EXHIBIT 1
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SHARE RIGHTS AGREEMENT
STELLENT, INC.
AND
▇▇▇▇▇ FARGO BANK MINNESOTA, N.A.
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF MAY 29, 2002
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TABLE OF CONTENTS
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Section 1. Certain Definitions..............................................1
Section 2. Appointment of Rights Agent......................................5
Section 3. Issue of Right Certificates......................................5
Section 4. Form of Right Certificates.......................................7
Section 5. Countersignature and Registration................................8
Section 6. Transfer, Split-Up, Combination, and Exchange of Right
Certificates; Lost, Stolen, Destroyed, or Mutilated Right
Certificates.....................................................9
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights....9
Section 8. Cancellation and Destruction of Right Certificates..............11
Section 9. Reservation and Availability of Preferred Shares................11
Section 10. Preferred Shares Record Date....................................13
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights................................................13
Section 12. Certificate of Adjusted Purchase Price or Number of Shares......24
Section 13. Consolidation, Merger, Statutory Share Exchange, or Sale or
Transfer of Assets or Earning Power.............................24
Section 14. Fractional Rights and Fractional Shares.........................27
Section 15. Rights of Action................................................28
Section 16. Agreement of Right Holders......................................29
Section 17. Right Certificate Holder Not Deemed a Shareholder...............30
Section 18. Concerning the Rights Agent.....................................30
Section 19. Merger or Consolidation or Change of Name of Rights Agent.......31
Section 20. Duties of Rights Agent..........................................31
Section 21. Change of Rights Agent..........................................33
Section 22. Issuance of New Right Certificates..............................34
Section 23. Redemption......................................................34
Section 24. Exchange........................................................35
Section 25. Notice of Certain Events........................................37
Section 26. Notices.........................................................38
Section 27. Supplements and Amendments......................................39
Section 28. Successors......................................................39
Section 29. Benefits of this Agreement......................................39
Section 30. Severability....................................................40
Section 31. Governing Law...................................................40
Section 32. Counterparts....................................................40
Section 33. Descriptive Headings............................................40
Exhibit A -- Certificate of Designation, Preferences, and Rights of
Series A Junior Participating Preferred Shares
Exhibit B -- Form of Right Certificate
Exhibit C -- Summary of Rights to Purchase Preferred Shares
-i-
RIGHTS AGREEMENT
This Agreement is dated as of May 29, 2002, between Stellent, Inc., a
Minnesota corporation (the "Company"), and ▇▇▇▇▇ Fargo Bank
Minnesota, N.A. (the
"Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (individually a "Right" and
collectively the "Rights") for each Common Share (as defined in this Agreement)
of the Company outstanding at the Close of Business (as defined in this
Agreement) on June 13, 2002 (the "Record Date"), each Right initially
representing the right to purchase one-hundredth of a Preferred Share (as
defined in this Agreement), upon the terms and subject to the conditions set
forth in this Agreement, and has further authorized the issuance of one Right
(as that number may hereafter be adjusted pursuant to Section 11) with respect
to each Common Share that becomes outstanding (a) at any time between the Record
Date and the earliest of the Distribution Date, the Redemption Date, or the
Final Expiration Date (as those terms are defined in this Agreement) or (b) upon
the exercise or conversion, before the earlier of the Redemption Date or the
Final Expiration Date, of any option or other security exercisable for or
convertible into Common Shares, which option or other such security is
outstanding on the Distribution Date.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" means any Person (as that term is
defined in this Agreement) who or which, together with all Affiliates
and Associates (as those terms are defined in this Agreement) of such
Person, shall be the Beneficial Owner (as that term is defined in this
Agreement) of 15% or more of the Common Shares of the Company then
outstanding, but shall not include:
(i) the Company,
(ii) any wholly owned Subsidiary (as that term is defined in
this Agreement) of the Company,
(iii) any employee benefit plan of the Company or of any
Subsidiary of the Company, or
(iv) any entity holding Common Shares for or pursuant to the
terms of any such plan described in clause (iii) of this sentence (each
Person described in clauses (i) through (iv) is called an "Exempt
Person").
Notwithstanding the foregoing provisions of this Section 1(a),
no Person shall become an "Acquiring Person" as the result of an
acquisition of Common Shares by the Company that, by reducing the
number of Common Shares outstanding, increases the proportionate number
of shares beneficially owned by that Person to 15% or more of the
Common Shares of the Company then outstanding. If, however, a Person,
together with all Affiliates or Associates of that Person, becomes the
Beneficial Owner of 15% or more of the Common Shares of the Company
then outstanding by reason of share acquisitions by the Company and if
that Person or that Person's Affiliates or Associates, after such share
acquisitions by the Company, becomes the Beneficial Owner of any
additional Common Shares of the Company (other than pursuant to a stock
dividend, stock split, recapitalization or similar transaction that
does not affect the percentage of outstanding Common Shares
beneficially owned by that Person and its Affiliates and Associates),
and, immediately after becoming the Beneficial Owner of such additional
Common Shares, that Person, together with all Affiliates and Associates
of that Person, is the Beneficial Owner of 15% or more of the Common
Shares of the Company then outstanding, then that Person (unless that
Person is an Exempt Person) shall be deemed an "Acquiring Person."
An entity other than the Company or any wholly owned
Subsidiary of the Company holding Common Shares for or pursuant to the
terms of an employee benefit plan of the Company or of any Subsidiary
of the Company and in addition being the Beneficial Owner of Common
Shares that are not held for or pursuant to the terms of any such plan
shall be deemed to constitute an Acquiring Person, notwithstanding
anything herein stated, if, but only if, it, together with its
Affiliates and Associates, is the Beneficial Owner of 15% or more,
exclusive of those Common Shares held by it for or pursuant to the
terms of any such plan, of the Common Shares then outstanding.
Notwithstanding the foregoing provisions of this Section 1(a),
if the Board of Directors of the Company determines in good faith that
a Person who would otherwise be deemed an "Acquiring Person" pursuant
to the foregoing provisions of this Section 1(a), has become such
inadvertently (including, without limitation, because (A) the Person
was unaware that it beneficially owned a percentage of the Common
Shares that would otherwise cause the Person to be an "Acquiring
Person" or (B) the Person was aware of the extent of its Beneficial
Ownership but had no actual knowledge of the consequences of such
Beneficial Ownership under this Agreement), and without any intention
of changing or influencing control of the Company, and the Person
certifies in writing to the Company that it satisfies the criteria of
clause (A) or (B) above and divests as promptly as practicable a
sufficient number of Common Shares so that the Person would no longer
be deemed an "Acquiring Person," as defined pursuant to the foregoing
provisions of this Section 1(a), then that Person shall not be deemed
to be an "Acquiring Person" for any purposes of this Agreement.
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(b) "Affiliate" and "Associate" have the respective
meanings ascribed to those terms in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on
the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of,
and shall be deemed to "beneficially own," or have "beneficial
ownership" of, any securities:
(i) that the Person or any of the Person's Affiliates
or Associates beneficially owns, directly or indirectly,
including without limitation securities with respect to which
the Person or any of the Person's Affiliates or Associates has
"beneficial ownership" under Rule 13d-3 under the Exchange
Act;
(ii) that the Person or any of the Person's
Affiliates or Associates has, directly or indirectly:
(A) the right to acquire (whether the right
is exercisable immediately or only after the passage
of time) pursuant to any agreement, arrangement, or
understanding, whether or not in writing (other than
customary agreements with and between underwriters
and selling group members with respect to a bona fide
public offering of securities), or upon the exercise
of conversion rights, exchange rights, other rights
(other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not
be deemed the Beneficial Owner of, or to beneficially
own, or to have beneficial ownership of, any
securities pursuant to subsection (i), (ii), or (iii)
of this Section 1(c) solely because those securities
are tendered pursuant to a tender or exchange offer
made by or on behalf of the Person or any of the
Person's Affiliates or Associates until the tendered
securities are accepted for purchase or exchange; or
(B) the right to vote or dispose of
(including without limitation 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, or to have beneficial ownership of,
any securities pursuant to subsection (i), (ii), or
(iii) of this Section 1(c) solely because of the
right to vote the securities pursuant to an
agreement, arrangement or understanding if the
agreement, arrangement or understanding to vote those
securities (1) arises solely from a revocable proxy
or consent given to the Person or any of the Person's
Affiliates or Associates in response to a public
proxy or consent solicitation made pursuant to, and
in accordance with, the applicable rules and
regulations under the Exchange Act and (2) is not
also then reportable by such Person on Schedule 13D
under the Exchange Act (or
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any comparable or successor report) as being
beneficially owned by such Person; or
(iii) that are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which that Person (or any of that Person's
Affiliates or Associates) has any agreement, arrangement, or
understanding, whether or not in writing (other than customary
agreements with and between underwriters and selling group
members with respect to a bona fide public offering of
securities), for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in the
final proviso to subsection (ii) of this Section 1(c)), or
disposing of any voting securities of the Company.
Notwithstanding anything in this Section 1(c) to the contrary,
the phrase "then outstanding," when used with reference to a Person's
beneficial ownership of securities of the Company, means the number of
such securities then issued and outstanding together with the number of
such securities not then actually issued and outstanding that the
Person would be deemed to beneficially own under this Agreement.
(d) "Business Day" means any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York
or
Minnesota are authorized or obligated by law or executive order to
close.
(e) "Close of Business" on any given date means 5:00
p.m., Central Time, on that date; but if that date is not a Business
Day, it means 5:00 p.m., Central Time, on the next Business Day.
(f) "Common Shares," when used with reference to the
Company, means shares of Common Stock, $.01 par value per share (as the
par value may be changed from time to time), of the Company. "Common
Shares," when used with reference to any Person other than the Company,
means the capital stock (or equity interest) with the greatest voting
power of the other Person or, if the other Person is a Subsidiary of
another Person, the Person or Persons that ultimately control the
first-mentioned Person.
(g) "Distribution Date" has the meaning set forth in Section
3.
(h) "Final Expiration Date" has the meaning set forth in
Section 7.
(i) "Person" means any individual, firm, corporation,
partnership, limited liability company, trust, or other entity, and
includes any successor (by merger or otherwise) of any such entity.
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(j) "Preferred Shares" means the Series A Junior
Participating Preferred Stock, $.01 par value per share (as such par
value may be changed from time to time), of the Company having the
rights and preferences set forth in the form of Certificate of
Designation, Preferences, and Rights attached to this Agreement as
Exhibit A.
(k) "Redemption Date" has the meaning set forth in Section 7.
(l) "Section 11(a)(ii) Event" means an event described in
the first sentence of Section 11(a)(ii).
(m) "Section 13 Event" means any event described in
clause (w), (x), (y), or (z) of Section 13(a).
(n) "Shares Acquisition Date" means the first date of
public announcement (which, for purposes of this definition, includes,
without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such.
(o) "Subsidiary" of any Person means any corporation or
other entity of which a majority of the voting power of the voting
equity securities or other equity interests entitled to vote in the
election of directors (or Persons with comparable responsibilities if
the entity has no directors) is beneficially owned, directly or
indirectly, by the Person, or otherwise controlled by the Person.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3, shall before the Distribution Date also be the
holders of the Common Shares) in accordance with the terms and conditions of
this Agreement, and the Rights Agent hereby accepts the appointment. The Company
may from time to time appoint such co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issue of Right Certificates.
