SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-A/A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
SECURE COMPUTING CORPORATION
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(Exact name of Registrant as specified in its charter)
Delaware 52-1637226
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(State of incorporation or organization) (IRS Employer Identification No.)
One Almaden Boulevard, Suite 400
San Jose, CA 95113
(Address of principal executive offices) (Zip Code)
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Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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None None
Securities to be registered pursuant to Section 12(g) of the Act:
Preferred Share Purchase Rights
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(Title of Class)
<PAGE>
Item 1. Description of Securities to be Registered.
On July 24, 1997, the Board of Directors of Secure Computing
Corporation (the "Company"), declared a dividend of one preferred share purchase
right (a "Right") for each outstanding Common Share, $.01 par value (the "Common
Shares"), of the Company. The dividend was payable on August 15, 1997 (the
"Record Date") to stockholders of record on that date. The Board also authorized
the issuance of one Right for each Non-Voting Exchangeable Share (the
"Exchangeable Shares") of Secure Computing Canada Ltd. ("Secure Computing
Canada") outstanding on the Record Date. Rights issued with respect to the
Exchangeable Shares will be issued to The Bank of Nova Scotia Trust Company of
New York, as trustee (the "Trustee") for the benefit of Secure Computing Canada,
in order to enable Secure Computing Canada to effectuate the economic equivalent
to the holders of Exchangeable Shares of the Rights issued to the holders of
Common Shares as required under the Support Agreement by and between the Company
and Secure Computing Canada, dated as of August 29, 1996. In connection
therewith, on July 24, 1997, the Company, the Trustee and Norwest Bank
Minnesota, National Association, as Rights Agent (the "Rights Agent") entered
into a Rights Agreement.
On October 22, 1998, the Company, the Trustee and the Rights Agent
entered into an Amended and Restated Rights Agreement (the "Rights Agreement").
The purpose of the amendment was to provide that all directors shall have an
equal vote with respect to matters involving the Rights Agreement and to
eliminate certain voting rights granted to those directors of the Company who
were directors of the Company immediately prior to a person or group of
affiliated or associated persons becoming an Acquiring Person (as such term is
defined below).
Each Right entitles the registered holder to purchase from the
Company one one-hundredth of a Series B Junior Participating Preferred Share,
$.01 par value (the "Preferred Shares"), of the Company at a price of $50 per
one one-hundredth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in the Rights
Agreement.
The Rights attach to all certificates representing Common Shares and
held by the Trustee for the benefit of Secure Computing Canada with respect to
Exchangeable Shares then outstanding, and no separate Right Certificates will be
distributed. The Rights will separate from the Common Shares, will no longer be
held by the Trustee for the benefit of Secure Computing Canada and a
Distribution Date for the Rights will occur upon the earlier of:
(i) the close of business on the fifteenth day following a public
announcement that a person or group of affiliated or associated persons has
become an "Acquiring Person" (i.e., has become, subject to certain exceptions,
the beneficial owner of 15% or more of the outstanding Common Shares, including
Exchangeable Shares); or
(ii) the close of business on the fifteenth day following the
commencement or public announcement of a tender offer or exchange offer the
consummation of which would result in a person or group of affiliated or
associated persons becoming, subject to certain exceptions, the beneficial owner
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of 15% or more of the outstanding Common Shares, including Exchangeable Shares
(or such later date as may be determined by the Board of Directors of the
Company).
Until the Distribution Date,
(i) the Rights will be evidenced by the Common Share certificates
and on the books and records of Secure Computing Canada and will be transferred
with and only with the Common Shares and, in the case of Rights held by the
Trustee for the benefit of Secure Computing Canada, at the direction of Secure
Computing Canada;
(ii) new Common Share certificates and Exchangeable Share
certificates issued after the Record Date upon transfer or new issuance of the
Common Shares or Exchangeable Shares will contain a notation incorporating by
reference, or in the case of Exchangeable Shares denoting, the Rights Agreement,
and
(iii) the surrender for transfer of any Common Share certificate,
even without such notation or a copy of this Summary of Rights attached thereto,
will also constitute the transfer of the Rights associated with the Common
Shares represented by such certificate.
As promptly as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and to Secure Computing Canada or as Secure Computing Canada
directs and such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on August 15, 2007, unless extended or earlier redeemed or
exchanged by the Company as described below.
The Purchase Price payable, and the number of Preferred Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution:
(i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred Shares;
(ii) upon the grant to holders of the Preferred Shares of certain
rights, options or warrants to subscribe for or purchase Preferred Shares or
convertible securities at less than the then current market price of the
Preferred Shares; or
(iii) upon the distribution to holders of the Preferred Shares of
evidences of indebtedness or assets (excluding regular periodic cash dividends
or dividends payable in Preferred Shares) or of subscription rights or warrants
(other than those described in clause (ii) hereof). The number of Preferred
Shares issuable upon the exercise of a Right is also subject to adjustment in
the event of a dividend on Common Shares payable in Common Shares, or a
subdivision, combination or consolidation of the Common Shares.
