FIBERSTARS, INC. a Delaware corporation and MELLON INVESTOR SERVICES LLC a New Jersey limited liability company Rights Agent
FIBERSTARS, INC.
a
Delaware corporation
and
MELLON
INVESTOR SERVICES LLC
a
New
Jersey limited liability company
Rights
Agent
Dated
as
of October 25, 2006
TABLE
OF CONTENTS
|
|
|
|
|
Page
|
|
1.
|
|
Certain
Definitions
|
|
1
|
|
2.
|
|
Appointment
of Rights Agent
|
|
5
|
|
3.
|
|
Issue
of Rights Certificates
|
|
5
|
|
4.
|
|
Form
of Rights Certificates
|
|
7
|
|
5.
|
|
Countersignature
and Registration
|
|
7
|
|
6.
|
|
Transfer,
Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates
|
|
8
|
|
7.
|
|
Exercise
of Rights; Purchase Price; Expiration Date of Rights
|
|
9
|
|
8.
|
|
Cancellation
and Destruction of Rights Certificates
|
|
11
|
|
9.
|
|
Reservation
and Availability of Preferred Stock
|
|
11
|
|
10.
|
|
Preferred
Stock Record Date
|
|
13
|
|
11.
|
|
Adjustment
of Purchase Price, Number and Kind of Shares or Number of
Rights
|
|
13
|
|
12.
|
|
Certificate
of Adjusted Purchase Price or Number of Shares
|
|
21
|
|
13.
|
|
Consolidation,
Merger or Sale or Transfer of Assets or Earning Power
|
|
21
|
|
14.
|
|
Additional
Covenants
|
|
23
|
|
15.
|
|
Fractional
Rights and Fractional Shares
|
|
24
|
|
16.
|
|
Rights
of Action
|
|
25
|
|
17.
|
|
Agreement
of Rights Holders
|
|
26
|
|
18.
|
|
Rights
Certificate Holder Not Deemed a ▇▇▇▇▇▇▇▇▇▇▇
|
|
▇▇
|
|
▇▇.
|
|
Concerning
the Rights Agent
|
|
26
|
|
20.
|
|
Merger
or Consolidation or Change of Name of Rights Agent
|
|
27
|
|
21.
|
|
Rights
and Duties of Rights Agent
|
|
28
|
|
22.
|
|
Change
of Rights Agent
|
|
30
|
|
23.
|
|
Issuance
of New Rights Certificates
|
|
31
|
|
24.
|
|
Redemption,
Termination and Exchange
|
|
32
|
|
25.
|
|
Notice
of Certain Events
|
|
34
|
|
26.
|
|
Notices
|
|
35
|
|
27.
|
|
Supplements
and Amendments
|
|
36
|
|
28.
|
|
Determination
and Actions by the Board
|
|
36
|
|
29.
|
|
Successors
|
|
37
|
|
30.
|
|
Benefits
of This Agreement
|
|
37
|
|
31.
|
|
Severability
|
|
37
|
|
32.
|
|
Governing
Law
|
|
37
|
|
33.
|
|
Counterparts
|
|
37
|
|
34.
|
|
Descriptive
Headings
|
|
37
|
|
Exhibit
A—Certificate of Determination of Series A Participating Preferred
Stock
|
A-1
|
|||
|
Exhibit
B—Form of Rights Certificate
|
B-1
|
|||
|
Exhibit
C—Form of Summary of Rights
|
C-1
|
|||
i
THIS
RIGHTS AGREEMENT (this "Agreement")
is
dated as of October 25, 2006, between FIBERSTARS, INC., a Delaware
corporation (the "Company"),
and
MELLON INVESTOR SERVICES LLC, a New Jersey limited liability company (the
"Rights
Agent").
W
I T N E
S S E T H:
WHEREAS,
on September 12, 2001, the Board of Directors of Fiberstars, Inc., a
California corporation (“Fiberstars
California”)
authorized and declared a dividend distribution of one California Right (as
hereinafter defined) for each share of Common Stock outstanding as of the Close
of Business on September 26, 2001 (the "Record
Date"),
and
provided for the issuance of one California Right for each share of common
stock
of Fiberstars-California issued between the Record Date and the earlier of
the
Distribution Date and the Expiration Date, as such terms are hereinafter defined
(with California Rights also to be issued in connection with certain issuances
of such common stock after the Distribution Date, each California Right
representing the right to purchase one one-thousandth of a share of
Series A Participating Preferred Stock of Fiberstars California having the
rights, powers and preferences set forth in the form of Certificate of
Determination attached as Exhibit A to the Rights Agreement between
Fiberstars California and the Rights Agent dated as of September 21, 2001,
upon
the terms and subject to the conditions hereinafter set forth (the "California
Rights").
WHEREAS,
upon the merger of Fiberstars California into the Company, the California Rights
will be automatically converted into Rights to purchase one-thousandths of
a
share of Series A Participating Preferred Stock of the Company (“Preferred
Stock”)
having
the rights, powers and preferences set forth in the form of Certificate of
Designation attached hereto as Exhibit A (the “Certificate
of Designation”)
upon
the terms and subject to the conditions hereinafter set forth (the “Rights”).
NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein
set
forth, the parties hereto hereby agree as follows:
1. Certain
Definitions. For
purposes of this Agreement, the following terms have the meanings indicated:
(a) "Acquiring
Person"
shall
mean any Person (as such term is hereinafter defined) who or which, together
with all Affiliates (as such term is hereinafter defined) and Associates (as
such term is hereinafter defined) of such Person, shall be the Beneficial Owner
(as such term is hereinafter defined) of fifteen percent (15%) or more of the
shares of Common Stock then outstanding or who was such a Beneficial Owner
at
any time on or after the date hereof, whether or not such Person continues
to be
the Beneficial Owner of fifteen percent (15%) or more of the outstanding shares
of Common Stock. Notwithstanding the foregoing:
(i) in
no event shall a Person who or which, together with all Affiliates and
Associates of such Person, is the Beneficial Owner of less than fifteen percent
(15%) of the outstanding shares of Common Stock become an Acquiring Person
solely as a result of a reduction of the number of shares of outstanding Common
Stock, including repurchases of outstanding shares of Common Stock by the
Company, which reduction increases the percentage of outstanding shares of
Common Stock Beneficially Owned (as such term is hereinafter defined) by such
Person; provided,
however,
that
any subsequent increase in the amount of Common Stock Beneficially Owned by
such
Person, together with all Affiliates and Associates of such Person, without
the
prior written approval of the Board shall cause such Person to be an Acquiring
Person (unless, measured at such time, such Person would not be an Acquiring
Person);
(ii) the
term Acquiring Person shall not mean: (A) the Company; (B) any
Subsidiary (as such term is hereinafter defined) of the Company; (C) any
employee benefit plan of the Company or any of its Subsidiaries; (D) any
entity holding securities of the Company organized, appointed or established
by
the Company or any of its Subsidiaries for or pursuant to the terms of any
such
plan; or (E) any underwriter acting in good faith in a firm commitment
underwriting of an offering of the Company's securities pursuant to arrangements
with the Company that have been approved by the Board (however,
the
exception provided by this clause (E)
shall
no
longer be available in the event that any such underwriter is otherwise an
Acquiring Person on or after the date which is forty (40) days after the
date of initial acquisition
of the Company's securities by such underwriter in connection with such
offering); and
(iii) no
Person shall be deemed to be an Acquiring Person if: (A)(1) any
Schedule 13D under the Exchange Act (as hereinafter defined), or any
comparable or successor report, filed (or required to be filed) by such Person
does not (or would not) state any intention to or reserve the right to control
or influence the management or policies of the Company or engage in any of
the
actions specified in Item 4 (or any comparable or successor Item) of such
Schedule 13D (other than the disposition of Common Stock), (2) either
(x) within two (2) Business Days of being requested by the Company to
advise the Company regarding the same, such Person certifies in writing to
the
Company that such Person acquired Beneficial Ownership of fifteen percent (15%)
or more of the outstanding shares of Common Stock inadvertently or without
knowledge of the terms of the Rights, or (y) the Board determines in good
faith that such Person has become an Acquiring Person inadvertently,
(3) such Person divests as promptly as practicable (as determined in good
faith by the Board) a sufficient number of securities so that such Person would
not be deemed to be an Acquiring Person pursuant to the first sentence of this
Section 1(a),
(or
such other provisions of this Section 1(a) as may be applicable) and
(4) promptly following such Person's divestiture of such securities, such
Person certifies to the Board that such Person would no longer be deemed an
Acquiring Person as defined pursuant to the first sentence of this Section 1(a)
(or
such
other provisions of this Section 1(a) as may be applicable); or (B) by
reason of such Person's Beneficial Ownership of fifteen percent (15%) or more
of
the outstanding shares of Common Stock on the date hereof if prior to the Record
Date such Person notifies the Board that such Person is no longer the Beneficial
Owner of fifteen percent (15%) or more of the then outstanding shares of Common
Stock.
2
(b) "Affiliate"
and
"Associate"
shall
have the respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act as in effect on the date
of
this Agreement.
(c) A
Person shall be deemed the "Beneficial
Owner,"
and
shall be deemed to "Beneficially
Own"
or have
"Beneficial
Ownership,"
of any
securities:
(i) which
such Person or any of such Person's Affiliates or Associates is deemed to
beneficially own (within the meaning of Rule 13d-3 of the General Rules and
Regulations under the Exchange Act as in effect on the date hereof);
(ii) which
such Person or any of such Person's Affiliates or Associates has (A) the
right or obligation to acquire (whether such right or obligation is exercisable
or effective immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon
the
exercise of conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided,
however,
that a
Person shall not be deemed (under this clause (A)
)
the
"Beneficial
Owner,"
and
shall not be deemed (under this clause (A))
to
"Beneficially
Own"
or have
"Beneficial
Ownership,"
of
securities
tendered pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for payment or exchange; or (B) the right to vote
or dispose of pursuant to any agreement, arrangement or understanding (whether
or not in writing); provided,
however,
that a
Person shall not be deemed the "Beneficial
Owner,"
and
shall not be deemed to "Beneficially
Own"
or have
"Beneficial
Ownership,"
of any
security under this clause (B)
if
the
agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules
and
regulations of the Exchange Act and (2) is not also then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which
are Beneficially Owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding
(whether or not in writing) (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), or with which such Person or any of such Person's
Affiliates or Associates have otherwise formed a group, for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described
in
clause (B)
of
subparagraph
(ii) of
this
paragraph (c))
or
disposing of any securities of the Company.
3
(d) "Business
Day"
shall
mean any day other than a Saturday, Sunday, or a day on which banking
institutions in the State of California or the State of New Jersey are
authorized or obligated by law or executive order to close.
(e) "Close
of Business"
on any
given date shall mean 5:00 p.m., San Francisco time, on such date;
provided,
however,
that if
such date is not a Business Day it shall mean 5:00 p.m., San Francisco
time, on the next succeeding Business Day.
(f) "Common
Stock"
shall
mean the Common Stock of the Company or any other shares of capital stock of
the
Company into which such Common Stock may be reclassified or exchanged, except
that "Common
Stock"
when
used with reference to stock issued by any Person other than the Company shall
mean the capital stock with the greatest Voting Power, or the equity securities
or other equity interest having power to control or direct the management,
of
such Person or, if such Person is a Subsidiary of another Person, of the Person
which ultimately controls such first-mentioned Person and which has issued
and
outstanding such capital stock, equity securities or equity interests.
(g) "Distribution
Date"
shall
have the meaning set forth in Section 3(a)
hereof.
(h) "Exchange
Act"
shall
mean the Securities Exchange Act of 1934, as amended.
(i) "Permitted
Offer"
shall
mean a tender or exchange offer for all outstanding shares of Common Stock
at a
price and on terms determined, prior to the date of the first acceptance of
payment for any of such shares, to be fair to and in the best interests of
the
Company and its shareholders (other than the offeror or any Affiliate or
Associate thereof) by at least a majority of the
members of the Board who are not (i) officers of the Company, (ii) the
offeror, (iii) Acquiring Persons or (iv) Affiliates or Associates of
the offeror or any Acquiring Person.
(j) "Person"
shall
mean any individual, firm, corporation, partnership, limited liability company,
joint venture, association, trust or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(k) "Preferred
Stock"
shall
mean the Series A Participating Preferred Stock of the Company.
(l) "Stock
Acquisition Date"
shall
mean the first date of public announcement by the Company or an Acquiring Person
that an Acquiring Person has become such.
(m) A
"Subsidiary"
of any
Person shall mean any corporation or other entity of which a majority of the
voting power of the voting equity securities or voting interests is owned,
directly or indirectly, by such Person, or which is otherwise controlled by
such
Person.
4
(n) "Triggering
Event"
shall
mean a Section 11 Event (as defined in Section 11(a) hereof) or a
Section 13 Event (as defined in Section 13(a)
hereof).
(o) "Voting
Power"
shall
mean the voting power of all securities of the Company then outstanding and
generally entitled to vote for the election of directors of the Company.
2. Appointment
of Rights Agent. The
Company hereby appoints the Rights Agent to act as agent for the Company in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable upon written notice
to
the Rights Agent. The Rights Agent shall have no duty to supervise, and shall
in
no event be liable for, the acts or omissions of any such co-Rights Agent.
In
the event the Company appoints one or more co-Rights Agents, the respective
duties of the Rights Agents and any co-Rights Agents shall be as the Company
shall determine.
3. Issue
of Rights Certificates.