(a) Until the earlier of:
(i) the Close of Business on the 15th day after the
Shares Acquisition Date, or
(ii) the Close of Business on the 15th day (or such
later date as may be determined by action of the Board of
Directors of the Company before such time as any Person
becomes an Acquiring Person) after the date of the first
public announcement (as defined in Rule 14d-2 under the
Exchange Act) by any Person (other than an Exempt Person)
relating to a tender or exchange offer the
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consummation of which would result in beneficial ownership by
a Person (other than an Exempt Person) of 15% or more of the
then-outstanding Common Shares (including any such date that
is after the date of this Agreement and before the issuance of
the Rights, the earlier of such dates being herein referred to
as the "Distribution Date"),
(x) the Rights will be evidenced (subject to
the provisions of Section 3(b)) by the certificates
for Common Shares registered in the names of the
holders thereof (which certificates shall also be
deemed to be Right Certificates when the context so
requires) and not by separate Right Certificates, and
(y) the right to receive Right Certificates
will be transferable only in connection with the
transfer of Common Shares.
As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign,
and the Company will send or cause to be sent (and the Rights Agent
will, if requested, send) by first-class, postage-prepaid mail, to each
record holder of Common Shares as of the Close of Business on the
Distribution Date, at the address of the holder shown on the records of
the Company, one or more Right Certificates, in substantially the form
of Exhibit B (the "Right Certificates"), evidencing one Right for each
Common Share so held, subject to adjustment pursuant to Section 11(i).
If an adjustment in the number of Rights per Common Share has been made
pursuant to Section 11(i), at the time Right Certificates are
distributed, the Company may, to the extent provided in Section 14(a),
make the necessary and appropriate rounding adjustments (as set forth
in Section 14(a)) so that Right Certificates are distributed
representing only whole numbers of Rights and pay cash in lieu of
fractional Rights pursuant to Section 14(a). As of and after the
Distribution Date, the Rights will be evidenced solely by those Right
Certificates.
(b) On the Record Date, or as soon as practicable
thereafter, the Company will send a copy of a Summary of Rights to
Purchase Preferred Shares, in substantially the form of Exhibit C (the
"Summary of Rights"), by first-class, postage-prepaid mail, to each
record holder of Common Shares as of the Close of Business on the
Record Date, at the address of the holder shown on the records of the
Company. With respect to certificates for Common Shares outstanding as
of the Record Date, until the Distribution Date (or the earlier
Redemption Date or Final Expiration Date), the Rights will be evidenced
by such certificates registered in the names of the holders thereof,
and the registered holders of the Common Shares shall also be the
registered holders of the associated Rights. Until the Distribution
Date (or the earlier of the Redemption Date or the Final Expiration
Date), the surrender for transfer of any certificate for Common Shares
(including, without limitation, the surrender for transfer of any
certificate for Common Shares outstanding on the Record Date), with or
without a copy of the
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Summary of Rights attached thereto, shall also constitute the transfer
of the Rights associated with the Common Shares represented thereby.
(c) Certificates for Common Shares that become
outstanding after the Record Date and (i) before the earliest of the
Distribution Date, the Redemption Date, or the Final Expiration Date or
(ii) upon the exercise or conversion, before the earlier of the
Redemption Date or the Final Expiration Date, of any option or other
security exercisable for or convertible into Common Shares, which
option or other security is outstanding on the Distribution Date, shall
have impressed on, printed on, written on, or otherwise affixed to them
the following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement between
Stellent, Inc. and ▇▇▇▇▇ Fargo Bank
Minnesota, N.A., dated as
of May 29, 2002 (the "Rights Agreement"), the terms of which
(including restrictions on the transfer of such Rights) are
hereby incorporated herein by reference and a copy of which is
on file at the principal executive offices of the Company.
Under certain circumstances, as set forth in the Rights
Agreement, the Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor from the holder.
Under certain circumstances, as set forth in the Rights
Agreement, Rights that are or were acquired or beneficially
owned by an Acquiring Person or any Associate or Affiliate
thereof (as those terms are defined in the Rights Agreement)
may become void.
With respect to certificates containing the foregoing legend,
until the earliest of the Distribution Date, the Redemption Date, or
the Final Expiration Date, the Rights associated with the Common Shares
represented by those certificates shall be evidenced by the
certificates alone, the registered holders of the Common Shares shall
also be the registered holders of the associated Rights, and the
surrender for transfer of any such certificate shall also constitute
the transfer of the Rights associated with the Common Shares
represented thereby. If the Company purchases or acquires any Common
Shares after the Record Date but before the Distribution Date, any
Rights associated with those Common Shares shall be deemed canceled and
retired so that the Company shall not be entitled to exercise any
Rights associated with the Common Shares that are no longer
outstanding.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase Preferred Shares and of assignment to be printed
on the reverse thereof) shall be in substantially the form of Exhibit B and may
have such marks of identification or
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designation and such legends, summaries, or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable law, rule,
or regulation (including, without limitation, any rule or regulation of any
stock exchange or automated quotation system on which the Rights may from time
to time be listed) or to conform to usage or to reflect adjustments to the
Rights made pursuant to this Agreement. Subject to Sections 11 and 22, the
initial Right Certificates, whenever distributed, shall entitle the holders
thereof to purchase such number of one-hundredths of a Preferred Share as shall
be set forth therein at the price per one-hundredth of a Preferred Share set
forth therein (the price per one-hundredth of a Preferred Share being herein
called the "Purchase Price"), but the amount and type of securities purchasable
upon the exercise of each Right and the Purchase Price shall be subject to
adjustment as provided in this Agreement.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of
the Company by any one of its Chairman of the Board, its Chief
Executive Officer, its President, its Chief Financial Officer, or any
of its Vice Presidents, either manually or by facsimile signature. The
Right Certificates shall be countersigned, either manually or by
facsimile signature, by the Rights Agent and shall not be valid for any
purpose unless so countersigned. If any officer of the Company who
shall have signed or whose facsimile signature shall appear on any of
the Right Certificates ceases to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the
Company, such Right Certificates, nevertheless, may be countersigned by
the Rights Agent and issued and delivered by the Company with the same
force and effect as though the person who signed or whose facsimile
signature shall appear on such Right Certificates had not ceased to be
such officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any person who, at the actual date of the
signing of such Right Certificate, shall be a proper officer of the
Company to sign such Right Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an
officer.
(b) Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at its principal office or the office or
offices designated as the appropriate place for surrender of Right
Certificates upon exercise or transfer, books for registration and
transfer of the Right Certificates. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right
Certificates and the date and certificate number of each of the Right
Certificates.
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Section 6. Transfer, Split-Up, Combination, and Exchange of Right
Certificates; Lost, Stolen, Destroyed, or Mutilated Right Certificates.
(a) Subject to Section 14, at any time after the Close of
Business on the Distribution Date, and at or before the Close of
Business on the earlier of the Redemption Date or the Final Expiration
Date, any Right Certificate or Right Certificates (other than Right
Certificates representing Rights that have become void pursuant to
Section 11(a)(ii) or that have been exchanged pursuant to Section 24)
may be transferred, split up, combined, or exchanged for another Right
Certificate or Right Certificates, entitling the registered holder to
purchase a like number of one-hundredths of a Preferred Share as the
Right Certificate or Right Certificates surrendered then entitled such
holder (or former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine, or exchange
any Right Certificate or Right Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up,
combined, or exchanged at the office or offices of the Rights Agent
designated for such purpose. Thereupon the Rights Agent shall, subject
to Section 14, countersign and deliver to the Person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment by the registered holder of
a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split-up, combination, or
exchange of Right Certificates. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with respect
to the transfer of any such surrendered Right Certificate until the
registered holder shall have duly completed and executed the form of
assignment on the reverse side of such Right Certificate and shall have
provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) of such Right Certificate or
Affiliates or Associates thereof as the Company shall reasonably
request.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction, or mutilation of a Right Certificate, and, in case of
loss, theft, or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company's request, reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the
Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed, or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Subject to Section 11(a)(ii), the registered holder
of any Right Certificate may exercise the Rights evidenced thereby
(except as otherwise provided
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in this Agreement) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the
form of election to purchase on the reverse side thereof duly completed
and executed, to the Rights Agent at the office or offices of the
Rights Agent designated for such purpose, together with payment of the
Purchase Price for each one-hundredth of a Preferred Share as to which
the Rights are exercised, before the earliest of:
(i) the Close of Business on June 13, 2012 (the
"Final Expiration Date");
(ii) the time at which the Rights are redeemed as
provided in Section 23 (the "Redemption Date"); or
(iii) the time at which such Rights are exchanged as
provided in Section 24.
(b) The Purchase Price for each one-hundredth of a
Preferred Share purchasable pursuant to the exercise of a Right shall
initially be $75, shall be subject to adjustment from time to time as
provided in Sections 11 and 13, and shall be payable in lawful money of
the United States of America in accordance with Section 7(c).
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly
completed and executed, accompanied by payment of the Purchase Price
for the shares to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 in cash, or by certified check
or bank cashier's check or money order payable to the order of the
Company, the Rights Agent shall, subject to Section 20(k), thereupon
promptly:
(i) (A) requisition from any transfer agent of the
Preferred Shares (or make available, if the Rights Agent is
the transfer agent for such shares) certificates for the
number of Preferred Shares to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply
with all such requests, or (B) if the Company shall have
elected to deposit the total number of Preferred Shares
issuable upon exercise of the Rights under this Agreement with
a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one-hundredths
of a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such
receipts shall be deposited by the transfer agent with the
depositary agent) and the Company hereby directs the
depositary agent to comply with such request;
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(ii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of
fractional interests in shares in accordance with Section 14;
(iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate,
registered in such name or names as may be designated by such
holder; and
(iv) when appropriate, after receipt, deliver such
cash for fractional interests to or upon the order of the
registered holder of such Right Certificate.
(d) If the registered holder of any Right Certificate
exercises less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to the
registered holder of such Right Certificate or to the holder's duly
authorized assigns, subject to Section 14.
(e) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated
to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section
unless such registered holder shall have (i) duly completed and
executed the form of election to purchase set forth on the reverse side
of the Right Certificate surrendered for such exercise and (ii)
provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) of such Right Certificate or
Affiliates or Associates thereof as the Company may reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split-up,
combination, or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Right Certificates
to the Company.
Section 9. Reservation and Availability of Preferred Shares.
(a) The Company will cause to be reserved and kept
available out of its authorized and unissued Preferred Shares the
number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights.
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(b) The Company will prepare and file, as soon as
practicable following the Shares Acquisition Date, a registration
statement under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the Rights and the Company's securities
purchasable upon exercise of the Rights on an appropriate form, and use
its best efforts to cause such registration statement to:
(i) become effective as soon as practicable after
such filing, and
(ii) remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the
earlier of (A) the date as of which the Rights are no longer
exercisable for such securities or (B) the Final Expiration
Date.