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With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. No fractional Preferred Shares will be issued (other than
fractional shares which are integral multiples of one one-hundredth (subject to
adjustment) of a Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts) if in lieu thereof a payment in cash is made
based on the closing price (pro-rated for the fraction) of the Preferred Shares
on the last trading date prior to the date of exercise.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person (unless such person first becomes an
Acquiring Person pursuant to a tender offer or exchange offer for all
outstanding Common Shares, including Exchangeable Shares, at a price and on
terms determined by the Board of Directors of the Company (prior to any change
in control of the Board of Directors) to be fair to the stockholders and
otherwise in the best interests of the Company and its stockholders and which
the Board of Directors recommends to the stockholders), proper provision shall
be made so that each holder of a Right, other than Rights that are or were
beneficially owned by the Acquiring Person (which will thereafter be void), will
thereafter have the right to receive upon exercise thereof at the then current
exercise price of the Right that number of Common Shares having a market value
of two times the exercise price of the Right, subject to certain possible
adjustments.
In the event that, after a party becomes Acquiring Person, the
Company is acquired in certain mergers or other business combination
transactions (other than a transaction for at least the same per-share
consideration with a person who acquired Common Shares through a tender offer or
exchange offer for all outstanding Common Shares, including Exchangeable Shares,
approved by the Board of Directors in accordance with the preceding paragraph or
any wholly owned subsidiary of any such person) or 50% or more of the assets or
earning power of the Company and its subsidiaries (taken as a whole) are sold
after the Distribution Date or within 15 days prior thereto in one or a series
of related transactions, each holder of a Right (other than Rights which have
become void under the terms of the Rights Agreement) will thereafter have the
right to receive, upon exercise thereof at the then current exercise price of
the Right, that number of common shares of the acquiring company (or, in certain
cases, one of its affiliates) having a market value of two times the exercise
price of the Right.
In certain events specified in the Rights Agreement, the Company is
permitted to temporarily suspend the exercisability of the Rights.
At any time after a person or group of affiliated or associated
persons becomes an Acquiring Person (subject to certain exceptions) and prior to
the acquisition by a person or group of affiliated or associated persons of 50%
or more of the outstanding Common Shares, including Exchangeable Shares, the
Board of Directors of the Company may exchange all or part of the Rights (other
than Rights which have become void under the terms of the Rights Agreement) for
Common Shares or equivalent securities at an exchange ratio per Right equal to
the result obtained by dividing the exercise price of a Right by the current per
share market price of the Common Shares, subject to adjustment.
At any time prior to the close of business on the twentieth day
after a public announcement that a person or group of affiliated or associated
persons has become an Acquiring Person, the Board of
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Directors of the Company may redeem the Rights in whole, but not in part, at a
price of $.001 per Right, subject to adjustment (the "Redemption Price"),
payable in cash. The period of time during which the Rights may be redeemed may
be extended by the Board of Directors of the Company if no such change of
control has occurred or if no person has become an Acquiring Person. The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish. The Board of Directors and the Company shall not have any liability
to any person as a result of the redemption or exchange of the Rights pursuant
to the provisions of the Rights Agreement. The Rights are not exercisable for
Common Shares or Preferred Shares, and the Distribution Date shall not occur,
until the Company's right to redeem the Rights shall have expired.
The terms of the Rights may be amended by the Board of Directors of
the Company, subject to certain limitations after the Distribution Date, without
the consent of the holders of the Rights, including an amendment prior to the
date a person or group of affiliated or associated persons becomes an Acquiring
Person to lower the 15% threshold for exercisability of the Rights to not less
than the greater of (i) the sum of .001% and the largest percentage of the
outstanding Common Shares, including Exchangeable Shares, then known by the
Company to be beneficially owned by any person or group of affiliated or
associated persons (subject to certain exceptions) or (ii) 10%.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
A copy of the Rights Agreement (including all exhibits thereto), as
amended and restated October 22, 1998 among the Company, the Rights Agent and
the Trustee, specifying the terms of the Rights, which includes as Exhibit B the
form of Right Certificate, is attached hereto as Exhibit 1 and incorporated
herein by reference. The foregoing description of the Rights does not purport to
be complete and is qualified in its entirety by reference to the Rights
Agreement.
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Item 2. Exhibits.
1. Form of Rights Agreement, as amended and restated
October 22, 1998 among Secure Computing Corporation,
Norwest Bank Minnesota, National Association, as Rights
Agent, and The Bank of Nova Scotia Trust Company of New
York, as Trustee, which includes as Exhibit B the form
of Right Certificate.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized.
SECURE COMPUTING CORPORATION
Date: November , 1998 By:
------------------------------------------
Timothy McGurran
Its: Vice President of Operations and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Page No.
