EL CAPITAN PRECIOUS METALS, INC.
and
OTR, INC.
Rights Agent
------
Rights Agreement
Dated as of December 28, 2005
TABLE OF CONTENTS
Section Page
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1. Certain Definitions 1
2. Appointment of Rights Agent 3
3. Issue of Rights Certificates 3
4. Form of Rights Certificates 5
5. Countersignature and Registration 6
6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or
Stolen Rights Certificates 6
7. Exercise of Rights; Purchase Price; Expiration Date of Rights 7
8. Cancellation and Destruction of Rights Certificates 8
9. Reservation and Availability of Common Stock 9
10. Common Stock Record Date 10
11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights 10
12. Certificate of Adjusted Purchase Price or Number of Shares 15
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power 15
14. Fractional Rights and Fractional Shares 17
15. Rights of Action 18
16. Agreement of Rights Holders 19
17. Rights Certificate Holder Not Deemed a ▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇. Concerning the Rights Agent 19
19. Merger or Consolidation or Change of Name of Rights Agent 20
20. Duties of Rights Agent 20
21. Change of Rights Agent 22
22. Issuance of New Rights Certificates 22
Section Page
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23. Redemption and ▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇. ▇▇▇▇▇▇▇▇ ▇▇
▇▇. Notice of Certain Events 24
26. Notices 25
27. Supplements and Amendments 26
28. Successors 26
29. Benefits of this Agreement 26
30. Administration of Agreement 26
31. Severability 26
32. Governing Law 27
33. Counterparts 27
34. Descriptive Headings 27
35. Signature Page 28
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of December 28, 2005 (the "Agreement"), between
El Capitan Precious Metals, Inc., a Nevada corporation (the "Company"), and OTR,
Inc. (the "Rights Agent").
WHEREAS, on December 7, 2005, the Board of Directors of the Company (the
"Board") authorized and declared a dividend distribution of one Right (as
hereinafter defined) for each share of common stock, par value $.001 per share
(the "Common Stock") of the Company outstanding on December 16, 2005 (the
"Record Date"), each Right initially represents the right to purchase one share
of Common Stock upon the terms and subject to the conditions hereinafter set
forth (the "Rights").
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby amend and restate the Agreement and agree
as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (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, without the prior approval of a majority of the Board of Directors
shall be the Beneficial Owner (as such term is hereinafter defined) of voting
securities representing 15% or more of the then voting power of the Company or
who was such a Beneficial Owner at any time after the date hereof, whether or
not such person continues to be the Beneficial Owner of voting securities having
15% or more of the then voting power of the Company. Notwithstanding the
foregoing, (A) the term Acquiring Person shall not include (i) the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any entity organized, appointed or established by
the Company for or pursuant to the terms of any such plan, (ii) any Person, who
or which together with all Affiliates of such Person becomes the Beneficial
Owner of 15% or more of the then outstanding shares of Common Stock as a result
of the acquisition of Common Stock directly from the Company (provided, however,
that if, after such acquisition, such Person or any Affiliate of such Person
becomes the Beneficial Owner of any additional shares of Common Stock in an
acquisition not made directly from the Company, then such Person shall be deemed
an Acquiring Person), or (iii) any Person who was the Beneficial Owner of voting
securities having 15% or more of the voting power of the Company on the date of
this Agreement, and (B) no Person shall be deemed to be an Acquiring Person
either (X) as a result of the acquisition of voting securities by the Company
which, by reducing the number of shares of voting securities outstanding,
increases the proportionate voting percentage Beneficially Owned by such Person
together with all Affiliates of such Person; except that if (i) such Person
would become an Acquiring Person (but for the operation of this subclause (X))
as a result of the acquisition of Common Stock by the Company, and (ii) after
such share acquisition by the Company, such Person or any Affiliate of such
Person becomes the Beneficial Owner of any additional shares of Common Stock,
then such Person shall be deemed an Acquiring Person or (Y) if (i) such Person
or any Affiliate of such Person inadvertently becomes the Beneficial Owner of
shares of voting securities representing 15% or more of the voting power of the
Company, and (ii) within eight (8) calendar days thereafter such Person notifies
the Board of Directors that such Person did so inadvertently and (iii) within
two (2) days after such notification, such Person is the Beneficial Owner of
shares of voting securities representing less than 15% of the voting power of
the Company. For 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 (and therefore the particular percentage of voting power of the
Company) 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 Securities Exchange Act of 1934, as amended, as in
effect on the date of this Agreement (the "Exchange Act").
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(b) "Acquisition Event" shall mean either the event described in
Section 11(a)(ii) or Section 13(a) hereof.
(c) "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.
(d) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own", any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(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 at any time prior to the occurrence of an Acquisition
Event, but thereafter including the Rights acquired from and after the
Distribution Date (as defined in Section 3(a) below) other than pursuant to
Section 3(a) below), warrants or options, or otherwise; provided, however, that
a Person shall not be deemed the "Beneficial Owner" of, or to "beneficially
own," securities tendered pursuant to a tender or exchange offer made by such
Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange; or (B) the right to vote
pursuant to any agreement, arrangement or understanding (whether or not in
writing); provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," any security under this 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), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in clause (B)
of subparagraph (ii) of this paragraph (d)) or disposing of any voting
securities of the Company.
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(e) "Business Day" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in the State of Arizona are authorized or
obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M.,
Scottsdale, Arizona time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., Scottsdale, Arizona time, on the
next succeeding Business Day.
(g) "Common Stock" shall mean the Common Stock, except that "Common
Stock" when used with reference to any Person other than the Company shall mean
the capital stock of such Person with the greatest voting power, or the equity
securities or other equity interest having power to control or direct the
management, of such Person or, if such Person is a subsidiary of another Person,
the Person which ultimately controls such first-mentioned Person and which has
issued and outstanding capital stock, equity securities or equity interests.
(h) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(i) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, includes, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such.
