. The rights of Preferred Stock as to
dividends, liquidation and voting are protected by anti-dilution provisions. If
the dividends accrued on the Preferred Stock for four or more quarterly dividend
periods, whether consecutive or not, shall not have been declared and paid or
irrevocably set aside for payment, the holders of record of the Preferred Stock
of the Corporation of all series (including the Preferred Stock) will have the
right to elect two members to the Corporation's Board of Directors.
The number of shares of Preferred Stock issuable upon exercise of
the Rights is subject to certain adjustments from time to time in the event of a
stock dividend on, or a subdivision, combination or issuance of capital stock in
a reclassification of, the Common Stock. The Exercise Price for the Rights is
subject to adjustment in certain circumstances including certain distributions
of cash or other property to holders of Common Stock.
Unless the Rights are earlier redeemed, in the event that, after the
time that a Person becomes an Acquiring Person, the Corporation were to be
acquired in a merger or other business combination (in which any shares of
Common Stock are changed into or exchanged for other securities or assets) or
more than 50% of the assets or earning power of the Corporation and its
subsidiaries (taken as a whole) were to be sold or transferred in one or a
series of related transactions, the Rights Agreement provides that proper
provision will be made so that each holder of record of a Right, other than the
Acquiring Person, of a Right will from and after such date have the right to
receive, upon payment of the Exercise Price, that number of shares of common
stock of the acquiring company having a market value at the time of such
transaction equal to two times the Exercise Price.
In addition, unless the Rights are earlier redeemed, in the event
that a person or group becomes an Acquiring Person, the Rights Agreement
provides that proper provision will be made so that each holder of record of a
Right, other than the Acquiring Person (whose Rights will thereupon become null
and void), will thereafter have the right to receive, upon payment of the
Exercise Price, that number of shares of Series B Preferred Stock having a
market value at the time of the transaction equal to two times the Exercise
Price (such market value to be determined with reference to the market value of
the Common Stock as provided in the Rights Agreement).
At any time after any person or group becomes an Acquiring Person
and prior to the acquisition by such person or group of 50% or more of the
outstanding voting stock the Board of Directors of the Corporation may exchange
the Rights (other than Rights owned by such person or group which will have
become void), in whole or in part, at an exchange ratio of one share of Common
Stock per Right (subject to adjustment).
Fractions of shares of Series B Preferred Stock (other than
fractions which are integral multiples of one one-thousandth of a share) may, at
the election of the Corporation, be evidenced by depositary receipts. The
Corporation may also issue cash in lieu of fractional shares which are not
integral multiples of one one-thousandth of a share.
At any time on or prior to the close of business on the earlier of
(i) the tenth day after the Stock Acquisition Date (or such later date as a
majority of the Board of Directors may determine) or (ii) the Expiration Date,
the Corporation may redeem the Rights in whole, but not in part, at a price of
$0.005 per Right (the "Redemption Price"). Immediately upon the effective time
of the action of the Board of Directors of the Corporation authorizing
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption Price.
For as long as the Rights are then redeemable, the Corporation may
amend the Rights in any manner, including an amendment to extend the time period
in which the Rights may be redeemed. At any time when the Rights are not then
redeemable, the Corporation may amend the Rights in any manner that does not
materially adversely affect the interests of holders of the Rights as such.
The Independent Directors Committee of the Corporation will review
the Rights Agreement at least every three years and, if a majority of the
members of the Independent Directors Committee deems it appropriate, may
recommend a modification or termination of the Rights Agreement.
Until a Right is exercised, the holder, as such, will have no rights
as a stockholder of the Corporation, including, without limitation, the right to
vote or to receive dividends. Holders of Common Stock may, depending upon the
circumstances, recognize taxable income should the Rights become exercisable or
upon the occurrence of certain events thereafter.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to the Corporation's report on Form 8-K
dated December 5, 2002. A copy of the Rights Agreement is available free of
charge from the Corporation. 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 in this summary description herein by
reference.