The Company will also take such action as may be appropriate under, or
to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights. The
Company may temporarily suspend, for a period of time not to exceed 90
days after the date the registration statement is filed, the
exercisability of the Rights in order to permit the registration
statement to become effective. Upon any such suspension, the Company
shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. In
addition, if the Company determines that a registration statement is
required following the Distribution Date, the Company may temporarily
suspend the exercisability of the Rights until such time as a
registration statement has become effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite qualification in such
jurisdiction shall not have been obtained or the exercise thereof is
not permitted under applicable law.
(c) The Company will take all such action as may be
necessary to ensure that all Preferred Shares delivered upon exercise
of Rights shall, at the time of delivery of the certificates for such
Preferred Shares (subject to payment of the Purchase Price and any
applicable transfer taxes), be duly and validly authorized and issued
and fully paid and nonassessable shares.
(d) The Company will pay when due and payable all federal
and state transfer taxes and charges that may be payable in respect of
the issuance or delivery of the Right Certificates or of any Preferred
Shares upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax that may be payable in respect of any
transfer or delivery of Right Certificates to a person other than, or
the issuance or delivery of certificates or depositary receipts for the
Preferred Shares in a name other than that of, the registered holder of
the Right Certificate evidencing Rights surrendered for exercise, or to
issue or deliver any certificates or depositary receipts for Preferred
Shares upon the exercise of any Rights, until any such tax shall have
been paid
12
(any such tax being payable by the holder of such Right Certificate at
the time of surrender) or until it has been established to the
Company's reasonable satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date. Each person in whose name any
certificate for Preferred Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Shares transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next Business Day on which the Preferred Shares
transfer books of the Company are open. Before the exercise of the Rights
evidenced thereby, the holder of a Right Certificate as such shall not be
entitled to any rights of a holder of Preferred Shares for which the Rights
shall be exercisable, including without limitation, the right to vote, to
receive dividends or other distributions, or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a)(i) If the Company shall, at any time after the date of
this Agreement,
(A) declare a dividend on the Preferred
Shares payable in Preferred Shares,
(B) subdivide the outstanding Preferred
Shares,
(C) combine the outstanding Preferred Shares
into a smaller number of Preferred Shares, or
(D) issue any shares of its capital stock in
a reclassification of the Preferred Shares (including
any such reclassification in connection with a
consolidation, merger, or statutory share exchange in
which the Company is the continuing, surviving, or
acquiring corporation), except as otherwise provided
in this Section 11(a),
then the Purchase Price in effect at the time of the record
date for such dividend or of the effective date of such
subdivision, combination, or reclassification, and the number
and kind of shares of capital stock issuable on such date
pursuant to
13
the exercise of the Rights, shall be proportionately adjusted
so that the holder of any Right exercised after such time
shall be entitled to receive, upon payment of the Purchase
Price then in effect (and any applicable transfer taxes), the
aggregate number and kind of shares of capital stock that, if
such Right had been exercised immediately before such date and
at a time when the Preferred Shares transfer books of the
Company were open, such holder would have owned upon such
exercise and been entitled to receive by virtue of such
dividend, subdivision, combination, or reclassification;
provided, however, that in no event shall the consideration to
be paid upon exercise of one Right be less than the aggregate
par value of the shares of capital stock of the Company
issuable upon exercise of one Right. If an event occurs that
would require an adjustment under both this Section 11(a)(i)
and Section 11(a)(ii), the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made
before, any adjustment required under Section 11(a)(ii).
(ii) Subject to Section 24, if any Person becomes an
Acquiring Person (other than pursuant to any Section 13 Event
occurring after the Distribution Date or within 15 days prior
thereto), proper provision shall be made so that each holder
of a Right, subject to Section 11(a)(iii), shall thereafter
have a right to receive, upon exercise thereof by payment of
the amount equal to the product of the number of
one-hundredths of a Preferred Share that would otherwise be
issuable upon exercise of a Right and the then-current
Purchase Price in accordance with the terms of this Agreement,
in lieu of Preferred Shares, such number of Common Shares of
the Company equal to the result obtained by (x) multiplying
the then-current Purchase Price by the number of
one-hundredths of a Preferred Share for which a Right is
exercisable immediately before the occurrence of the Section
11(a)(ii) Event and (y) dividing that product by 50% of the
then-current per-share market price of the Company's Common
Shares (determined pursuant to Section 11(d)) on the date of
such occurrence.
From and after the first occurrence of a Section
11(a)(ii) Event or a Section 13 Event, any Rights that are
beneficially owned by any Acquiring Person (or any Associate
or Affiliate thereof) or were beneficially owned by any
Acquiring Person (or any Associate or Affiliate thereof) after
the Acquiring Person became an Acquiring Person shall become
void without any further action and no holder of such Rights
shall thereafter have any rights to exercise such Rights or
any other rights whatsoever with respect to such Rights,
whether under this Agreement or otherwise. No Right
Certificate shall be issued pursuant to Section 3 that
represents Rights that would be void pursuant to the preceding
sentence; no Right Certificate shall be issued at any time
upon the transfer of any Rights to an Acquiring Person whose
Rights would be void pursuant to the preceding sentence or any
Associate or Affiliate of such an Acquiring Person or to any
nominee of such Acquiring Person, Associate, or
14
Affiliate; and any Right Certificate delivered to the Rights
Agent for transfer to an Acquiring Person or any Associate or
Affiliate of such Acquiring Person whose Rights would be void
pursuant to the preceding sentence shall be canceled. The
Company shall use all reasonable efforts to ensure that the
provisions of this Section 11(a)(ii) are complied with, but
shall have no liability to any holder of a Right Certificate
or other Person as a result of its failure in good faith to
make any determinations with respect to an Acquiring Person or
its Affiliates or Associates.
(iii) If, on the date of the occurrence of a Section
11(a)(ii) Event (the "Adjustment Date"), the Company does not
have sufficient authorized, unissued, and unreserved Common
Shares available to permit the exercise in full of all Rights
that are exercisable on the Adjustment Date for the number of
Common Shares per Right provided for in Section 11(a)(ii),
then the Exercise Price (as defined below) and the number of
Common Shares to be delivered by the Company upon exercise of
a Right shall be further adjusted as provided in this Section
11(a)(iii).
(1) Definitions:
(A) The "Aggregate Market Value" is
the product of (i) the number of Available
Shares times (ii) the current per-share
market price of the Common Shares on the
Adjustment Date, determined under Section
11(d).
(B) The "Available Shares" are all
unreserved Common Shares that are authorized
and unissued immediately before the
Adjustment Date.
(C) The "Exercise Price" is the
amount of the payment that must be made by
the holder of a Right in connection with the
exercise of the Right immediately before the
Adjustment Date.
(D) The "Deficiency" is the amount
by which (x) two times the Exercise Price
exceeds (y) the quotient obtained by
dividing the Aggregate Market Value by the
number of Rights remaining outstanding
immediately before the Adjustment Date (the
"Remaining Rights") (which number shall not
include the Rights that are beneficially
owned by any Acquiring Person (or any
Associate or Affiliate thereof) or were
beneficially owned by any Acquiring Person
(or any Associate or Affiliate thereof)
after the Acquiring Person became an
Acquiring Person that shall have become void
under Section 11(a)(ii)).
15
(2) If the Deficiency is less than or equal
to the Exercise Price, then:
(A) the number of Common Shares to
be delivered by the Company upon exercise of
a Right shall be adjusted to equal the
number of Available Shares divided by the
number of Remaining Rights; and
(B) the amount of cash required to
be delivered by the holder of a Right upon
the exercise thereof shall be adjusted (the
"New Exercise Price") to equal the Exercise
Price minus the Deficiency; provided,
however, that in no event will the New
Exercise Price be less than the aggregate
par value of the Common Shares required to
be delivered upon the exercise of a Right
pursuant to subparagraph (2)(A) above.
(3) If the Deficiency is greater than the
Exercise Price, then:
(A) the number of Common Shares to
be delivered by the Company upon exercise of
a Right shall be adjusted to equal the
quotient obtained by dividing the Exercise
Price by the per-share market price of the
Common Shares on the Adjustment Date;
(B) the New Exercise Price shall
equal the aggregate par value of the Common
Shares required to be delivered upon the
exercise of one Right pursuant to
subparagraph (3)(A) above; and
(C) in lieu of issuing Common Shares
(in whole or in part upon the exercise of
Rights) the Company may issue, upon the
exercise of Rights at the New Exercise
Price, other equity securities of the
Company (including, without limitation,
shares, or units or fractions of shares, of
preferred stock, which may include Preferred
Shares) that the Board of Directors of the
Company has determined to have substantially
the same value, voting rights, and other
rights as Common Shares (such equity
securities are called "common share
equivalents"). To the extent that such
common share equivalents (or fractions
thereof) are substituted for Common Shares
upon exercise of the Rights following the
occurrence of a Section 11(a)(ii) Event,
they shall be substituted on a pro-rata
basis with respect to all Rights (other
16
than Rights that are beneficially owned by
any Acquiring Person (or any Associate or
Affiliate thereof) or were beneficially
owned by any Acquiring Person (or any
Associate or Affiliate thereof) after the
Acquiring Person became an Acquiring Person
that shall have become void under Section
11(a)(ii)). Such common share equivalents
shall not be included in Available Shares,
and all of the Available Shares shall be
reserved, as of the Adjustment Date, for
issuance, on a pro-rata basis, upon exercise
of the Rights and may not be substituted for
with common share equivalents upon the
exercise of any Right except to the extent
that the number of Common Shares required to
be delivered under subparagraph (3)(A) upon
the exercise of such Right exceeds the
quotient of the number of Available Shares
divided by the number of Remaining Rights.
(4) If, at the time any adjustment is
required pursuant to this Section 11(a)(iii), the
Common Shares shall have no par value, then for the
purposes of this Section 11(a)(iii), the par value of
the Common Shares shall be deemed to be $.01 per
share.
(5) If there are not sufficient authorized
but unissued and unreserved Common Shares (or common
share equivalents the issuance of which is permitted
under Section 11(a)(iii)(3)(C)) to permit the
exercise in full of the Rights in accordance with
this Section 11(a)(iii), the Company shall use its
best efforts to cause the authorization of sufficient
additional Common Shares or common share equivalents
to permit such exercise and, if the Board of
Directors of the Company shall determine in good
faith that it is likely that sufficient additional
Common Shares or common share equivalents could be
authorized to permit such exercise, the Company may
suspend the exercisability of the Rights for a period
not to exceed 90 days (and not beyond the Final
Expiration Date) in order to seek any authorization
of additional Common Shares or common share
equivalents. In the event of any such suspension, the
Company shall issue a public announcement stating
that the exercisability of the Rights has been
temporarily suspended, as well as a public
announcement at such time as the suspension is no
longer in effect.