(j) "Subsidiary" shall mean, with reference to any other Person, any
corporation of which a majority of any class of equity security is beneficially
owned, directly or indirectly, by such other Person.
Any determination required by the definitions contained in this Section 1
shall be made by the Board in their good faith judgment, which determination
shall be final and binding on the Rights Agent.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Stock) 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. In the event the Company appoints one or more Co-Rights Agents, the
respective duties of the Rights Agent and any Co-Rights Agent shall be as the
Company shall determine.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the close of business on the tenth
Business Day after the Stock Acquisition Date, or (ii) the close of business on
the tenth Business Day after the date of the commencement of, or first public
announcement of the intent of any Person (other than the Company, any Subsidiary
of the Company or any employee benefit plan of the Company or of any Subsidiary
of the Company or any entity organized, appointed or established by the Company
for or pursuant to the terms of any such plan), to commence (which intention to
commence remains in effect for five Business Days after such announcement), a
tender or exchange offer which would result in such person becoming the
Beneficial Owner of voting securities having 15% or more of the then voting
power of the Company (including any such date which is 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 will be
evidenced (subject to the provisions of paragraph (b) of this Section 3) by the
certificates for Common Stock registered in the names of the holders of such
Common Stock (which certificates shall be deemed also to be certificates for the
Rights) and not by separate certificates, and (y) the Rights (and the right to
receive certificates therefor) will be transferable only in connection with the
transfer of the underlying shares of Common Stock (including a transfer to the
Company). As soon as practicable after the Distribution Date, the Rights Agent
will send by first-class, postage prepaid mail to each record holder of Common
Stock as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or more rights
certificates, in substantially the form of Exhibit A hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so held. As
of and after the Distribution Date, the Rights will be evidenced solely by such
Rights Certificates.
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(b) The Company has made available a copy of a Summary of Rights, in
substantially the form of Exhibit B attached hereto, to each record holder of
Common Stock as of the Record Date. With respect to certificates for the Common
Stock outstanding as of the Record Date, until the Distribution Date, the Rights
will be evidenced by such certificates and the registered holders of such Common
Stock shall also be the registered holders of the associated Rights. Until the
earlier of the Distribution Date or the Expiration Date (as such term is defined
in Section 7 hereof), 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 respective Rights associated with such certificates.
(c) Certificates for the Common Stock issued after the Record Date,
but prior to the earlier of the Distribution Date or the Expiration Date, shall
be deemed also to be certificates for Rights, and shall bear the following
legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between El
Capitan Precious Metals, Inc. and OTR, Inc. dated as of December 28,
2005 (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 G El Capitan Precious Metals, Inc. Under
certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer
be evidenced by this certificate. El Capitan Precious Metals, Inc.
will mail to the holder of this certificate a copy of the Rights
Agreement without charge promptly after receipt of a written request
therefor. Under certain circumstances, Rights issued to, or held by,
Acquiring Persons, or Affiliates or Associates thereof (as such
terms are defined in the Rights Agreement) and any subsequent holder
of such Rights may become null and void.
With respect to such certificates containing the foregoing legend, until
the earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and the registered holders of Common Stock
shall also be the registered holders of the associated Rights, 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 certificates.
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Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to exercise
and of assignment to be printed on the reverse thereof) shall each be
substantially in the form attached hereto as Exhibit A, 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, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Section 11
and Section 22 hereof, the Rights Certificates, whenever distributed, shall be
dated as of the Record Date and on their face shall entitle the holders thereof
to purchase such number of shares of Common Stock as shall be set forth therein
at the price per share set forth therein (the "Purchase Price"), but the number
of such shares and the Purchase Price shall be subject to adjustment as provided
herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by: (i) an Acquiring
Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or such Associate or Affiliate) who becomes a transferee
after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring
Person (or such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to or on behalf of holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors otherwise concludes in
good faith (as determined in its discretion by the vote of a majority of the
Directors then in office) is part of a plan, arrangement or understanding which
has as a primary purpose or effect avoidance of Section 7(e) hereof, and any
Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Rights Certificate
referred to in this sentence, shall contain (to the extent feasible and
reasonably identifiable as such) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms
are defined in that certain Rights Agreement between El Capitan
Precious Metals, Inc. and OTR, Inc. dated as of December 28, 2005
(the "Rights Agreement"). Accordingly, this Rights Certificate and
the Rights represented hereby may become void in the circumstances
specified in Section 7(e) of the Rights Agreement.
The provisions of Section 7(e) of the Rights Agreement shall be operative
whether or not the foregoing legend is contained on any such Rights Certificate.
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Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive Officer, or its
President, either manually or by facsimile signature, 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 manually countersigned by
the Rights Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights
Agent, and issued and delivered by the Company with the same force and effect as
though the person who signed such Rights Certificates had not ceased to be such
officer of the Company; and any Rights Certificates may be signed on behalf of
the Company by any person who, at the actual date of the execution of such
Rights Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its offices in Portland, Oregon, books for registration and
transfer of the Rights Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights Certificates and
the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 14 hereof, at any time
after the close of business on the Distribution Date, and at or prior to the
close of business on the Expiration Date, any Rights Certificate or Certificates
may be transferred, split up, combined or exchanged for another Rights
Certificate or Certificates, entitling the registered holder to purchase a like
number of shares of Common Stock as the Rights Certificate or Certificates
surrendered then entitled such holder 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 or offices of the Rights Agent designated
for such purpose. Thereupon the Rights Agent shall countersign and deliver to
the Person entitled thereto a Rights Certificate or Rights Certificates, as the
case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights
Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
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Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Section 7(e), the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including without limitation, the restrictions on exercisability
set forth in Section 9(c), Section 11(a)(iii) and Section 23(a) hereof) in whole
or in part at any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to exercise on the reverse side thereof
duly executed, to the Rights Agent at the office or offices of the Rights Agent
designated for such purpose, together with payment of the Purchase Price for
each share of Common Stock (or, if applicable, such other number of shares or
other securities) as to which the Rights are exercised, at or prior to the
earlier of (i) the close of business on December 28, 2015 (the "Final Expiration
Date"), or (ii) the time at which the Rights are redeemed as provided in Section
23 hereof (such earlier time being herein referred to as the "Expiration Date").