EXHIBIT B
TO RIGHTS AGREEMENT
Form of Rights Certificate
Certificate No. W - ________ Rights
NOT EXERCISABLE AFTER (I) DECEMBER 5, 2012, OR (II) IF THE DISTRIBUTION
DATE (AS DEFINED BELOW) SHALL HAVE OCCURRED BEFORE THE DATE SPECIFIED IN
CLAUSE (I), THE DATE WHICH IS NINETY (90) DAYS AFTER THE DISTRIBUTION
DATE, OR EARLIER IF REDEEMED. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE CORPORATION AND UNDER CERTAIN OTHER CIRCUMSTANCES, AT $0.005
PER RIGHT (SUBJECT TO ADJUSTMENT), ON THE TERMS SET FORTH OR REFERRED TO
IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE
RIGHTS AGREEMENT (AS REFERRED TO BELOW), RIGHTS ISSUED TO OR BENEFICIALLY
OWNED BY ACQUIRING PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS SHALL BE NULL AND VOID AND MAY NOT BE TRANSFERRED TO ANY
PERSON.
Rights Certificate
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 December 5, 2002 (the "Rights Agreement") between VitalWorks Inc.
(the "Corporation"), and Rights Agent Name, (the "Rights Agent"), to purchase
from the Corporation 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
December 27, 2002 (or if the Distribution Date shall have occurred before
December 27, 2002, at the close of business on the 90th day following the
Distribution Date) at the office of the Rights Agent designated in the Rights
Agreement for such purpose, or its successor as Rights Agent, in New York, NY,
one one-thousandth (1/1,000) of a fully paid nonassessable share of Series B
Preferred Stock, of the Corporation (the "Preferred Stock") at a purchase price
of $20.00, as the same may from time to time be adjusted in accordance with the
Rights Agreement (the "Exercise Price"), upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase attached hereto duly
executed.
As provided in the Rights Agreement, the Exercise Price and the number of shares
of 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 and, upon the happening of certain events,
securities other than shares of Preferred Stock, or other property, may be
acquired upon exercise of the Rights evidenced by this Rights Certificate, as
provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
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 of the Rights Agent,
the Corporation and the holders of record of Rights Certificates. Copies of the
Rights Agreement are on file at the principal executive office of the
Corporation.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated in the Rights Agreement
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder of
record to purchase a like aggregate number of shares of Preferred Stock as the
Rights evidenced by the Rights Certificate or Rights Certificates surrendered
shall have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof, another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may be redeemed by the Corporation at its option or under certain
other circumstances at a redemption price of $0.005 per Right. No fractional
shares of Preferred Stock (other than fractions which are integral multiples of
one one-thousandth (1/1,000) of a share) are required to be issued upon the
exercise of any Right or Rights evidenced hereby, and in lieu thereof the
Corporation may cause depositary receipts to be issued and/or a cash payment may
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 Preferred Stock or
of any other securities of the Corporation 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 Corporation or any right to vote for the election of
directors or upon any matter submitted to stockholders at meeting thereof, or to
give or withhold consent to any corporate action or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement. This Rights Certificate shall not
be valid or obligatory for any purpose until it shall have been countersigned by
the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Corporation and
its corporate seal.
Dated as of _____________, ____.
ATTEST:
______________________________ By_____________________________________
Secretary Name:
Title:
Countersigned:
Stock Trans, Inc.
By:______________________________
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 Certificates.)
FOR VALUE RECEIVED _____________________________________ hereby sells, assigns
and transfers unto _____________________________________________________________
__________________________________ (Please print name and address of transferee)
_____________________________________________________________________ Rights
evidenced by this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
______________________________ Attorney to transfer the within Rights
Certificate on the books of the within-named Corporation, with full power of
substitution.
Dated: ________________, ____
____________________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned or
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Associate or an Affiliate thereof (as such terms are defined in the Rights
Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it [ ] did
[ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement).
Dated: ________________, ____ _______________________________________
Signature
NOTICE
The signature to the foregoing Assignment and Certificate must correspond to the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if registered holder
desires to exercise the Rights Certificate.)
TO VITALWORKS INC.:
The undersigned hereby irrevocably elects to exercise _________________ Rights
represented by this Rights Certificate to purchase the shares of Preferred Stock
issuable upon the exercise of such Rights and requests that certificates for
such share(s) be issued in the following name:
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 must conform in all respects to
name of holder as specified on the fact of
this Rights Certificate)
Signature Guaranteed
EXHIBIT C
FORM OF
CERTIFICATE OF DESIGNATION
OF
SERIES B PREFERRED STOCK
OF
VITALWORKS INC.
