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RIGHTS AGREEMENT between FARGO ELECTRONICS, INC. and NORWEST BANK MINNESOTA, N.A. Dated as of February 9, 2000
TABLE OF CONTENTS
Section
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| Page
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| 1.
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| Certain Definitions.
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| 1
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| 2.
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| Appointment of Rights Agent.
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| 5
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| 3.
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| Issue of Rights Certificates.
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| 5
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| 4.
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| Form of Rights Certificates.
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| 7
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| 5.
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| Countersignature and Registration.
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| 8
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| 6.
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| Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
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| 8
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| 7.
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| Exercise of Rights; Purchase Price; Expiration Date.
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| 9
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| 8.
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| Cancellation and Destruction of Rights Certificates.
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| 10
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| 9.
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| Reservation and Availability of Capital Stock; Registration.
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| 11
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| 10.
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| Capital Stock Record Date.
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| 12
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| 11.
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| Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights.
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| 12
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| 12.
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| Certificate of Adjusted Purchase Price or Number of Shares.
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| 19
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| 13.
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| Consolidation, Merger or Sale or Transfer of Assets or Earning Power.
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| 19
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| 14.
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| Fractional Rights and Fractional Shares.
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| 21
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| 15.
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| Rights of Action.
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| 22
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| 16.
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| Agreement of Rights Holders.
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| 22
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| 17.
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| Rights Certificate Holder Not Deemed a Shareholder.
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| 23
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| 18.
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| Concerning the Rights Agent.
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| 23
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| 19.
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| Merger or Consolidation or Change of Name of Rights Agent.
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| 24
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| 20.
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| Duties of Rights Agent.
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| 24
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| 21.
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| Change of Rights Agent.
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| 26
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| 22.
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| Issuance of New Rights Certificates.
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| 26
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| 23.
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| Redemption and Termination.
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| 27
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| 24.
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| Exchange.
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| 28
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| 25.
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| Notice of Certain Events.
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| 29
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| 26.
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| Notices.
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| 29
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| 27.
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| Supplements and Amendments.
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| 30
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| 28.
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| Successors.
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| 31
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| 29.
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| Determinations and Actions by the Board.
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| 31
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| 30.
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| Benefits of this Agreement.
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| 31
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| 31.
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| Severability.
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| 31
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| 32.
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| Governing Law.
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| 32
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| 33.
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| Counterparts.
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| 32
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| 34.
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| Descriptive Headings.
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| 32
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Exhibits
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| A—Form of Certificate of Designation, Preferences and Rights of Series C Preferred Stock
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| B—Form of Rights Certificate
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| C—Summary of Rights Agreement
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RIGHTS AGREEMENT
This RIGHTS AGREEMENT, dated as of February 9, 2000 (this "Agreement"), is between Fargo Electronics, Inc., a Delaware corporation (the "Company"), and
Norwest Bank Minnesota, N.A., a national banking association, as Rights Agent (the "Rights Agent").
On
February 9, 2000 (the "Rights Dividend Declaration Date"), the IPO Committee of the Board of Directors of the Company (as the composition of Board of Directors may change from time
to time, the "Board") authorized and declared a dividend distribution of one Right for each Common Share (as hereinafter defined) of the Company outstanding at the close of business (as hereinafter
defined) on February 10, 2000 (the "Record Date"), each Right (individually a "Right" and collectively the "Rights") initially representing the right to purchase one one-thousandth of a
Preferred Share (as hereinafter defined) of the Company having the rights, powers and preferences set forth in the form of the Certificate of Designation, Preferences and Rights attached hereto as
Exhibit A, upon the terms and subject to the conditions hereinafter set forth, and has further authorized and directed the issuance of one Right for each Common Share issued between the Record
Date and the earlier of the Distribution Date or the Expiration Date (both as hereinafter defined).
Accordingly,
in consideration of the premises and the mutual agreements herein set forth, the parties hereto, intending to be legally bound, hereby 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 who or which, alone or together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of 15% or
more of the Common Shares then outstanding (other than as a result of a Permitted Offer (as hereinafter defined)), but shall not include the Company, any Subsidiary of the Company, any Grandfathered
Holder, or any employee benefit plan of the Company or of any Subsidiary of the Company or any Person organized, appointed or established by the Company for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person": (i) as the result of an acquisition of Common Shares by the Company which, by reducing the number of Common Shares
outstanding, increases the proportionate number of Common Shares beneficially owned by such Person to 15% or more of the Common Shares then outstanding; provided, however, that if a Person shall
become the Beneficial Owner of 15% or more of the Common Shares then outstanding by reason of Common Share
purchases by the Company and shall thereafter become the Beneficial Owner of any additional Common Shares, other than pursuant to the receipt of stock dividends or stock splits on a pro rata basis on
Common Shares already beneficially owned by such Person, then such Person shall be deemed to be an "Acquiring Person"; or (ii) who beneficially owns 15% or more of the outstanding Common Shares
but who acquired Beneficial Ownership of Common Shares without any plan or intention to seek or affect control of the Company, if such Person promptly enters into an irrevocable commitment promptly to
divest, and thereafter promptly divests (without exercising or retaining any power, including voting, with respect to such shares), sufficient shares of Common Shares (or securities convertible into,
exchangeable into or exercisable for Common Shares) so that such Person ceases to be the Beneficial Owner of 15% or more of the outstanding shares of Common Shares; or (iii) who beneficially
owns Common Shares consisting solely of one or more (A) Common Shares beneficially owned pursuant to the grant for exercise of an option granted to such Person by the Company in connection with
an agreement to merge with, or acquire, the Company entered into prior to a Section 11(a)(ii) Trigger Date, (B) Common Shares (or securities convertible into, exchangeable into or
exercisable for Common Shares), beneficially owned by such Person or its Affiliates or Associates at the time of grant of such option or (C) Common Shares (or securities convertible into,
exchangeable into or exercisable for Common Shares) acquired by Affiliates or
Associates of such Person after the time of such grant which, in the aggregate, amount to less than 1% of the outstanding Common Shares.
(b) "Act"
shall mean the Securities Act of 1933, as amended.
(c) "Adjustment
Shares" shall have the meaning set forth in Section 11(a)(ii).
(d) "Adverse
Person" shall mean any Person determined to be an Adverse Person pursuant to the criteria set forth in Section 11(a)(ii)(B).
(e) "Affiliate"
and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act as in effect on the date hereof.
(f) "Agreement"
shall have the meaning set forth in the preamble clause at the beginning hereof.
(g) "Beneficial
Owner" shall mean the following:
(i) A
Person shall be deemed the "Beneficial Owner" of, and shall be deemed to "beneficially own," any securities:
(A) which
such Person or any of such Person's Affiliates or Associates, directly or indirectly, beneficially owns;
(B) which
such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately
or only after the passage of time) pursuant to any agreement, arrangement or understanding, whether or not in writing (other than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities), or upon the exercise of conversion rights, exchange rights, other rights, warrants or options or otherwise; provided, however, that
a Person shall not be deemed the "Beneficial Owner" of, or to "beneficially own," (1) securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange, (2) securities issuable upon exercise of Rights at any time prior to the occurrence
of a Triggering Event, or (3) securities issuable
upon exercise of Rights from and after the occurrence of a Triggering Event which Rights were acquired by such Person or any of such Person's Affiliates or Associates prior to the Distribution Date or
pursuant to Section 3(a) or Section 22 (the "Original Rights") or pursuant to Section 11(i) in connection with an adjustment made with respect to any Original Rights;
(C) which
such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right (sole or shared) to vote or dispose of or has "beneficial
ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act, or any comparable or successor rule, whether or not the Company is
subject to the Exchange Act), including, without limitation, pursuant to any agreement, arrangement or understanding, whether or not in writing; provided, however, that a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own," any security under this Section 1(g)(i)(C) as a result of an oral or written agreement, arrangement or understanding to vote such security
if such agreement, arrangement or understanding (1) arises solely from a revocable proxy given in response to a proxy or consent solicitation made pursuant to and in accordance with, the
applicable provisions of the General Rules and Regulations under the Exchange Act (and if such provisions are not applicable by law such proxy or solicitation is made in substantially the same manner
as if such provisions were applicable), and (2) is not also then reportable by
such Person on Schedule 13D under the Exchange Act (or any comparable or successor report) (and if the Company is not subject to the Exchange Act, would not be then reportable if the Company
was subject to the Exchange Act); or
(D) 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 Section 1(g)(i)(C)(1)) or disposing of such securities.