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.
(b) The Purchase Price for each share of Common Stock an pursuant to
the exercise of a Right shall initially be Twenty Dollars ($20.00), and shall be
subject to adjustment from time to time as provided in Section 11 hereof and
shall be payable in lawful money of the United States of America in accordance
with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to exercise duly executed, accompanied by
payment (in cash, or by certified check or bank draft payable to the order of
the Company) of the Purchase Price for the shares to be purchased and an amount
equal to any applicable transfer tax, the Rights Agent shall thereupon promptly
(i) (A) requisition from any transfer agent of the shares of Common Stock (or
make available, if the Rights Agent is the transfer agent for such shares)
certificates for the number of shares of Common 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 shares of Common Stock issuable upon exercise of the Rights
hereunder into a depositary, requisition from the depositary agent depositary
receipts representing such number of shares of Common Stock as are to be
purchased (in which case certificates for the shares of Common Stock represented
by such receipts shall be deposited by the transfer agent with the depositary
agent) and the Company will 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 fractional shares in accordance with Section 14
hereof, (iii) after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be designated by
such holder, and (iv) when appropriate, after receipt thereof, deliver such
cash, if any, 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, pay cash and/or distribute other property pursuant to
Section 11(a)(iii) hereof, the Company will make all arrangements necessary so
that such other securities, cash, 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) of the Rights Agreement and 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).
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(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 holder's duly
authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the occurrence of the event described in Section 11(a)(ii), any Rights
beneficially owned by (a) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (b) except as provided below, a transferee of an Acquiring
Person (or such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, and (c) except as provided below, a transferee of
an Acquiring Person (or such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (i) a transfer (whether or not for consideration)
from the Acquiring Person to or on behalf of holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (ii) a transfer which the Board of Directors otherwise concludes in
good faith (as determined in its discretion by the vote of a majority of the
Directors then in office) is part of a plan, arrangement or understanding which
has as a primary purpose or effect of avoidance of this Section 7(e), shall
become null and void without any further action, and any holder of such Rights
shall thereupon have no right to exercise such Rights. The Board of Directors
(as determined in its discretion by the vote of a majority of the Directors then
in office) may in appropriate circumstances waive application of this Section
7(e) and the requirements of Section 4(b) to any transfer by an Acquiring Person
in connection with a transfer or series of transfers which cause an Acquiring
Person to become the Beneficial Owner of voting securities having 5% or less of
the voting power of the Company. The Company shall use all reasonable efforts to
insure that the provisions of this Section 7(e) hereof are complied with, but
shall have no liability to any holder of Rights for the inability to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of any Rights Certificate 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 completed and signed 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) of such Rights Certificate
or Affiliates or Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All Rights
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company one and one-half years after the
cancellation date.
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Section 9. Reservation and Availability of Common Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of Common
Stock, the number of shares of Common Stock that, except as provided in Section
11(a)(iii) and subject to Section 7(e) hereof, will be sufficient to permit the
exercise in full of all outstanding Rights. In the event that there shall not be
sufficient authorized but unissued shares of Common Stock to permit such
exercise, the Company shall use its best efforts to have the stockholders of the
Company take such action as may be necessary to authorize additional shares of
Common Stock for issuance upon exercise of Rights.
(b) If the Common Stock is listed on any national securities
exchange, the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all shares reserved for issuance upon the
exercise of the Rights to be listed on such exchange upon official notice of
issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the Distribution Date, a registration statement under the
Securities Act of 1933 (the "Act"), with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Act)
until the date of the expiration of the Rights. The Company will also take such
action as may be appropriate under the blue sky laws of the various states. The
Company may temporarily suspend, for a period of time not to exceed ninety (90)
days, the exercisability of the Rights in order to prepare and file any required
registration statement. Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Common Stock delivered
upon exercise of Rights shall, at the time of delivery of the certificates for
such shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Rights Certificates
and of any certificates for shares of Common Stock upon the exercise of Rights.
The Company shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Rights Certificates to a
Person other than, or the issuance or delivery of the shares of Common Stock in
respect of a name other than that of, the registered holder of the Rights
Certificates evidencing Rights surrendered for exercise or to issue or deliver
any certificates for shares of Common Stock in a name other than that of the
registered holder upon the exercise of any Rights until such tax shall have been
paid (any such tax being payable by the holder of such Rights Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
9
Section 10. Common Stock Record Date. Each Person in whose name any
certificate for shares of Common Stock (or other securities, as the case may be)
is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the shares of Common Stock (or other securities,
as the case may be) represented thereby on, and such certificate shall be dated
the date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and all applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Common Stock (or other securities, as the case
may be) transfer books of the Company are closed, such person shall be deemed to
have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Common Stock transfer books
of the Company are open. Prior to the exercise of the Rights evidenced thereby,
the holder of a Rights Certificate shall not be entitled to any rights of a
stockholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Common Stock payable in shares of
Common Stock, (B) subdivide the outstanding Common Stock, (C) combine the
outstanding Common Stock into a smaller number of shares, or (D) issue any
shares of its capital stock in a reclassification of the Common Stock (including
any such reclassification in connection with a consolidation or merger in which
the 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 Common Stock or capital stock, as the case may be, issuable on such
date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the aggregate number and
kind of shares of Common Stock or capital stock, as the case may be, which, if
such Right had been exercised immediately prior to such date and at a time when
the Common 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 Section 11(a)(i) and Section 11(a)(ii),
the adjustment provided for in this Section 11(a)(i) shall be in addition to,
and shall be made prior to any adjustment required pursuant to Section
11(a)(ii).