Pursuant to Section 151 of the Delaware
General Corporation Law
I, [name] , [office] of VitalWorks Inc., a corporation organized and
existing under the Delaware General Corporation Law (the "Corporation"), in
accordance with the provisions of Section 151 of such law, DO HEREBY CERTIFY
that pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Corporation, the Board of Directors on
December 5, 2002 adopted the following resolution which creates a series of
200,000 shares of Preferred Stock designated as Series B Preferred Stock, as
follows:
RESOLVED, that pursuant to Section 151(g) of the Delaware General
Corporation Law and the authority vested in the Board of Directors of the
Corporation in accordance with the provisions of ARTICLE Fourth of the
Certificate of Incorporation of the Corporation, a series of Preferred Stock of
the Corporation be, and hereby is, created, and the powers, designations,
preferences and relative, participating, optional or other special rights of the
shares of such series, and the qualifications, limitations or restrictions
thereof, be, and hereby are, as follows:
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series B Preferred Stock" (the "Series B Preferred Stock") and
the number of shares constituting such series shall be 200,000.
Section 2. Dividends and Distributions.
(A) Subject to the provisions for adjustment hereinafter set forth,
the holders of shares of Series B Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, (i) cash dividends in an amount per share (rounded to
the nearest cent) equal to 1000 times the aggregate per share amount of all cash
dividends declared or paid on the Common Stock, $0.001 par value per share, of
the Corporation (the "Common Stock") and (ii) a preferential cash dividend (the
"Preferential Dividends"), if any, in preference to the holders of Common Stock,
on the first day of February, May, August and November of each year (each a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series B Preferred Stock, payable in an amount (except in the case of the first
Quarterly Dividend Payment if the date of the first issuance of Series B
Preferred Stock is a date other than a Quarterly Dividend Payment date, in which
case such payment shall be a prorated amount of such amount) equal to $50 per
share of Series B Preferred Stock less the per share amount of all cash
dividends declared on the Series B Preferred Stock pursuant to clause (i) of
this sentence since the immediately preceding Quarterly Dividend Payment Date
or, with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series B Preferred Stock. In the
event the Corporation shall, at any time after the issuance of any share or
fraction of a share of Series B Preferred Stock, make any distribution on the
shares of Common Stock of the Corporation, whether by way of a dividend or a
reclassification of stock, a recapitalization, reorganization or partial
liquidation of the Corporation or otherwise, which is payable in cash or any
debt security, debt instrument, real or personal property or any other property
(other than cash dividends subject to the immediately preceding sentence, a
distribution of shares of Common Stock or other capital stock of the Corporation
or a distribution of rights or warrants to acquire any such share, including any
debt security convertible into or exchangeable for any such share, at a price
less than the Fair Market Value (as hereinafter defined) of such share), then,
and in each such event, the Corporation shall simultaneously pay on each then
outstanding share of Series B Preferred Stock of the Corporation a distribution,
in like kind, of 1000 times such distribution paid on a share of Common Stock
(subject to the provisions for adjustment hereinafter set forth). The dividends
and distributions on the Series B Preferred Stock to which holders thereof are
entitled pursuant to clause (i) of the first sentence of this paragraph and
pursuant to the second sentence of this paragraph are hereinafter referred to as
"Dividends" and the multiple of such cash and non-cash dividends on the Common
Stock applicable to the determination of the Dividends, which shall be 1,000
initially but shall be adjusted from time to time as hereinafter provided, is
hereinafter referred to as the "Dividend Multiple." In the event the Corporation
shall at any time after December 27, 2002 (i) declare or pay any dividend or
make any distribution on Common Stock payable in shares of Common Stock, (ii)
effect a subdivision or split or a combination, consolidation or reverse split
of the outstanding shares of Common Stock into a greater or lesser number of
shares of Common Stock, or (iii) issue any shares of its capital stock in a
reclassification of the Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Corporation is the
continuing or surviving corporation), then in each such case the Dividend
Multiple thereafter applicable to the determination of the amount of Dividends
which holders of shares of Series B Preferred Stock shall be entitled to receive
shall be the Dividend Multiple applicable immediately prior to such event
multiplied 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 each Dividend at the same time it
declares any cash or non-cash dividend or distribution on the Common Stock in
respect of which a Dividend is required to be paid. No cash or non-cash dividend
or distribution on the Common Stock in respect of which a Dividend is required
to be paid shall be paid or set aside for payment on the Common Stock unless a
Dividend in respect of such dividend or distribution on the Common Stock shall
be simultaneously paid, or set aside for payment, on the Series B Preferred
Stock.