(ii) Notwithstanding
anything in this definition to the contrary, the phrase "then outstanding," when used with reference to a Person's Beneficial Ownership of
securities, shall mean the number of such securities then issued and outstanding together with the number of such securities not then actually issued and outstanding which such Person is deemed to own
beneficially hereunder.
(h) "Board"
shall have the meaning set forth in the recital clause at the beginning of this Agreement.
(i) "Business
Day" shall mean any day other than a Saturday, Sunday or a day on which banking institutions in the State of Minnesota are authorized or obligated by law
or executive order to close.
(j) "Close
of business" on any given date shall mean 5:00 p.m. Minneapolis, Minnesota time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 p.m. Minneapolis, Minnesota time on the next succeeding Business Day.
(k) "Common
Shares" when used with reference to the Company shall mean the shares of Common Stock, par value $.01 per share, of the Company. "Common Shares" when used
with reference to any Person other than the Company shall mean: (i) in the case of Persons organized in corporate form, the shares of capital stock or units of equity security with the greatest
voting power of such Person or, if such Person is a Subsidiary of another Person, of the Person or Persons which ultimately control or direct the management of such first-mentioned Person, and
(ii) in the case of Persons not organized in corporate form, the units of beneficial interest which (A) represent the right to participate generally in the profits and losses of such
Person (including without limitation any flow-through tax benefits resulting
from an ownership interest in such Person) and (B) are entitled to exercise the greatest voting power of such Person or, in the case of a limited partnership, shall have the power to remove the
general partner or partners.
(l) "Common
stock equivalents" shall have the meaning set forth in Section 11(a)(iii).
(m) "Company"
shall have the meaning set forth in the preamble clause at the beginning of this Agreement.
(n) "Current
Market Price" shall have the meaning set forth in Section 11(d).
(o) "Current
Value" shall have the meaning set forth in Section 11(a)(iii).
(p) "Distribution
Date" shall have the meaning set forth in Section 3(a).
(q) "Equivalent
preferred shares" shall have the meaning set forth in Section 11(b).
(r) "Exchange
Act" shall mean the Securities Exchange Act of 1934, as amended.
(s) "Exchange
Ratio" shall have the meaning set forth in Section 24(a).
(t) "Expiration
Date" shall have the meaning set forth in Section 7(a).
(u) "Final
Expiration Date" shall mean the close of business on February 9, 2010.
(v) "Grandfathered
Holder" shall mean any Person who or which, together with all Affiliates and Associates of such Person, is the Beneficial Owner, as of the Rights
Dividend Declaration Date, of 10% or more of the Common Shares then outstanding (provided that such Person, and its Affiliates and Associates, are shareholders of record of the Common Shares
constituting such 10% Beneficial Ownership); provided, however, that any such Person shall cease being a Grandfathered Holder at and after the date on which such Person, together with all Affiliates
and Associates, subsequent to the Rights Dividend Declaration Date, either (a) becomes the Beneficial Owner of a percentage of the Common Shares outstanding as of such later date exceeding such
Person's percentage Beneficial Ownership of Common Shares outstanding as of the Rights Dividend Declaration Date plus ten percentage points, or (b) becomes the Beneficial Owner of less than 10%
of the Common Shares outstanding as of such later date.
(w) "Original
Rights" shall have the meaning set forth in Section 1(g)(i)(B)(3).
(x) "Person"
shall mean any individual, firm, corporation, partnership or other entity.
(y) "Permitted
Offer" shall mean a tender or exchange offer which is for all outstanding Common Shares at a price and on terms determined, prior to the purchase of
shares under such tender or exchange offer, by the Board, who are not officers of the Company and who are not Acquiring Persons or Affiliates, Associates, nominees or representatives of an Acquiring
Person, to be adequate (taking into account all factors that such directors deem relevant including, without limitation, prices that could reasonably be achieved if the Company or its assets were sold
on an orderly basis designed to realize maximum value) and otherwise in the best interests of the Company and its shareholders (other than the Person or any Affiliate or Associate thereof on whose
behalf the offer is being made), taking into account all factors that such directors may deem relevant.
(z) "Preferred
Share" shall mean a share of Series C Preferred Stock, par value $.01 per share, of the Company and, to the extent that there are not a sufficient
number of shares of Series C Preferred Stock authorized to permit the full exercise of the Rights, shares of any other series of Preferred Stock of the Company designated for such purpose
containing terms substantially similar to the terms of the Series C Preferred Stock.
(aa) "Preferred
Share Fraction" shall mean one one-thousandth of a Preferred Share.
(bb) "Principal
Party" shall have the meaning set forth in Section 13(b).
(cc) "Purchase
Price" shall have the meaning set forth in Section 4(a), and shall initially be as set forth in Section 7(b).
(dd) "Record
Date" shall have the meaning set forth in the recital clause at the beginning of this Agreement.
(ee) "Redemption
Price" shall have the meaning set forth in Section 23(a).
(ff) "Rights"
shall have the meaning set forth in the recital clause at the beginning of this Agreement.
(gg) "Rights
Agent" shall have the meaning set forth in the preamble clause at the beginning of this Agreement until a successor Rights Agent shall have become such
pursuant to the applicable provisions of this Agreement, and thereafter "Rights Agent" shall mean such successor Rights Agent. If at any time there is more than one Person appointed by the Company as
Rights Agent pursuant to the provisions of this Agreement, "Rights Agent" shall mean and include each such Person.
(hh) "Rights
Certificates" shall have the meaning set forth in Section 3(a).
(ii) "Rights
Dividend Declaration Date" shall have the meaning set forth in the recital clause at the beginning of this Agreement.
(jj) "Section 11(a)(ii) Election"
shall mean the election described in Sections 11(a)(ii)(x) and (y).
(kk) "Section 11(a)(ii) Event"
shall mean any event described in Section 11(a)(ii)(A) or (B).
(ll) "Section 11(a)(ii) Trigger
Date" shall have the meaning set forth in Section 11(a)(iii).
(mm) "Section 13
Event" shall mean any event described in clauses (i), (ii) or (iii) of Section 13(a).
(nn) "Section 24(a)
Election" shall have the meaning set forth in Section 24(a).
(oo) "Spread"
shall have the meaning set forth in Section 11(a)(iii).
(pp) "Stock
Acquisition Date" shall mean the date of first public announcement (which, for purposes of this definition, shall include, without limitation, a report
filed pursuant to Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has become such.
(qq) "Subsidiary"
shall mean, with reference to any Person, any other Person of which at least a majority of the voting power of the voting equity securities or equity
interests is beneficially owned, directly or indirectly, or otherwise controlled by such first-mentioned Person.
(rr) "Substitute
Consideration" shall have the meaning set forth in Section 11(a)(iii).
(ss) "Substitution
Period" shall have the meaning set forth in Section 11(a)(iii).
(tt) "Trading
Day" shall have the meaning set forth in Section 11(d)(i).
(uu) "Triggering
Event" shall mean any Section 11(a)(ii) Event or any Section 13 Event.
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 Common Shares) 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 additional Rights Agents as it may deem necessary or desirable.
Section 3. Issue of Rights Certificates.