(ii) In the event any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any entity organized, appointed or established by
the Company for or pursuant to the terms of any such plan), alone or together
with its Affiliates and Associates, shall become an Acquiring Person, then,
except as provided below and in Section 7(e) hereof, the holder of any Right
which has not theretofore been exercised shall thereafter be entitled to
receive, upon exercise of such Right at the then current Purchase Price in
accordance with the terms of this Agreement, such number of shares of Common
Stock of the Company equal to the result obtained by (1) multiplying the then
current Purchase Price by the then number of shares of Common Stock for which a
Right is then exercisable and (2) dividing that product by 50% of the current
market price (determined pursuant to Section 11(d) hereof) per share of Common
Stock as of the Stock Acquisition Date in question; provided, however, that if
the transaction that would otherwise give rise to the foregoing adjustment also
constitutes an event described in Section 13(a), then only the provisions of
Section 13 shall apply and no adjustment shall be made pursuant to this Section
11(a)(ii).
10
(iii) In lieu of issuing shares of Common Stock in accordance
with Section 11(a)(ii) hereof, the Company's Board of Directors may, if the
Board of Directors determines in its discretion (as evidenced by the vote of a
majority of the Directors then in office) that such action is necessary or
appropriate and not contrary to the interests of holders of Rights, elect to
issue or pay, upon the exercise of the Rights, cash (including an offset against
the Purchase Price), property, shares of Common Stock, other securities or any
combination thereof having an aggregate value equal to the value of the shares
of Common Stock which otherwise would have been issuable pursuant to Section
11(a)(ii), which value shall be determined by a nationally recognized investment
banking firm selected by the Company's Board of Directors (as determined by the
Board in its discretion by the vote of a majority of the Directors then in
office). For purposes of the preceding sentence, the value of any preferred
stock which the Board of Directors determines to be a "common stock equivalent"
shall be deemed to have the same value as the Common Stock. Any such election by
the Board of Directors must be made and publicly announced within 90 days of the
relevant Stock Acquisition Date. Following the occurrence of an event described
in Section 11(a)(ii), the Board of Directors may (as determined in its
discretion by the vote of a majority of the Directors then in office) suspend
the exercisability of the Rights for a period of up to 90 days following the
occurrence of such event to the extent that the Board of Directors has not
determined whether to exercise its rights of election under this paragraph
(a)(iii). In the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Common Stock entitling them to
subscribe for or purchase (for a period expiring within forty-five (45) calendar
days after such record date) Common Stock (or securities convertible into Common
Stock) at a price per share of Common Stock (or having a conversion price per
share of Common Stock, if a security convertible into Common Stock) less than
the current market price (as determined pursuant to Section 11(d) hereof) per
share of Common 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 Common Stock outstanding on such record
date, plus the number of shares of Common Stock which the aggregate offering
price of the total number of shares of Common Stock so offered for subscription
or purchase (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 Common Stock outstanding
on such record date, plus the number of additional shares of Common 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 in good faith by
the Board of Directors (as evidenced by the vote of a majority of the Directors
then in office) whose determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent. Shares of Common
Stock owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed; and in the event that
such rights or warrants are not so issued, the Purchase Price shall be adjusted
to be the Purchase Price which would then be in effect if such record date had
not been fixed.
11
(c) In case the Company shall fix a record date for a distribution
to all holders of Common 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 Common Stock, but including any dividend
payable in stock other than Common Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b)), the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the current market price (as determined pursuant to
Section 11(d) hereof) per share of Common Stock on such record date, less the
fair market value, as determined in good faith by the Board of Directors (as
evidenced by the vote of a majority of the Directors then in office) whose
determination shall be described in a statement filed with the Rights Agent, of
the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to a share of
Common Stock and the denominator of which shall be such current market price (as
determined pursuant to Section 11(d) hereof) per share of Common Stock. Such
adjustments shall be made successively whenever such a record date is fixed; and
in the event that such distribution is not so made, the Purchase Price shall be
adjusted to be the Purchase Price which would have been in effect if such record
date had not been fixed.
(d) For the purpose of any computation hereunder, 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 market price per share of the Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of (A) a dividend
or distribution on such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock (other than the Rights),
or (B) any subdivision, combination or reclassification of such Common Stock,
and prior to the expiration of the thirty (30) Trading Day period 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, the last quoted sale price or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") National Market 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 in good faith by the Board of Directors (as evidenced by the vote of
a majority of the Directors then in office), shall be used. The term "Trading
Day" shall mean a day on which the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading is open for
the transaction of business or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, a Business Day. If the
Common Stock is not publicly held or not so listed or traded, "current market
price" per share shall mean the fair value per share as determined in good faith
by the Board of Directors (as evidenced by the vote of a majority of the
Directors then in office) whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
12
(e) Anything herein to the contrary notwithstanding, no adjustment
in the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a share of Common Stock,
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 an adjustment made pursuant to Section 11(a)
or Section 13, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Common 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 contained in Sections
11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of
Sections 7, 9, 10, 13 and 14 hereof with respect to the Common 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 shares of Common Stock
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of shares (calculated to
the nearest ten-thousandth) of Common Stock obtained by (i) multiplying (x) the
number of shares covered by the 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.
13
(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 shares of Common Stock purchasable upon the exercise
of such Rights. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of shares of Common 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 ten-thousandth) obtained
by dividing the Purchase Price in effect immediately prior to the adjustment of
the Purchase Price by the Purchase Price in effect immediately after adjustment
of the Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be made.
This record date may be the date on which the Purchase Price is adjusted or any
day thereafter, but, if the Rights Certificates have been issued, shall be at
least ten (10) days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights Certificates on such
record date Rights Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of shares of Common Stock issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may continue
to express the Purchase Price per share and the number of shares 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 shares of Common
Stock issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the shares of Common Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the shares of Common 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.