(a) Until
the earlier of (i) the Stock Acquisition Date or (ii) the Close of
Business on the tenth (10th)
Business Day (or such later date as may be determined by action of the Board)
after the date of the commencement (determined in accordance with
Rule 14d-2 of the General Rules and Regulations under the Exchange Act as
in effect as the date hereof or, if no longer applicable, the intent of such
Rule 14d-2 as in effect on the date hereof as determined in good faith by
the Board) by any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any of its Subsidiaries, or any
entity organized, appointed or established by the Company or any of its
Subsidiaries for or pursuant to the terms of any such plan) of a tender or
exchange offer (other than a Permitted Offer) the consummation of which would
result in such Person becoming an Acquiring Person (including any such date
which is on or after the date of this Agreement and prior to the issuance of
the
Rights) (the earlier of such dates being herein referred to as the "Distribution
Date"),
(x) the Rights shall be evidenced by the certificates for Common Stock
registered in the names of the holders of the Common Stock (which certificates
for Common Stock shall be deemed also to be certificates for Rights) and not
by
separate certificates and (y) the Rights (and the right to receive
certificates therefor) shall be transferable only in connection with the
transfer of the underlying shares of Common Stock. As soon as practicable after
the Distribution Date, the Company shall provide the Rights Agent with a list
of
holders of Common Stock and the Rights Agent shall send, by first-class,
insured, postage prepaid mail, to each record holder of the Common Stock as
of
the Close of Business on the Distribution Date, at the address of such holder
shown on the records of the Company, a certificate for Rights, in substantially
the form of Exhibit B
hereto
(the "Rights
Certificates"),
evidencing one Right for each share of Common Stock so held (subject to
adjustment as provided herein).
As of and after the Distribution Date, the Rights shall be evidenced solely
by
such Rights Certificates.
The
Company shall promptly notify the Rights Agent in writing upon the occurrence
of
the Distribution Date and, if such notification is given orally, the Company
shall confirm same in writing on or prior to the Business Day next following.
Until such notice is received by the Rights Agent, the Rights Agent may presume
conclusively for all purposes that the Distribution Date has not occurred.
5
Promptly
following the Record Date, the Company shall send a copy of a Summary of Rights,
in substantially the form attached hereto as Exhibit C
(the
"Summary
of Rights"),
by
first-class, postage prepaid mail, to each record holder of the Common Stock
as
of the Close of Business on the Record Date, at the address of such holder
shown
on the records of the Company. With respect to certificates for the Common
Stock
outstanding as of the Record Date, until the Distribution Date (or earlier
redemption, expiration or termination of the Rights), the Rights shall be
evidenced by such certificates for the Common Stock and the registered holders
of the Common Stock shall also be the registered holders of the associated
Rights. Until the Distribution Date (or earlier redemption, expiration or
termination of the Rights), the surrender for transfer of any of the
certificates for the Common Stock outstanding on the Record Date shall also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.
(b) Certificates
issued for Common Stock (including, without limitation, certificates issued
upon
transfer or exchange of Common Stock) after the Record Date, but prior to the
earlier of the Distribution Date or the Expiration Date (as such term is
hereinafter defined), shall be deemed also to be certificates for Rights, and
shall have impressed, printed, stamped, written or otherwise affixed onto them
the following legend:
This
certificate also evidences and entitles the holder hereof to certain "Rights"
as
set forth in a Rights Agreement between Fiberstars, Inc. (the "Company")
and Mellon Investor Services LLC (the "Rights Agent") dated as of October 25,
2006 (the "Rights Agreement"), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal offices of the
Company. Under certain circumstances, as set forth in the Rights Agreement,
such
Rights may be redeemed, may expire or may 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. Under certain circumstances, Rights
"Beneficially Owned" by "Acquiring Persons" (as such terms are defined in the
Rights Agreement) or certain related parties, as well as subsequent holders
of
such Rights, may become null and void.
With
respect to such certificates containing the foregoing legend, until the
Distribution Date (or earlier redemption, expiration or termination of the
Rights), the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any of such certificates shall also constitute the transfer
of
the Rights associated with the Common Stock represented by such certificate.
6
4. Form
of Rights Certificates.
(a) The
Rights Certificates (and the forms of election to purchase shares and of
assignment and certificates to be printed on the reverse thereof) shall each
be
substantially in the form set forth in Exhibit B
hereto
and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, and do not
affect the rights, duties or responsibilities of the Rights Agent or as may
be
required to comply with any applicable law or with
any
rule or regulation made pursuant thereto or with any rule or regulation of
any
stock exchange or interdealer quotation system on which the Rights may from
time
to time be listed or traded, or to conform to usage. Subject to the provisions
of Section 11
and
Section 23
hereof,
the Rights Certificates, whenever distributed, shall be dated as of the Record
Date, and on their face shall entitle the holders thereof to purchase such
number of one one-thousandths of a share of Preferred Stock as shall be set
forth therein at the price per one one-thousandth of a share set forth therein
(the "Purchase
Price"),
such
Purchase Price to be initially equal to the amount set forth in Section 7(b)
below
but
the number of one one-thousandths of a share and the Purchase Price shall be
subject to adjustment as provided herein.
(b) Any
Rights Certificate issued pursuant to Section 3(a)
hereof
that represents Rights Beneficially Owned by an Acquiring Person or any
Associate or Affiliate thereof, any Rights Certificate issued at any time upon
the transfer of any Rights to such an Acquiring Person or any Associate or
Affiliate thereof or to any nominee of such Acquiring Person, Associate or
Affiliate, and any Rights Certificate issued pursuant to Section 6,
Section 11 or
Section 23
hereof
upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain the following legend:
The
Rights represented by this Rights Certificate were issued to a Person who was
an
Acquiring Person or an Affiliate or an Associate of an Acquiring Person (as
such
terms are defined in the Rights Agreement). This Rights Certificate and the
Rights represented hereby may become null and void under the circumstances
specified in Section 7(e) of the Rights Agreement.
The
provisions of Section 7(e) hereof shall be operative whether or not the
foregoing legend is contained on any such Rights Certificate.
5. Countersignature
and Registration.
(a) The
Rights Certificates shall be executed on behalf of the Company by its Chief
Executive Officer, its President, its Chief Financial Officer or any Vice
President, either manually or by facsimile signature, and shall have affixed
thereto the Company's seal or a facsimile thereof which shall be attested by
the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be countersigned by the
Rights Agent, either manually or by facsimile signature, and shall not be valid
for any purpose unless so countersigned. In case any officer of the Company
who
shall have signed any of the Rights Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent, and issued and delivered by the Company
with
the same force and effect as though the Person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights
Certificates may be signed on behalf of the Company by any Person who, at the
actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date
of
the execution of this Agreement any such Person was not such an officer.
7
(b) Following
the Distribution Date and receipt by the Rights Agent of notice to that effect
and any necessary information, the Rights Agent will keep or cause to be kept,
at its office designated for such purpose, books for registration and transfer
of the Rights Certificates issued hereunder. Such books shall show the names
and
addresses of the respective holders of the Rights Certificates, the number
of
Rights evidenced on its face by each of the Rights Certificates and the date
of
each of the Rights Certificates.
(a) Subject
to the provisions of Sections
7(e), 7(f) and 15 hereof,
at any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the Expiration Date, any Rights Certificate
or
Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Rights Certificates, entitling the registered holder
to
purchase a like number of one one-thousandths of a share of Preferred Stock
(or,
after the occurrence of a Triggering Event, shares of Common Stock or other
securities and property, as the case may be) as the Rights Certificate or Rights
Certificates surrendered then entitled such holder (or former holder in the
case
of a transfer) to purchase. Any registered holder desiring to transfer, split
up, combine or exchange any Rights Certificate shall make such request in
writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Rights Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent designated for such purpose. Subject
to receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them (as the Company may reasonably request) of the identity
of
the Beneficial Owner (or former Beneficial Owner) of the Rights Certificate
or
the Affiliates or Associates thereof, the Rights Agent shall (subject to
Section 7(e)
hereof)
thereupon countersign and deliver to the Person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or charge
that
may be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates. The Rights Agent shall have no duty or
obligation under this Section 6 unless and until it is satisfied that all
applicable taxes and charges have been paid in full.
(b) Subject
to the provisions of Sections
7(e), 7(f) and 15 hereof,
upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Rights
Certificate and such additional evidence of the identity of the Beneficial
Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
or the Rights Agent shall reasonably request, and, in case of loss, theft or
destruction, of indemnity or security satisfactory to them, and reimbursement
to
the Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company shall execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature and delivery
to the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
8
7. Exercise
of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject
to the provisions of Sections
7(e) and 7(f) hereof,
the registered holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or in part
at
any time after the Distribution Date upon presentation of the Rights
Certificate, with the appropriate form of election to purchase on the reverse
side thereof duly executed, to the Rights Agent at the office of the Rights
Agent set forth in Section 26
hereof,
together with payment of the Purchase Price for each one one-thousandth of
a
share of Preferred Stock (or such other securities or property as the case
may
be) as to which the Rights are exercised, at or prior to the earliest of
(i) the Close of Business on September 20, 2011 (the "Final
Expiration Date"),
(ii) the time at which the Rights are redeemed as provided in Section 24
hereof,
(iii) the consummation of a transaction contemplated by Section 13(d)
hereof
or
(iv) the time at which the Rights are exchanged as provided in Section 24(c)
hereof
(such earliest time being herein referred to as the "Expiration
Date").
Notwithstanding any other provision of this Agreement, any Person who prior
to
the Distribution Date becomes a record holder of shares of Common Stock may
exercise all of the rights of a registered holder of a Rights Certificate with
respect to the Rights associated with such shares of Common Stock in accordance
with and subject to the provisions of this Agreement, including the provisions
of Section 7(e)
hereof,
as of the date such Person becomes a record holder of shares of Common Stock.
(c) Upon
receipt of a Rights Certificate representing exercisable Rights, with the
appropriate form of election to purchase duly executed, accompanied by payment
of the Purchase Price for the fractional interests in shares of Preferred Stock
(or other securities or property) to be purchased and an amount equal to any
applicable tax or charge in cash, or by certified check or bank draft payable
to
the order of the Company, the Rights Agent shall, subject to Section 21(k)
hereof,
thereupon promptly (i)(A) requisition from any transfer agent of the shares
of
Preferred Stock (or make available, if the Rights Agent is the transfer agent)
certificates for the number of one one-thousandths of a share of Preferred
Stock
to be purchased, and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests, or (B) if the Company, in its sole
discretion, shall have elected to deposit the fractional interests in shares
of
Preferred Stock issuable upon exercise of the Rights hereunder into a
depositary, requisition from the depositary agent depositary receipts
representing such number of one one-thousandths of a share of Preferred Stock
as
are to be purchased (in which case certificates for the one one-thousandths
of a
share of Preferred Stock represented by such receipts shall be deposited by
the
transfer agent with the depositary agent) and the Company shall direct the
depositary agent to comply with such request, (ii) when appropriate,
requisition from the Company the amount of cash, if any, to be paid in lieu
of
issuance of fractional shares in accordance with Section 15,
(iii) promptly after receipt of such certificates or depositary receipts,
cause the same to be delivered to or upon the order of the registered holder
of
such Rights Certificate, registered in such name or names as may be designated
by such holder and, (iv) when appropriate, after receipt promptly deliver
such cash to or upon the order of the registered holder of such Rights
Certificate. In the event that the Company is obligated to issue other
securities of the Company, and/or distribute other property pursuant to
Section 11(a)
,
the
Company shall make all arrangements necessary so that such other securities
and/or property are available for distribution by the Rights Agent, if and
when
appropriate. In addition, in the case of an exercise of the Rights by a holder
pursuant to Section 11(a)(ii),
the
Rights Agent shall return such Rights Certificate to the registered holder
thereof after imprinting, stamping or otherwise indicating thereon that the
rights represented by such Rights Certificate no longer include the rights
provided by Section 11(a)(ii)
hereof;
provided,
however,
that if
less than all the Rights represented by such Rights Certificate were so
exercised, the Rights Agent shall indicate on the Rights Certificate the number
of Rights represented thereby which continue to include the rights provided
by
Section 11(a)(ii).
9
(d) In
case the registered holder of any Rights Certificate shall exercise (except
pursuant to Section 11(a)(ii))
less
than all the Rights evidenced thereby, a new Rights Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to the registered holder of such Rights Certificate
or to such registered holder's duly authorized assigns, subject to the
provisions of Section 6
and
Section 15
hereof.
(e) Notwithstanding
anything in this Agreement to the contrary, if there occurs any Triggering
Event, then any Rights that are or were on or after the Distribution Date
Beneficially Owned by an Acquiring Person or any Associate or Affiliate of
an
Acquiring Person shall become null and void, without any further action, and
any
holder of such Rights shall thereafter have no rights whatsoever with respect
to
such Rights, whether under any provision of this Agreement or otherwise. Without
limiting the foregoing sentence, Rights held by the following Persons shall
be
null and void without any further action: (i) any direct or indirect
transferee of any Rights that are or were on or after the Distribution Date
Beneficially Owned by an Acquiring Person or any Associate or Affiliate of
an
Acquiring Person; (ii) any direct or indirect transferee of any Rights
that
were
on or before the Distribution Date Beneficially Owned by an Acquiring Person
or
any Associate or Affiliate of an Acquiring Person if the transferee received
such Rights, directly or indirectly, (A) from an Acquiring Person or any
Associate or Affiliate of an Acquiring Person (x) as a result of a
distribution by such Acquiring Person or any Associate or Affiliate of an
Acquiring Person to holders of its equity securities or similar interests
(including, without limitation, partnership interests) or (y) pursuant to
any continuing agreement, arrangement or understanding with respect to the
Rights or (B) in a transfer (or series of transfers) which the Board
determines is part of a plan, agreement, arrangement or understanding which
has
the purpose or effect of avoiding the provisions of this Section 7(e);
and
(iii) subsequent transferees of Persons referred to in the foregoing
clauses (i) and (ii) as well as this clause (iii). The Company
shall notify the Rights Agent when this Section 7(e)
applies
and shall use all reasonable efforts to ensure that the provisions of this
Section 7(e)
are
complied with, but neither the Company nor the Rights Agent shall have any
liability to any holder of Rights or any Rights Certificate or to any other
Person as a result of the Company's failure to make any determination with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.