(a) Until
the first to occur of:
(i) the
close of business on the tenth Business Day after the Stock Acquisition Date (or, if the tenth Business Day after the Stock Acquisition Date occurs before the
Record Date, the close of business on the Record Date),
(ii) the
close of business on the tenth Business Day (or such later date as may be determined by the Board, prior to such time as any Person has become an Acquiring
Person) after the date that a tender or exchange offer (other than a Permitted Offer) by any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or
of any Subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan) is first published or sent or given within
the meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act (or any comparable or successor rule), if upon consummation thereof, such Person would be
the Beneficial Owner of 15% or more of the Common Shares then outstanding, or
(iii) the
close of business on the tenth Business Day after a determination, pursuant to Section 11(a)(ii)(B), that a Person is an Adverse Person, (the first to
occur of (i), (ii), and (iii) being herein referred to as the "Distribution Date"), (A) the Rights will be evidenced (subject to the provisions of Section 3(b)) by the
certificates for the Common Shares registered in the names of the holders thereof (which certificates for Common Shares shall be deemed also to be certificates for Rights) and not by separate
certificates and (B) the Rights will be transferable only in connection with the transfer of the underlying Common Shares (including a transfer to the Company). As soon as practicable after the
Company has notified the Rights Agent of the occurrence of the Distribution Date, the Rights Agent will send by first-class, insured, postage prepaid mail, to each record holder of Common Shares 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 B hereto
(the "Rights Certificates"), evidencing one Right for each Common Share so held, subject to adjustment as provided herein. In the event that an adjustment in the number of Rights per Common Share has
been made pursuant to Section 11(p), at the time of distribution of the Right Certificates, the Company shall make and notify the Rights Agent of the necessary and appropriate rounding
adjustments (in accordance with Section 14(a)) so that Rights Certificates representing only whole numbers of Rights are distributed and cash is paid in lieu of any fractional Rights. As of and
after the Distribution Date, the Rights will be evidenced solely by such Rights Certificates.
(b) As
promptly as practicable following the Record Date, the Company will send a copy of a Summary of Rights Agreement, in substantially the form attached hereto as
Exhibit C, by first-class, postage prepaid mail, to each record holder of Common Shares as of the close of business on the Record Date at the address of such holder shown on the records of the
Company. With respect to certificates for the Common Shares outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by such certificates for the Common Shares and
the registered holders of the Common Shares shall also be the registered holders of the associated Rights. Until the earlier of the Distribution Date or the Expiration Date, the transfer of any
certificates representing Common Shares in respect of which Rights have been issued shall also constitute the transfer of the Rights associated with such Common Shares. Certificates issued after the
Record Date upon the transfer of Common Shares outstanding on the Record Date shall bear the legend set forth in Section 3(c).
(c) Rights
shall be issued in respect of all Common Shares which are issued after the Record Date but prior to the earlier of the Distribution Date or the Expiration
Date. Rights shall also be issued to the extent provided in Section 22 in respect of all Common Shares which are issued after the Distribution Date and prior to the Expiration Date.
Certificates representing Common Shares (including, without limitation, certificates issued upon transfer or exchange of Common Shares) issued after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date shall also be deemed to be certificates for the associated 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 Fargo Electronics, Inc. (the "Company") and Norwest Bank
Minnesota, N.A. (the "Rights Agent") dated as of February 9, 2000 (the "Rights Agreement"), and as the same may be amended from time to time, the terms of which (including restrictions on the transfer
of such Rights) are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of the Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. The Company will mail to the holder of this certificate a copy of the Rights
Agreement, as in
effect on the date of mailing, without charge after receipt of a written request therefor from such holder. Under certain circumstances, as set forth in the Rights Agreement, Rights issued to, or held
by, any Person who is, was or becomes an Acquiring Person, an Adverse Person or any Affiliate or Associate thereof (as such terms are defined in the Rights Agreement), and any subsequent holder of
such Rights, whether currently held by or on behalf of such Person or by any subsequent holder, may become null and void."
Until
the earlier of the Distribution Date or the Expiration Date, the Rights associated with the Common Shares represented by certificates for Common Shares shall be evidenced by such certificates
alone and registered holders of Common Shares shall also be the registered holders of the associated Rights, and the transfer of any of such certificates shall also constitute the transfer of the
Rights associated with such Common Shares, whether or not containing the foregoing legend. In the event that the Company purchases or acquires and cancels any Common Shares after the Record Date but
prior to the earlier of the Distribution Date or the Expiration Date, any Rights associated with such Common Shares shall be deemed canceled and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Shares that are no longer outstanding.
Section 4. Form of Rights Certificates.
(a) The
Rights Certificates (and the forms of election to exercise, certification and assignment to be printed on the reverse thereof) shall each be substantially in
the form set forth in Exhibit B hereto and
may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, 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, national market
system or over-the-counter market 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, the Rights Certificates, whenever distributed, shall entitle the holders thereof to purchase such number of Preferred Share Fractions as shall be set forth therein at the price per
Preferred Share Fraction set forth therein (the "Purchase Price"), but the amount and type of securities purchasable upon the exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any
Rights Certificate issued pursuant to Section 3(a) or Section 22 that represents Rights beneficially owned by a Person reasonably believed by the
Board to be (i) an Acquiring Person, an Adverse Person or any Associate or Affiliate of any such Person, (ii) a transferee of an Acquiring Person or an Adverse Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person or Adverse Person becomes such, or (iii) a transferee of an Acquiring Person or an Adverse Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person or Adverse Person becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person or Adverse Person (or from any such Associate or Affiliate) to holders of equity interests in such Acquiring Person or Adverse Person (or
any such Associate or Affiliate) or to any Person with whom such Acquiring Person or Adverse Person (or any such Associate or Affiliate) has any continuing oral or written plan, agreement, arrangement
or understanding regarding the transferred Rights or (B) a transfer which the Board has determined is part of an oral or written plan, arrangement or understanding that has as a primary purpose
or effect avoidance of Section 7(e), and any Rights Certificate issued to any such Person pursuant Section 6 or Section 11 upon transfer, exchange, replacement or adjustment of
any other Rights Certificate
referred to in this sentence, shall contain (to the extent feasible) the following legend, modified as applicable to such Person:
"The
Rights represented by this Rights Certificate are or were beneficially owned by a person who was or became an [Acquiring] [Adverse] Person or an
Affiliate or Associate of an [Acquiring] [Adverse] Person (as such terms are defined in the Rights Agreement). Accordingly, this Rights Certificate and
the Rights represented hereby may become null and void in the circumstances specified in Section 7(e) of such Agreement."
The
provisions of Section 7(e) of this Agreement shall be operative whether or not the foregoing legend is contained on any such Rights Certificate.
Section 5. Countersignature and Registration.
(a) The
Rights Certificates shall be executed on behalf of the Company by its Chief Executive Officer, its Chief Financial Officer or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the Company's seal or a facsimile thereof, if any, 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 office designated by the Rights Agent as the appropriate place for surrender
of Rights Certificates upon exercise or transfer, 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, the date of each of the Rights Certificates and whether each such Rights Certificate
contains a legend as set forth in Section 4(b).
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.
(a) Subject
to the provisions of Section 4(b), Section 7(e), Section 14 and Section 20(k), 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 Preferred Share Fractions (or, following a Triggering Event, Common Shares, other securities, cash or other
assets, as the case may be) as the Rights Certificate or Certificates surrendered then entitled such holder (or former holder in the case of a transfer) to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Rights Certificate or Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender the Rights Certificate or
Certificates to be transferred, split up, combined or exchanged, with the form of assignment and certificate appropriately executed, at the office of the Rights Agent designated for such purpose.
Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have duly completed and executed the certificate contained in the form of assignment on the reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 4(b), Section 7(e), Section 14 and Section 20(k), countersign and deliver to each Person entitled thereto a Rights Certificate or
Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient to cover any transfer tax or 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, at the Company's or the Rights Agent's request, reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Rights Certificate if mutilated, the Company will make and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature and delivery to the registered owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date.
(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)) 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 and the certificate on the reverse side thereof duly completed and executed, to the Rights Agent
at the office of the Rights Agent designated for such purpose, together with payment of the aggregate Purchase Price for the total number of Preferred Share Fractions (or Common Shares, other
securities, cash or other assets, as the case may be) as to which such surrendered Rights are then exercisable, at or prior to the first to occur of: (i) the Final Expiration Date;
(ii) the time at which such Rights expire as provided in Section 13(d); (iii) the time at which such Rights are redeemed as provided in Section 23; or (iv) the time
at which such Rights are exchanged as provided in Section 24 (the first to occur of (i), (ii), (iii) and (iv) being herein referred to as the "Expiration Date").
(b) The
Purchase Price for each Preferred Share Fraction purchasable pursuant to the exercise of a Right shall initially be One Hundred Seventy Dollars ($170) and shall
be subject to adjustment from time to time as provided in Section 11 and Section 13(a) and shall be payable in accordance with Section 7(c).