14
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that the Board of Directors shall determine in its discretion (as
evidenced by the vote of a majority of the Directors then in office) to be
advisable in order that any (i) consolidation or subdivision of the Common
Stock, (ii) issuance wholly for cash of any shares of Common Stock at less than
the current market price, (iii) issuance wholly for cash of shares of Common
Stock or securities which by their terms are convertible into or exchangeable
for shares of Common Stock, (iv) stock dividends or (v) issuance of rights,
options or warrants referred to in this Section 11, hereafter made by the
Company to holders of its Common Stock shall not be taxable to such
stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with, (ii) merge with or into, or
(iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one or
more transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to, any other Person if at the time of or immediately after such consolidation,
merger or sale (x) there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights or (y) there are not sufficient unissued, unreserved shares of Common
Stock of the Company to permit the exercise in full of the Rights (except to the
extent cash, property, or other securities have been substituted pursuant to
Section 11(a)(iii)).
(o) The Company covenants and agrees that, after the Stock
Acquisition Date, it will not, except as permitted by Section 23, 24 or 27
hereof, take (or permit any Subsidiary to take) any action the purpose or effect
of which is to diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.
(p) The exercise of Rights under Section 11(a) (ii) shall only
result in the loss of rights under Section 11(a) (ii) with respect to Rights so
exercised and shall not otherwise affect the rights represented by unexercised
Rights under this Rights Agreement, including the rights represented by Section
13.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with each transfer agent for the Common Stock a
copy of such certificate, and (c) mail a brief summary thereof to each holder of
a Rights Certificate in accordance with Section 26 hereof. The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
15
(a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or merge with
and into, any other Person, and the Company shall not be the continuing or
surviving corporation of such consolidation or merger, (y) any Person shall
consolidate with, or merge with or into, the Company, and the Company shall be
the continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the outstanding
shares of Common Stock shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property, or (z) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer), in one or more transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than the Company
or any Subsidiary of the Company), then, and in each such case, proper provision
shall be made so that: (i) following the Distribution Date, each holder of a
Right, shall thereafter have the right to receive, upon the exercise thereof at
the then current Purchase Price in accordance with the terms of this Agreement,
such number of validly authorized and issued, fully paid, non-assessable and
freely tradeable shares of 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 (1)
multiplying the then current Purchase Price by the then number of shares of
Common Stock for which a Right is then exercisable (without giving effect to the
occurrence, if any, of any transaction described in Section 11(a)(ii) hereof)
and (2) dividing that product by 50% of the current market price (determined
pursuant to Section 11(d) hereof) per share of the Common Stock of such
Principal Party 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 connection with the consummation of any such transaction
as may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be possible, in relation to its shares
of Common Stock thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in (x) or (y) of
the first sentence of Section 13(a), the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted in
such merger or consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in (z) of the
first sentence in Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person, the Common Stock of which is
and has been so registered, "Principal Party" shall refer to such other Person;
(2) in case such Person is a Subsidiary, directly or indirectly, of more than
one Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value; and (3)
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 (1) and (2) above shall apply to each of the
chains of ownership having an interest in such joint venture as if such party
were a "Subsidiary" of both or all of such joint venturers 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.
16
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will:
(i) prepare and file a registration statement under the Act,
with respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after such
filing and (B) remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date;
(ii) use its best efforts to 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
(iii) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates which
comply in all material respects with the requirements for registration on Form
10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive mergers, consolidations, and sales or other transfers. If an
adjustment under Section 13(a) occurs at any time after an adjustment under
Section 11(a)(ii), the Rights that have not theretofore been exercised will
thereafter become exercisable in the manner described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Rights Certificates which evidence fractional Rights. In lieu
of such fractional Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable The closing price of the Rights for any day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading, or if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted sale price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors (as evidenced by the vote of a majority of the Directors then in
office). If on any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined in good faith by
the Board of Directors (as evidenced by the vote of a majority of the Directors
then in office) shall be used.
17
(b) 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 14(b), the current market value of a
share of Common Stock shall be the closing sale price of a share of Common Stock
(as determined pursuant to Section 11(d) hereof) for the Trading Day immediately
prior to the date of such exercise.
(c) Following the occurrence of an Acquisition 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 one (1) share of Common Stock. For purposes of this
Section 14(c), the current market value of one (1) share of Common Stock shall
be the closing sale price of a share of Common Stock (as determined pursuant to
Section 11(d) hereof) for the Trading Day immediately prior to the date of such
exercise.
(d) The holder of a Right by the acceptance of the Rights expressly
waives such holder's right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of 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 of this Agreement and
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
hereunder of any Person 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.
18
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person
in whose name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Rights Certificates or the associated Common Stock certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No holder,
as such, of any Rights Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the shares of Common Stock or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder 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 administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. All compensation and expenses paid to Rights Agent shall be
consistent with current market rates for similar services. The Company also
agrees to indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability, or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability arising therefrom, directly or indirectly.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any 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.
19
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto; provided, however, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties
and obligations imposed by this Agreement 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 opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent as
to any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "current market price") be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by the
Chairman of the Board, the Vice Chairman of the Board, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
20
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Sections 11 or 13 hereof or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after actual notice of any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock to be issued pursuant
to this Agreement or any Rights Certificate or as to whether any shares of
Common Stock will, when so issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, any Vice Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, or omission, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting from any such act,
or omission, default, neglect or misconduct; provided, however, reasonable care
was exercised in the selection and continued employment thereof.