(b) If the Company fixes a record date for the issuance
of rights, options, or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar days after
such record date) to subscribe for or purchase Preferred Shares (or
shares having the same rights, privileges, and preferences as the
Preferred Shares ("equivalent preferred shares")) or securities
convertible into Preferred Shares or equivalent preferred shares at a
price per Preferred Share or equivalent preferred share
17
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the current
per-share market price of the Preferred Shares (as determined pursuant
to Section 11(d)) on the record date, the Purchase Price to be in
effect after the record date shall be determined by multiplying the
Purchase Price in effect immediately before the record date by a
fraction, the numerator of which shall be the number of Preferred
Shares outstanding on the record date, plus the number of Preferred
Shares that the aggregate offering price of the total number of
Preferred Shares and/or equivalent preferred shares so to be offered
(and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase, at such current per-share
market price, and the denominator of which shall be the number of
Preferred Shares outstanding on such record date, plus the number of
additional Preferred Shares and/or equivalent preferred shares to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one
Right. If such subscription price may be paid in a consideration part
or all of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the
Rights Agent and the holders of the Rights. Preferred Shares owned by
or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed; and in the event
that such rights, options, or warrants are not so issued, the Purchase
Price shall again be adjusted to be the Purchase Price that would then
be in effect if the record date had not been fixed.
(c) If the Company fixes a record date for the making of
a distribution to all holders of the Preferred Shares (including any
such distribution made in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation or in a
statutory share exchange) of evidences of indebtedness or cash or
non-cash assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Shares) or subscription rights or
warrants (excluding those referred to in Section 11(b)), the Purchase
Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately before such record
date by a fraction, the numerator of which shall be the current
per-share market price of the Preferred Shares (as determined under
Section 11(d)) on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders
of the Rights) of the portion of the evidences of indebtedness or cash
or non-cash assets so to be distributed on, or of such subscription
rights or warrants applicable to, one Preferred Share, and the
denominator of which shall be such then-current per-share market price
of the Preferred
18
Shares; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par
value of the shares of capital stock of the Company to be issued upon
exercise of one Right. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted
to be the Purchase Price that would then be in effect if such record
date had not been fixed.
(d)(i) For the purpose of any computation hereunder, the
"current per-share market price" of any security (a "Security" for the
purpose of this Section 11(d)(i)) on any date shall be deemed to be the
average of the daily closing prices per share of the Security for the
30 consecutive Trading Days (as that term is defined below) immediately
before such date; provided, however, that if the current per-share
market price of the Security is determined during a period following
the announcement by the issuer of such Security of:
(A) a dividend or distribution on such
Security payable in such Security or securities
convertible into such Security (other than the
Rights), or
(B) any subdivision, combination or
reclassification of such Security, and before the
expiration of 30 Trading Days after the ex-dividend
date for such dividend or distribution, or the record
date for such subdivision, combination or
reclassification,
then, and in each such case, the current per-share market price shall
be appropriately adjusted to reflect the current market price per share
equivalent of such Security.
The closing price for each day shall be the last sale price,
regular way, or, if no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case:
(w) as reported on the principal
consolidated transaction-reporting system with
respect to securities listed or admitted to trading
on the New York Stock Exchange or,
(x) if the Security is not listed or
admitted to trading on the New York Stock Exchange,
as reported on the principal consolidated
transaction-reporting system with respect to
securities listed on the principal national
securities exchange on which the Security is listed
or admitted to trading or,
(y) if the Security is not listed or
admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted,
the
19
average of the high bid and low asked prices on the
over-the-counter market, as reported on the Nasdaq
National Market, the Nasdaq SmallCap Market, or any
similar system then in use, or,
(z) if on any such day the Security is not
so quoted or reported, the average of the closing bid
and asked prices as furnished by a professional
market-maker making a market in the Security selected
by the Board of Directors of the Company.
Except as provided in Section 11(d)(ii) with respect to Preferred
Shares, if on any such day no professional market-maker is making a
market in the Security, the fair value of such Security on such day as
determined in good faith by the Board of Directors of the Company
(whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders
of the Rights) shall be used in lieu of the closing price for such day.
The term "Trading Day" means a day on which the principal national
securities exchange on which the Security is listed or admitted to
trading is open for the transaction of business or, if the Security is
not listed or admitted to trading on any national securities exchange,
a Business Day.
(ii) If the Preferred Shares are not publicly held or
listed or traded in a manner described in Section 11(d)(i),
then, notwithstanding anything to the contrary provided in
Section 11(d)(i), the "current per-share market price" of the
Preferred Shares shall be conclusively deemed to be the
current per-share market price of the Common Shares as
determined pursuant to Section 11(d)(i) (appropriately
adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date of this Agreement)
multiplied by 100. If neither the Common Shares nor the
Preferred Shares are publicly held or so listed or traded, the
"current per-share market price" of the Preferred Shares shall
mean the fair value per share as determined in good faith by
the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent
and shall be binding on the Rights Agent and the holders of
the Rights.
(e) Anything herein to the contrary notwithstanding,
except as provided in the third sentence of this Section 11(e), no
adjustment in the Purchase Price shall be required unless the
adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments that by reason
of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest cent or
to the nearest one-millionth of a Preferred Share or ten-thousandth of
any other share or security, as the case may be. Notwithstanding the
first sentence of this Section 11(e), any adjustment required by this
Section 11, but for the first sentence of this Section 11(e), shall be
made no later than the earlier of (i) three
20
years from the date of the transaction that requires the adjustment or
(ii) the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a) or Section 13(a), the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock
of the Company other than Preferred Shares, thereafter the number of
such other shares so receivable upon exercise of any Right shall be
subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Sections 11(a), (b), and (c), and the
provisions of Sections 7, 9, 10, 13, and 14 with respect to the
Preferred Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price under this
Agreement shall evidence the right to purchase, at the adjusted
Purchase Price, the number of one-hundredths of a Preferred Share (or
other securities) purchasable from time to time under this Agreement
upon exercise of the Rights, all subject to further adjustment as
provided in this Agreement.
(h) Unless the Company shall have exercised its election
as provided in Section 11(i), upon each adjustment of the Purchase
Price as a result of the calculations made in Sections 11(b) and (c),
each Right outstanding immediately before the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one-hundredths of a Preferred Share
(calculated to the nearest one-millionth of a Preferred Share) obtained
by (i) multiplying (x) the number of one-hundredths of a share covered
by a Right immediately before this adjustment by (y) the Purchase Price
in effect immediately before such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of one-hundredths of a
Preferred Share purchasable upon the exercise of a Right. Each of the
Rights outstanding after such adjustment of the number of Rights shall
be exercisable for the number of one-hundredths of a Preferred Share
for which a Right was exercisable immediately before such adjustment.
Each Right held of record before such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest
ten-thousandth) obtained by dividing the Purchase Price in effect
immediately before adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and,
if known at the time, the amount of the adjustment to be made. This
record date may be the date on which the Purchase Price is adjusted or
any
21
day thereafter, but, if the Right Certificates have been issued on or
after the Distribution Date, shall be at least 10 days later than the
date of the public announcement.
If Right Certificates have been issued on or after the
Distribution Date, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject
to Section 14, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such
holders before the date of adjustment, and upon surrender thereof, if
required by the Company, new Right Certificates evidencing all the
Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed, and
countersigned in the manner provided for in this Agreement, shall bear,
at the option of the Company, the adjusted Purchase Price, and shall be
registered in the names of the holders of record of Right Certificates
on the record date specified in the public announcement.
(j) Regardless of any adjustment or change in the
Purchase Price or the number of one-hundredths of a Preferred Share
issuable upon the exercise of the Rights, the Right Certificates
theretofore issued may continue to express the Purchase Price and the
number of one-hundredths of a Preferred Share that were expressed at
the time of the issuance of such Right Certificates under this
Agreement.
(k) Before taking any actions that would cause an
adjustment reducing the Purchase Price below one-hundredth of the then
par value, if any, of the Preferred Shares issuable upon exercise of
the Rights, the Company shall take any corporate action that may, in
the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Preferred Shares
at such adjusted Purchase Price.
(l) If this Section 11 requires that an adjustment in
the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of
such event the issuing to the holder of any Right exercised after such
record date of the Preferred Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise over and
above the Preferred Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect before such adjustment; provided, however,
that the Company shall deliver to such holder a due ▇▇▇▇ or other
appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such
adjustment.
22
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that the Board of
Directors of the Company shall determine to be advisable in order that
any:
(i) consolidation or subdivision of the Preferred
Shares,
(ii) issuance wholly for cash of any of the Preferred
Shares at less than the current per-share market price,
(iii) issuance wholly for cash of Preferred Shares or
securities that by their terms are convertible into or
exchangeable for Preferred Shares,
(iv) dividends on Preferred Shares payable in
Preferred Shares, or
(v) issuance of rights, options, or warrants referred
to in Section 11(b),
hereafter made by the Company to holders of its Preferred Shares shall
not be taxable to such shareholders.
(n) Anything in this Agreement or the Rights to the
contrary notwithstanding, if at any time after the date of this
Agreement and before the Distribution Date, the Company (i) declares or
pays any dividend on the Common Shares payable in Common Shares or (ii)
effects a subdivision, combination, or consolidation of the Common
Shares (by reclassification or otherwise than by payment of dividends
on the Common Shares payable in Common Shares) into a greater or lesser
number of Common Shares, then in any such case:
(x) the number of one-hundredths of a Preferred Share
purchasable after such event upon proper exercise of each
Right shall be determined by multiplying the number of
one-hundredths of a Preferred Share so purchasable immediately
before such event by a fraction, the numerator of which is the
number of Common Shares outstanding immediately before such
event and the denominator of which is the number of Common
Shares outstanding immediately after such event, and
(y) each Common Share outstanding immediately after
such event shall have issued with respect to it that number of
Rights that each Common Share outstanding immediately before
such event had issued with respect to it.
The adjustments provided for in this Section 11(n) shall be
made successively whenever such a dividend is declared or paid or such
a subdivision, combination, or
23
consolidation is effected. If an event occurs that would require an
adjustment under Section 11(a)(ii) and this Section 11(n), the
adjustments provided for in this Section 11(n) shall be in addition to,
and before, any adjustment required pursuant to Section 11(a)(ii).
(o) If any adjustment in the Purchase Price pursuant to
paragraph (b) or (c) of this Section 11 would not be permitted by law,
under the Company's Articles of Incorporation, or under the Certificate
of Designation, Preferences, and Rights establishing the Preferred
Shares, no such issuance of securities or distribution of evidences of
indebtedness or other assets or subscription rights or warrants, as the
case may be, that would require such an adjustment but for the
limitations established by law, the Company's Articles of
Incorporation, or such Certificate of Designation, Preferences, and
Rights shall be made by the Company.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13, the Company
shall (a) promptly prepare a certificate setting forth such adjustment and a
brief statement of the facts accounting for such adjustment, (b) promptly file
with the Rights Agent and with each transfer agent for the Common Shares or the
Preferred Shares a copy of such certificate, and (c) if such adjustment is made
after the Distribution Date, mail a brief summary thereof to each holder of
record of a Right Certificate in accordance with Section 25. The Rights Agent
shall be fully protected in relying on such certificate and on any adjustment
therein contained.
Section 13. Consolidation, Merger, Statutory Share Exchange, or Sale or
Transfer of Assets or Earning Power.