10
(f) Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the
Company shall be obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth in this
Section 7
unless
the Certificate contained in the appropriate form of Election to Purchase set
forth on the reverse side of the Rights Certificate surrendered for such
exercise shall have been properly completed and duly executed by the registered
holder thereof and the Company shall have been provided with such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or
Affiliates or Associates thereof as the Company or the Rights Agent shall
reasonably request.
8. Cancellation
and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split
up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted
by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel
and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request
of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
9. Reservation
and Availability of Preferred Stock.
(a)
The Company covenants and agrees that it shall cause to be reserved and kept
available out of its authorized and unissued shares of Preferred Stock, or
any
authorized and issued shares of Preferred Stock (and, following the occurrence
of a Triggering Event, shares of Common Stock and other securities) held in
its
treasury, the number of shares of Preferred Stock (and, following the occurrence
of a Triggering Event, shares of Common Stock and other securities) that will
be
sufficient (in accordance with the provisions of this Agreement, including
Section 11(a)(iii)
hereof)
to permit the exercise in full of all outstanding Rights.
11
(b)
So long as the shares of Preferred Stock (and, following the occurrence of
a
Triggering Event, shares of Common Stock and other securities) issuable upon
the
exercise of the Rights may be listed on any national securities exchange or
quoted on any national quotation system, the Company shall use its best efforts
to cause, from and after such time as the Rights become exercisable, all shares
(or other securities) reserved for such issuance to be listed on such exchange
or quoted on such system upon official notice of issuance upon such exercise.
(d) The
Company covenants and agrees that it shall take all such action as may be
necessary to ensure that all one one-thousandths of a share of Preferred Stock
and/or other securities delivered upon exercise of Rights shall, at the time
of
delivery of the certificates for such shares or other securities (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares or securities.
(e) The
Company further covenants and agrees that it shall pay when due and payable
any
and all taxes and charges which may be payable in respect of the issuance or
delivery of the Rights Certificates or of any certificates for one
one-thousandths of a share of Preferred Stock and/or other securities upon
the
exercise of Rights. The Company shall not, however, be required to (i) pay
any tax or charge which may be payable in respect of any transfer or delivery
of
Rights Certificates to a Person other than, or in respect of the issuance or
delivery of the shares of Preferred Stock and/or other securities in a name
other than that of, the registered holder of the Rights Certificates evidencing
Rights surrendered for exercise or (ii) issue or deliver any certificates
for shares of Preferred Stock and/or other securities in a name other than
that
of the registered holder upon the exercise of any Rights until such tax or
charge shall have been paid (any such tax or charge being payable by the holder
of such Rights Certificate at the time of surrender) or until it has been
established to the Company's or Rights Agent's satisfaction that no such tax
or
charge is due.
12
10. Preferred
Stock Record Date. Each
Person in whose name any certificate for one one-thousandths of a share of
Preferred Stock (or other securities) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
fractional shares of Preferred Stock (or other securities) represented thereby
on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly presented and payment of the
Purchase Price (and any applicable taxes or charges) was made; provided,
however,
that if
the date of such presentation and payment is a date upon which the Preferred
Stock (or other securities) 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 succeeding Business Day on which
the
Preferred Stock (or other securities) transfer books of the Company are open.
Prior to the exercise of the
Rights evidenced thereby, the holder of a Rights Certificate, as such, shall
not
be entitled to any rights of a shareholder of the Company with respect to shares
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
11. Adjustment
of Purchase Price, Number and Kind of Shares or Number of
Rights. The
Purchase Price, the number 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)
In the event the Company shall at any time after the date of this Agreement
(A) declare a dividend on the Preferred Stock payable in shares of
Preferred Stock, (B) subdivide the outstanding Preferred Stock,
(C) combine the outstanding Preferred Stock into a smaller number of shares
or (D) issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a)
and
in
Section 7(e)
hereof,
the Purchase Price in effect at the time of the record date for such dividend
or
of the effective date of such subdivision, combination or reclassification,
and
the number and kind of shares of capital stock issuable on such date, shall
be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock and other securities which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred Stock transfer
books of the Company were open, such holder would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would require an
adjustment under both this Section 11(a)(i)
and
Section 11(a)(ii)
hereof
the adjustment provided for in this Section 11(a)(i)
shall be
in addition to, and shall be made prior to, any adjustment required pursuant
to
Section 11(a)(ii)
hereof.
13
(ii) Subject
to Section 24(c)
hereof,
in the event any Person, alone or together with its Affiliates and Associates,
shall become an Acquiring Person other than pursuant to a Permitted Offer (such
an event being a "Section 11
Event"),
then,
promptly following the first occurrence of such a Section 11 Event, proper
provision shall be made so that each holder of a Right, except as provided
in
Section 7(e)
hereof,
shall, for a period of sixty (60) days after the later of the occurrence of
any such Section 11 Event and the effective date of an appropriate
registration statement pursuant to Section 9
hereof,
have a right to receive, upon exercise thereof at the then current Purchase
Price in accordance with the terms of this Agreement, in lieu of fractional
interests in shares of Preferred Stock, such number of shares of Common Stock
of
the Company as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to the
Section 11 Event at issue and (y) dividing that product by fifty
percent (50%) of the current market price per one share of Common Stock
(determined pursuant to Section 11(d)
hereof)
on the date of the occurrence of the Section 11 Event at issue (such number
of shares being referred to as the "number
of Adjustment Shares");
provided,
however,
that if
the transaction that would otherwise give rise to the foregoing adjustment
is
also subject to the provisions of Section 13
hereof,
then only the provisions of Section 13
hereof
shall apply and no adjustment shall be made pursuant to this Section 11(a)(ii);
and
provided,
further,
that
such sixty (60) day period shall not be deemed to run during any period in
which the exercise of the Rights or the fulfillment by the Company or the Rights
Agent of its or their obligations under this Agreement shall be enjoined or
otherwise prohibited in full or in part by any court or other governmental
agency or body.
14
(b) If
the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of any interests in Preferred Stock entitling them
(for
a period expiring within forty-five (45) calendar days after such record
date) to subscribe for or purchase any interests in Preferred Stock (or
securities having the same or more favorable rights, privileges and preferences
as the Preferred Stock ("equivalent
preferred stock"))
or
securities convertible into Preferred Stock or equivalent preferred stock at
a
price per share of Preferred Stock or per share of equivalent preferred stock
(or having a conversion price per share, if a security convertible into
Preferred Stock or equivalent preferred stock) less than the current market
price (as defined in Section 11(d))
per
share of Preferred Stock on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price
in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of shares of Preferred Stock outstanding on such
record date, plus the number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred Stock and/or
equivalent preferred stock to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price and the denominator of which shall be the number
of
shares of Preferred Stock outstanding on such record date, plus the number
of
additional shares of Preferred Stock and/or equivalent preferred stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price
may
be paid 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 reasonably and with good faith to the holders of Rights by the Board,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent and conclusive for all purposes.
Shares of Preferred Stock owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed;
and
in the event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then
be in
effect if such record date had not been fixed.
15
(c) If
the Company shall fix a record date for the making of a distribution to all
holders of interests in Preferred Stock (including any such distribution made
in
connection with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Preferred Stock, but including any dividend
payable in stock other than Preferred Stock) or subscription rights, options
or
warrants (excluding those referred to in Section 11(b)
hereof),
the Purchase Price to be in effect after such record date shall be determined
by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the then current market price
(as
defined in Section 11(d)
hereof)
per share of Preferred Stock on such record date, less the fair market value
(as
determined reasonably and with good faith to the holders of Rights by the Board,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent and conclusive for all purposes)
of the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights, options or warrants distributable
in
respect of one share of Preferred Stock and the denominator of which shall
be
the then current market price (as defined in Section 11(d)
hereof)
per share of the Preferred Stock. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distribution
is
not so made, the Purchase Price shall again be adjusted to be the Purchase
Price
which would be in effect if such record date had not been fixed.
(d)
(i)
For the purpose of any computation hereunder, other than as provided in
Section 11(a)(iii),
the
"current
market price"
per
share of Common Stock on any date shall be deemed to be the average of the
daily
closing prices per share of such Common Stock for the thirty
(30) consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided,
however,
that in
the event that the current per share market price of the Common Stock is
determined in whole or in part during a period following the announcement by
the
issuer of such Common Stock of (A) a dividend or distribution on such
Common Stock payable in shares of such Common Stock or securities convertible
into shares of such Common Stock or (B) any subdivision, combination or
reclassification of such Common Stock, and prior to the expiration of thirty
(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
market price"
shall
be properly adjusted to take into account ex-dividend trading. The closing
price
for each day shall be the last sale price, regular way, or, in case no such
sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted
to
trading on the New York Stock Exchange or, if the shares of Common Stock are
not
listed or admitted to trading on the New York Stock Exchange, as reported in
the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares of Common
Stock
are not listed or admitted to trading on any national securities exchange but
are listed or quoted on The Nasdaq Stock Market, the last reported sale price,
or, in case no such sale takes place on such day, the average of the closing
bid
and
asked prices as reported by Nasdaq, or, if the shares of Common Stock are not
listed or quoted on The Nasdaq Stock Market, the last quoted price or, if not
so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by the OTC Bulletin Board or such other system then in
use,
or, if on any such date the shares of Common Stock are not quoted by any such
organization, the average of the closing bid and asked prices as furnished
by a
professional market maker making a market in the Common Stock selected by the
Board. If on any such date no market maker is making a market in the Common
Stock, the fair value of such shares on such date as determined reasonably
and
with good faith by the Board shall be used and shall be binding on the Rights
Agent and conclusive for all purposes. The term "Trading
Day"
shall
mean a day on which the principal national securities exchange or The Nasdaq
Stock Market, as the case may be, on which the shares of Common Stock are
principally listed or admitted to trading or quoted is open for the transaction
of business or, if the shares of Common Stock are not listed or admitted to
trading or quoted on any national securities exchange or The Nasdaq Stock
Market, a Business Day. If the Common Stock is not publicly held or not so
listed or traded, "current
market price"
per
share shall mean the fair value per share determined reasonably and with good
faith to the holders of Rights by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on
the
Rights Agent and conclusive for all purposes.
16
(ii) For
the purpose of any computation hereunder, the "current
market price"
per
share (or one one-thousandth of a share) of Preferred Stock shall be determined
in the same manner as set forth above for the Common Stock in Section 11(d)(i)
(other
than the last sentence thereof). If the current market price per share (or
one
one-thousandth of a share) of Preferred Stock cannot be determined in the manner
provided above or if the Preferred Stock is not publicly held or listed or
traded in a manner described in Section 11(d)(i),
the
"current
market price"
per
share of Preferred Stock shall be conclusively deemed to be an amount equal
to
1,000 (as such number may be appropriately adjusted for such events as stock
splits, stock dividends and recapitalization with respect to the Common Stock
occurring after the date of this Agreement) multiplied by the current market
price per share of the Common Stock and the "current
market price"
per one
one-thousandth of a share of Preferred Stock shall be equal to the current
market price per share of the Common Stock (as appropriately adjusted). If
neither the Common Stock nor the Preferred Stock is publicly held or so listed
or traded, "current
market price"
per
share shall mean the fair value per share as determined in good faith by the
Board, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
17
(e) Anything
herein to the contrary notwithstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least one percent (1%) in the Purchase Price; provided,
however,
that any
adjustments which by reason of this Section 11(e)
are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11
shall be
made to the nearest cent or to the nearest thousandth of a share of Common
Stock
or other share or one-millionth of a share of Preferred Stock, as the case
may
be. Notwithstanding the first sentence of this Section 11(e),
any
adjustment required by this Section 11
shall be
made no later than the earlier of (i) three (3) years from the date of
the transaction which mandates such adjustment or (ii) the Expiration Date.
(f) If
as a result of any provision of this Section 11,
the
holder of any Right shall become entitled to receive any shares of capital
stock
of the Company other than Preferred Stock, 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 shares (and the related Purchase Price)
contained in
this
Section 11,
and the
provisions of Sections
7, 9, 10, 13
and
15
hereof
with respect to the Preferred Stock shall apply on like terms to any such other
shares.