(c) Upon
receipt of a Rights Certificate representing exercisable Rights, with the form of election to exercise and certificate on the reverse side thereof duly
completed and executed, accompanied by payment of the Purchase Price for the number of Preferred Share Fractions (or Common Share, other securities, cash or other assets, as the case may be) to be
purchased and an amount equal to any applicable transfer tax or charge, the Rights Agent shall, subject to Section 14(b) and Section 20(k), thereupon promptly (i) requisition from
any transfer agent of the Preferred Shares (or make available, if the Rights Agent is the transfer agent for such Preferred Shares) certificates for the total number of Preferred Shares to be
purchased and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests, (ii) requisition from the Company the amount of cash, if any, to be paid in lieu of
fractional shares in accordance with Section 14, (iii) promptly after receipt of such certificates, 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) promptly after receipt thereof, deliver such
cash, if any, to or upon the order of the registered holder of such Rights Certificate. The payment of the Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii)) may be
made by cash, certified bank check or money order payable to the order of the Company. If the Company determines to issue other securities of the Company (including without limitation, upon an
appropriate Section 11(a)(ii) Election or Section 24(a) Election, Common Shares), pay cash and/or distribute other assets pursuant to Section 11(a), the Company will make
all arrangements necessary so that such other securities, cash and/or other assets are available for distribution by the Rights Agent, if and when appropriate. The Company reserves the right to
require prior to the occurrence of a Triggering Event that, upon any exercise of Rights, a number of Rights be exercised so that only whole Preferred Shares would be issued.
(d) In
case the registered holder of any Rights Certificate shall exercise less than all 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, 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, subject to the provisions of Section 14.
(e) Notwithstanding
anything in this Agreement to the contrary, from and after the first occurrence of a Section 11(a)(ii) Event, any Rights that are or
were beneficially owned by (i) an Acquiring Person, an
Adverse Person or any Associate or Affiliate of any such Person, (ii) a transferee of an Acquiring Person or an Adverse Person (or of any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person or Adverse Person becomes such, or (iii) a transferee of an Acquiring Person or an Adverse Person (or of any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the Acquiring Person or Adverse Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person or Adverse Person (or from any such Associate or Affiliate) to holders of equity interests in such Acquiring Person or Adverse Person (or any such Associate or Affiliate) or to any
Person with whom the Acquiring Person or Adverse Person (or any such Associate or Affiliate) has any continuing oral or written plan, agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board has determined is part of an oral or written plan, agreement, arrangement or understanding that has as a primary purpose or effect the avoidance of this
Section 7(e), shall become null and void without any further action and any holder of such Rights shall have no rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall use all reasonable efforts to ensure that the provisions of this Section 7(e) and Section 4(b) are complied with, but shall have no
liability to any holder of a Rights Certificate or other Person as a result of its failure to make any determinations with respect to an Acquiring Person or Adverse Person or any of their respective
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 upon the occurrence of any purported transfer or exercise as set forth in this Section 7 unless such registered holder shall have (i) duly completed and executed the
certificate following the form of assignment or election to exercise set forth on the reverse side of the Rights Certificate surrendered for such assignment or exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) 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 to any of its agents, be delivered
to the Rights Agent for cancellation or in canceled form, or, if surrendered to the Rights Agent, shall be canceled by it, and
no Rights Certificates shall be issued in lieu thereof except as expressly permitted by this Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights
Agent shall so cancel and retire, any other Rights Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all canceled Rights
Certificates to the Company, or shall, at the written request of the Company, destroy such canceled Rights Certificates in accordance with the rules and regulations of the Securities and Exchange
Commission, and in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock; Registration.
(a) The
Company covenants and agrees that it will cause to be reserved and kept available for issuance upon the exercise of outstanding Rights as many of its authorized
and unissued Preferred Shares (and, following the occurrence of a Triggering Event, if applicable, out of its authorized and unissued Common Shares and/or other securities or out of its authorized and
issued shares held in its treasury), which together at all times after the Distribution Date as provided in this Agreement, including Section 11(a)(iii), will be sufficient to permit the
exercise in full of all outstanding Rights.
(b) If
the Preferred Shares (and, following the occurrence of a Triggering Event, Common Shares or other securities, if applicable) issuable and deliverable upon the
exercise of the Rights are listed or admitted for trading on any national securities exchange or included for quotation on any national market system, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all shares and other securities reserved for such issuance to be listed or admitted for trading on such national securities exchange or
included for quotation on any such national market system upon official notice of issuance upon such exercise.
(c) The
Company shall use its best efforts to (i) file, as soon as is practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event as of which the consideration to be delivered by the Company upon exercise of the Rights has been determined pursuant to this Agreement, including in accordance
with Section 11(a)(iii), or as soon as is required by law following the Distribution Date, as the case may be, a registration statement or statements under the Act, with respect to the Rights
and the securities purchasable upon exercise of the Rights on an appropriate form or forms, (ii) cause such registration statement or statements to become effective as soon as practicable after
such filing, and (iii) cause such registration statement or statements to remain effective (with a prospectus at all times meeting the requirements of the Act) until the earlier of
(A) the date as of which the Rights are no longer exercisable for such securities or (B) the Expiration Date. The Company will also take such action as may be appropriate under, or to
ensure compliance with, the securities or "blue sky" laws of the various states. The Company may temporarily suspend, for a period of time not to exceed 90 days after the date set forth in
clause (i) of the first sentence of this Section 9(c), the exercisability of the Rights in order to prepare and file such registration statement or statements and permit it or them to
become effective. Upon any such suspension, the Company shall either advise in writing all shareholders of record as of that date or issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as either advise in writing all shareholders of record as of that date or issue a public announcement at such time as the suspension is no longer in
effect. Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction unless the requisite qualifications in such jurisdiction, if any, shall
have been obtained, the exercise thereof shall not be permitted under applicable law or a registration statement (if required by law) shall not have been declared effective.
(d) The
Company covenants and agrees that it will take all such action as may be necessary to ensure that all Preferred Shares (and, following the occurrence of a
Triggering Event, Common Shares or other securities, if applicable) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares or other securities (subject to payment of the Purchase Price), be duly and validly authorized and issued and, with respect to Preferred Shares, Common
Shares or other shares of capital stock, fully paid and non-assessable.
(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 that may be payable in
respect of the issuance or delivery of the Rights Certificates and of any certificates for Preferred Share Fractions (or Common Shares or other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required (i) to pay any transfer tax or charge that may be payable in respect of any transfer or delivery of Rights Certificates to a Person other
than, or the issuance or delivery of a number of Preferred Share Fractions (or Common Shares or other securities, as the case may be) in respect of a name other than that of the registered holder of
the Rights Certificate evidencing Rights surrendered for exercise or (ii) to issue or deliver any certificates for a number of Preferred Share Fractions (or Common Shares or other securities,
as the case may be) in a name other than that of the registered holder upon the exercise of any Rights until such tax or charge shall have been paid (any such tax or charge being
payable by the holder of such Rights Certificate at the time of surrender) or until it has been established to the Company's satisfaction that no such tax or charge is due.
Section 10. Capital Stock Record Date.