(C) Preferential Dividends shall begin to accrue on outstanding
shares of Series B Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issuance of any shares of Series B Preferred Stock.
Accrued but unpaid Preferential Dividends shall cumulate but shall not bear
interest. Preferential Dividends paid on the shares of Series B 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.
Section 3. Voting Rights. The holders of shares of Series B
Preferred Stock shall have the following voting rights:
(A) Subject to the provisions for adjustment hereinafter set forth,
each share of Series B Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the holders of the Common Stock. The
number of votes which a holder of Series B Preferred Stock is entitled to cast,
as the same may be adjusted from time to time as hereinafter provided, is
hereinafter referred to as the "Vote Multiple." In the event the Corporation
shall at any time after December 27,2002, (i) declare or pay any dividend on
Common Stock payable in shares of Common Stock, (ii) effect a subdivision or
split or a combination, consolidation or reverse split of the outstanding shares
of Common Stock into a greater or lesser number of shares of Common Stock, or
(iii) issue any shares of its capital stock in a reclassification of the Common
Stock (including any such reclassification in connection with a consolidation or
merger in which the Corporation is the continuing or surviving corporation),
then in each such case the Vote Multiple thereafter applicable to the
determination of the number of votes per share to which holders of shares of
Series B Preferred Stock shall be entitled after such event shall be the Vote
Multiple immediately prior to such event multiplied 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 or the Second Amended and Restated By-Laws, the holders of shares
of Series B Preferred Stock and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote of stockholders of the
Corporation.
(C) In the event that the Preferential Dividends accrued on the
Series B Preferred Stock for four or more consecutive quarterly periods shall
not have been declared and paid or set apart for payment, the holders of record
of the Series B Preferred Stock, voting together with the holders of record of
any other series of preferred stock of the Corporation which shall then have the
right, expressly granted by the Certificate of Incorporation of the Corporation
or in any resolution or resolutions of the Board of Directors of the Corporation
providing for the issue of such shares of preferred stock, to elect directors
upon such a default in the payment of dividends by the Corporation shall have
the right, at the next meeting of stockholders called for the election of
directors, voting together as a class, to elect two members to the Board of
Directors, which directors shall be in addition to the number provided for
pursuant to the Corporation's the Second Amended and Restated By laws prior to
such event, to serve until the next Annual Meeting and until their successors
are elected and qualified or their earlier resignation, removal or incapacity or
until such earlier time as all accrued and unpaid Preferential Dividends upon
the outstanding shares of Series B Preferred Stock shall have been paid (or set
aside for payment) in full. The holders of shares of Series B Preferred Stock
shall continue to have the right to elect directors as provided by the
immediately preceding sentence until all accrued and unpaid Preferential
Dividends upon the outstanding shares of Series B Preferred Stock shall have
been paid (or set aside for payment) in full. Such directors may be removed and
replaced by such stockholders, and vacancies in such directorships may be filled
only by such stockholders (or by the remaining director elected by such
stockholders, if there be one) in the manner permitted by law. Subject to the
foregoing, any directors elected pursuant to this paragraph 3(C) shall be
elected annually.
(D) Except as otherwise required by the Certificate of Incorporation
or the Second Amended and Restated By-Laws or set forth herein, holders of
Series B Preferred Stock shall have no other 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 the taking of any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever Preferential Dividends or Dividends are in arrears or
the Corporation shall be in default of payment thereof, thereafter and until all
accrued and unpaid Preferential Dividends and Dividends, whether or not
declared, on shares of Series B Preferred Stock outstanding shall have been paid
or set irrevocably aside for payment in full, and in addition to any and all
other rights which any holder of shares of Series B Preferred Stock may have in
such circumstances, the Corporation shall not
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration, any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series B Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity as to dividends with the Series B
Preferred Stock, unless dividends are paid ratably on the Series B
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 if the full dividends accrued thereon
were to be paid;
(iii) except as permitted by subparagraph (iv) of this paragraph
4(A), redeem or purchase or otherwise acquire for consideration shares of
any stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series B Preferred Stock, provided
that the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such parity stock in exchange for shares of any stock of the
Corporation ranking junior (both as to dividends and upon liquidation,
dissolution or winding up) to the Series B Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series B Preferred Stock, or any shares of stock ranking on a parity with
the Series B Preferred Stock (either as to dividends or upon liquidation,
dissolution or winding up), except in accordance with a purchase offer
made to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective 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 (as hereinafter
defined) of the Corporation to purchase or otherwise acquire for consideration
any shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such shares at
such time and in such manner. A "Subsidiary" of the Corporation shall mean any
corporation or other entity of which securities or other ownership interests
having ordinary voting power sufficient to elect a majority of the board of
directors of such corporation or other entity or other persons performing
similar functions are beneficially owned, directly or indirectly, by the
Corporation or by any corporation or other entity that is otherwise controlled
by the Corporation.