(g) All
Rights originally issued by the Company subsequent to any adjustment made to
the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted
Purchase Price, the number of one one-thousandths of a share of Preferred Stock
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless
the Company shall have exercised its election as provided in Section 11(i)
hereof,
upon each adjustment of the Purchase Price as a result of the calculations
made
in Section 11(b)
and
(c)
hereof,
each Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that
number of one one-thousandths of a share of Preferred Stock (calculated to
the
nearest one-millionth) obtained by (i) multiplying (x) the number of
one one-thousandths of a share of Preferred Stock covered by a Right immediately
prior to this adjustment by (y) the Purchase Price in effect immediately
prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The
Company may elect on or after the date of any adjustment of the Purchase Price
to adjust the number of Rights, in substitution for any adjustment in the number
of one one-thousandths of a share of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in
the
number of Rights shall be exercisable for the number of one one-thousandths
of a
share of Preferred Stock for which a Right was exercisable immediately prior
to
such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest
one millionth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make
a
public announcement and promptly notify the Rights Agent of its election to
adjust the number of Rights, indicating the record date for the adjustment,
and,
if known at the time, the amount of the adjustment to be made. This record
date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Rights Certificates have been issued, shall be at least ten
(10) days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i),
the
Company shall, as promptly as practicable, cause to be distributed to holders
of
record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 15
hereof,
the additional Rights to which such holders shall be entitled as a result of
such adjustment, or, at the option of the Company, shall cause to be distributed
to such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
18
(j) Irrespective
of any adjustment or change in the Purchase Price or the number of one
one-thousandths of a share of Preferred Stock issuable upon the exercise of
the
Rights, the Rights Certificates theretofore and thereafter issued may continue
to express the Purchase Price per one one-thousandths of a share and the number
of one one-thousandths of a share which were expressed in the initial Rights
Certificates issued hereunder.
(k) Before
taking any action that would cause an adjustment reducing the Purchase Price
below the then par value, if any, of the number of one one-thousandths of a
share of Preferred Stock
or
shares of Common Stock or other securities issuable upon exercise of the Rights
(aggregating, for this purpose, an appropriate amount of the Purchase Price
for
fractional shares to compare such aggregated amount to the par value for a
whole
share), the Company shall take any corporate action which may, in the opinion
of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable one one-thousandths of a share of Preferred
Stock or shares of Common Stock or other securities at such adjusted Purchase
Price. If upon any exercise of the Rights, a holder is to receive a combination
of Common Stock and common stock equivalents, or Preferred Stock and preferred
stock equivalents, a portion of the consideration paid upon such exercise,
equal
to at least the then par value, if any, of a share of Common Stock or Preferred
Stock of the Company, as the case may be, shall be allocated as the payment
for
each share of Common Stock or Preferred Stock of the Company, as the case may
be, so received.
19
(l) In
any case in which this Section 11
shall
require that an adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to defer (and shall
promptly notify the Rights Agent of any such election) until the occurrence
of
such event the issuing to the holder of any Right exercised after such record
date the shares of Preferred Stock and other capital stock or securities of
the
Company, if any, issuable upon such exercise over and above the shares of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided,
however,
that the
Company shall deliver to such holder a due ▇▇▇▇ or other appropriate instrument
evidencing such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
(m) Anything
to the contrary in this Section 11
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11,
as and
to the extent that it in its sole discretion shall determine to be advisable
in
order that any consolidation or subdivision of the Preferred Stock, issuance
wholly for cash of any shares of Preferred Stock at less than the current market
price, issuance wholly for cash of shares of Preferred Stock or securities
which
by their terms are convertible into or exchangeable for shares of Preferred
Stock, stock dividends or issuance of rights, options or warrants referred
to
hereinabove in this Section 11,
hereafter made by the Company to holders of Preferred Stock shall not be taxable
to such shareholders.
(n) Anything
in this Agreement to the contrary notwithstanding, in the event that the Company
shall at any time after the date of this Agreement and prior to the Distribution
Date (i) declare a dividend on the outstanding shares of Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, (iii) combine the outstanding Common Stock into a smaller number of
shares, or (iv) issue any shares of its capital stock in a reclassification
of the outstanding Common Stock, the number of Rights associated with each
share
of Common Stock then outstanding, or issued or delivered thereafter but prior
to
the Distribution Date, shall be proportionately adjusted so that the number
of
Rights thereafter associated with each share of Common Stock following any
such
event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event
by a
fraction the numerator of which shall be the total number of shares of Common
Stock outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
(o) The
exercise of Rights under Section 11(a)(ii)
hereof
shall only result in the loss of rights under Section 11(a)(ii)
hereof
to the extent so exercised and shall not otherwise affect the rights represented
by the Rights under this Agreement, including the rights represented by
Section 13
hereof.
20
13. Consolidation,
Merger or Sale or Transfer of Assets or Earning Power.
(a) In
the event that, following the Stock Acquisition Date, directly or indirectly,
(x) the Company shall consolidate with, or merge with and into, any other
Person, (y) 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 merger (other than, in the case of any transaction described
in (x) or (y), a merger or consolidation which would result in all of the
Voting Power represented by the securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into securities of the surviving entity)
all
of the Voting Power represented by the securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation
and
the holders of such securities not having changed as a result of such merger
or
consolidation), or (z) the Company shall sell, mortgage or otherwise
transfer (or one or more of its Subsidiaries shall sell, mortgage or otherwise
transfer), in one or more transactions, assets or earning power aggregating
more
than fifty percent (50%) of the assets or earning power of the Company and
its
Subsidiaries (taken as a whole) to any other Person (any of the events described
in the foregoing clauses (x), (y) or (z) being herein referred to as a
"Section 13
Event"),
then,
and in each such case, proper provision shall be made so that (i) each
holder of a Right (other than as provided in Section 7(e)
hereof)
shall have the right to receive, upon the exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, such number
of
shares of freely tradable Common Stock of the Principal Party (as hereinafter
defined), free and clear of liens, rights of call or first refusal, encumbrances
or other adverse claims, as shall be equal to the result obtained by
(x) multiplying the then current Purchase Price by the number of one
one-thousandths of a share of Preferred Stock for which a Right is then
exercisable (without taking into account any adjustment previously made pursuant
to Section 11(a)(ii)
hereof)
and (y) dividing that product by fifty percent (50%) of the current market
price per share of the Common Stock of such Principal Party (determined pursuant
to Section 11(d)
hereof)
on the date of consummation of such consolidation, merger, sale or transfer;
(ii) such Principal Party shall thereafter be liable for, and shall assume,
by virtue of such consolidation, merger, sale or transfer, all the obligations
and duties of the Company pursuant to this Agreement; (iii) the term
"Company"
shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11
hereof
shall apply 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 shares of its Common Stock in accordance with Section 9
hereof)
in connection with such consummation as may be necessary to ensure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights.
21
(i) in
the case of any transaction described in clauses (x) or (y) of the
first sentence of this Section 13,
the
Person that is the issuer of any securities into which shares of Common Stock
of
the Company are converted in such merger or consolidation, and if no securities
are so issued, the Person that is the other party to the merger or consolidation
(including, if applicable, the Company, if it is the surviving corporation);
and
(ii) in
the case of any transaction described in clause (z) of the first sentence
in this Section 13,
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, (A) if the Common Stock of such Person is not at such time
and has not been continuously over the preceding twelve (12) month period
registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary or Affiliate of another Person the Common Stock
of
which is and has been so registered, "Principal
Party"
shall
refer to such other Person; (B) in case such Person is a Subsidiary,
directly or indirectly, or Affiliate of more than one Person, the Common Stock
of two or more of which are and have been so registered, "Principal
Party"
shall
refer to whichever of such Persons is the issuer of the Common Stock having
the
greatest aggregate market value; and (C) in case such Person is owned,
directly or indirectly, by a joint venture formed by two or more Persons that
are not owned, directly or indirectly, by the same Person, the rules set forth
in clauses (A) and (B) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such joint venture
were
a Subsidiary of each such joint venturer and the Principal Parties in each
such
chain shall bear the obligations set forth in this Section 13
in the
same ratio as their direct or indirect interests in such Person bear to the
total of such interests.
(c) The
Company shall not consummate any Section 13 Event unless the Principal
Party shall have a sufficient number of authorized shares of its Common Stock
that have not been issued or reserved for issuance to permit the exercise in
full of the Rights in accordance with this Section 13
and
unless prior thereto the Company and each Principal Party and each other Person
who may become a Principal Party as a result of such Section 13 Event 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 such
Section 13 Event, the Principal Party at its own expense shall:
22
(i) prepare
and file a registration statement under the Act with respect to the Rights
and the securities purchasable upon exercise of the Rights on an appropriate
form, will use its best efforts to cause such registration statement to become
effective as soon as practicable after such filing and will use its best efforts
to cause such registration statement to remain effective (with a prospectus
at
all times meeting the requirements of the Act) until the Expiration Date;
(ii) use
its best efforts to (x) qualify or register the Rights and the securities
purchasable upon exercise of the Rights under the blue sky laws of such
jurisdictions as may be necessary or appropriate and (y) cause the Rights
and the securities purchasable upon exercise of the Rights to be listed on
any
national securities exchange or national quotation system upon which its Common
Stock is listed, traded or quoted; and
(iii) deliver
to holders of the Rights historical financial statements for the Principal
Party
and each of its Affiliates that comply in all material respects with the
requirements for registration on Form 10 under the Exchange Act.
(d) Notwithstanding
anything in this Agreement to the contrary, this Section 13
shall
not be applicable to a transaction described in clauses (x) or (y) of
Section 13(a)
hereof
if (i) such transaction is (x) consummated with a Person or Persons
who acquired shares of Common Stock pursuant to a Permitted Offer (or a wholly
owned Subsidiary of any such Person or Persons) and (y) related to such
Permitted Offer, (ii) the price per share of Common Stock offered in such
transaction is not less than the price per share of Common Stock paid to all
holders of Common Stock whose shares were purchased pursuant to such Permitted
Offer and (iii) the form of consideration being offered to the remaining
holders of Common Stock pursuant to such transaction is the same as the form
of
consideration paid pursuant to such Permitted Offer. Upon consummation of any
such transaction contemplated by this subsection
(d),
all
Rights hereunder shall expire.
14. Additional
Covenants.
(a) The
Company covenants and agrees that after the Stock Acquisition Date it shall
not
(i) consolidate with, (ii) merge with or into or (iii) sell or
transfer to any other Person, in one or more transactions, assets or earning
power aggregating more than fifty percent (50%) of the assets or earning power
of the Company and its Subsidiaries taken as a whole, if at the time of or
after
such consolidation, merger or sale there are any charter or by-law provisions
or
any rights, warrants or other instruments outstanding or any other action taken
which would diminish or otherwise eliminate the benefits intended to be afforded
by the Rights. The Company shall not consummate any such consolidation, merger
or sale unless prior thereto the Company and such other Person shall have
executed and delivered to the Rights Agent a supplemental agreement evidencing
compliance with this subsection.
23
(b) The
Company covenants and agrees that, after the Stock Acquisition Date, it will
not, except as permitted by Section 24
hereof,
take any action the purpose or effect of which is to diminish or otherwise
eliminate the benefits intended to be afforded by the Rights.
15. Fractional
Rights and Fractional Shares.
(a) The
Company shall not be required to issue fractions of Rights, except prior to
the
Distribution Date as provided in Section 11(n)
hereof,
or to distribute Rights Certificates which evidence fractional Rights. In lieu
of such fractional Rights, there shall be paid to the registered holders of
the
Rights Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 15(a),
the
current market value of a whole Right shall be (except as otherwise provided
in
the last sentence of this Section 15(a))
the
closing price of the Rights for the Trading Day immediately prior to the date
on
which such fractional Rights would have been otherwise issuable. The closing
price of the Rights for any day shall be the last sale price, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices
in
the over-the-counter market, as reported by The Nasdaq Stock Market or such
other system then in use or, if on any such date the Rights are not quoted
by
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights selected
by the Board. 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 reasonably
and
with good faith to the holders of Rights by the Board shall be used and shall
be
binding on the Rights Agent and conclusive for all purposes.
24
(c) Following
the occurrence of a Triggering Event, the Company shall not be required to
issue
fractions of shares of Common Stock upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Common Stock. In lieu of
fractional shares of Common Stock, the Company may pay to the registered holders
of Rights Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market value of
a
share of Common Stock. For purposes of this Section 15(c),
the
current market value shall be determined in the manner set forth in Section 11(d)
hereof
for the Trading Day immediately prior to the date of such exercise.
(d) Except
as otherwise expressly provided herein, 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 (other than, in the case of Preferred Stock,
fractions which are integral multiples of one one-thousandth of a share of
Preferred Stock) upon exercise of a Right. The Rights Agent shall have no duty
or obligation with respect to this Section 15
and
Section 24
below
unless and until it has received specific instructions (and sufficient cash,
if
required) from the Company with respect to its duties or obligations under
such
Sections.
16. Rights
of Action. All
rights of action in respect of this Agreement, except those rights of action
expressly vested in the Rights Agent under this Agreement, are vested in the
respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock); and any
registered holder of any Rights Certificate (or, prior to the Distribution
Date,
of the Common Stock), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in such holder's own behalf and for such holder's own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, such holder's
right to exercise the Rights evidenced by such Rights Certificate in the manner
provided in such Rights Certificate and in this Agreement. Without limiting
the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at
law
for any breach by the Company of this Agreement and shall be entitled to
specific performance of the obligations hereunder and injunctive relief against
actual or threatened violations by the Company of the obligations hereunder
of
any Person subject to this Agreement. Holders of Rights shall be entitled to
recover the reasonable costs and expenses, including attorneys' fees, incurred
by them in any action to enforce the provisions of this Agreement.