21
(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
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock, 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, 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 his
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 corporation organized and doing
business under the laws of the United States or of the State of Arizona (or of
any other state of the United States so long as such corporation is authorized
to do business as a banking institution in the State of Arizona), in good
standing, having a principal office in the State of Arizona, which is authorized
under such laws to exercise corporate trust 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
$250,000,000. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock, and mail a notice thereof in writing to the registered holders
of the Rights Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by the Board to reflect any adjustment or change in the
Purchase Price 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 Final Expiration Date, the Company (a) will, with respect
to shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, granted or awarded as of the
Distribution Date, or upon the exercise, conversion, or exchange of securities
issued by the Company, and (b) may, in any other case, if deemed necessary or
appropriate by the Board of Directors of the Company, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (y) no such Rights Certificate will be issued
if, and to the extent that, the Company is advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued, and (z)
no such Rights Certificate will be issued if, and to the extent that,
appropriate adjustment has otherwise been made in lieu of the issuance of such
Rights Certificate.
22
Section 23. Redemption and Termination.
(a) (i) Subject to the provisions of Section 24 and 27, the Board of
Directors may, at its option, at any time prior to 5:00 P.M., Scottsdale,
Arizona time, on the earlier of (i) the date of the related acquisition pursuant
to which a Person has become an Acquiring Person, or (ii) the Final Expiration
Date, redeem all but not less than all the then outstanding Rights at a
redemption price of $.001 per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such redemption price being hereinafter referred to as the "Redemption Price").
(ii) In addition, the Board of Directors may redeem all, but
not less than all, of the then outstanding Rights at the Redemption Price
following the date of the related acquisition pursuant to which a Person has
become an Acquiring Person, but prior to any event described in Section 13(a)
either (x) if each of the following shall have occurred and remain in effect:
(1) a Person who is an Acquiring Person shall have transferred or otherwise
disposed of a number of shares of Common Stock in a transaction, or series of
transactions, such that such Person is thereafter a Beneficial Owner of voting
securities have 5% or less of the voting power of the Company and (2) there are
no other Persons, immediately following the occurrence of the event described in
clause (1), who are Acquiring Persons or (y) in connection with any event
specified in Section 13(a), not involving an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
(b) In the case of a redemption permitted under Section 23(a),
immediately upon the action of the Board of Directors of the Company 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. Within ten Business Days
after the action of the Board of Directors ordering any 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 which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made.
23
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at any
time after any Person becomes an Acquiring Person, exchange all or part of the
then outstanding and exercisable Rights (which shall not include such Rights
that have become void pursuant to the provisions of Section 7(e) hereof) for
shares of Common Stock, respectively, at exchange ratios of one share of Common
Stock per Right (the "Exchange Ratio"), appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof. Notwithstanding the foregoing, the Board of Directors 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 or any trust agreement entered into by the Company to
secure benefits payable under any employee benefit plan of the Company or any
Subsidiary of the Company), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of shares of voting securities representing
50% or more of the then voting power of the Company.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock equal
to the number of Rights held by such holder multiplied by the Exchange Ratio.
The Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company shall promptly mail a notice
of any such exchange to all of the holders of the then outstanding Rights at
their last address as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the shares of Common Stock for Rights
will be effected and, in the event of any partial exchange, the number and kind
of Rights which will be exchanged. Any partial exchange shall be effected pro
rata based on the number of Rights being exchanged (other than Rights which have
become void pursuant to the provisions of Section 7(e) hereof) and the number of
Rights held by each holder.
(c) In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding, or authorized but unissued, to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights (including using
its best efforts to cause the stockholders of the Company to take all actions
necessary to authorize such additional shares).
Section 25. Notice of Certain Events. In case the Company shall propose,
at any time after the Distribution Date, (a) to pay any dividend payable in
stock of any class to the holders of Common Stock or to make any other
distribution to the holders of Common Stock (other than a regular quarterly cash
dividend out of earnings or retained earnings of the Company), or (b) to offer
to the holders of Common Stock rights or warrants to subscribe for or to
purchase any additional shares of Common Stock or shares of stock of any class
or any other securities, rights or options, or (c) to effect any
reclassification of its Common Stock (other than a reclassification involving
only the subdivision of outstanding shares of Common Stock), or (d) 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 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person, or (e) 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, to the extent feasible and 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 Common 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 (a) or (b) above at least twenty (20) days prior to the record
date for determining holders of the shares of Common 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 Common Stock whichever
shall be the earlier.
24
In case of the occurrence of the event set forth in Section 11(a)(ii) of
this Agreement, (i) the Company shall as soon as practicable thereafter give to
each holder of a Rights Certificate, to the extent feasible and in accordance
with Section 26 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof, and (ii) all references in the preceding paragraph to
Common Stock shall be deemed thereafter to refer to Common Stock and/or, if
appropriate, other securities.
Section 26. Notices. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Rights Certificate to
or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
El Capitan Precious Metals, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Subject to the provisions of Section 21, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
OTR, Inc.
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
25
Section 27. Supplements and Amendments. The Company and the Rights Agent
shall from time to time, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates (or, prior
to the Distribution Date, the associated Common Stock certificates) in order (i)
to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to extend the Final Expiration Date, notwithstanding anything to the
contrary provided in clause (v) hereof, (iv) prior to the time a Person has
become an Acquiring Person, to change or supplement any of the provisions
hereunder which the Company may deem necessary or desirable to effectuate the
purposes of this Agreement or (v) following the time a Person has become an
Acquiring Person, to change or supplement any of the provisions hereunder in any
manner which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Rights Certificates (other than
an Acquiring Person or an Affiliate or Associate of an Acquiring Person);
provided, however, that this Agreement shall not be supplemented or amended in
any way unless such amendment is approved by a majority of the Board of
Directors (as determined in its discretion by the vote of a majority of the
Directors then in office) whose determination shall be final. Upon the delivery
of a certificate from an appropriate officer of the Company which states that
the proposed supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or amendment unless
the Rights Agent shall have determined in good 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.
Section 28. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock).