(C) The Corporation shall not issue any shares of Series B Preferred
Stock except upon exercise of Rights issued pursuant to that certain Rights
Agreement dated as of December 5, 2002 between the Corporation and Stock Trans,
Inc., as Rights Agent, a copy of which is on file with the Secretary of the
Corporation at its principal executive office and shall be made available to
stockholders of record without charge upon written request therefor addressed to
said Secretary. Notwithstanding the foregoing sentence, nothing contained in the
provisions hereof shall prohibit or restrict the Corporation from issuing for
any purpose any series of Preferred Stock with rights and privileges similar to,
different from, or greater than, those of the Series B Preferred Stock.
Section 5. Reacquired Shares. Any shares of Series B Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares upon their retirement and cancellation shall become authorized but
unissued shares of Preferred Stock, without designation as to series, and such
shares may be reissued as part of a new series of Preferred Stock to be created
by resolution or resolutions of the Board of Directors.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
voluntary or involuntary 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 B Preferred Stock unless the holders of shares of
Series B Preferred Stock shall have received, subject to adjustment as
hereinafter provided, (A) $20.00 per one one-thousandth (1/1000) of a share plus
an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment or, (B) if greater than the
amount specified in clause (i)(A) of this sentence, an amount equal to 1,000
times the aggregate amount to be distributed per share to holders of Common
Stock, as the same may be adjusted as hereinafter provided and (ii) to the
holders of stock ranking on a parity upon liquidation, dissolution or winding up
with the Series B Preferred Stock, unless simultaneously therewith distributions
are made ratably on the Series B Preferred Stock and all other shares of such
parity stock in proportion to the total amounts to which the holders of shares
of Series B Preferred Stock are entitled under clause (i)(A) of this sentence
and to which the holders of such parity shares are entitled, in each case upon
such liquidation, dissolution or winding up. The amount to which holders of
Series B Preferred Stock may be entitled upon liquidation, dissolution or
winding up of the Corporation pursuant to clause (i)(B) of the foregoing
sentence is hereinafter referred to as the "Participating Liquidation Amount"
and the multiple of the amount to be distributed to holders of shares of Common
Stock upon the liquidation, dissolution or winding up of the Corporation
applicable pursuant to said clause to the determination of the Participating
Liquidation Amount, as said multiple may be adjusted from time to time as
hereinafter provided, is hereinafter referred to as the "Liquidation Multiple."
In the event the Corporation shall at any time after December 27, 2002 (i)
declare or pay any dividend on Common Stock payable in shares of Common Stock,
(ii) effect a subdivision or split or a combination, consolidation or reverse
split of the outstanding shares of Common Stock into a greater or lesser number
of shares of Common Stock, or (iii) issue any shares of its capital stock in a
reclassification of the Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Corporation is continuing
or surviving corporation), then, in each such case, the Liquidation Multiple
thereafter applicable to the determination of the Participating Liquidation
Amount to which holders of Series B Preferred Stock shall be entitled after such
event shall be the Liquidation Multiple applicable immediately prior to such
event multiplied 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 7. Certain Reclassification and Other Events.