25
(a) prior
to the Distribution Date, the Rights will be transferable only in connection
with the transfer of Common Stock;
(b) after
the Distribution Date, the Rights Certificates are transferable only on the
registry books of the Rights Agent and only if surrendered at the office of
the
Rights Agent set forth in Section 26
hereof,
duly endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates attached;
(c) the
Company and the Rights Agent shall deem and treat the Person in whose name
a
Rights Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on
the
Rights Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent shall be affected by any notice to
the
contrary; and
(d) notwithstanding
anything in this Agreement to the contrary, neither the Company nor the Rights
Agent shall have any liability to any holder of a Right or other Person as
a
result of the inability of the Company or the Rights Agent to perform any of
its
or their obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree, judgment or ruling (whether
interlocutory or final) issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any governmental
authority prohibiting or otherwise restraining performance of such obligation;
provided,
however,
that
the Company must use its best efforts to have any such order, decree, judgment
or ruling lifted or otherwise overturned as soon as possible.
18. Rights
Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of Preferred
Stock, Common Stock or any other securities of the Company which may at any
time
be issuable upon exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a 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
hereof),
or to receive dividends or subscription rights, or otherwise, until the Right
or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions thereof.
19. Concerning
the Rights Agent.
(a) The
Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and disbursements and
other disbursements incurred in the preparation, delivery, administration,
amendment and execution of this Agreement and the exercise and performance
of
its duties hereunder. The Company also agrees to indemnify the Rights Agent
for,
and to hold it harmless against, any loss, liability, damage, judgment, fine,
penalty, claim, demand, settlement, cost, or expense (including, without
limitation, the reasonable fees and expenses of legal counsel), incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent (which gross negligence, bad faith or willful misconduct must be
determined by a final, non-appealable order, judgment, decree or ruling of
a
court of competent jurisdiction), for any
action taken, suffered or omitted by the Rights Agent in connection with the
acceptance, administration, exercise and performance of this Agreement,
including the costs and expenses of defending against any claim of liability
arising therefrom, directly or indirectly. The costs and expenses incurred
in
enforcing this right of indemnification shall be paid by the Company. The
provisions of this Section 19
and
Section 21
below
shall survive the termination of this Agreement, the exercise or expiration
of
the Rights and the resignation or removal of the Rights Agent.
26
(b) The
Rights Agent shall be authorized to rely on, 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 acceptance and administration of this Agreement or the
exercise or performance of its duties hereunder in reliance upon any Rights
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged by the proper Person or Persons,
or
otherwise upon the advice of counsel as set forth in Section 21
hereof.
20. Merger
or Consolidation or Change of Name of Rights Agent.
(a) Any
Person into which the Rights Agent or any successor Rights Agent may be merged
or with which it may be consolidated, or any Person resulting from any merger
or
consolidation to which the Rights Agent or any successor Rights Agent shall
be a
party, or any Person succeeding to the shareholder services business of the
Rights Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or
any
further act on the part of any of the parties hereto, provided that such Person
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 22
hereof.
In case at the time such successor Rights Agent shall succeed to the agency
created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt
the
countersignature of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent
may
countersign such Rights Certificates either in the name of the predecessor
or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates
and
in this Agreement.
27
(b) In
case at any time the name of the Rights Agent shall be changed and at such
time
any of the Rights Certificates shall have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its prior name and deliver
Rights Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may countersign
such Rights Certificates either in its prior name or in its changed name; and
in
all such cases such Rights Certificates shall have the full force provided
in
the Rights Certificates and in this Agreement.
21. Rights
and Duties of Rights Agent. The
Rights Agent undertakes the duties and obligations expressly imposed by this
Agreement (and not implied duties or obligations) upon the following terms
and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The
Rights Agent may consult with legal counsel selected by it (who may be legal
counsel for the Company), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent and, in
the
absence of bad faith, the Rights Agent shall incur no liability for or in
respect of any action taken, suffered or omitted by it in accordance with such
advice or opinion.
(c) The
Rights Agent shall be liable hereunder only for its own gross negligence, bad
faith or willful misconduct (which gross negligence, bad faith or willful
misconduct must be determined by a final, non-appealable order, judgment, decree
or ruling of a court of competent jurisdiction). Anything in this Agreement
to
the contrary notwithstanding, in no case will the Rights Agent be liable for
special, indirect, punitive, incidental or consequential loss or damages of
any
kind whatsoever (including but not limited to lost profits), even if the Rights
Agent has been advised of the possibility of such damages. Notwithstanding
anything to the contrary herein, the liability of the Rights Agent hereunder
will be limited to the amount of fees paid by the Company to the Rights Agent
hereunder.
(d) The
Rights Agent shall not be liable for or by reason of any of the statements
of
fact or recitals contained in this Agreement or in the Rights Certificates
(except as to the fact that it has countersigned the Rights Certificates) 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.
28
(e) The
Rights Agent shall not have any liability for or be under any responsibility
in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible or liable for any breach by the Company
of
any covenant or condition contained in this Agreement or in any Rights
Certificate; nor shall it be responsible or liable for any adjustment required
under the provisions of Section 11
or
13
hereof
or
responsible or liable for the manner, method or amount of any such adjustment
or
the ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by Rights
Certificates after receipt of a certificate pursuant to Section 12
describing
any such adjustment); nor shall it be responsible or liable for any
determination by the Board of the current market value of the Rights or
Preferred Stock or Common Stock pursuant to the provisions of Section 15
hereof;
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Preferred
Stock
or other securities to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Preferred Stock or other securities
will, when so issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The
Company agrees that it will perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such further and
other
acts, instruments and assurances as may reasonably be required by the Rights
Agent for the carrying out or performance by the Rights Agent of the provisions
of this Agreement.
(g) The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder and certificates delivered
pursuant to any provision hereof from the Chief Executive Officer, the
President, any Vice President, the Chief Financial Officer, the Secretary,
any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company,
and
is
authorized to apply to such officers for advice or instructions in connection
with its duties, and such advice or instructions shall be full authorization
and
protection to the Rights Agent and, in the absence of bad faith, the Rights
Agent shall incur no liability for or in respect of any action taken, suffered
or omitted to be taken by it in accordance with the advice or written
instructions of any such officer. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken, suffered or omitted by
the
Rights Agent with respect to its duties or obligations under this Agreement
and
the date on and/or after which such action shall be taken, suffered or omitted
and the Rights Agent shall not be liable for any action taken, suffered or
omitted in accordance with a proposal included in any such application on or
after the date specified therein (which date shall not be less than three
(3) Business Days after the date any such officer actually receives such
application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking, suffering or omitting any such action,
the Rights Agent has received written instructions in response to such
application specifying the action to be taken, suffered or omitted.
29
(h) The
Rights Agent and any Affiliate, 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 may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though the Rights Agent were not the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent
or
any such Affiliate, shareholder, director, officer or employee from acting
in
any other capacity for the Company or for any other Person.
(i) The
Rights Agent may execute and exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself (through its directors,
officers and employees) or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, omission, default,
neglect or misconduct of any such attorneys or agents or for any loss to the
Company or to the holders of the Rights or any other Person resulting from
any
such act, omission, default, neglect or misconduct, absent gross negligence,
bad
faith or willful misconduct in the selection and continued employment thereof
(which gross negligence, bad faith or willful misconduct must be determined
by a
final, non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction).
(j) No
provision of this Agreement shall require the Rights Agent to expend or risk
its
own funds or otherwise incur any financial liability in the performance of
any
of its duties hereunder or in the exercise of its rights if the Rights Agent
believes that repayment of such funds or adequate indemnification against such
risk or liability is not reasonably assured to it.
(k) If,
with respect to any Rights Certificate surrendered to the Rights Agent for
exercise or transfer, the certificate attached to the form of assignment or
form
of election to purchase, as the case may be, has either not been properly
completed or indicates an affirmative response to clause l and/or 2
thereof, the Rights Agent shall not take any further action with respect to
such
requested exercise or transfer without first consulting with the Company.
22. Change
of Rights Agent. The
Rights Agent or any successor Rights Agent may resign and be discharged from
its
duties under this Agreement upon thirty (30) days' notice in writing mailed
to the Company and to each transfer agent of the Common Stock and Preferred
Stock by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. The Company may remove the Rights Agent or
any
successor Rights Agent upon thirty (30) days' notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and Preferred Stock by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company
shall fail to make such appointment within a period of thirty (30) days
after giving notice of such removal or after it has been notified in writing
of
such resignation or incapacity by the resigning or incapacitated Rights Agent
or
by the holder of a Rights Certificate (who shall, with such notice, submit
such
holder's Rights Certificate for inspection by the Company), then the registered
holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be (a) a
Person organized and doing business under the laws of the United States or
of
the State of New York or the State of California (or of any other state of
the
United States so long as such Person is authorized to do business in the State
of New York or the State of California), in good standing, which is authorized
under such laws to exercise shareholder services powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000.00 or (b) an Affiliate of a Person described in
clause (a) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as
if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall mail notice
thereof in writing to the predecessor Rights Agent and each transfer agent
of
the Common Stock and Preferred Stock, and mail a notice thereof in writing
to
the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 22,
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.
30
23. Issuance
of New Rights Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights
in
such form as may be approved by the Board to reflect any adjustment or change
in
the Purchase Price per share and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
Date and prior to the redemption or expiration of the Rights, the Company
(a) shall, with respect to shares of Common Stock so issued or sold
pursuant to the exercise of stock options or otherwise under any employee plan
or arrangement, which plan or arrangement is existing as of the Distribution
Date, or upon the exercise, conversion or exchange of any other securities
issued by the Company on or prior to the Distribution Date, and (b) may, in
any other case, if deemed necessary or appropriate by the Board, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided,
however,
that
(i) no such Rights Certificates shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Rights Certificates would be issued, and (ii) no such
Rights Certificates shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
31
24. Redemption,
Termination and Exchange.
(a)
(i) The Board may, at its option, at any time prior to the earlier of
(x) the Stock Acquisition Date or (y) 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 $0.001 per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (such redemption price being hereinafter referred to as the
"Redemption
Price").
The
Company may, at its option, pay the Redemption Price in any form of
consideration deemed appropriate by the Board.
(ii) In
addition, and notwithstanding the provisions of Section 24(a)(i)
hereof,
the Board may redeem all but not less than all of the then outstanding Rights
at
the Redemption Price on
or
after the Stock Acquisition Date but prior to any Section 13 Event either
(x) in connection with any Section 13 Event in which all holders of
Common Stock are treated alike and not involving (other than as a holder of
Common Stock being treated like all other such holders) an Acquiring Person
or
an Affiliate or Associate thereof or any other Person in which such Acquiring
Person or Affiliate or Associate thereof has any interest, or any other Person
acting directly or indirectly on behalf of or in association with any such
Acquiring Person or Affiliate or Associate thereof, or (y) following the
occurrence of a Section 11 Event, and the expiration of any period during
which the holder of Rights may exercise the rights under Section 11(a)(ii)
hereof
as
a result thereof, if and for as long as any Acquiring Person having triggered
the Section 11 Event at issue is not thereafter the Beneficial Owner of
fifteen percent (15%) or more of the outstanding shares of Common Stock, and
at
the time of redemption there are no other Persons who are Acquiring Persons.
(b)
(i)
In the case of a redemption permitted under Section 24(a)(i)
hereof,
immediately upon the action of the Board ordering the redemption of the Rights,
evidence of which shall have been filed with the Rights Agent and without any
further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. In the case of a redemption permitted only under
Section 24(a)(ii)
hereof,
evidence of which shall have been filed with the Rights Agent, the right to
exercise the Rights will terminate and represent only the right to receive
the
Redemption Price only after ten (10) Business Days following the giving of
notice of such redemption to the holders of such Rights if no Section 11
Event shall have occurred, and, if a Section 11 Event shall have occurred,
upon the later of ten (10) Business Days following the giving of such
notice or the expiration of any period during which the rights under
Section 11(a)(ii)
hereof
may be exercised as a result thereof. Within ten (10) days after the action
of the Board ordering any such 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 the Rights Agent and to all such
holders at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Stock. Any notice that is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made.
32
(ii) In
the case of a redemption permitted under Section 24(a)(i)
or
(ii),
the
Company may, at its option, discharge all of its obligations with respect to
the
Rights by (i) issuing a press release announcing the manner of redemption
of the Rights and (ii) mailing payment of the Redemption Price to the
registered holders of the Rights at their last addresses as they appear on
the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent of the Common Stock, and upon such action,
all outstanding Rights Certificates shall be null and void without any further
action by the Company.
(c)
(i)
Subject to the limitations of applicable laws, the Board may, at its option
and
at any time after any Person becomes an Acquiring Person, exchange all or part
of the then outstanding and exercisable Rights (which shall not include Rights
that have become null and void pursuant to the provisions of Section 7(e)
hereof)
for (A) shares of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (the
"Exchange
Shares"),
or
(B) Substitute Consideration (as that term is defined below). The Board may
determine, in its sole discretion, whether to deliver Exchange Shares or
Substitute Consideration. Notwithstanding the foregoing, the Board shall not
be
empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary
of
the Company, any employee benefit plan of the Company or any such Subsidiary,
or
any entity holding Common Stock for or pursuant to the terms of any such plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of fifty percent (50%) or more of the Common Stock then
outstanding.