Section 30. Administration of Agreement. The Board shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board or the Company or as may be
necessary or advisable in the administration of this Agreement, including
without limitation the right and power to interpret the Agreement and to make
all determinations deemed necessary or advisable for the administration of this
Agreement. All such acts, interpretations and determinations done or made by the
Board in good faith shall be final, conclusive and binding on the Company, the
Rights Agent and the holders of the Rights. Accordingly, the Board shall not be
liable to the holders of Rights Certificates or any other party for any
determination made, action taken, or action omitted to be taken pursuant to the
terms of this Agreement, if such determination, action or omitted action was
made or taken in good faith.
Section 31. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated,
provided, however, that notwithstanding anything in this Agreement or the Rights
to the contrary, if any such term, provision, covenant, or restriction is held
by such court or authority to be invalid, void, or unenforceable and the Board
of Directors determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose or effect of
this Agreement, the right of redemption set forth in Section 23 shall be
reinstated and shall not expire until the close of business on the 15th calendar
day following the date of such determination.
26
Section 32. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Nevada and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
[The remainder of this page is intentionally left blank.]
27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
EL CAPITAN PRECIOUS METALS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Its: President and CEO
---------------------------------
OTR, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Its: Vice President
---------------------------------
28
Exhibit A
[Form of Rights Certificate]
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER DECEMBER 28, 2015 OR EARLIER IF REDEEMED
BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT REFERRED TO HEREIN. UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS
AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE
OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF SUCH AGREEMENT.](1)
Rights Certificate
EL CAPITAN PRECIOUS METALS, INC.
This certifies that __________________________, or registered assigns, is
the registered owner of the number of Rights (the "Rights") set forth above,
each of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of December 28, 2005 (the "Rights
Agreement"), between El Capitan Precious Metals, Inc., a Nevada corporation (the
"Company"), and OTR, Inc. (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. (Scottsdale, Arizona time) on December 28,
2015 at the office or offices of the Rights Agent designated for such purpose,
or its successors as Rights Agent, one fully paid, non-assessable share of
Common Stock (the "Common Stock") of the Company, at a purchase price of Twenty
Dollars ($20.00) per share (the "Purchase Price"), subject to adjustment as
provided in the Rights Agreement, upon presentation and surrender of this Rights
Certificate with the Form of Election to Exercise duly executed. The number of
Rights evidenced by this Rights Certificate (and the number of shares which may
be purchased upon exercise thereof) set forth above, and the Purchase Price per
share set forth above, are the number and Purchase Price as of December 16,
2005, based on the Common Stock as constituted at such date.
(1) The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
A-1
If the Rights evidenced by this Rights Certificate are beneficially owned
by (i) an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined in the Rights Agreement), (ii) transferees of
any such Acquiring Person, Associate or Affiliate, or (iii) under certain
circumstances, transferees of persons who became an Acquiring Person, Affiliate
or Associate following such transfer, such Rights shall become null and void and
no holder hereof shall have any right with respect to such Rights.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of shares of Common 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, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under certain circumstances specified in such Rights Agreement.
Copies of the Rights Agreement are on file at the office of the Rights Agent and
are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office or offices 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 shares of Common 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 Rights Certificate may be redeemed by the Company at its option at a
redemption price of $.001 per Right.
No fractional shares of Common Stock will be issued upon the exercise of
any Right or Rights evidenced hereby, but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of Common Stock or
of any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
A-2
WITNESS the facsimile signature of the proper officers of the Company.
Dated as of _______________, 20__
ATTEST: EL CAPITAN PRECIOUS METALS, INC.
By:
--------------------------------- -------------------------------------
Secretary Title:
----------------------------------
Countersigned:
OTR, INC.,
as Rights Agent
By:
------------------------------
Authorized Signature
A-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 and address of transferee) this Rights Certificate, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint ____________________ Attorney, to transfer the within Rights Certificate
on the books of the within-named Company, with full power of substitution.
The undersigned hereby certifies (after due inquiry and to the best of its
knowledge) by checking the appropriate boxes that:
(1) this Rights Certificate
|_| is
or
|_| 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 an Acquiring Person (as such
terms are defined in the Rights Agreement); and
(2) the undersigned
|_| did
or
|_| did not
A-4
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:
THE SIGNATURE(S) SHOULD BE MEDALLION GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT
UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEED MEDALLION PROGRAM).
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.
A-5
FORM OF ELECTION TO EXERCISE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: EL CAPITAN PRECIOUS METALS, INC.:
The undersigned hereby irrevocably elects to exercise ____________ Rights
represented by this Rights Certificate to purchase the shares of Common Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of:
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please insert social security
or other identifying number)
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: (complete
only if Rights Certificate is to be registered in a name other than the
undersigned)
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please insert social security or other identifying number)
A-6
The undersigned hereby certifies (after due inquiry and to the best of its
knowledge) by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate
|_| are
or
|_| are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement); and
(2) the undersigned
|_| did
or
|_| 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:
THE SIGNATURE(S) SHOULD BE MEDALLION GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT
UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEED MEDALLION PROGRAM).
PURSUANT TO S.E.C. RULE 17AD-15.
NOTICE
The signature to the foregoing Election to Exercise 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.
A-7
Exhibit B
SUMMARY OF SHAREHOLDERS' RIGHTS PLAN
On December 7, 2005, the Board of Directors of El Capitan Precious Metals,
Inc. (the "Company") declared a dividend of one Right (a "Right") for each
outstanding share of the Company's common stock, par value of $.001 per share
(the "Common Stock"), to the stockholders of record at the close of business on
December 16, 2005 (the "Record Date").
Initially, the Rights will be attached implicitly to all Common Stock
certificates representing shares then outstanding, and no separate Right
certificates will be distributed. Except as set forth below, each Right entitles
the registered holder thereof to purchase from the Company one share of Common
Stock at a price of $20.00 per share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement, dated as of December 28, 2005 (the "Rights Agreement") between the
Company and OTR, Inc., as Rights Agent.