Each
Person in whose name any certificate for a number of Preferred Share Fractions (or Common Shares 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 such Preferred Share Fractions (or Common Shares 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 or charges) was
made; provided, however, that if the date of such surrender and payment is a date upon which the applicable transfer books of the Company are closed, such Person shall be deemed to have become the
record holder of such shares (or other securities, as the case may be), fractional or otherwise, on, and such certificate shall be dated, the next succeeding Business Day on which the applicable
transfer books of the Company are open. Prior to the exercise of the Rights evidenced thereby, the holder of a Rights Certificate, as such, shall not be entitled to any rights of a shareholder of the
Company with respect to shares (or other securities, as the case may be) 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 or other securities covered by each Right and the number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11:
(i) In
the event the Company shall at any time after the date of this Agreement (A) declare or pay any dividend on any security of the Company payable in
Preferred Shares, (B) subdivide or split the outstanding Preferred Shares, (C) combine or consolidate the outstanding Preferred Shares into a smaller number of shares or effect a reverse
stock split of the outstanding Preferred Shares, or (D) issue any shares of its capital stock in a reclassification of the Preferred Shares (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11(a) and Section 7(e), the Purchase Price
in effect at the time of the record date for such dividend or of the effective date of such subdivision, split, combination, consolidation or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive, upon payment of the Purchase
Price then in effect, the aggregate number and kind of shares of capital stock which, if such Right had been exercised immediately prior to such date and at a time when the Company's transfer books
for the Preferred Shares (or other capital stock, as the case may be) were open, he would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, split,
combination, consolidation or reclassification. If an event occurs that would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii), the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) Subject
to Section 24 of this Agreement, in the event:
(A) Any
Person shall, at any time after the Rights Dividend Declaration Date, become an Acquiring Person, unless the event causing such Person to become an Acquiring
Person is a transaction set forth in Section 13(a), or
(B) the
Board shall declare any Person to be an Adverse Person, upon a determination by the Board, that such Person, alone or together with its Affiliates or
Associates, has, at any time after the Rights Dividend Declaration Date, become the Beneficial Owner of a substantial amount of Common Shares (which amount shall in no event be less than 12% of the
Common Shares then outstanding) and a determination by the Board, after reasonable inquiry and investigation, including consultation with such Persons as such directors shall deem appropriate, that
(1) such Beneficial Ownership by such Person is intended to cause the Company to repurchase the Common Shares beneficially owned by such Person or to cause pressure on the Company to take
action or enter into a transaction or series of transactions intended to provide such Person or its Affiliates or Associates with short-term financial gain under circumstances where the
Board determines that the best long-term interests of the Company and its shareholders would not be served by taking such action or entering into such transaction or series of transactions
at that time or (2) such Beneficial Ownership is causing or reasonably likely to cause a material adverse impact (including, but not limited to, impairment of relationships with customers or
impairment of the Company's ability to maintain its competitive position) on the business or prospects of the Company,
then,
promptly following the first occurrence of a Section 11(a)(ii) Event, proper provision shall be made so that each holder of a Right (except as provided below and in
Section 7(e)) shall thereafter have the right to receive, upon exercise thereof at the then current Purchase Price in accordance with the terms of this Agreement, (x) such number of
Preferred Share Fractions, or (y) at the election of the Board and in lieu of a number of Preferred Share Fractions (a "Section 11(a)(ii) Election"), such number of Common Shares,
that equals the result obtained by (xx) multiplying the then current Purchase Price by the then number of Preferred Share Fractions for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event, and (yy) dividing that product (which, following such first occurrence, shall thereafter be referred to as the "Purchase Price" for each
Right for all purposes of this Agreement) by one one-thousandth of 50% of the Current Market Price (determined pursuant to Section 11(d)(ii) per Preferred Share (or 50% of
the current market price (determined pursuant to Section 11(d)(ii)) per Common Share, as the case may be) on the date of such first occurrence (such number of shares, the "Adjustment Shares").
(iii) In
the event that the number of Preferred Shares (or Common Shares, if applicable) that are authorized by the Company's Articles of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise of the Rights are not sufficient to permit the exercise in full of all of the exercisable Rights in accordance with
Section 11(a)(ii), the Company shall: (A) determine the excess of (1) the value of the Adjustment Shares issuable upon the exercise of a Right (the "Current Value") over
(2) the Purchase Price (such excess, the "Spread"), and (B) with respect to each Right, make adequate provision to substitute for the Adjustment Shares, upon payment of the applicable
Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3) Preferred Shares, Common Shares and/or other equity securities of the Company (including, without limitation,
shares, or units of shares, of preferred stock which based on, among other things, the dividend and liquidation rights of such preferred shares, have substantially the same economic value as Common
Shares (such shares of preferred stock, "common stock equivalents")), (4) debt securities of the Company, (5) other assets, or (6) any combination of the foregoing (whichever
substituted, the "Substitute Consideration"), having an aggregate value equal to the Current Value, where such aggregate value has been determined by the Board based upon the advice of an investment
banking firm selected by the Board; provided, however, if the Company shall not have made adequate provision to deliver substitute consideration pursuant to clause (B) above within
30 days following the later of (x) the date of the occurrence of a Section 11(a)(ii) Event and (y) the date on which the Company's right of redemption pursuant to
Section 23(a) expires (the later of (x) and (y) being referred to herein as the "Section 11(a)(ii) Trigger Date"), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the Purchase Price, Preferred Shares (or Common Shares, as the case may be), to the extent available and then, if necessary, cash,
which shares and/or cash have an aggregate value equal to the Spread. If the Board shall determine in good faith that it is likely that sufficient additional Preferred Shares (or Common Shares, as the
case may be) could be authorized for issuance upon exercise in full of the Rights, the 30-day period set forth above may be extended to the extent necessary, but not more than
90 days after the Section 11(a)(ii) Trigger Date, in order that the Company may seek shareholder approval for the authorization of such additional shares (such period, as it may be
extended, the "Substitution Period"). To the extent that some action need be taken pursuant to the first and/or second sentences of this Section 11(a)(iii), the Company (xx) shall
provide, subject to Section 7(e), that such action shall apply uniformly to all outstanding Rights, and (yy) may suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares and/or to decide the appropriate form of distribution to be made pursuant to such first sentence and to determine the value
thereof. In the event of any such suspension, the Company shall give notice to the Rights Agent and either advise in writing all shareholders of record as of that date or issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended, as well as a notice to the Rights Agent and either a written notice to all shareholders of record or a public announcement
at such time as the suspension is no longer in effect. For purposes of this Section 11(a)(iii), (xxx) the value of the Preferred Shares shall be the Current Market Price (as determined
pursuant to Section 11(d)(ii)) per Preferred Share on the Section 11(a)(ii) Trigger Date, (yyy) the value of the Common Shares (if applicable) shall be the Current Market Price (as
determined pursuant to Section 11(d)(i)) per Common Share on the Section 11(a)(ii) Trigger Date, and (zzz) the value of any other "common stock equivalent" shall be deemed to have the
same value as a Common Share on such date.
(b) In
case the Company shall fix a record date for the issuance of rights, options or warrants to all holders of any security of the Company entitling them to
subscribe for or purchase (for a period expiring within 45 calendar days after such record date) Preferred Shares (or shares having
the same rights, privileges and preferences as the Preferred Shares ("equivalent preferred shares")) or
securities convertible into Preferred Shares or equivalent preferred shares at a price per Preferred Share or equivalent preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the Current Market Price (as determined pursuant to Section 11(d)(ii)) per Preferred Share 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 Preferred Shares outstanding on such record date, plus the number of Preferred Shares which the aggregate offering price of the total number of preferred Shares and/or equivalent
preferred shares so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such Current Market Price, and the denominator of
which shall be the number of Preferred Shares outstanding on such record date, plus the number of additional Preferred Shares and/or equivalent preferred shares to be offered for subscription or
purchase (or into which the convertible securities so to be offered are initially convertible). In case such subscription price may be paid by delivery of consideration part or all of which may in a
form other than cash, the value of such consideration shall be as determined in good faith by the Board, whose determination shall be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights. Preferred Shares owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustments shall be made successively whenever such a record date is fixed, and in the event that such rights, options or warrants are not so issued, the Purchase Price shall be adjusted to be
the Purchase Price which would then be in effect if such record date had not been fixed.