(ii) In
the event the Board shall determine to deliver Substitute Consideration in
exchange for Rights, the Company shall (1) determine the value of the
Exchange Shares (the "Exchange
Value"),
and
(2) with respect to each Right to be exchanged, make adequate provision to
substitute for Exchange Shares the following (the "Substitute
Consideration"):
(v) cash, (w) Common Stock or common stock equivalents (as that term
is defined in Section 11(a)(iii)
hereof)
or Preferred Stock or equivalent preferred stock (as that term is defined in
Section 11(b)
hereof),
(x) debt securities of the Company, (y) other assets, or (z) any
combination of the foregoing, having an aggregate value equal to the Exchange
Value, where such aggregate value has been determined by the Board based upon
the advice of a nationally recognized investment banking firm selected by the
Board. For purposes of this Section 24(c),
the
value of a share of Common Stock shall be the current market price (as
determined pursuant to Section 11(d)
hereof)
per share of Common Stock on the day that is the later of (x) the first
occurrence of a Section 11 Event or (y) the date on which the
Company's right of redemption pursuant to Section 24(a)(i)
hereof
expires; and the value of any common stock equivalent shall be deemed to have
the same value as the Common Stock on such date.
33
(iii) Immediately
upon the action of the Board ordering the exchange of any Rights pursuant to
this Section 24(c),
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 Exchange Shares or Substitute Consideration for each Right
exchanged by such holder. The Company shall promptly give public notice and
notice to the Rights Agent of any such exchange; provided,
however,
that
the failure to give, or any defect in, such notice shall not affect the validity
of such exchange. The Company 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 Common Stock (or Substitute Consideration) for Rights will be effected and,
in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 7(e)
hereof)
held by each holder of Rights.
(iv) In
the event that there shall not be sufficient shares of Common Stock or Preferred
Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24(c),
the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock or Preferred Stock for issuance upon exchange of the
Rights.
(v) The
Company shall not be required to issue fractions of shares of Common Stock
or to
distribute certificates which evidence fractional shares of Common Stock. In
lieu of such fractional shares of Common Stock, the Company shall pay to the
registered holders of the Rights Certificates with regard to which such
fractional shares of Common Stock would otherwise be issuable an amount in
cash
equal to the same fraction of the current market value of a whole share of
Common Stock. For the purposes of this Section 24(c)(v),
the
current market value of a whole share of Common Stock shall be determined in
the
manner set
forth
in Section 11(d)
hereof
for the Trading Day immediately prior to the date of exchange pursuant to this
Section 24(c).
25. Notice
of Certain Events.
(a) In
case the Company shall propose (i) to pay any dividend payable in stock of
any class to the holders of Preferred Stock or to make any other distribution
to
the holders of Preferred Stock (other than a regular quarterly cash dividend
out
of earnings or retained earnings of the Company), (ii) to offer to the
holders of Preferred Stock rights or warrants to subscribe for or to purchase
any additional shares of Preferred Stock or shares of stock of any class or
any
other securities, rights or options, (iii) to effect any reclassification
of Preferred Stock (other than a reclassification involving only the subdivision
of outstanding shares of Preferred Stock), (iv) to effect any consolidation
or merger into or with, or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other transfer), in one
or
more transactions, of more than fifty percent (50%) of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to, any other
Person or (v) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of
a
Rights Certificate, in accordance with Section 26
hereof,
a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the
date
on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of the shares of Preferred Stock, if any
such date is to be fixed, and such notice shall be so given in the case of
any
action covered by clause (i) or (ii) above at least twenty
(20) days prior to the record date for determining holders of the shares of
Preferred Stock for purposes of such action, and in the case of any such other
action, at least twenty (20) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
shares of Preferred Stock, whichever shall be the earlier.
34
(b) In
case any Triggering Event shall occur, then, in any such case, the Company
or
the Principal Party, as the case may be, shall as soon as practicable thereafter
give to each holder of a Rights Certificate and the Rights Agent, in accordance
with Section 26
hereof,
a
notice of the occurrence of such Triggering Event, which shall specify the
event
and the consequences of the Triggering Event to holders of Rights under
Section 11(a)(ii) or 13(a) hereof, as the case may be.
(c) The
failure to give notice required by this Section 25
or
any
defect therein shall not affect the legality or validity of the action taken
by
the Company or the vote upon any such action.
26. Notices. Notices
or demands authorized by this Agreement to be given or made by the Rights Agent
or by the holder of any Rights Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid, or
sent
by nationwide overnight delivery, addressed (until another address is filed
in
writing with the Rights Agent) as follows:
Fiberstars, Inc.
▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇,
▇▇
▇▇▇▇▇
Attention:
Corporate Secretary
35
Mellon
Investor Services LLC
▇▇▇
▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
With
a
copy to:
Mellon
Investor Services LLC
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
General Counsel
Notices
or demands authorized by this Agreement to be given or made by the Company
or
the Rights Agent to the holder of any Rights Certificate shall be sufficiently
given or made if sent by first-class mail, postage prepaid, or sent by
nationwide overnight delivery, addressed to such holder at the address of such
holder as shown on the registry books of the Company.
27. Supplements
and Amendments. The
Company and the Rights Agent may from time to time supplement or amend this
Agreement without approval of any holders of Rights or Rights Certificates
in
order (i) to cure any ambiguity, (ii) to correct or supplement any
provision contained herein which may be defective or inconsistent with any
other
provisions herein, (iii) prior to the Distribution Date, to change or
supplement any provision hereunder in any manner which the Company may deem
necessary or desirable or (iv) on or following the Distribution Date, to
change or supplement any provision hereunder in any manner which the Company
may
deem necessary or desirable and which shall not adversely affect the interests
of the holders of Rights Certificates. Upon the delivery of a certificate from
an appropriate officer of the Company, and if requested by the Rights Agent
an
opinion of counsel, which states that the proposed supplement or amendment
is in
compliance with the terms of this Section 27,
the
Rights Agent shall execute such supplement or amendment unless the Rights Agent
shall have determined, in the absence of bad faith, that such supplement or
amendment would adversely affect its interests under this Agreement. Prior
to
the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
28. Determination
and Actions by the Board. For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common
Stock
or any other securities of which any Person is the Beneficial Owner, shall
be
made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of
the General Rules and Regulations under the Exchange Act as in effect on the
date of this Agreement. Except as otherwise provided herein, the Board shall
have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to
(i) interpret the provisions of this Agreement and (ii) make all
determinations and calculations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend this Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y)
below, all omissions with respect to the foregoing) which are done or made
by
the Board in good faith, shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders
of
the Rights Certificates and all other parties and (y) not subject the Board
to any liability to the holders of the Rights Certificates. The Rights Agent
may
hereby assume without any need to investigate that the Board has acted in good
faith and shall be fully protected and incur no liability in reliance thereon.
36
29. 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.
30. Benefits
of This Agreement. Nothing
in this Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, the Common Stock) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for
the
sole and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Distribution Date, the
Common Stock).
31. Severability. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
32. Governing
Law. This
Agreement, each Right and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of the Company's
jurisdiction of incorporation and for all purposes shall be governed by and
construed in accordance with the laws of such state applicable to contracts
to
be made and to be performed entirely within such state; provided,
however,
that
all provisions regarding the rights, duties and obligations of the Rights Agent
shall be governed by and construed in accordance with the laws of the State
of
New York applicable to contracts made and to be performed entirely within such
State.
33. Counterparts. This
Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.
34. Descriptive
Headings. Descriptive
headings of the several Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any of
the
provisions hereof.
37
|
|
|
FIBERSTARS,
INC.
|
||
|
|
|
By:
|
|
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
|
|
|
|
Title:
|
|
Chief
Executive Officer
|
|
|
|
MELLON
INVESTOR SERVICES LLC, as Rights Agent
|
||
|
|
|
By:
|
|
/s/ ▇▇▇ ▇▇▇▇
|
|
|
|
Title:
|
|
Assistant
Vice President
|
38
EXHIBIT
A
CERTIFICATE
OF DESIGNATION
OF
SERIES A PARTICIPATING PREFERRED STOCK
OF
FIBERSTARS,
INC.
Fiberstars,
Inc., a corporation organized and existing under the Delaware General
Corporation Law (the “Corporation”),
DOES
HEREBY CERTIFY:
That
pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Corporation, and pursuant to Section 151
of
the Delaware Corporation Law, the Board of Directors on _______________, 2006,
by unanimous consent in lieu of a meeting, duly determined that the Corporation
shall designate One Hundred Thousand (100,000) shares of Preferred Stock as
Series A Participating Preferred Stock and to that end, the Board of
Directors adopted the following resolution providing for the terms,
designations, powers, preferences and relative participating, optional and
other
special rights, and the qualifications, limitations, and restrictions, of the
Series A Participating Preferred Stock:
RESOLVED,
that pursuant to the authority vested in the Board of Directors of the
Corporation in accordance with the provisions of its Certificate of
Incorporation, and pursuant to Section 151 of the Delaware Corporation Law,
a
series of Preferred Stock of the Corporation be and it hereby is created, and
that the designation and amount thereof and the powers, preferences and
relative, participating, optional and other special rights of the shares of
such
series, and the qualifications, limitations or restrictions thereof are as
follows:
1.
Designation
and Amount.
The shares of such series shall be designated as “Series A
Participating Preferred Stock,”
and
the number of shares constituting such series shall be One Hundred Thousand
(100,000). Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided,
that no
decrease shall reduce the number of shares of Series A Participating
Preferred Stock to a number less than that of the shares then outstanding plus
the number of shares issuable upon exercise of outstanding rights, options
or
warrants or upon conversion of outstanding securities issued by the
Corporation.
2.
Dividends
and Distributions.
(A)
Subject
to the prior and superior rights of the holders of any shares of any series
of
Preferred Stock ranking prior and superior to the shares of Series A
Participating Preferred Stock with respect to dividends, the holders of shares
of Series A Participating Preferred Stock in preference to the holders of
shares of Common Stock (the “Common
Stock”),
of
the Corporation and 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 first 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 share or fraction of a share of Series A Participating Preferred Stock
in an amount per share (rounded to the nearest cent) equal to the greater of
(a) $25.00 or, (b) subject to the provision for adjustment hereinafter
set forth, 1,000 times the aggregate per share amount of all cash dividends,
and
1,000 times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock, since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to
the
first Quarterly Dividend Payment Date, since the first issuance of any share
or
fraction of a share of Series A Participating Preferred Stock. In the
event the Corporation shall at any time after the close of business on the
Effective Date, as defined in the Merger Agreement between Fiberstars California
and the Corporation (the “Rights
Declaration Date”)
(i) declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock or (iii) combine the
outstanding Common Stock into a smaller number of shares, by reclassification
or
otherwise, then in each such case the amount to which holders of shares of
Series A Participating Preferred Stock were entitled immediately prior to
such event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number
of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately
prior to such event.
A-1
(B)
The
Corporation shall declare a dividend or distribution on the Series A
Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided
that, in
the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the
next
subsequent Quarterly Dividend Payment Date, a dividend of $25.00 per share
on
the Series A Participating Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(C)
Dividends
shall begin to accrue and be cumulative on outstanding shares of Series A
Participating Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Participating
Preferred Stock unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends
on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date
after
the record date for the determination of holders of shares of Series A
Participating Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Participating Preferred Stock in
an amount less than the total amount of such dividends at the time accrued
and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may
fix a record date for the determination of holders of shares of Series A
Participating Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than
30 days prior to the date fixed for the payment thereof.
A-2
3.
Voting
Rights.
The holders of shares of Series A Participating Preferred Stock shall have
the following voting rights:
(A)
Subject
to the provision for adjustment hereinafter set forth, each share of
Series A Participating Preferred Stock shall entitle the holder thereof to
1,000 votes on all matters submitted to a vote of the shareholders of the
Corporation. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock into a
greater number of shares or (iii) combine the outstanding Common Stock into
a smaller number of shares, by reclassification or otherwise, then in each
such
case the number of votes per share to which holders of shares of Series A
Participating Preferred Stock were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such
event and the denominator of which is the number of shares of Common Stock
outstanding immediately prior to such event.
(B)
Except
as
otherwise provided herein, in the Certificate of Incorporation or by law, the
holders of shares of Series A Participating Preferred Stock and the holders
of shares of Common Stock and any other capital stock of the Corporation having
general voting rights shall vote together as one class on all matters submitted
to a vote of shareholders of the Corporation.
(C)
(i)
If at any time dividends on any Series A Participating Preferred Stock shall
be
in arrears in an amount equal to six quarterly dividends thereon, the holders
of
the Series A Participating Preferred Stock, voting as a separate series from
all
other series of Preferred Stock and classes of capital stock, shall be entitled
to elect two members of the Board of Directors in addition to any Directors
elected by any other series, class or classes of securities and the authorized
number of Directors will automatically be increased by two. Promptly
thereafter, the Board of Directors of this Corporation shall, as soon as may
be
practicable, call a special meeting of holders of Series A Participating
Preferred Stock for the purpose of electing such members of the Board of
Directors. Said special meeting shall in any event be held within 45 days
of the occurrence of such arrearage.
(ii)
During
any period when the holders of Series A Participating Preferred Stock, voting
as
a separate series, shall be entitled and shall have exercised their right to
elect two Directors, then and during such time as such right continues (a)
the
then authorized number of Directors shall remain increased by two, and the
holders of Series A Participating Preferred Stock, voting as a separate series,
shall remain entitled to elect the additional Directors so provided for, and
(b)
each such additional Director shall not be a member of any existing class of
the
Board of Directors, but shall serve until the next annual meeting of
shareholders for the election of Directors, or until his or her successor shall
be elected and shall qualify, or until his or her right to hold such office
terminates pursuant to the provisions of this Section
3(C).