(A) In the event that holders of shares of Common Stock of the
Corporation receive after December 5, 2002 in respect of their shares of Common
Stock any share of capital stock of the Corporation (other than any share of
Common Stock of the Corporation), whether by way of reclassification,
recapitalization, reorganization, dividend or other distribution or otherwise (a
"Transaction"), then, and in each such event, the dividend rights, voting rights
and rights upon the liquidation, dissolution or winding up of the Corporation of
the shares of Series B Preferred Stock shall be adjusted so that after such
event the holders of Series B Preferred Stock shall be entitled, in respect of
each share of Series B Preferred Stock held, in addition to such rights in
respect thereof to which such holder was entitled immediately prior to such
adjustment, to (i) such additional dividends as equal the Dividend Multiple in
effect immediately prior to such Transaction multiplied by the additional
dividends which the holder of a share of Common Stock shall be entitled to
receive by virtue of the receipt in the Transaction of such capital stock, (ii)
such additional voting rights as equal the Vote Multiple in effect immediately
prior to such Transaction multiplied by the additional voting rights which the
holder of a share of Common Stock shall be entitled to receive by virtue of the
receipt in the Transaction of such capital stock and (iii) such additional
distributions upon liquidation, dissolution or winding up of the Corporation as
equal the Liquidation Multiple in effect immediately prior to such Transaction
multiplied by the additional amount which the holder of a share of Common Stock
shall be entitled to receive upon liquidation, dissolution or winding up of the
Corporation by virtue of the receipt in the Transaction of such capital stock,
as the case may be, all as provided by the terms of such capital stock.
(B) In the event that holders of shares of Common Stock of the
Corporation receive after December 5, 2002 in respect of their shares of Common
Stock any right or warrant to purchase Common Stock (including as such a right,
for all purposes of this paragraph, any security convertible into or
exchangeable for Common Stock) at a purchase price per share less than the Fair
Market Value of a share of Common Stock on the date of issuance of such right or
warrant, then and in each such event the dividend rights, voting rights and
rights upon the liquidation, dissolution or winding up of the Corporation of the
shares of Series B Preferred Stock shall each be adjusted so that after such
event the Dividend Multiple, the Vote Multiple and the Liquidation Multiple
shall each be the product of the Dividend Multiple, the Vote Multiple and the
Liquidation Multiple, as the case may be, in effect immediately prior to such
event multiplied by a fraction the numerator of which shall be the number of
shares of Common Stock outstanding immediately before such issuance of rights or
warrants plus the maximum number of shares of Common Stock which could be
acquired upon exercise in full of all such rights or warrants and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately before such issuance of rights or warrants plus the number of shares
of Common Stock which could be purchased, at the Fair Market Value of the Common
Stock at the time of such issuance, by the maximum aggregate consideration
payable upon exercise in full of all such rights or warrants.
(C) In the event that holders of shares of Common Stock of the
Corporation receive after December 5, 2002 in respect of their shares of Common
Stock any right or warrant to purchase capital stock of the Corporation (other
than shares of Common Stock), including as such a right, for all purposes of
this paragraph, any security convertible into or exchangeable for capital stock
of the Corporation (other than Common Stock), at a purchase price per share less
than the Fair Market Value of such shares of capital stock on the date of
issuance of such right or warrant, then and in each such event the dividend
rights, voting rights and rights upon liquidation, dissolution or winding up of
the Corporation of the shares of Series B Preferred Stock shall each be adjusted
so that after such event each holder of a share of Series B Preferred Stock
shall be entitled, in respect of each share of Series B Preferred Stock held, in
addition to such rights in respect thereof to which such holder was entitled
immediately prior to such event, to receive (i) such additional dividends as
equal the Dividend Multiple in effect immediately prior to such event
multiplied, first, by the additional dividends to which the holder of a share of
Common Stock shall be entitled upon exercise of such right or warrant by virtue
of the capital stock which could be acquired upon such exercise and multiplied
again by the Discount Fraction (as hereinafter defined) and (ii) such additional
voting rights as equal the Vote Multiple in effect immediately prior to such
event multiplied, first, by the additional voting rights to which the holder of
a share of Common Stock shall be entitled upon exercise of such right or warrant
by virtue of the capital stock which could be acquired upon such exercise and
multiplied again by the Discount Fraction and (iii) such additional
distributions upon liquidation, dissolution or winding up of the Corporation as
equal the Liquidation Multiple in effect immediately prior to such event
multiplied, first, by the additional amount which the holder of a share of
Common Stock shall be entitled to receive upon liquidation, dissolution or
winding up of the Corporation upon exercise of such right or warrant by virtue
of the capital stock which could be acquired upon such exercise and multiplied
again by the Discount Fraction. For purposes of this paragraph, the "Discount
Fraction" shall be a fraction the numerator of which shall be the difference
between the Fair Market Value of a share of the capital stock subject to a right
or warrant distributed to holders of shares of Common Stock of the Corporation
as contemplated by this paragraph immediately after the distribution thereof and
the purchase price per share for such share of capital stock pursuant to such
right or warrant and the denominator of which shall be the Fair Market Value of
a share of such capital stock immediately after the distribution of such right
or warrant.