(c) In
case the Company shall fix a record date for a distribution to all holders of Preferred Shares (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 dividend out of the earnings or retained earnings of the
Company), assets (other than a regular quarterly dividend referred to above or a dividend payable in Preferred Shares, but including any dividend payable in stock other than Preferred Shares) or
subscription rights or warrants (excluding those referred to in Section 11(b)), the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price
in effect immediately 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)(ii) per Preferred Share
on such record date, less the fair market value (as determined in good faith by the Board, whose determination shall be described in a statement filed with the Rights Agent) 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 Preferred Share and the denominator of which shall be such Current Market
Price (as determined pursuant to Section 11(d)(ii)) per Preferred Share. 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)
(i) For
the purpose of any computation hereunder, other than computations made pursuant to Section 11(a)(iii), the "Current Market Price" per Common Share on any
date shall be deemed to be the average of the daily closing prices per share of such Common Shares for the 30 consecutive Trading Days (as such term is hereinafter defined) immediately prior to such
date, and for purposes of computations made pursuant to Section 11(a)(iii), the "Current Market Price" per share of Common Shares on any date shall be deemed to be the average of the daily
closing prices per share of such Common Shares for the 10 consecutive
Trading Days immediately following such date; provided, however, that in the event that the Current
Market Price per share of the Common Shares is determined during a period following the announcement by the issuer of such Common Shares of (A) a dividend or distribution on such Common Shares
payable in such Common Shares or securities convertible into such Common Shares (other than the Rights), or (B) any subdivision, split, combination or reclassification of such Common Shares,
and prior to the expiration of the requisite 30 Trading Day or 10 Trading Day period, as set forth above, after the ex-dividend date for such dividend or distribution, or the record date
for such subdivision, split, 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 Trading 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 on the principal national securities exchange on which the Common Shares are listed
or admitted to trading or, if the Common Shares are not listed or admitted to trading on any national securities exchange, the last sale price or, if not so reported, the average of the high bid and
low asked prices in the over-the-counter market, as reported by the Nasdaq System or such other system then in use, or, if on any such date the Common Shares are not quoted by
any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Shares selected by the Board. If on any such date no
market maker is making a market in the Common Shares, the "Current Market Price" per share shall mean the fair value per share as determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for all purposes. The term "Trading Day" shall mean a day on which the principal national securities exchange on which the
Common Shares are listed or admitted to trading is open for the transaction of business or, if the Common Shares are not listed or admitted to trading on any national securities exchange, a Business
Day.
(ii) For
the purpose of any computation hereunder, the "Current Market Price" per Preferred Share shall be determined in the same manner as set forth above for the
Common Shares in Section 11(d)(i) (other than the last sentence thereof). If the Current Market Price per Preferred Share cannot be determined in the manner provided above or if the
Preferred Shares are not publicly held or listed or traded in a manner described in Section 11(d)(i), the "Current Market Price" per Preferred Share shall be conclusively deemed to be an amount
equal to one thousand (1000) (as such number may be appropriately adjusted for such events as stock splits, stock dividends and recapitalizations with respect to the Common Shares occurring after the
date of this Agreement) multiplied by the Current Market Price per Common Share. If neither the Common Shares nor the Preferred Shares are publicly held or so listed or traded, "Current Market Price"
per Preferred Share shall mean the fair value per share as determined in good faith by the Board, whose determination shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes. For all purposes of this Agreement, the "Current Market Price" of a Preferred Share Fraction shall be equal to the "Current Market Price" of one Preferred Share divided by
one thousand (1,000).
(e) Anything
herein to the contrary notwithstanding, except the last sentence of this Section 11(e), no adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 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-thousandths of a Common Share or other share or one-millionth of a Preferred Share, as the case may be. Notwithstanding
the first sentence of this Section 11(e), any adjustment which would be required by this Section 11, but for the first sentence of this Section 11(e), shall be made no later than
the earlier of (i) three years from the date of the transaction or event which mandates such adjustment or (ii) the Expiration Date.
(f) If
as a result of an adjustment made pursuant to Section 11(a)(ii) or Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Preferred Shares, thereafter the number of such other shares so receivable upon exercise of any Right and the Purchase Price thereof shall be
subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Shares 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 with respect to the Preferred Shares shall apply on like terms to any such other shares.
(g) All
Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at the adjusted
Purchase Price, the number of Preferred Share Fractions 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 Preferred Share Fractions (calculated to the nearest one-millionth of a Preferred Share) obtained by (i) multiplying (A) the number of Preferred Share Fractions covered by
a Right immediately prior to this adjustment, by (B) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase Price.
(i) The
Company, acting by the Board, may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights, in lieu of any adjustment
in the number of Preferred Share Fractions purchasable upon the exercise of a Right. Each of the Rights outstanding after the adjustment in the number of Rights shall be exercisable for the number of
Preferred Share Fractions for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one-ten-thousandth of a Preferred Share) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall either advise in writing all shareholders of record as of that date or 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 10 Business Days later than the date of written advice to
all shareholders of record or the public announcement. If Rights Certificates have been issued, upon each adjustment of the number of rights pursuant to this Section 11(i), the Company shall,
as promptly as practicable, cause to be distributed to holders of record of Rights Certificates on such record date Rights Certificates evidencing, subject to Section 14, the additional Rights
to which such holders shall be entitled as a result of such adjustment, or at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Company, new Rights Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Rights Certificates 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 Preferred Share Fractions issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter
issued may continue to express the Purchase Price per Preferred Share Fraction and the number of Preferred Share Fractions 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 stated or par value, if any, of the number of Preferred Share
Fractions 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 non-assessable Preferred Share Fractions 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 Preferred Share Fractions and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above the number of Preferred Share Fractions 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 or securities (fractional or otherwise) upon the occurrence of the event requiring such adjustment.
(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 in their sole discretion the Board shall determine to be advisable in order that any (i) consolidation
or subdivision of the Preferred Shares, (ii) issuance wholly for cash of any Preferred Shares at less than the Current Market Price, or (iii) issuance wholly for cash of Preferred Shares
or securities which by their terms are convertible into or exchangeable for Preferred Shares, (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 Preferred Shares shall not be taxable to such shareholders.
(n) The
Company covenants and agrees that it shall not, at any time after the Distribution Date, (i) consolidate with any Person (other than a Subsidiary of the
Company in a transaction that complies with Section 11(o)), (ii) merge with or into any other Person (other than a Subsidiary of the Company in a transaction which complies with
Section 11(o)), or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one transaction, or a series of related transactions, assets or earning power aggregating
more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o)), if (A) at the time of or immediately after such consolidation, merger, sale or transfer there are any rights, warrants or other
instruments or securities outstanding or agreements in effect that would substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights or (B) prior to,
simultaneously with or immediately after such consolidation, merger, sale or transfer, the shareholders of the Person who constitutes, or would constitute, the "Principal Party" for purposes of
Section 13(a) shall have received a distribution of Rights previously owned by such Person or any of its Affiliates and Associates.
(o) The
Company covenants and agrees that, after the Distribution Date, it will not, except as permitted by Section 23, Section 24 or Section 27,
take (or permit any Subsidiary to take) any
action if at the time such action is taken it is reasonably foreseeable that such action will diminish substantially or otherwise eliminate the benefits intended to be afforded by the Rights, unless
such action is approved by the Board.
(p) Anything
in this Agreement to the contrary notwithstanding, in the event that the Company shall at any time after the Rights Dividend Declaration Date and prior to
the Distribution Date (i) declare or pay any dividend on the outstanding Common Shares payable in Common Shares, (ii) subdivide or split the outstanding Common Shares, or
(iii) combine or consolidate the outstanding Common Shares into a smaller number of Common Shares or effect a reverse stock split of the outstanding Common Shares, or (iv) issue any
shares of its capital stock in a reclassification of the Common Shares (including any such reclassification in connection with the consolidation or merger in which the Company is the continuing or
surviving corporation), the number of Rights associated with each Common Share then outstanding, or issued or delivered thereafter but prior to the Distribution Date, shall be proportionately adjusted
so that the number of Rights thereafter associated with each Common Share following any such event shall equal the result obtained by multiplying the number of Rights associated with each Common Share
immediately prior to such event by a fraction, the numerator of which shall be the number of Common Shares outstanding immediately prior to the occurrence of such event and the denominator of which
shall be the total number of Common Shares outstanding following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever
an adjustment is made as provided in Section 11 or Section 13, the Company shall (a) promptly prepare a certificate setting forth such adjustment and a
brief statement of the facts accounting for such adjustment, (b) promptly file with the Rights Agent, and with each transfer agent for the Preferred Shares and the Common Shares, a copy of such
certificate, and (c) mail a brief summary thereof to each holder of a Rights Certificate (or, if prior to the Distribution Date, to each holder of a certificate representing Common Shares) in
accordance with Section 26. The Rights Agent shall be fully authorized to rely and be 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.