A-3
(iii)
A
Director elected pursuant to the terms hereof may be removed with or without
cause by the holders of Series A Participating Preferred Stock entitled to
vote
in an election of such Director.
(iv)
If,
during any interval between annual meetings of shareholders for the election
of
Directors and while the holders of Series A Participating Preferred Stock shall
be entitled to elect two Directors, there are fewer than two such Directors
in
office by reason of resignation, death or removal, then, promptly thereafter,
the Board of Directors shall call a special meeting of the holders of Series
A
Participating Preferred Stock for the purpose of filling such vacancy(ies)
and
such vacancy(ies) shall be filled at such special meeting. Such special
meeting shall in any event be held within 45 days of the occurrence of any
such
vacancy(ies).
(v)
At
such
time as the arrearage is fully cured, and all dividends accumulated and unpaid
on any shares of Series A Participating Preferred Stock outstanding are paid,
and, in addition thereto, at least one regular dividend has been paid subsequent
to curing such arrearage, the term of office of any Director elected pursuant
to
this Section
3(C),
or his
or her successor, shall automatically terminate, and the authorized number
of
Directors shall automatically decrease by two, and the rights of the holders
of
the shares of the Series A Participating Preferred Stock to vote as provided
in
this Section 3(C)
shall
cease, subject to renewal from time to time upon the same terms and
conditions.
(D)
Except
as
set forth herein or as otherwise provided by law, holders of Series A
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock 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 Participating Preferred Stock as provided in Section 2
are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Participating
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not:
(i)
declare
or pay dividends on, make any other distributions on, or redeem or purchase
or
otherwise acquire for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to the
Series A Participating Preferred Stock;
(ii)
declare
or pay dividends on or make any other distributions on any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution
or
winding up) with the Series A Participating Preferred Stock except
dividends paid ratably on the Series A Participating Preferred Stock and
all such parity stock on which dividends are payable or in arrears in proportion
to the total amounts to which the holders of all such shares are then
entitled;
A-4
(iii)
redeem
or
purchase or otherwise acquire for consideration shares of any stock ranking
on a
parity (either as to dividends or upon liquidation, dissolution or winding
up)
with the Series A Participating Preferred Stock provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares of
any
such parity stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or winding
up)
to the Series A Participating Preferred Stock; or
(iv)
purchase
or otherwise acquire for consideration any shares of Series A Participating
Preferred Stock or any shares of stock ranking on a parity with the
Series A Participating Preferred Stock except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other
relative rights and preferences of the respective 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 paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such
manner.
5.
Reacquired
Shares.
Any shares of Series A Participating Preferred Stock purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof. All such shares shall
upon their cancellation become authorized but unissued shares of Preferred
Stock
and may be reissued as part of a new series of Preferred Stock to be created
by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.
6.
Liquidation,
Dissolution or Winding Up.
(A)
Upon
any
liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Participating Preferred Stock unless, prior
thereto, the holders of shares of Series A Participating Preferred Stock
shall have received per share, the greater of $1,000.00 or 1,000 times the
payment made per share of Common Stock, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the
date
of such payment (the “Series A
Liquidation Preference”).
Following the payment of the full amount of the Series A Liquidation
Preference, no additional distributions shall be made to the holders of shares
of Series A Participating Preferred Stock unless, prior thereto, the
holders of shares of Common Stock shall have received an amount per share (the
“Common
Adjustment”)
equal
to the quotient obtained by dividing (i) the Series A Liquidation
Preference by (ii) 1,000 (as appropriately adjusted as set forth in
subparagraph (C) below to reflect such events as stock splits, stock dividends
and recapitalization with respect to the Common Stock) (such number in
clause (ii), the “Adjustment
Number”).
Following the payment of the full amount of the Series A Liquidation
Preference and the Common Adjustment in respect of all outstanding shares of
Series A Participating Preferred Stock and Common Stock, respectively,
holders of Series A Participating Preferred Stock and holders of shares of
Common Stock shall receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio of the Adjustment Number to
1
with respect to such Preferred Stock and Common Stock, on a per share basis,
respectively.
A-5
(B)
In
the
event there are not sufficient assets available to permit payment in full of
the
Series A Liquidation Preference and the liquidation preferences of all
other series of Preferred Stock, if any, which rank on a parity with the
Series A Participating Preferred Stock, then such remaining assets shall be
distributed ratably to the holders of such parity shares in proportion to their
respective liquidation preferences. In the event, following payment in
full of all liquidation preferences of all shares senior to Common Stock
(including the Series A Participating Preferred Stock), there are not sufficient
assets available to permit payment in full of the Common Adjustment, then the
remaining assets shall be distributed ratably to the holders of Common
Stock.
(C)
In
the
event the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, by reclassification
or
otherwise, then in each such case the Adjustment Number in effect immediately
prior to such event shall be adjusted by multiplying such Adjustment Number
by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such
event.
7.
Consolidation,
Merger, etc.
In
case the Corporation shall enter into any consolidation, merger, combination
or
other transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other property, then
in
any such case the shares of Series A Participating Preferred Stock shall at
the same time be similarly exchanged or changed in an amount per share (subject
to the provision for adjustment hereinafter set forth) equal to 1,000 times
the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common
Stock
is changed or exchanged. In the event the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a smaller number
of shares, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A Participating
Preferred Stock shall be adjusted by multiplying such amount by a fraction
the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that are outstanding immediately prior to such
event.
8.
Redemption.
The shares of Series A Participating Preferred Stock shall not be
redeemable.
A-6
9.
Ranking.
The Series A Participating Preferred Stock shall rank junior to all other
series of the Corporation’s Preferred Stock as to the payment of dividends and
the distribution of assets, unless the terms of any such series shall provide
otherwise.
10.
Amendment.
The Certificate of Incorporation and the By-Laws of the Corporation shall not
be
further amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Participating Preferred Stock
so as to affect them adversely without the affirmative vote of the holders
of at
least 66-2/3% of the outstanding shares of Series A Participating Preferred
Stock voting separately as a class.
11.
Fractional
Shares.
Series A Participating Preferred Stock may be issued in fractions of a
share which shall entitle the holder, in proportion to such holder’s fractional
shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of
Series A Participating Preferred Stock.
IN
WITNESS WHEREOF,
in
accordance with Subsections (a)(1)(b) and (b)(2) of Section 103 and Section
151(g) of the Delaware General Corporation Law, the undersigned Chief Executive
Officer of Fiberstars, Inc. has hereunto set his hand on this _____ day of
October, 2006, and affirms under penalties of perjury that this instrument
is
his act and deed and the act and deed of the Corporation and that the facts
stated herein are true.
| FIBERSTARS, INC. | ||
|
|
By: | |
| Name: |
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ |
|
| Title: | Chief Executive Officer | |
A-7
EXHIBIT
B
[Form
of Rights Certificate]
Certificate
No. R-____________ ____________
Rights
NOT
EXERCISABLE AFTER SEPTEMBER 20, 2011, OR EARLIER IF NOTICE OF REDEMPTION OR
EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $0.001 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE WERE ISSUED
TO A PERSON WHO WAS AN ACQUIRING PERSON OR AN ASSOCIATE OR AN AFFILIATE OF
AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID UNDER
THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
*
The
portion of the legend in brackets shall be inserted only if applicable.
Rights
Certificate
FIBERSTARS, INC.
This
certifies that _________, or registered assigns, is the registered owner of
the
number of Rights set forth above, each of which entitles the owner thereof,
subject to the terms, provisions and conditions of the Rights Agreement dated
as
of October 25, 2006(the "Rights
Agreement")
between Fiberstars, Inc., a Delaware corporation (the "Company"),
and
Mellon Investor Services LLC, a New Jersey limited liability company (the
"Rights
Agent"),
to
purchase from the Company at any time after the Distribution Date (as such
term
is defined in the Rights Agreement) and prior to 5:00 p.m. (San Francisco
time) on September 20, 2011, unless earlier redeemed or exchanged by the
Company as set forth in the Rights Agreement, at the office of the Rights Agent
designated for such purpose, one one-thousandth of a fully paid, nonassessable
share of Series A Participating Preferred Stock (the "Preferred
Stock"),
of
the Company, at a purchase price of Thirty
Dollars
($30.00)
per one
one-thousandth of a share (the "Purchase
Price"),
upon
presentation and surrender of this Rights Certificate with the appropriate
Form
of Election to Purchase and Certificate duly executed.
The
number of Rights evidenced by this Rights Certificate (and the number of one
one-thousandths of a share which may be purchased upon exercise thereof) set
forth above, and the Purchase Price set forth above, are the number and Purchase
Price as of the close of business on the record date relating to the initial
distribution of the Rights, based on the Preferred Stock as constituted at
such
date.
B-1
Upon
the occurrence of a Triggering Event (as such term is defined in the Rights
Agreement), if the Rights evidenced by this Rights Certificate are Beneficially
Owned (as such term is defined in the Rights Agreement) by (i) an Acquiring
Person (as such term is defined in the Rights Agreement) or an Associate or
Affiliate thereof (as such terms are defined in the Rights Agreement) or,
(iii) under certain circumstances specified in the Rights Agreement, a
transferee of an Acquiring Person, or an Affiliate or Associate of an Acquiring
Person, such Rights shall become null and void and no holder hereof shall have
any rights with respect to such Rights from and after the occurrence of any
such
Triggering Event.
As
provided in the Rights Agreement, the Purchase Price and the number of one
one-thousandths of a share of Preferred Stock or other securities which may
be
purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification and adjustment
upon the happening of certain events.
This
Rights Certificate is subject to all of the terms, provisions and conditions
of
the Rights Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies
of
the Rights Agreement are on file at the principal office of the Company and
are
also available upon written request to the Company.
This
Rights Certificate, with or without other Rights Certificates, upon surrender
at
the office of the Rights Agent designated for such purpose, may be exchanged
for
another Rights Certificate or Rights Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number
of
one one-thousandths of a share of Preferred Stock as the Rights evidenced by
the
Rights Certificate or Rights Certificates surrendered shall have entitled such
holder to purchase. If this Rights Certificate shall be exercised (other than
pursuant to Section 11(a)(ii)
of
the
Rights Agreement) in part, the holder shall be entitled to receive upon
surrender hereof another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised. If this Rights Certificate shall be
exercised in whole or in part pursuant to Section 11(a)(ii)
of the
Rights Agreement, the holder shall be entitled to receive this Rights
Certificate duly marked to indicate that such exercise has occurred as set
forth
in the Rights Agreement.
Subject
to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may, in certain instances, be (i) redeemed by the Company at
its option at a redemption price of $0.001 per Right or (ii) exchanged in
whole or in part for shares of the Company's Common Stock or substitute
consideration. Subject to the provisions of the Rights Agreement, the Company,
at its option, may elect to mail payment of the redemption price to the
registered holder of the Rights at the time of redemption, in which event this
Certificate may become void without any further action by the Company.
The
Company may elect not to issue fractional shares of Preferred Stock upon the
exercise of any Right or Rights evidenced hereby (other than fractions which
are
integral multiples of one one-thousandth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depositary receipts),
in
which event a cash payment will be made, in lieu thereof, as provided in the
Rights Agreement.
B-2
No
holder of this Rights Certificate, as such, shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of one one-thousandths of
a
share of Preferred Stock or of any other securities of the Company which may
at
any time be issuable on the exercise hereof, nor shall anything contained in
the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a 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 Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This
Rights Certificate shall not be valid or obligatory for any purpose until it
shall have been countersigned by the Rights Agent.
Dated:
________________________, 20____.
|
Attest:
|
|
FIBERSTARS,
INC.
|
||
|
|
|
By:
|
|
|
|
Title:
|
|
|
Title:
|
|
|
Countersigned:
|
|
|
|
|
|
MELLON
INVESTOR SERVICES LLC,
as
Rights Agent
|
|
|
|
|
|
By:
|
|
|
|
|
B-3
[Form
of
Reverse Side of Rights Certificate]
FORM
OF ASSIGNMENT
(To
be
executed by the registered holder if such
holder
desires to transfer the Rights Certificate.)
FOR
VALUE
RECEIVED, hereby
sells, assigns and transfers
unto
|
(please
print name, address and social security or other identifying number
of
transferee)
|
|
this
Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and
appoint Attorney,
to transfer the within Rights Certificate on the books of the within-named
Company, with full power of
substitution.
|
Dated:
________________________, 20____.
________________________
Signature
Signature
Guaranteed:
Signatures
must be guaranteed by an Eligible Guarantor Institution, as defined in
Rule 17Ad-15 under the Securities Exchange Act of 1934.
B-4
CERTIFICATE
The
undersigned hereby certifies by checking the appropriate boxes that:
(1)
the Rights evidenced by this Rights Certificate [ ] are
[ ] are not being sold, assigned and transferred by or on behalf of a
Person who is or was an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person (as such terms are defined in the Rights Agreement);
and
(2)
after due inquiry and to the best knowledge of the undersigned, the undersigned
[ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated:
________________________, 20____.
________________________
Signature
Signature
Guaranteed:
Signatures
must be guaranteed by an Eligible Guarantor Institution, as defined in
Rule 17Ad-15 under the Securities Exchange Act of 1934.
NOTICE
The
signature to the foregoing Assignment must correspond to the name as written
upon the face of this Rights Certificate in every particular, without alteration
or enlargement or any change whatsoever.