(a) If, on or after the Distribution Date or within 15 days
prior thereto, directly or indirectly,
(w) the Company shall consolidate with, or merge with
and into, any other Person, and the Company is not the
continuing or surviving corporation of such consolidation or
merger,
(x) any Person shall consolidate with the Company or
merge with and into the Company and the Company shall be the
continuing or surviving corporation of such consolidation or
merger and, in connection with such consolidation or merger,
all or part of the outstanding Common Shares of the Company
held by existing shareholders of the Company shall be changed
into or exchanged for stock or other securities of any other
Person (or the Company) or money or any other property (except
as a result of the exercise of statutory dissenters' rights),
24
(y) the Company shall effect a statutory share
exchange with outstanding Common Shares of the Company being
exchanged for stock or other securities of any other Person,
money, or other property, or
(z) the Company shall sell or otherwise transfer (or
one or more of its Subsidiaries shall sell or otherwise
transfer), in one or a series of related transactions, assets
or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company
or one or more of its wholly owned Subsidiaries),
then, and in each such case, proper provision shall be made so that:
(i) each holder of a Right (except as otherwise
provided herein) shall thereafter have the right to receive,
upon the exercise thereof by payment of the amount equal to
the product of the number of one-hundredths of a Preferred
Share that would otherwise be issuable upon exercise of a
Right and the then-current Purchase Price in accordance with
the terms of this Agreement and in lieu of Preferred Shares,
such number of validly authorized and issued, fully paid,
nonassessable, and freely tradable Common Shares of the
Principal Party (as defined below), not subject to any liens,
encumbrances, rights of first refusal, or adverse claims, as
shall be equal to the result obtained by (A) multiplying the
then-current Purchase Price by the number of one-hundredths of
a Preferred Share for which a Right is, immediately before the
occurrence of the Section 13 Event, exercisable and (B)
dividing that product by 50% of the then-current per-share
market price of the Common Shares of such Principal Party
(determined under Section 11(d)) on the date of consummation
of such Section 13 Event;
(ii) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such merger,
consolidation, statutory share exchange, sale or transfer, all
the obligations and duties of the Company pursuant to this
Agreement;
(iii) the term "Company" shall thereafter be deemed
to refer to such Principal Party; and
(iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a
sufficient number of its Common Shares to permit the exercise
of all outstanding Rights) in connection with the consummation
of any such transaction as may be necessary to ensure that the
provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter
deliverable upon the exercise of the Rights.
25
(b) "Principal Party" means:
(i) in the case of any transaction described in
clause (w), (x), or (y) of the first sentence of Section
13(a), the Person (including, without limitation, the Company
as successor thereto or as the surviving corporation) that is
the issuer of any securities into which Common Shares of the
Company are converted in such merger, consolidation, or
exchange, or if no securities are so issued, the Person that
is the other party to such merger, consolidation, or exchange;
and
(ii) in the case of any transaction described in
clause (z) of the first sentence of Section 13(a), the Person
that is the party receiving the greatest portion of the assets
or earning power transferred pursuant to such transaction or
transactions;
provided, however, that in any such case, (1) if the Common Shares of
such Person are not at such time or have 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 Shares of which are and have been so registered,
"Principal Party" shall refer to such other Person, and (2) in case
such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Shares of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Shares having the greatest aggregate market
value.
(c) The Company shall not consummate any Section 13 Event
unless the Principal Party has a sufficient number of authorized,
unreserved Common Shares which have not been issued or are held in
treasury to permit the exercise in full of the Rights in accordance
with this Section 13 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs
(a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any Section 13 Event, the Principal Party
will:
(i) prepare and file a registration statement under
the Securities Act, with respect to the Rights and the
securities purchasable upon exercise of the Rights, on an
appropriate form, and use its best efforts to cause such
registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (1) the date as of which
the Rights are no longer exercisable for such securities or
(2) the Final Expiration Date;
26
(ii) 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; and
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates that comply in all respects with the requirements
for registration on Form 10 under the Exchange Act.
(d) The Company shall not enter into any transaction of
the kind referred to in this Section 13 if at the time of such
transaction there are any rights, warrants, instruments, or securities
outstanding or any agreements or arrangements that, as a result of the
consummation of such transaction, would eliminate or substantially
diminish the benefits intended to be afforded by the Rights.
(e) The provisions of this Section 13 shall similarly
apply to successive mergers, consolidations, statutory share exchanges,
sales, or other transfers.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions
of Rights or to distribute Right Certificates that evidence fractional
Rights. In lieu of such fractional Rights, there may be paid to the
registered holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable an amount in cash equal
to the same fraction of the current market value of a whole Right. For
the purposes of this Section 14(a), the current market value of a whole
Right shall be the closing price of the Rights for the Trading Day
immediately before the date on which such fractional Rights would have
been otherwise issuable. 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:
(i) as reported on the principal consolidated
transaction-reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or,
(ii) if the Rights are not listed or admitted to
trading on the New York Stock Exchange, as reported on the
principal consolidated transaction-reporting system with
respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted
to trading or,
(iii) if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and
low asked prices on the over-the-counter market, as reported
on the Nasdaq National Market, the Nasdaq SmallCap Market, or
any similar system then in use or,
27
(iv) if on any such date the Rights are not so quoted
or reported, the average of the closing bid and asked prices
as furnished by a professional market-maker making a market in
the Rights selected by the Board of Directors of the Company.
If on any such date no such market-maker is making a market in the
Rights, the fair value of the Rights on such date as determined in good
faith by the Board of Directors of the Company shall be used in lieu of
the closing price for such day.
(b) The Company shall not be required to issue fractions
of Preferred Shares (other than fractions that are integral multiples
of one-hundredth of a Preferred Share, or, if a Right shall then be
exercisable for a fraction other than one-hundredth of a Preferred
Share, integral multiples of that fraction) upon exercise of the Rights
or to issue certificates which evidence fractions of Preferred Shares
(other than fractions that are integral multiples of one-hundredth of a
Preferred Share or, if a Right shall then be exercisable for a fraction
other than one-hundredth of a Preferred Share, integral multiples of
that fraction). Fractions of Preferred Shares in integral multiples of
one-hundredth of a Preferred Share or, if a Right shall then be
exercisable for a fraction other than one-hundredth of a Preferred
Share, integral multiples of that fraction may, at the election of the
Company, be evidenced by depositary receipts pursuant to an appropriate
agreement between the Company and a depositary selected by it,
provided, that such agreement shall provide that the holders of such
depositary receipts shall have all the rights, privileges, and
preferences to which they are entitled as beneficial owners of the
Preferred Shares represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not integral multiples of
one-hundredth of a Preferred Share, or, if a Right shall then be
exercisable for a fraction other than one-hundredth of a Preferred
Share, integral multiples of that fraction, the Company may pay to the
registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one Preferred Share. For
purposes of this Section 14(b), the current market value of a Preferred
Share shall be the closing price of a Preferred Share (as determined
pursuant to the second sentence of Section 11(d)(i)) for the Trading
Day immediately before the date of such exercise or, if the closing
price is not determinable pursuant to the second sentence of Section
11(d)(i), the current market value of a Preferred Share shall be
determined pursuant to Section 11(d)(ii).
(c) The holder of a Right by the acceptance of the Right
expressly waives such holder's right to receive any fractional Rights
or any fractional shares (except as provided above) upon exercise of a
Right.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, except the rights of action given to the Rights Agent under Section
18, are vested in the respective registered holders of the Right Certificates
(and, before the Distribution Date, the
28
registered holders of the Common Shares); and any registered holder of any Right
Certificate (or, before to the Distribution Date, of any Common Share), without
the consent of the Rights Agent or of the holder of any other Right Certificate
(or, before the Distribution Date, of any other Common Share), may, in such
holder's own behalf and for such holder's own benefit, enforce, and may
institute and maintain any suit, action, or proceeding against the Company to
enforce, or otherwise act in respect of, such holder's right to exercise the
Rights evidenced by such Right Certificate (or, before the Distribution Date,
the associated Common Shares certificate) in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) before the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates
are transferable only on the registry books of the Rights Agent if
surrendered at the office or offices of the Rights Agent designated for
such purposes, duly endorsed or accompanied by a proper instrument of
transfer;
(c) the Company and the Rights Agent may deem and treat
the person in whose name the Right Certificate (or, before the
Distribution Date, the associated Common Shares certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Right Certificate or the associated Common Shares certificate made by
anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary;
(d) the Company may issue Rights on or after the Record
Date but before the Distribution Date, and in certain circumstances
after the Distribution Date, as provided in this Agreement; and
(e) notwithstanding anything in this Agreement or the
Rights to the contrary, the Company, the Rights Agent, and the Board of
Directors of the Company shall not have any liability to any holder of
a Right or other Person as a result of the inability of the Company or
the Rights Agent to perform any of its obligations under this Agreement
by reason of any preliminary or permanent injunction or other order,
decree,
29
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.
Section 17. Right Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company that may at any time be issuable on the exercise
of the Rights represented thereby, nor shall anything contained in this
Agreement or in any Right Certificate be construed to confer upon the holder of
any Right Certificate, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions
affecting shareholders (except as provided in Section 25), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance with
the provisions of this Agreement.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it under this
Agreement and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred
in the administration and execution of this Agreement and the exercise
and performance of its duties under this Agreement. The Company also
agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense (including the costs and
expenses of defending against any claim of liability), incurred without
negligence, bad faith, or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement.
(b) The Rights Agent shall be protected and shall incur
no liability for, or in respect of any action taken, suffered, or
omitted by it in connection with, its administration of this Agreement
in reliance upon any Right Certificate or certificate for the Preferred
Shares or Common Shares or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement,
or other paper or document believed by it to be genuine and to be
signed, executed, and, where necessary, verified or acknowledged, by
the proper person or persons, or otherwise upon the advice of its
counsel as set forth in Section 20.
30
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any corporation succeeding to the corporate trust
or stock transfer business of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the
part of any of the parties to this Agreement; provided, however, that
such corporation would be eligible for appointment as a successor
Rights Agent under Section 21. If at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the
Right Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates
shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent;
and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
(b) If at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates
shall not have been countersigned, the Rights Agent may countersign
such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates (or, before the Distribution Date, the Common Shares certificates),
by their acceptance of the Rights, shall be bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter (including, without limitation, the identity of any
Acquiring Person and the determination of the "current per-share market
price") be proved or established by the Company before
31
taking or suffering any action under this Agreement, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by
a certificate signed by any one of the Chairman of the Board, the Chief
Executive Officer, the President, the Chief Financial Officer, any Vice
President, the Secretary or the Treasurer of the Company and delivered
to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by
it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the
Company and any other Person only for its own negligence, bad faith, or
willful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this
Agreement or in the Right Certificates (except its countersignature
thereof) or be required to verify the same, but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the
execution and delivery of this Agreement (except the due execution by
the Rights Agent) or in respect of the validity or execution of any
Right Certificate (except its countersignature thereof); nor shall it
be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor
shall it be responsible for any change in the exercisability of the
Rights (including the Rights becoming void pursuant to Section
11(a)(ii)) or any adjustment in the terms of the Rights (including the
manner, method or amount thereof) provided for in Section 3, 11, 13,
23, or 24, or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after actual notice
that such change or adjustment is required); nor shall it by any act
under this Agreement be deemed to make any representation or warranty
as to the authorization or reservation of any Preferred Shares or
Common Shares to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Preferred Shares or Common Shares
will, when issued, be validly authorized and issued, fully paid, and
nonassessable.