(a) In
the event that, following the Stock Acquisition Date, directly or indirectly,
(i) the
Company shall consolidate with, or merge with and into, any other Person (other than a Subsidiary of the Company in a transaction that complies with
Section 11(o)), and the Company shall not be the continuing or surviving corporation of such consolidation or merger,
(ii) any
Person (other than a Subsidiary of the Company in a transaction that complies with Section 11(o)) 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 Common
Shares held by existing shareholders of the Company shall be changed into or exchanged for stock or other securities of any Person or cash or any other property, or
(iii) the
Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise transfer), in one transaction or a series of related
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 in one or more transactions each of which complies with Section 11(o)),
then,
and in each such case, except as contemplated by Section 13(d), proper provision shall be made so that: (A) each holder of a Right, except as otherwise provided herein, 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 tradable Common Shares of the Principal Party, not subject to any liens, encumbrances, rights of first refusal or other adverse claims, as shall be equal to the
result obtained by (1) multiplying the then current Purchase Price by the number of Preferred Share Fractions for which a Right is exercisable immediately prior to the first occurrence of a
Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section 13 Event, multiplying the number of such Preferred Share
Fractions for which a Right was exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect immediately prior to such first
occurrence), and dividing that product (which, following the first occurrence of a Section 13 Event, shall be referred to as the "Purchase Price" for each Right for all purposes of this
Agreement) by (2) 50% of the Current Market Price (determined pursuant to Section 11(d)) per Common Share of such Principal Party on the date of consummation of such Section 13
Event; (B) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such Section 13 Event, all the obligations and duties of the Company pursuant to this
Agreement; (C) the term "Company" shall thereafter be deemed to refer to such Principal Party, it being specifically intended that the provisions of Section 11 shall apply only to such
Principal Party following the first occurrence of a Section 13 Event; (D) such Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares) 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, in relation to its Common Shares thereafter deliverable upon the exercise of the Rights; and (E) the provisions of Section 11(a)(ii) shall be of no effect
following the first occurrence of any Section 13 Event.
(b) "Principal
Party" shall mean (i) in the case of any transaction described in Section 13(a)(i) or (ii), the Person that is the issuer of any
securities into which Common Shares 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 Section 13(a)(iii), the Person that is the party receiving the greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions; provided, however, that in any such case, (A) if the Common Shares of such Person are not at such time and have not been continuously over the preceding
12 month period registered under Section 12 of the Exchange Act, and such Person is a direct or indirect Subsidiary of another Person the Common Shares of which are and have been so
registered, "Principal Party" shall refer to such other Person; and (B) in case such Person is a Subsidiary, directly or indirectly, of more than one Person, the Common Shares of two or more of
which are and have been so registered, "Principal Party" shall refer to whichever of such Persons is the issuer of the Common Shares having the greatest aggregate market value.
(c)
(i) The
Company shall not consummate any such transaction constituting a Section 13 Event unless the Principal Party shall have a sufficient number of authorized
Common Shares 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 Section 13(a) and (b) and further providing that, as
soon as practicable after the date of consummation of any transaction constituting a Section 13 Event, the Principal Party will (A) 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
(1) become effective as soon as practicable after such filing and (2) remain effective (with a prospectus
at all times meeting the requirements of the Act) until the Expiration Date, and (B) will deliver to holders of the Rights historical financial statements for the Principal Party and each of
its Affiliates that comply in all respects with the requirements for registration on Form 10 under the Exchange Act.
(ii) The
provisions of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers. In the event that a
Section 13 Event shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
(d) Notwithstanding
anything in this Agreement to the contrary, Section 13 shall not be applicable to a transaction described in subparagraphs (i) and
(ii) of Section 13(a) if: (i) such transaction is consummated with a Person or Persons who acquired Common Shares pursuant to a Permitted Offer (or a wholly owned Subsidiary of
any such Person or Persons); (ii) the price per Common Share offered in such transaction is not less than the price per Common Share paid to all holders of Common Shares whose shares were
purchased pursuant to such Permitted Offer, and (iii) the form of consideration offered in such transaction is the same as the form of consideration paid pursuant to such Permitted Offer. Upon
consummation of any such transaction contemplated by this Section 13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The
Company shall not be required to issue fractions of Rights, except prior to the Distribution Date as provided in Section 11(p), or to distribute Rights
Certificates that evidence fractional Rights. The Company may, in lieu of such fractional Rights, pay 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 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 sale price or, if not so reported, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the Nasdaq System or such other system then in use or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights selected by the Board. If on any such date no such market maker is making a market
in the Rights, the fair value of the Rights on such date shall be as determined in good faith by the Board, whose determination shall be described in a statement filed with the Rights Agent and shall
be conclusive for all purposes.
(b) The
Company shall not be required to issue fractions of Preferred Shares upon exercise of the Rights or to distribute certificates that evidence fractional
Preferred Shares, except in each case for fractions which are integral multiples of Preferred Share Fractions. The Company may, in lieu of fractional Preferred Shares which are not integral multiples
of Preferred Share Fractions, 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 Preferred Share. For purposes of this Section 14(b), the current market value of a Preferred Share
shall be as determined pursuant to Section 11(d)(ii) for the Trading Day immediately prior to the date of such exercise.
(c) Following
the occurrence of a Triggering Event and at or after a Section 11(a)(ii) Election or Section 24(a) Election, the Company shall not be
required to issue fractions of Common Shares upon exercise of the Rights or to distribute certificates that evidence fractional Common Shares. The Company may, in lieu of fractional Common Shares, 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 Common Share.
For purposes of this Section 14(c), the current market value of one Common Share shall be as determined pursuant to Section 11(d)(i) for the Trading Day immediately prior to the
date of such exercise.
(d) In
the event the Company determines it advisable to issue fractions of Rights, fractions of Preferred Shares for fractions which are not integral multiples of
Preferred Share Fractions or fractions of Common Shares as permitted in this Agreement, the Company shall immediately so notify the Rights Agent, and in no event later than five Business Days prior to
the date such fractions are to be issued. The Company and the Rights Agent shall then adopt mutually agreeable procedures with respect to any such issuance. In the event the Company and the Rights
Agent are unable to agree upon such procedures, the Rights Agent may resign and be discharged from its duties under this Agreement or the Company may remove the Rights Agent, both as set forth in
Section 21; provided, however, that only one day's prior written notice need be given of such resignation or removal.
(e) The
holder of a Right by the acceptance of the Right expressly waives his right to receive any fractional Rights, or any fractions of Preferred Shares for fraction
which are not integral multiples of a Preferred Share Fraction, or any fractional Common Shares (if applicable) 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 associated Common Share certificates). Any registered holder of any Rights Certificate (or, prior to the Distribution Date, the associated Common Share certificate), without the consent
of the Rights Agent or of the holder of any other Rights Certificate (or, prior to the Distribution Date, the associated Common Share certificate), may, in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his right to exercise the Rights in the manner provided 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.
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 Shares;
(b) on
or 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 with the appropriate forms and certificates duly completed and fully executed and otherwise complying with any other requirements set forth in this Agreement;
(c) subject
to Section 6(a) and Section 7(f), 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 Share certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Rights Certificate or the associated Common Share certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the
Rights Agent, subject to the last sentence of Section 7(e), shall be required to be affected by any notice or knowledge to the contrary; and
(d) Notwithstanding
anything in this Agreement or the Rights to the contrary, the Company, the Board and the Rights Agent shall not have any liability to any holder of
a Right or other Person as a result of the inability of the Company or the Rights Agent to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation.
Section 17. Rights Certificate Holder Not Deemed a Shareholder.
No
holder, as such, of any Rights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of the number of Preferred Share Fractions or any
other securities of the Company (including the Common Shares) 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 shareholder 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 shareholders (except as
provided in Section 25), 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 acceptance, administration and execution of this Agreement and the exercise and performance of
its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability 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 administration and execution of this Agreement and the exercise and performance of
its duties hereunder, including without limitation the costs and expenses of defending against and appealing any such claim of liability.
(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 Shares or for other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, instruction, direction, consent, certificate, statement or other paper or document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or
Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any
Person into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any Person resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the corporate trust or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided,
however, that such Person would be eligible for appointment as a successor Rights Agent under the provisions of Section 21. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of 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 (or, prior to the Distribution Date, the associated Common Share certificates), by their acceptance thereof, shall be bound:
(a) The
Rights Agent may consult with legal counsel (who may be legal counsel for the Company), and the advice of such counsel shall be full and complete authorization
and protection to the Rights Agent as to any action taken, suffered or omitted by it in good faith and in accordance with such advice.