In
the event the Certificate set forth above is not completed, the Company will
deem the beneficial owner of the Rights evidenced by this Rights Certificate
to
be an Acquiring Person or an Affiliate or Associate thereof (as defined in
the
Rights Agreement) and will affix a legend to that effect on any Rights
Certificate issued in exchange for this Rights Certificate.
B-5
FORM
OF ELECTION TO PURCHASE
(To
be
executed if holder desires to
exercise
the Rights Certificate pursuant to
Section 11(a)(ii)
of
the
Rights Agreement.)
To:
FIBERSTARS, INC.
The
undersigned hereby irrevocably elects to
exercise Rights
represented by this Rights Certificate to purchase the shares of Common Stock
(or such other securities of the Company) issuable upon the 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)
______________________________________________________________________________
The
Rights Certificate indicating the balance, if any, of such Rights which may
still be exercised pursuant to Section 11(a)(ii)
of
the
Rights Agreement shall be returned to the undersigned unless the undersigned
requests that the Rights Certificate be registered in the name of and delivered
to:
______________________________________________________________________________
Please
insert social security or other identifying number (complete only if Rights
Certificate is to be registered in a name other than the undersigned)
______________________________________________________________________________
(Please
print name and address)
Dated:
________________________, 20____.
________________________
Signature
Signature
Guaranteed:
Signatures
must be guaranteed by an Eligible Guarantor Institution, as defined in
Rule 17Ad-15 under the Securities Exchange Act of 1934.
B-6
The
undersigned hereby certifies by checking the appropriate boxes that:
(1) the
Rights evidenced by this Rights Certificate [ ] are [ ]
are not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) this
Rights Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person
or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement); and
(3) after
due inquiry and to the best knowledge of the undersigned, the undersigned
[ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated:
________________________, 20____.
________________________
Signature
NOTICE
The
signature to the foregoing Election to Purchase must correspond to the name
as
written upon the face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
In
the event the Certificate set forth above is not completed, the Company will
deem the beneficial owner of the Rights evidenced by this Rights Certificate
to
be an Acquiring Person or an Affiliate or Associate thereof (as defined in
the
Rights Agreement).
B-7
(To
be
executed if holder desires to exercise
the
Rights Certificate other than pursuant to
Section 11(a)(ii)
of
the
Rights Agreement.)
To:
FIBERSTARS, INC.
The
undersigned hereby irrevocably elects to
exercise Rights
represented by this Rights Certificate to purchase the one one-thousandths
of a
share of Preferred Stock (or such other securities of the Company or any other
Person) issuable upon the 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
applicable, the Rights Certificate indicating the balance, if any, of such
Rights which may still be exercised pursuant to Section 11(a)(ii)
of
the
Rights Agreement shall be returned to the undersigned unless such Person
requests that the Rights Certificate be registered in the name of and delivered
to:
______________________________________________________________________________
Please
insert social security or other identifying number (complete only if Rights
Certificate is to be registered in a name other than the undersigned)
______________________________________________________________________________
(Please
print name and address)
______________________________________________________________________________
Dated:
________________________, 20____.
________________________
Signature
Signature
Guaranteed:
Signatures
must be guaranteed by an Eligible Guarantor Institution, as defined in
Rule 17Ad-15 under the Securities Exchange Act of 1934.
B-8
CERTIFICATE
The
undersigned hereby certifies by checking the appropriate boxes that:
(1) the
Rights evidenced by this Rights Certificate [ ] are [ ]
are not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) the
Rights evidenced by this Rights Certificate [ ] are [ ]
are not being sold, assigned and transferred by or on behalf of a Person who
is
or was an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined in the Rights Agreement); and
(3) after
due inquiry and to the best knowledge of the undersigned, the undersigned
[ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated:
________________________, 20____.
________________________
Signature
NOTICE
The
signature to the foregoing Election to Purchase must correspond to the name
as
written upon the fact of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
In
the event the Certificate set forth above is not completed, the Company will
deem the beneficial owner of the Rights evidenced by this Rights Certificate
to
be an Acquiring Person or an Affiliate or Associate thereof (as defined in
the
Rights Agreement).
B-9
EXHIBIT
C
SUMMARY
OF RIGHTS
On
September 12, 2001, the Board of Directors of Fiberstars, Inc. a
California corporation, declared a dividend distribution of one "Right" for
each
outstanding share of common stock of such company to shareholders of record
at
the close of business on September 26, 2001). Upon the merger of such
corporation into Fiberstars, Inc., a Delaware corporation (“Fiberstars
Delaware”)
each
outstanding right was automatically converted into a Right of like Tenor of
Fiberstars Delaware. Except as set forth below, each Right, when exercisable,
entitles the registered holder to purchase from Fiberstars Delaware one
one-thousandth of a share of a new series of preferred stock, designated as
Series A Participating Preferred Stock (the "Preferred
Stock"),
at a
price of Thirty
Dollars ($30.00)
per one
one-thousandth of a share (the "Purchase
Price"),
subject to adjustment. The description and terms of the Rights are set forth
in
a Rights Agreement (the "Rights
Agreement")
between Fiberstars Delaware and Mellon Investor Services LLC, as "Rights
Agent."
Initially,
the Rights will be attached to all Common Stock certificates representing shares
then outstanding, and no separate Rights certificates will be distributed.
The
Rights will separate from the Common Stock and a "Distribution
Date"
will
occur upon the earliest of the following: (i) a public announcement that a
person, entity or group of affiliated or associated persons and/or entities
(an
"Acquiring
Person")
has
acquired, or obtained the right to acquire, beneficial ownership of fifteen
percent (15%) or more of the outstanding shares of Common Stock (other than
(A) as a result of repurchases of stock by Fiberstars Delaware or certain
inadvertent actions by institutional or certain other shareholders,
(B) Fiberstars Delaware, any subsidiary of Fiberstars Delaware or any
employee benefit plan of Fiberstars Delaware or any subsidiary, and
(C) certain other instances set forth in the Rights Agreement); or
(ii) ten (10) business days (unless such date is extended by the Board
of Directors) following the commencement of a tender offer or exchange offer
which would result in any person, entity or group of affiliated or associated
persons and/or entities becoming an Acquiring Person (unless such tender offer
or exchange offer is a Permitted Offer (defined below)).
Until
the Distribution Date (or earlier redemption or expiration of the Rights, if
applicable), (i) the Rights will be evidenced by certificates for Common
Stock and will be transferred only with such Common Stock certificates,
(ii) new Common Stock certificates issued after the Record Date upon
transfers or new issuances of the Common Stock will contain a notation
incorporating the Rights Agreement by reference and (iii) the surrender for
transfer of any certificates for outstanding Common Stock will also constitute
the transfer of the Rights associated with such Common Stock. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Rights
Certificates")
will
be mailed to holders of record of the Common Stock as of the close of business
on the Distribution Date, and the separate Rights Certificates alone will
evidence the Rights.
C-1
The
Rights are not exercisable until the Distribution Date. The Rights will expire
on the earliest of (i) September 20, 2011, (ii) consummation of a
merger transaction with a person, entity or group who (x) acquired Common
Stock pursuant to a Permitted Offer (as defined below) and (y) is offering
in the merger the same price per share and form of consideration paid in the
Permitted Offer or (iii) redemption or exchange of the Rights by Fiberstars
Delaware as described below.
In
the event that, after the first date of public announcement by Fiberstars
Delaware or an Acquiring Person that an Acquiring Person has become such,
Fiberstars Delaware is involved in a merger or other business combination
transaction (whether or not Fiberstars Delaware is the surviving corporation)
or
fifty percent (50%) or more of Fiberstars Delaware's assets or earning power
are
sold (in one transaction or a series of transactions), proper provision shall
be
made so that each holder of a Right (other than an Acquiring Person) shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price, that number of shares of common stock of either
Fiberstars Delaware, in the event that it is the surviving corporation of a
merger or consolidation, or the acquiring company (or, in the event there is
more than one acquiring company, the acquiring company receiving the greatest
portion of the assets or earning power transferred) which at the time of such
transaction would have a market value of two (2) times the Purchase Price
(such right being called the "Merger
Right").
In
the event that a person, entity or group becomes an Acquiring Person (unless
pursuant to a tender offer or exchange offer for all outstanding shares of
Common Stock at a price and on terms determined prior to the date of the first
acceptance of payment for any of such shares by at least a majority of the
members of the Board of Directors who are not officers of Fiberstars Delaware
and are not Acquiring Persons (or affiliated or associated persons and/or
entities thereof) to be fair to and in the best interests of Fiberstars Delaware
and its shareholders (a "Permitted
Offer")),
then
proper provision shall be made so that each holder of a Right will, for a sixty
(60) day period (subject to extension under certain circumstances)
thereafter, have the right to receive upon exercise that number of shares of
Common Stock (or, at the election of Fiberstars Delaware, which election may
be
obligatory if sufficient authorized shares of Common Stock are not available,
a
combination of Common Stock, property, other securities (e.g.,
Preferred Stock) and/or cash (including by way of a reduction in the Purchase
Price)) having a market value of two (2) times the Purchase Price (such
right being called the "Subscription
Right").
The
holder of a Right will continue to have the Merger Right whether or not such
holder exercises the Subscription Right. Notwithstanding the foregoing, upon
the
occurrence of any of the events giving rise to the exercisability of the Merger
Right or the Subscription Right, any Rights that are or were at any time after
the Distribution Date owned by an Acquiring Person (or affiliated or associated
persons and/or entities thereof) shall immediately become null and void.
C-2
At
any time prior to the earlier to occur of (i) a person, entity or group
becoming an Acquiring Person or (ii) the expiration of the Rights,
Fiberstars Delaware may redeem the Rights in whole, but not in part, at a price
of $0.001 per Right (the "Redemption
Price"),
which
redemption shall be effective upon the action of the Board of Directors.
Additionally, Fiberstars Delaware may, following a person, entity or group
becoming an Acquiring Person, redeem the then outstanding Rights in whole,
but
not in part, at the Redemption Price (i) if such redemption is incidental
to a merger or other business combination transaction or series of transactions
involving Fiberstars Delaware but not involving an Acquiring Person (or certain
related persons and/or entities) or (ii) following an event giving rise to,
and the expiration of the
exercise period for, the Subscription Right if and for as long as the Acquiring
Person triggering the Subscription Right beneficially owns securities
representing less than fifteen percent (15%) of the outstanding shares of Common
Stock and at the time of redemption there are no other Acquiring Persons. The
redemption of Rights described in the preceding sentence shall be effective
only
as of such time when the Subscription Right is not exercisable. Upon the
effective date of the redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
Subject
to applicable law, the Board of Directors, at its option, may at any time after
a person, group or entity becomes an Acquiring Person (but not after the
acquisition by such Acquiring Person of fifty percent (50%) or more of the
outstanding shares of Common Stock), exchange all or part of the then
outstanding and exercisable Rights (except for Rights which have become void)
for shares of Common Stock at a rate of one share of Common Stock per Right
(subject to adjustment) or, alternatively, for substitute consideration
consisting of cash, securities of Fiberstars Delaware or other assets (or any
combination thereof).
The
Preferred Stock purchasable upon exercise of the Rights will be nonredeemable
and junior to any other series of preferred stock Fiberstars Delaware may issue
(unless otherwise provided in the terms of such stock). Each share of Preferred
Stock will have a preferential quarterly dividend in an amount equal to 1,000
times the dividend declared on each share of Common Stock, but in no event
less
than $25.00. In the event of liquidation, the holders of shares of Preferred
Stock will receive a preferred liquidation payment equal, per share, to the
greater of $1,000.00 or 1,000 times the payment made per share of Common Stock.
Each share of Preferred Stock will have 1,000 votes, voting together with the
shares of Common Stock. In the event of any merger, consolidation or other
transaction in which shares of Common Stock are exchanged, each share of
Preferred Stock will be entitled to receive 1,000 times the amount and type
of
consideration received per share of Common Stock. The rights of the Preferred
Stock as to dividends, liquidation and voting, and in the event of mergers
and
consolidations, are protected by customary antidilution provisions. Fractional
shares of Preferred Stock will be issuable; however,
Fiberstars Delaware may elect to (i) distribute depositary receipts in lieu
of such fractional shares and (ii) make an adjustment in cash, in lieu of
fractional shares other than fractions that are multiples of one one-thousandth
of a share, based on the market price of the Preferred Stock prior to the date
of exercise.
C-3
Until
a Right is exercised, the holder thereof, as such, will have no rights as a
shareholder of Fiberstars Delaware, including, without limitation, the right
to
vote or to receive Fiberstars Delaware dividends. Holders of Rights may,
depending upon the circumstances, recognize taxable income in the event
(i) that the Rights become exercisable for (x) Common Stock or
Preferred Stock (or other consideration) or (y) common stock of an
acquiring company in the instance of the Merger Right as set forth above or
(ii) of any redemption or exchange of the Rights as set forth above.
Fiberstars
Delaware and the Rights Agent retain broad authority to amend the Rights
Agreement; however,
following any Distribution Date any amendment may not adversely affect the
interests of holders of Rights.
A
copy of the Rights Agreement and the Certificate of Designation of the Series
A
Particiating Preferred Stock of Fiberstars Delaware are attached as appendices
D
and E to the Proxy Statement regarding the Merger. THIS SUMMARY DESCRIPTION
OF
THE RIGHTS AND SERIES A PARTICIPATING PREFERRED STOCK DOES NOT PURPORT TO BE
COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE RIGHTS AGREEMENT
CERTIFICATE OF DESIGNATION, WHICH IS INCORPORATED HEREIN BY REFERENCE.
C-4