(D) For purposes of this Certificate of Designation, the "Fair
Market Value" of a share of capital stock of the Corporation (including a share
of Common Stock) on any date shall be deemed to be the average of the daily
closing price per share thereof over the 30 consecutive Trading Days (as such
term is hereinafter defined) immediately prior to such date; provided, however,
that, in the event that such Fair Market Value of any such share of capital
stock is determined during a period which includes any date that is within 30
Trading Days after (i) the ex-dividend date for a dividend or distribution on
stock payable in shares of such stock or securities convertible into shares of
such stock, or (ii) the effective date of any subdivision, split, combination,
consolidation, reverse stock split or reclassification of such stock, then, and
in each such case, the Fair Market Value shall be appropriately adjusted by the
Board of Directors of the Corporation to take into account ex-dividend or
post-effective date trading. The closing price for any day shall be the last
sale price, regular way, or, in case, no such sale takes place on such day, the
average of the closing bid and asked prices, regular way (in either case, as
reported in the applicable transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange), or, if
the shares are not listed or admitted to trading on the New York Stock Exchange,
as reported in the applicable transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
shares are listed or admitted to trading or, if the shares are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system then in
use, or if on any such date the shares are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the shares selected by the Board of Directors of
the Corporation. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the shares are listed or admitted to
trading is open for the transaction of business or, if the shares are not listed
or admitted to trading on any national securities exchange, on which the New
York Stock Exchange or such other national securities exchange as may be
selected by the Board of Directors of the Corporation is open. If the shares are
not publicly held or not so listed or traded on any day within the period of 30
Trading Days applicable to the determination of Fair Market Value thereof as
aforesaid, "Fair Market Value" shall mean the fair market value thereof per
share as determined in good faith by the Board of Directors of the Corporation.
In either case referred to in the foregoing sentence, the determination of Fair
Market Value shall be described in a statement filed with the Secretary of the
Corporation.
Section 8. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each
outstanding share of Series B Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and/or other property (payable in like kind), as the case may
be, for which or into which each share of Common Stock is changed or exchanged
multiplied by the highest of the Vote Multiple, the Dividend Multiple or the
Liquidation Multiple in effect immediately prior to such event.
Section 9. Effective Time of Adjustments.
(A) Adjustments to the Series B Preferred Stock required by the
provisions hereof shall be effective as of the time at which the event requiring
such adjustments occurs.
(B) The Corporation shall give prompt written notice to each holder
of a share of Series B Preferred Stock of the effect of any adjustment to the
voting rights, dividend rights or rights upon liquidation, dissolution or
winding up of the Corporation of such shares required by the provisions hereof.
Notwithstanding the foregoing sentence, the failure of the Corporation to give
such notice shall not affect the validity of or the force or effect of or the
requirement for such adjustment.
Section 10. No Redemption. The shares of Series B Preferred Stock
shall not be redeemable at the option of the Corporation or any holder thereof.
Notwithstanding the foregoing sentence of this Section, the Corporation may
acquire shares of Series B Preferred Stock in any other manner permitted by law,
the provisions hereof and the Certificate of Incorporation of the Corporation.
Section 11. Ranking. Unless otherwise provided in the Certificate of
Incorporation of the Corporation or a Certificate of Designation relating to a
subsequent series of preferred stock of the Corporation, the Series B Preferred
Stock shall rank junior to all other series of the Corporation's preferred stock
as to the payment of dividends and the distribution of assets on liquidation,
dissolution or winding up and senior to the Common Stock.
Section 12. Amendment. The provisions hereof and the Certificate of
Incorporation of the Corporation shall not be amended in any manner which would
adversely affect the rights, privileges or powers of the Series B Preferred
Stock without, in addition to any other vote of stockholders required by law,
the affirmative vote of the holders of two-thirds or more of the outstanding
shares of Series B Preferred Stock, voting together as a single class.
IN WITNESS WHEREOF, I have executed and subscribed this Certificate of
Designation and do affirm the foregoing as true under the penalties of perjury
this ______ day of ___________,2002.
______________________________________
Name:
Title:
ATTEST:
______________________________________