(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 or Adverse 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 Chief
Executive Officer, the Chief Financial Officer, any Vice President, the Secretary or any Assistant Secretary of the Company and delivered to the Rights Agent; and any such certificate shall be full
and complete authorization and protection to the Rights Agent for any action taken, suffered or omitted in good faith by it under the provisions of this Agreement in reliance upon such certificate.
(c) The
Rights Agent shall not be liable or responsible hereunder except 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 Section 11, Section 13 or
Section 24 or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to
the exercise of Rights evidenced by Rights Certificates after receipt of a certificate delivered pursuant to Section 12 describing any such adjustment); nor shall it be deemed to make any
representation or warranty as to the authorization or reservation of any Preferred Shares or Common Shares to be issued pursuant to this Agreement or any Rights Certificate or as to whether any
Preferred Shares or Common Shares will, when so issued, be validly authorized and issued, fully paid and non-assessable.
(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 or direction with respect to the administration of this Agreement and the exercise and
performance of its duties hereunder from the Chief Executive Officer, the Chief Financial Officer, any Vice President, the Secretary or any Assistant Secretary of the Company, and to apply to such
officers for advice, instructions or direction 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 or direction of any such officer.
(h) The
Rights Agent and any shareholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the
Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent or any shareholder, director, officer or employee of the Rights Agent from acting in any other capacity for the
Company or for any other Person.
(i) The
Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its
attorneys or agents, and the Rights Agent shall not be liable or responsible for any act, default, neglect or misconduct of any such attorneys or agents or for any loss or damages to the Company
resulting from any such act, default, neglect or misconduct; provided, however, reasonable care was exercised in the selection and continued employment thereof.
(j) No
provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any
of its duties hereunder or in the
exercise of its rights or powers if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to
it.
(k) If,
with respect to any Rights Certificate surrendered to the Rights Agent for exercise or transfer, the certificate attached to the form of assignment or form of
election to exercise, as the
case may be, has either not been duly completed and executed or indicates an affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not take any further action with respect
to such requested exercise or transfer until it has received instructions with respect thereto from the Company.
Section 21. Change of Rights Agent.
The
Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon 30 days' notice in writing mailed to the Company, and to
each transfer agent of the Common Shares and the Preferred Shares the existence of which the Rights Agent has received notice from the Company, by registered or certified mail, and to the registered
holders of the Rights Certificates (or, prior to the Distribution Date, the associated Common Share certificates) by first-class mail. The Company may remove the Rights Agent or any successor Rights
Agent upon 30 days' notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Shares and the Preferred Shares, by
registered or certified mail, and to the registered holders of the Rights Certificates (or, prior to the Distribution Date, the associated Common Share certificates) by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the
registered holder of a Rights Certificate (or, prior to the Distribution Date, the associated Common Share certificate) who shall, with such notice, submit his Rights Certificate (or, prior to the
Distribution Date, the associated Common Share certificate) for inspection by the Company, then the registered holder 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, the State of
Minnesota or the State of New York (or of any other state of the United States so long as such corporation is authorized to do business as a banking institution in the State of Minnesota or the State
of New York) in good standing, having an office in the State of Minnesota or the State of New York, 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 $5 million. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for such
purpose. Not later than the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Shares and
the Preferred Shares, and mail a notice thereof in writing to the registered holders of the Rights Certificates (or, prior to the Distribution Date, the associated Common Share certificates). Failure
to give any notice provided for in this Section 21 or to appoint a successor Rights Agent, 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, but subject to Section 7(e), the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be specified by the Board to reflect any adjustment or change in the Purchase Price and the number or kind or class of shares or other securities or
property purchasable under the Rights Certificates made in accordance with the provisions of this Agreement. In addition, in connection with the issuance or sale of Common Shares following the
Distribution Date and prior to
the Expiration Date, the Company (a) shall, with respect to Common Shares so issued or sold pursuant to the exercise of stock options, grants or awards outstanding as of the Distribution Date
under any benefit plan or arrangement for employees or directors, or upon the exercise, conversion or exchange of securities issued by the Company prior to the Distribution Date, and (b) may,
in any other case, if deemed necessary or appropriate by the Board, issue Rights Certificates representing the appropriate number of Rights in connection with such issuance or sale; provided, however,
that (i) no such Rights Certificate shall be issued if, and to the extent that, the Company shall be advised by counsel that such issuance could create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Rights Certificate would be issued, and (ii) no such Rights Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of issuance thereof.
Section 23. Redemption and Termination.
(a) The
Board may, at its option, at any time prior to the first to occur of the close of business on (i) the tenth Business Day following the Stock Acquisition
Date (or, if the Stock Acquisition Date shall have occurred prior to the Record Date, the close of business on the tenth Business Day following the Record Date), (ii) the tenth Business Day
after a determination, pursuant to Section 11(a)(ii)(B), that a Person is an Adverse Person, or (iii) the Final Expiration Date, redeem all but not less than all of the then outstanding
Rights at a redemption price of $.001 per Right, as such amount may be 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") and the Company may, at its option, pay the Redemption Price in Preferred Shares (based on the "Current Market Price," as
defined in Section 11(d)(ii) of the Preferred Shares at the time of redemption), Common Shares (based on the "Current Market Price," as defined in Section 11(d)(i) of the
Common Shares at the time of redemption), cash or any other form of consideration deemed appropriate by the Board. Notwithstanding anything contained in this Agreement to the contrary, the Rights
shall not be exercisable after the first occurrence of a Section 11(a)(ii) Event until such time as the Company's right of redemption hereunder has expired. The Company shall promptly
notify the Rights Agent following the action of the Board ordering redemption of the Rights.
(b) Immediately
upon the action of the Board ordering the redemption of the Rights pursuant to this Section 23, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price for each Right so held. Promptly after the
action of the Board ordering the redemption of the Rights, the Company shall give notice of such redemption to the Rights Agent and the registered holders of the then outstanding Rights by mailing
such notice to all such holders at each holder's last address as it appears upon the registry books of the Rights Agent for the Common Shares; provided, however, the failure to give or any defect in
any such notice shall not affect the validity of such redemption. Any notice which is mailed in the manner provided in Section 26 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.
(c) In
the event the Company shall at any time after the date of this Agreement but before the Distribution Date (A) pay any dividend on Common Stock in shares
of Common Stock, (B) subdivide or split the outstanding shares of Common Stock into a greater number of shares or (C) combine or consolidate the outstanding shares of Common Stock into a
smaller number of shares or effect a reverse split of the outstanding shares of Common Stock and as a consequence thereof the number of Rights outstanding shall change, then, and in each such event,
the Redemption Price may, by action of the Board of Directors of the Company in its discretion, be appropriately adjusted in respect of such transaction so as to maintain the aggregate Redemption
Price of all Rights after such transaction at the same amount, insofar as practicable, as before the transaction.
Section 24. Exchange.
(a) The
Board may, at its option, at any time after a Section 11(a)(ii) Event, exchange all or part of the then outstanding and exercisable Rights (which
shall not include Rights that have become void pursuant to the provisions of Section 7(e)) for Preferred Share Fractions (or, at the election of the Board (a "Section 24(a) Election"),
Common Shares) at an exchange ratio of one Preferred Share Fraction (or Common Share, as the case may be) per Right, appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being hereinafter referred to as the "Exchange Ratio").
(b) Immediately
upon the action of the Board ordering the exchange of any Rights pursuant to Section 24(a) 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 Preferred Share Fractions (or Common Shares, as the case
may be) equal to the number of such Rights held by such holder multiplied by the Exchange Ratio. The Company shall promptly notify the Rights Agent and give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice shall not affect the validity of such exchange. The Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry books of the Rights Agent. Any notice which is mailed in the manner provided in Section 26 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 Preferred Share Fractions (or Common Shares, as the case may be) for Rights
will be effected and, in the event of any partial exchange, shall be effected pro rata based on the number of Rights (other than Rights which have become void pursuant to the provision of
Section 7(e)) held by each holder of Rights.
(c) In
the event that there shall not be sufficient Preferred Shares (or Common Shares, if applicable) 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 Preferred Shares (or Common Shares,
as the case may be) for issuance upon exchange of the Rights.
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