(f) The Company will perform, execute, acknowledge, and
deliver or cause to be performed, executed, acknowledged, and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties under
this Agreement from any one of the Chairman of the Board, the Chief
Executive Officer, the President, the Chief Financial
32
Officer, any Vice President, the Secretary, or the Treasurer of the
Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action
taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer or for delay in acting while waiting
for those instructions.
(h) The Rights Agent and any shareholder, director,
officer, or employee of the Rights Agent may buy, sell, or deal in any
of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company or its Subsidiaries
may be interested, or contract with or lend money to the Company or its
Subsidiaries or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing in this Agreement precludes
the Rights Agent from acting in any other capacity for the Company or
its Subsidiaries 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 under this
Agreement either itself or by or through its attorneys or agents, and
the Rights Agent shall not be answerable or accountable for any act,
default, neglect, or misconduct of any such attorneys or agents or for
any loss to the Company resulting from any such act, default, neglect,
or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties under this
Agreement or in the exercise of its rights or powers if there shall be
reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered
to the Rights Agent for exercise or transfer, the form of assignment or
form of election to purchase, as the case may be, has either not been
duly completed and executed or indicates an affirmative response to
enumerated clause 1 or 2 on the reverse side of the applicable Right
Certificate, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting
with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares and Preferred Shares by registered or certified mail, and,
if such notice is mailed after the Distribution Date, to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon 30 days' notice in writing mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
33
agent of the Common Shares and Preferred Shares by registered or certified mail,
and, if such notice is mailed after the Distribution Date, to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit such holder's Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be (a) a corporation organized and doing business under the
laws of the United States or of the State of
Minnesota or New York (or of any
other state of the United States so long as such corporation is authorized to do
business as a banking institution in the State of
Minnesota or New York), in
good standing, having an office in the State of
Minnesota or New York that is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority and
that has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million or (b) an affiliate of 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 under this Agreement, and execute and deliver any further
assurance, conveyance, act, or deed necessary for the purpose. Not later than
the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares and Preferred Shares, and, if such notice is filed after the
Distribution Date, mail a notice thereof in writing to the registered holders of
the Right Certificates. Failure to give any notice provided for in this Section,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
Section 23. Redemption.
(a) Subject to the provisions of Section 27, the Board of
Directors of the Company may, at its option, at any time before the
earlier of (i) such time as a Person
34
becomes an Acquiring Person or (ii) the Close of Business on the Final
Expiration Date, redeem all but not less than all of the then
outstanding Rights at a redemption price of $.001 per Right,
appropriately adjusted to reflect any stock split, stock dividend, or
similar transaction occurring after the date of this Agreement (such
redemption price being referred to as the "Redemption Price"). The
Redemption Price shall be payable in cash by the Company. The
redemption of the Rights by the Board of Directors of the Company may
be made effective at such time, on such basis, and with such conditions
as the Board of Directors of the Company in its sole discretion may
establish. Except for the obligation of the Company to pay the
Redemption Price, neither the Board of Directors nor the Company shall
have any liability to any Person as a result of the redemption of
Rights pursuant to this Section 23.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights pursuant to
Section 23(a), and without any further action and without any notice,
the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption
Price for each Right so held. Promptly after the action of the Board of
Directors of the Company ordering the redemption of the Rights, the
Company shall give notice of such redemption to the Rights Agent and
the holders of the then-outstanding Rights by mailing such notice to
all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, before the Distribution Date, on
the registry books of the transfer agent for the Common Shares;
provided, however, that the failure to give, or any defect in, any such
notice shall not affect the validity of such redemption. Any notice
that is mailed in the manner provided in this paragraph shall be deemed
given whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its
Affiliates or Associates may redeem, acquire, or purchase for value any
Rights at any time in any manner except as specifically set forth in
this Section or in Section 24 or in connection with the purchase of
Common Shares before the Distribution Date.
Section 24. Exchange.
(a) The Board of Directors of the Company 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 under Section
11(a)(ii)) for Common Shares, with each Right to be exchanged for such
number of Common Shares as shall equal the result obtained by dividing
(i) the Exercise Price (as defined in Section 11(a)(iii)) by (ii) the
current per-share market price of the Common Shares (determined under
Section 11(d)) on the date the Rights first become exercisable for
Common Shares pursuant to Section 11(a)(ii) (such number of shares
being referred to as the "Exchange Ratio"). The Exchange Ratio shall be
appropriately adjusted to reflect any stock split, stock
35
dividend, or similar transaction affecting the Common Shares that
occurs after the date the Rights first become exercisable for Common
Shares under Section 11(a)(ii). Notwithstanding the foregoing, the
Board of Directors of the Company shall not be empowered to effect such
exchange at any time after any Person (other than an Exempt Person),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the exchange of any Rights pursuant to
paragraph (a) of this Section 24 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 Common Shares equal to the number of such Rights
held by such holder multiplied by the Exchange Ratio. The Company
promptly shall give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Company promptly shall
mail a notice of any such exchange to all of the holders of such Rights
at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice that is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the
exchange of the Common Shares for Rights will be effected and, in the
event of any partial exchange, the number of Rights that will be
exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights that have become void under the
provisions of Section 11(a)(ii)) held by each holder of Rights.
(c) If there are not sufficient Common Shares authorized,
unissued, and unreserved to permit the exchange of Rights as
contemplated in accordance with this Section 24, the Company, at its
option, may substitute Preferred Shares (or equivalent preferred
shares, as that term is defined in Section 11(b), or common share
equivalents, as that term is defined in Section 11(a)(iii)(3)(C)), for
Common Shares exchangeable for Rights, at the initial rate of
one-hundredth of a Preferred Share (or equivalent preferred share) or
one common share equivalent for each Common Share, as appropriately
adjusted to reflect stock splits, stock dividends, or similar
transactions affecting the Common Shares that occur after the date of
this Agreement.
(d) If there are not sufficient Common Shares, Preferred
Shares, equivalent preferred shares, or common share equivalents
authorized and unissued to permit the exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take
all such action as may be necessary to authorize additional Common
Shares or Preferred Shares, equivalent preferred shares, or common
share equivalents for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions
of Common Shares or to distribute certificates that evidence fractional
Common Shares. In lieu of such
36
fractional Common Shares, the Company shall pay to the registered
holders of the Right Certificates with regard to which such fractional
Common Shares would otherwise be issuable an amount in cash equal to
the same fraction of the current market value of a whole Common Share.
For the purposes of this Section 24(e), the current market value of a
whole Common Share shall be the closing price of a Common Share (as
determined under the second sentence of Section 11(d)(i)) for the
Trading Day immediately before the date of exchange pursuant to this
Section. The Board of Directors and the Company shall not have any
liability to any Person as a result of the exchange of Rights pursuant
to the terms of this Section.
Section 25. Notice of Certain Events.
(a) If the Company proposes, at any time after the
Distribution Date,
(i) to pay any dividend payable in stock of any class
to the holders of its Preferred Shares or to make any other
distribution to the holders of its Preferred Shares (other
than a regular quarterly cash dividend);
(ii) to offer to the holders of its Preferred Shares
rights or warrants to subscribe for or to purchase any
additional Preferred Shares or shares of stock of any class or
any other securities, rights, or options;
(iii) to effect any reclassification of its Preferred
Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares);
(iv) to effect any consolidation or merger into or
with any other Person, 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 a series of related
transactions, of 50% or more of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons (other than the Company and/or any of
its wholly owned Subsidiaries);
(v) to effect any statutory share exchange with
outstanding Common Shares of the Company being exchanged for
stock or other securities of any other corporation or money or
other property;
(vi) to effect the liquidation, dissolution, or
winding up of the Company; or
(vii) to declare or pay any dividend on the Common
Shares payable in Common Shares or to effect a subdivision,
combination, or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends on
Common Shares payable in Common Shares);
37
then, in each such case, the Company shall give to each holder of a
Right Certificate, to the extent feasible and in accordance with
Section 26, a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend or distribution of
rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or
winding up is to take place and the date of participation therein by
the holders of the Common Shares and/or Preferred Shares, if any such
date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least 10 days before
the record date for determining holders of the Preferred Shares for
purposes of such action, and in the case of any such other action, at
least 10 days before the date of the taking of such proposed action or
the date of participation therein by the holders of the Common Shares
and/or Preferred Shares, whichever shall be the earlier.
(b) If any Section 11(a)(ii) Event shall occur, then, in
any such case, the Company shall as soon as practicable thereafter give
to each holder of a Right Certificate, in accordance with Section 26
hereof, a notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of Rights under
Section 11(a)(ii).
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage-prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Stellent, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage-prepaid, addressed (until another address is
filed in writing with the Company) as follows:
▇▇▇▇▇ Fargo Bank
Minnesota, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Stock Transfer Manager
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage-prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
38
Section 27. Supplements and Amendments. The Company may and the Rights
Agent shall, if so directed by the Company, from time to time supplement or
amend this Agreement without the approval of any holders of Common Shares or
Right Certificates in order:
(a) to extend the Final Expiration Date;
(b) to cure any ambiguity or to correct or supplement any
provision contained in this Agreement that may be defective or
inconsistent with any other provisions in this Agreement;
(c) before the Distribution Date, to otherwise change, add, or
supplement any provision in this Agreement in any manner that the
Company may deem necessary or desirable; or
(d) following the Distribution Date, to otherwise change, add,
or supplement any provision in this Agreement in any manner that the
Company may deem necessary or desirable and that shall not adversely
affect the interests of the holders of Right Certificates (other than
Right Certificates evidencing Rights that shall have become void under
Section 11(a)(ii)).
Without limiting the foregoing, the Company may at any time before such time as
any Person becomes an Acquiring Person amend this Agreement to lower the
thresholds set forth in Sections 1(a) and 3(a) from 15% to not less than the
greater of (i) the sum of .001% and the largest percentage of the outstanding
Common Shares then known by the Company to be beneficially owned by any Person
(other than an Exempt Person) or (ii) 10%.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement.
(a) Nothing in this Agreement shall be construed to give to
any Person other than the Company, the Rights Agent, and the registered
holders of the Right Certificates (and, before the Distribution Date,
the registered holders of Common Shares) any legal or equitable right,
remedy, or claim under this Agreement. This Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent, and the
registered holders of the Right Certificates (and, before the
Distribution Date, the registered holders of Common Shares).
(b) The Board of Directors of the Company shall have the
exclusive power and total and complete authority to administer this
Agreement and to exercise all rights and powers specifically granted to
the Board of Directors or the Company or necessary
39
or advisable in the administration of this Agreement, including without
limitation the right and power to interpret this Agreement and to make
conclusively all determinations deemed necessary or advisable for the
administration of this Agreement. All such acts, calculations,
interpretations, and determinations (including, for purposes of clause
(2) below, all omissions with respect to the foregoing) that are done
or made by the Board of Directors in good faith shall (1) be final,
conclusive and binding on the Company, the Rights Agent and the holders
of the Rights and all other parties and (2) not subject the Board of
Directors to any liability to the holders of the Rights or any other
party.