The Rights will separate from the shares of Common Stock to which they are
attached, and a Distribution Date (as defined below) for the Rights will occur
upon the earlier of: (i) the first date of public announcement that a person or
group of affiliated or associated persons has become an "Acquiring Person"
(i.e., has become, subject to certain exceptions, the beneficial owner of voting
securities having 15% or more of the then voting power of the Company without
the prior approval of a majority of the Board of Directors) (such date is
referred to herein as a "Stock Acquisition Date") and (ii) the 10th day
following the commencement or public announcement of a tender offer or exchange
offer, the consummation of which would result in a person or group of affiliated
or associated persons becoming, subject to certain exceptions, an Acquiring
Person (or such later date as may be determined by the Board of Directors of the
Company prior to a person or group of affiliated or associated persons becoming
an Acquiring Person) (the earlier of such dates being called the "Distribution
Date").
Until the Distribution Date (or the earlier redemption or expiration of
the Rights), the Rights will be transferred with and only with certificates
representing shares of the Company's Common Stock and any new certificates
representing such shares issued after the Record Date (either upon transfer or
new issuance of the such common shares) will contain a notation incorporating by
reference the Rights Agreement. Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer of any
certificates representing shares of Common Stock outstanding as of the Record
Date will also constitute the transfer of the Rights associated with the stock
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of shares of Common Stock as
of the close of business on the Distribution Date, and the separate Rights
Certificates alone will evidence the Rights. The Rights are not exercisable
until the Distribution Date.
B-1
In the event that any person becomes an Acquiring Person, each Right
(except with respect to Rights held by the Acquiring Person, its affiliates and
associates and certain transferees of the Acquiring Person or such affiliates or
associates) will entitle the holder thereof (subject to possible suspensions
provided for in the Rights Agreement) to receive that number of shares of Common
Stock having a value equal to twice the Purchase Price (in such event, the right
to acquire such amount of Common Stock is referred to as a "Flip-In Right"). A
majority of the Board of Directors (as determined in its discretion by the vote
of a majority of the directors then in office) may elect to distribute cash,
other securities or other property in lieu of shares of Common Stock to the
Right holders upon the exercise of their Rights following any such event.
In the event that, at any time following a Stock Acquisition Date, the
Company is acquired in a merger or other business combination transaction where
the Company is not the surviving corporation or in the event that 50% or more of
its assets or earning power is sold, proper provision shall be made so that each
holder of a Right will thereafter have the right (in lieu of the Flip-In Right)
to receive, upon the exercise thereof at the then current Purchase Price of the
Right, common stock of the acquiring entity which has a value equal to twice the
purchase price of the Right (such right being called a "Flip-Over Right"). Upon
the occurrence of any of the events giving rise to the exercisability of the
Flip-In Right, any Rights that are or were at any time owned by an Acquiring
Person engaging in any of such transactions or receiving the benefits thereof on
or after the time the Acquiring Person became such shall become null and void.
For example, assuming a purchase price of $20 per Right, and assuming a
current market price of $2 per share, if (i) any person becomes an Acquiring
Person or (ii) the Company is the surviving corporation in a merger with an
Acquiring Person in which the Common Stock is not converted or exchanged, each
Right other than a Right owned by the Acquiring Person would entitle its holder
to purchase $40 worth of Common Stock, for $20. If, following the Distribution
Date, there occurs (i) a business combination with another entity in which the
Company's Common Stock is converted or exchanged, or (ii) a sale of 50% or more
of the Company's assets or earning power, each Right would entitle its holder to
purchase $40 worth of the acquiring entity's stock for $20.
The Purchase Price payable, and the number of shares of Common Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Common
Stock, (ii) upon the grant to holders of the Common Stock of certain rights or
warrants to subscribe for Common Stock or convertible securities at less than
the current market price of the Common Stock or (iii) upon the distribution to
holders of the Common Stock of evidences of indebtedness or assets (excluding
regular quarterly cash dividends) or of subscription rights or warrants (other
than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. No fractions of shares will be issued and, in lieu thereof,
an adjustment in cash will be made based on the market price of the Common Stock
on the last trading date prior to the date of exercise.
B-2
At any time prior to the earlier to occur of (i) a person becoming an
Acquiring Person or (ii) the expiration of the Rights, the Company may redeem
the Rights in whole, but not in part, at a price of $.001 per Right (the
"Redemption Price"), which redemption shall be effective upon the action of the
Board of Directors. Additionally, the Board of Directors may thereafter redeem
the then outstanding Rights in whole, but not in part, at the Redemption Price
provided that (a) the redemption is incidental to a merger or other business
combination transaction or series of transactions involving the Company but not
involving an Acquiring Person, or (b) an Acquiring Person has reduced his
beneficial ownership to less than 5% of the then voting power of the Company and
there exists no other Acquiring Person at the time of the redemption. 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.
Additionally, the Board of Directors (as evidenced by the vote of a
majority of the directors then in office) may also, at any time from and after a
person has become an Acquiring Person, exchange one share of Common Stock for
each Right held by a shareholder other than the Acquiring Person during such
time as the Acquiring Person holds between 15% and 50% of the voting power of
the Company.
Until a Right is exercised, it will not entitle the holder to any rights
as a stockholder of the Company (other than those as an existing stockholder),
including, without limitation, the right to vote or to receive dividends.
The terms of the Rights may be amended by the Board of Directors of the
Company in any manner prior to a person becoming an Acquiring Person, and may
thereafter amend the terms of the Rights to cure any ambiguity, to correct or
supplement any provision of the Rights Agreement which may be defective or
inconsistent with any other provisions, or in any manner not adversely affecting
the interests of the holders of the Rights.
The Rights will expire December 28, 2015, unless earlier redeemed by the
Company pursuant to the Rights Agreement.
A copy of the Rights Agreement will be filed with the Securities and
Exchange Commission as an exhibit to the Company's Current Report on Form 8-K. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement.
B-3