Section 30. Severability. If any term, provision, covenant, or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, or unenforceable, the remainder of the
terms, provisions, covenants, and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired, or invalidated.
Section 31.Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of
Minnesota and for all purposes shall be governed by and construed in
accordance with the laws of the State of Minnesota applicable to contracts to be
made and performed entirely within that state.
Section 32. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the Sections
of this Agreement are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions of this Agreement.
40
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.
STELLENT, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Its: Chief Financial Officer
------------------------------
▇▇▇▇▇ FARGO BANK MINNESOTA, N.A.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Its: Officer
-----------------------------------
41
EXHIBIT A
CERTIFICATE OF DESIGNATION, PREFERENCES, AND RIGHTS
OF SERIES A JUNIOR PARTICIPATING PREFERRED SHARES
OF
STELLENT, INC.
I, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, the Secretary of Stellent, Inc., a corporation
organized and existing under the Business Corporation Act of the State of
Minnesota, in accordance with the provisions of Section 302A.401 thereof, do
hereby certify:
That pursuant to the authority conferred upon the Board of Directors by
the Amended Restated Articles of Incorporation of the corporation, the Board of
Directors on May 29, 2002 adopted the following resolution creating a series of
1 million Preferred Shares, par value $.01 per share, designated as Series A
Junior Participating Preferred Shares:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of the corporation in accordance with the provisions of its
Amended and Restated Articles of Incorporation (the "Articles of
Incorporation"), a series of Preferred Stock of this corporation be, and it
hereby is, created, and that the designation and amount thereof and the relative
rights and preferences of the shares of the series, are as follows:
1. Designation and Amount. The shares of the series shall be designated
as "Series A Junior Participating Preferred Shares" (the "Series A Preferred
Shares"), and the number of shares constituting the series shall be 1 million.
The number of shares constituting the series may, unless prohibited by the
Articles of Incorporation or by applicable law of the State of Minnesota, be
increased or decreased by resolution of the Board of Directors; but no decrease
shall reduce the number of Series A Preferred Shares to a number less than the
number of shares then outstanding plus the number of shares issuable upon the
exercise of outstanding options, rights, or warrants or upon the conversion of
any outstanding securities issued by the corporation convertible into Series A
Preferred Shares.
2. Dividends and Distributions.
(a) The holders of Series A Preferred Shares, in preference to
the holders of Common Shares and of any other junior stock, shall be
entitled to receive, when, as, and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the last day of March, June, September,
and December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a Series A Preferred
Share, or fraction thereof, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1.00 or (b) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate
per-share amount of all cash dividends, and 100 times the aggregate
per-share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in
A-1
Common Shares or a subdivision of the outstanding Common Shares (by
reclassification or otherwise), declared on the Common Shares since the
immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance
of any Series A Preferred Share, or fraction thereof. If the
corporation, at any time after June 13, 2002, declares or pays any
dividend on Common Shares payable in Common Shares or effects a
subdivision or combination or consolidation of the outstanding Common
Shares (by reclassification or otherwise) into a greater or lesser
number of Common Shares, then in each such case the per-share amount to
which holders of Series A Preferred Shares were entitled immediately
before such event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of
which is the number of Common Shares outstanding immediately after such
event and the denominator of which is the number of Common Shares that
were outstanding immediately before such event.
(b) The corporation shall declare a dividend or distribution
on the Series A Preferred Shares as provided in subparagraph (a) of
this paragraph 2 simultaneously with its declaration of a dividend or
distribution on the Common Shares (other than a dividend payable in
Common Shares or a subdivision of the outstanding Common Shares); but
if no dividend or distribution shall have been declared on the Common
Shares during the period between any Quarterly Dividend Payment Date
and the next subsequent Quarterly Dividend Payment Date, a dividend of
$1.00 per share on the Series A Preferred Shares shall nevertheless be
payable, out of funds legally available for such purpose, on such
subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on
outstanding Series A Preferred Shares from the Quarterly Dividend
Payment Date immediately preceding the date of issue of such Series A
Preferred Shares, unless the date of issue of such shares is before the
record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of Series A Preferred Shares entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to accrue
and be cumulative from such Quarterly Dividend Payment Date. Accrued
but unpaid dividends shall not bear interest. Dividends paid on the
Series A Preferred Shares 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
outstanding at that time. The Board of Directors may fix a record date
for the determination of holders of Series A Preferred Shares entitled
to receive payment of a dividend or distribution declared thereon,
which record date shall be not more than 60 days before the date fixed
for the payment thereof.
A-2
3. Voting Rights. The holders of Series A Preferred Shares shall have
the following voting rights:
(a) Subject to the provision for adjustment hereinafter set
forth, each Series A Preferred Share shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the shareholders of
the corporation. If the corporation, at any time after June 13, 2002,
declares or pays any dividend on Common Shares payable in Common Shares
or effects a subdivision or combination or consolidation of the
outstanding Common Shares (by reclassification or otherwise) into a
greater or lesser number of Common Shares, then in each such case the
number of votes per share to which holders of Series A Preferred Shares
were entitled immediately before such event shall be adjusted by
multiplying such number by a fraction, the numerator of which is the
number of Common Shares outstanding immediately after such event and
the denominator of which is the number of Common Shares that were
outstanding immediately before such event.
(b) Except as otherwise provided herein, in any other
Certificate of Designation, Preferences and Rights creating a series of
Preferred Stock or by law, the holders of Series A Preferred Shares and
the holders of Common Shares and any other capital shares of the
corporation having general voting rights shall vote together as one
class on all matters submitted to a vote of the shareholders of the
corporation.
(c) Except as otherwise provided herein or by law, the holders
of Series A Preferred Shares shall have no special voting rights and
their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Shares and any other capital
stock of the corporation having general voting rights as set forth
herein) for taking any corporate action.
4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Shares as provided in
paragraph 2 hereof are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on Series
A Preferred Shares outstanding shall have been paid in full, the
corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution, or winding
up) to the Series A Preferred Shares;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution, or
winding up) with the Series A Preferred Shares, except
dividends
A-3
paid ratably on the Series A Preferred Shares and all such
parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution, or winding up) to
the Series A Preferred Shares, provided that the corporation
may at any time redeem, purchase, or otherwise acquire shares
of any such junior stock in exchange for shares of stock of
the corporation ranking junior (both as to dividends and upon
liquidation, dissolution, or winding up) to the Series A
Preferred Shares; or
(iv) redeem or purchase or otherwise acquire for
consideration any Series A Preferred Shares, or any shares of
stock ranking on a parity with the Series A Preferred Shares,
except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the
respective series or classes.
(b) The corporation shall not permit any subsidiary of the
corporation to purchase or otherwise acquire for consideration any
shares of stock of the corporation unless the corporation could, under
subparagraph (a) of this paragraph 4, purchase or otherwise acquire
such shares at such time and in such manner.
5. Reacquired Shares. Any Series A Preferred Shares purchased or
otherwise acquired by the corporation in any manner whatsoever shall constitute
authorized but unissued Preferred Shares and may be reissued as part of a new
series of Preferred Stock by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein, in the Articles of Incorporation, in any other Certificate of
Designation, Preferences, and Rights creating a series of Preferred Stock, or as
otherwise required by law.
6. Liquidation, Dissolution, or Winding Up. Upon any liquidation,
dissolution, or winding up of the corporation, no distribution shall be made (a)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution, or winding up) to the Series A Preferred Shares
unless, prior thereto, the holders of Series A Preferred Shares shall have
received the greater of (i) $1.00 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment, or (ii) an aggregate amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 100 times the aggregate amount to
be distributed per share to holders of Common Shares, or (b) to the holders of
shares of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution, or winding up) with the Series A Preferred Shares, except
A-4
distributions made ratably on the Series A Preferred Shares and all other such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution, or winding up. If the
corporation, at any time after June 13, 2002, declares or pays any dividend on
the Common Shares payable in Common Shares or effects a subdivision or
combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise) into a greater or lesser number of Common Shares,
then in each such case the aggregate amount per share to which holders of Series
A Preferred Shares were entitled immediately before such event under clause
(a)(ii) of the preceding sentence shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is the number of
Common Shares that were outstanding immediately before such event.
7. Consolidation, Merger, Exchange, etc. If the corporation enters into
any consolidation, merger, combination, statutory share exchange, or other
transaction in which the Common Shares are exchanged for or changed into other
stock or securities, money, and/or any other property, then the Series A
Preferred Shares shall at the same time be similarly exchanged or changed into
an amount per share (subject to the provision for adjustment hereinafter set
forth) equal to 100 times the aggregate amount of stock, securities, money,
and/or any other property (payable in kind), as the case may be, into which or
for which each Common Share is changed or exchanged. If the corporation, at any
time after June 13, 2002, declares or pays any dividend on Common Shares payable
in Common Shares or effects a subdivision or combination or consolidation of the
outstanding Common Shares (by reclassification or otherwise) into a greater or
lesser number of Common Shares, then in each such case the amount per share set
forth in the preceding sentence with respect to the exchange or change of Series
A Preferred Shares shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of Common Shares outstanding immediately
after such event and the denominator of which is the number of Common Shares
that were outstanding immediately before such event.
8. No Redemption. The Series A Preferred Shares shall not be
redeemable.
9. Rank. The Series A Preferred Shares shall rank junior in terms of
dividend and liquidation, dissolution, and winding-up rights to all other series
of the corporation's Preferred Stock hereafter issued that specifically provide
that they shall rank senior to the Series A Preferred Shares.
10. Fractional Shares. Series A Preferred Shares may be issued in
fractions of a share which shall entitle the holder, in proportion to the
holder's fractional shares, to receive dividends, participate in distributions
and to have the benefit of all other rights of holders of Series A Preferred
Shares.
A-5
IN WITNESS WHEREOF, I have executed this Certificate of Designation,
Preferences, and Rights this 29th day of May, 2002.
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary
A-6
EXHIBIT B
[FORM OF RIGHT CERTIFICATE]
Certificate No. R- ______ _________ Rights
NOT EXERCISABLE AFTER JUNE 13, 2012 OR SUCH EARLIER DATE AS THE BOARD
OF DIRECTORS ORDERS REDEMPTION OR EXCHANGE OF THE RIGHTS. THE RIGHTS ARE SUBJECT
TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.001 PER RIGHT (SUBJECT TO
ADJUSTMENT) AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS THAT ARE
OR WERE ACQUIRED OR BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) MAY BECOME VOID.
Right Certificate
STELLENT, INC.
This certifies that _________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms of the Rights Agreement dated as of May
29, 2002 (the "Rights Agreement") between Stellent, Inc., a Minnesota
corporation (the "Company"), and ▇▇▇▇▇ Fargo Bank Minnesota, N.A. (the "Rights
Agent"), to purchase from the Company at any time after the Distribution Date
(as that term is defined in the Rights Agreement) and before 5:00 p.m. (Central
Time) on June 13, 2012 at the office or offices of the Rights Agent designated
for such purpose, or of its successor as Rights Agent, one-hundredth of a fully
paid, nonassessable Series A Junior Participating Preferred Share, $.01 par
value per share, of the Company (the "Preferred Shares"), at a purchase price of
$75 per one-hundredth of a Preferred Share (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly completed and executed. The number of Rights evidenced by this
Right Certificate (and the number of one-hundredths of a Preferred Share which
may be purchased upon exercise thereof) set forth above, and the Purchase Price
set forth above, are, except for adjustments required pursuant to the Rights
Agreement, the number and Purchase Price as of June 13, 2002, based on the
Preferred Shares as constituted at that date.
As provided in the Rights Agreement, the Purchase Price and the number
of one-hundredths of a Preferred Share that may be purchased upon the exercise
of the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement, which terms, provisions, and conditions are
hereby incorporated herein by reference and made a part hereof and which Rights
Agreement contains a full description of the
B-1
rights, limitations of rights, obligations, duties, and immunities hereunder of
the Rights Agent, the Company and the holders of the Right Certificates (which
limitations of rights include the voiding of the Rights under certain
circumstances specified in the Rights Agreement). Copies of the Rights Agreement
are on file with the Secretary of the Company at its principal executive office
and will be mailed without charge by the Company or the Rights Agent to the
holder of this certificate promptly following receipt by the Company or the
Rights Agent of a written request therefor.
Upon the occurrence of a Section 11(a)(ii) Event (as that term is
defined in the Rights Agreement), any Rights evidenced by this Right Certificate
that are beneficially owned by an Acquiring Person or an Associate or Affiliate
of such Acquiring Person (as those terms are defined in the Rights Agreement) or
were beneficially owned by an Acquiring Person or an Associate or Affiliate of
such Acquiring Person after the Acquiring Person becomes an Acquiring Person
shall be void from and after the occurrence of the Section 11(a)(ii) Event.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of one-hundredths of a Preferred Share as the Rights evidenced
by the Right Certificate or Right Certificates surrendered then entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (a) may, but are not required to, be redeemed by the Company
at a redemption price of $.001 per Right, subject to adjustment as provided in
the Rights Agreement, payable in cash and (b) may, but are not required to, be
exchanged by the Company in whole or in part for Common Shares or other shares
of capital stock of the Company. The Board of Directors of the Company and the
Company shall not have any liability to any person as a result of the redemption
or exchange of the Rights pursuant to the provisions of the Rights Agreement.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractional shares which are
integral multiples of one-hundredth of a Preferred Share or, if a Right shall
then be exercisable for a fraction other than one-hundredth of a Preferred
Share, integral multiples of that fraction, which may, at the election of the
Company, be evidenced by depositary receipts), if in lieu thereof a cash payment
is made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company that may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
B-2
of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned, manually or by facsimile signature, by
the Rights Agent.
WITNESS the manual or facsimile signature of the proper officer of the
Company.
Dated:
-------------------
STELLENT, INC.
By:
--------------------------------
Its:
-----------------------------
Countersigned:
▇▇▇▇▇ FARGO BANK MINNESOTA, N.A.
By:
-----------------------------
Authorized Manual or
Facsimile Signature
B-3
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ________________________ hereby sells, assigns and transfers
unto
-------------------------------------------------------------------------
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ___________________________
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated:
-------------------
------------------------------------
Signature
Signature Medallion Guaranteed:
Signatures must be Medallion Guaranteed by a member firm of a
registered national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an office
or correspondent in the United States or by an eligible guarantor institution
(bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program), pursuant to Rule 17Ad-15
promulgated under the Securities Exchange Act of 1934, as amended.
B-4
CERTIFICATE
The undersigned hereby certifies (after due inquiry and to the best of
the undersigned's knowledge) by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate
[ ] are
or
[ ] are not
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as those terms are defined in the Rights Agreement); and
(2) the undersigned
[ ] did
or
[ ] did not
acquire the Rights evidenced by this Right Certificate from any Person who, at
any time that such Person beneficially owned such Rights, is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
-----------------------------------------
Signature
NOTICE
The signature of the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B-5
FORM OF ELECTION TO EXERCISE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
TO: STELLENT, INC.
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights (or such other securities of the Company or of
any other person that may be issuable upon exercise of the Rights) and requests
that certificates for such shares be issued in the name of:
Please insert social security
or other identifying number
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right 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
B-6
Signature Medallion Guaranteed:
Signatures must be Medallion Guaranteed by a member firm of a
registered national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an office
or correspondent in the United States or by an eligible guarantor institution
(bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program), pursuant to Rule 17Ad-15
promulgated under the Securities Exchange Act of 1934, as amended.
B-7
CERTIFICATE
The undersigned hereby certifies (after due inquiry and to the best of
the undersigned's knowledge) by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate
[ ] are
or
[ ] are not
being exercised by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as those terms are defined in the Rights Agreement); and
(2) the undersigned
[ ] did
or
[ ] did not
acquire the Rights evidenced by this Right Certificate from any Person who, at
any time that such Person beneficially owned such Rights, is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
----------------------------------------
Signature
NOTICE
The signature of the foregoing Election to Exercise and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
B-8
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
OF
STELLENT, INC.
On May 29, 2002, the Board of Directors of Stellent, Inc. (the
"Company") declared a dividend of one preferred share purchase right (a "Right")
for each outstanding share of Common Stock, par value of $.01 per share (the
"Common Shares"), of the Company. The dividend is payable on June 13, 2002 (the
"Record Date") to shareholders of record on that date.
Each Right entitles the registered holder to purchase from the Company
one-hundredth of a Series A Junior Participating Preferred Share, $.01 par value
per share (the "Preferred Shares"), of the Company at a price of $75 per
one-hundredth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement"), dated as of May 29, 2002, between the
Company and ▇▇▇▇▇ Fargo Bank Minnesota, N.A. (the "Rights Agent").
Initially, the Rights will attach to all certificates representing
Common Shares then outstanding and no separate Right Certificates will be
distributed. The Rights will separate from the Common Shares and a Distribution
Date for the Rights will occur, subject to certain exceptions, upon the earlier
of:
o the close of business on the fifteenth day following a public
announcement that a person or group of affiliated or associated
persons has become an "Acquiring Person" (i.e., has become, subject
to certain exceptions, the beneficial owner of 15% or more of the
outstanding Common Shares), or
o the close of business on the fifteenth day following the first
public announcement relating to a tender offer or exchange offer
the consummation of which would result in a person or group of
affiliated or associated persons becoming, subject to certain
exceptions, the beneficial owner of 15% or more of the outstanding
Common Shares (or such later date as may be determined by the Board
of Directors of the Company before a person or group of affiliated
or associated persons becomes an Acquiring Person).
Until the Distribution Date,
o the Rights will be evidenced by the Common Share certificates and
will be transferred with and only with the Common Shares,
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o new Common Share certificates issued after the Record Date upon
transfer or new issuance of the Common Shares will contain a
notation incorporating the Rights Agreement by reference, and
o the surrender for transfer of any Common Share certificate, even
without such notation or a copy of this Summary of Rights attached
thereto, will also constitute the transfer of the Rights associated
with the Common Shares represented by such certificate.
As promptly as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and the separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on June 13, 2012, unless extended or earlier redeemed or exchanged
by the Company as described below.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution:
o in the event of a stock dividend on, or a subdivision, combination,
or reclassification of, the Preferred Shares,
o upon the grant to holders of the Preferred Shares of certain
rights, options, or warrants to subscribe for or purchase Preferred
Shares or convertible securities at less than the then-current
market price of the Preferred Shares, or
o upon the distribution to holders of the Preferred Shares of
evidences of indebtedness or assets (excluding regular periodic
cash dividends or dividends payable in Preferred Shares) or of
subscription rights or warrants (other than those described in the
preceding bullet).
The number of Preferred Shares issuable upon the exercise of a Right is
also subject to adjustment in the event of a dividend on Common Shares payable
in Common Shares, or a subdivision, combination, or consolidation of the Common
Shares.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. No fractional Preferred Shares will be issued (other than
fractional shares that are integral multiples of one-hundredth (subject to
adjustment) of a Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts) if in lieu of such issuance a payment in cash
is
C-2
made based on the closing price (pro rated for the fraction) of the Preferred
Shares on the last trading date before the date of exercise.
If any person or group of affiliated or associated persons becomes an
Acquiring Person, proper provision shall be made so that each holder of a Right,
other than Rights that are or were beneficially owned by the Acquiring Person
(which will thereafter be void), will thereafter have the right to receive upon
exercise of the Right at the then-current exercise price of the Right that
number of Common Shares having a market value of two times the exercise price of
the Right, subject to certain possible adjustments.
If, on or after the Distribution Date or within 15 days prior thereto,
the Company is acquired in certain mergers or other business-combination
transactions or 50% or more of the assets or earning power of the Company and
its subsidiaries (taken as a whole) are sold on or after the Distribution Date
or within 15 days prior thereto in one or a series of related transactions, each
holder of a Right (other than Rights that have become void under the terms of
the Rights Agreement) will thereafter have the right to receive, upon exercise
of the Right at the then-current exercise price of the Right, that number of
common shares of the acquiring company (or, in certain cases, one of its
affiliates) having a market value of two times the exercise price of the Right.
In certain events specified in the Rights Agreement, the Company is
permitted temporarily to suspend the exercisability of the Rights.
At any time after a person or group of affiliated or associated persons
becomes an Acquiring Person (subject to certain exceptions) and before the
acquisition by a person or group of affiliated or associated persons of 50% or
more of the outstanding Common Shares, the Board of Directors of the Company may
exchange all or part of the Rights (other than Rights that have become void
under the terms of the Rights Agreement) for Common Shares or equivalent
securities at an exchange ratio per Right equal to the result obtained by
dividing the exercise price of a Right by the current per-share market price of
the Common Shares, subject to adjustment.
At any time before a person or group of affiliated or associated
persons becomes an Acquiring Person, the Board of Directors of the Company may
redeem the Rights in whole, but not in part, at a price of $.001 per Right,
subject to adjustment, payable in cash. The redemption of the Rights may be made
effective at such time, on such basis, and with such conditions as the Board of
Directors in its sole discretion may establish. The Board of Directors and the
Company shall not have any liability to any person as a result of the redemption
or exchange of the Rights under the Rights Agreement.
The terms of the Rights may be amended by the Board of Directors of the
Company, subject to certain limitations after the Distribution Date, without the
consent of the holders of the Rights, including an amendment before a person or
group of affiliated or associated persons
C-3
becomes an Acquiring Person to lower the 15% threshold for exercisability of the
Rights to not less than the greater of (a) the sum of .001% and the largest
percentage of the outstanding Common Shares then known by the Company to be
beneficially owned by any person or group of affiliated or associated persons
(subject to certain exceptions) or (b) 10%.
Until a Right is exercised, the holder of the Right, as such, will have
no rights as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an exhibit to a Registration Statement on Form 8-A dated
__________, 2002. A copy of the Rights Agreement is available free of charge
from the Company by contacting its Chief Financial Officer at: Stellent, Inc.,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. 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 hereby incorporated
into this summary by reference.
C-4