- ----------- --------
1. Form of Rights Agreement
8
EXHIBIT 1
AMENDED AND RESTATED
SHARE RIGHTS AGREEMENT
SECURE COMPUTING CORPORATION
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION RIGHTS AGENT
AND
THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK TRUSTEE
RIGHTS AGREEMENT
DATED AS OF JULY 24, 1997
AND AMENDED AND RESTATED AS OF OCTOBER 22, 1998
<PAGE>
TABLE OF CONTENTS
Section 1 Certain Definitions
Section 2. Appointment of Rights Agent
Section 3. Issue of Right Certificates
Section 4. Form of Right Certificates
Section 5. Countersignature and Registration
Section 6. Transfer, Split-Up, Combination and Exchange of Right Certificates;
Lost, Stolen, Destroyed or Mutilated Right Certificates
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights
Section 8. Cancellation and Destruction of Right Certificates
Section 9. Reservation and Availability of Preferred Shares
Section 10. Preferred Shares Record Date
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights
Section 12. Certificate of Adjusted Purchase Price or Number of Shares
Section 13. Consolidation, Merger, Sale or Transfer of Assets or Earning Power
Section 14. Fractional Rights and Fractional Shares
Section 15. Rights of Action
Section 16. Agreement of Right Holders
Section 17. Right Certificate Holder Not Deemed a Stockholder
Section 18. Concerning the Rights Agent and the Trustee
Section 19. Merger or Consolidation or Change of Name of Rights Agent or Trustee
Section 20. Duties of Rights Agent and Trustee
Section 21. Change of Rights Agent or Trustee
Section 22. Issuance of New Right Certificates
Section 23. Redemption
Section 24. Exchange
Section 25. Notice of Certain Events
<PAGE>
Section 26. Notices
Section 27. Supplements and Amendments
Section 28. Successors
Section 29. Benefits of this Agreement
Section 30. Severability
Section 31. Governing Law
Section 32. Counterparts
Section 33. Descriptive Headings
Exhibit A -- Certificate of Powers, Designations, Preferences and Rights of
Series B Junior Participating Preferred Shares
Exhibit B -- Form of Right Certificate
Exhibit C -- Summary of Rights to Purchase Preferred Shares
<PAGE>
AMENDED AND RESTATED
RIGHTS AGREEMENT
Agreement, dated as of [October 22], 1998, among Secure Computing
Corporation, a Delaware corporation (the "Company"), Norwest Bank Minnesota,
National Association (the "Rights Agent"), and The Bank of Nova Scotia Trust
Company of New York (the "Trustee").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (individually a "Right" and
collectively the "Rights") for each Common Share (as defined in this Agreement)
of the Company outstanding at the Close of Business (as defined in this
Agreement) on August 15, 1997 (the "Record Date"), each Right initially
representing the right to purchase one one-hundredth of a Preferred Share (as
defined in this Agreement), upon the terms and subject to the conditions set
forth in this Agreement, and, except as provided in the second to last sentence
of the next succeeding paragraph, has further authorized the issuance of one
Right (as such number may hereafter be adjusted pursuant to the provisions of
Section 11) with respect to each Common Share that shall become outstanding (i)
at any time between the Record Date and the earliest of the Distribution Date,
the Redemption Date or the Final Expiration Date (as such terms are defined in
this Agreement) or (ii) upon the exercise or conversion, prior to the earlier of
the Redemption Date or the Final Expiration Date, of any option or other
security exercisable for or convertible into Common Shares, which option or
other such security is outstanding on the Distribution Date.
Pursuant to a Support Agreement by and between the Company and
Secure Computing Canada (as defined in this Agreement), dated as of August 29,
1996 (the "Support Agreement"), Secure Computing Canada is obligated to issue or
distribute to the holders of Exchangeable Shares (as defined in this Agreement)
the economic equivalent on a per share basis of any rights issued or distributed
to the holders of Common Shares of the Company. In order to permit Secure
Computing Canada to be able to satisfy this obligation and in accordance with
the Company's obligations under the Support Agreement, the Board of Directors of
the Company has authorized the issuance to the Trustee of one Right for each
Exchangeable Share outstanding at the Close of Business on the Record Date to be
held by the Trustee pursuant to the terms hereof for the benefit of Secure
Computing Canada in order to enable Secure Computing Canada to effectuate the
economic equivalent to the holders of Exchangeable Shares of the Rights issued
to the holders of Common Shares of the Company, each Right initially
representing the right to purchase one one-hundredth of a Preferred Share of the
Company, upon the terms and subject to the conditions set forth in this
Agreement. The Board of Directors of the Company has further authorized the
issuance of one Right (as such number may hereafter be adjusted pursuant to the
provisions of Section 11) (i) to the Trustee for the benefit of Secure Computing
Canada with respect to each Exchangeable Share that shall become outstanding at
any time between the Record Date and the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date and (ii) after the Distribution
Date, to Secure Computing Canada or as Secure Computing Canada may direct with
respect to each Exchangeable Share that shall become outstanding upon the
exercise or conversion, prior to the earlier of the Redemption Date or the Final
Expiration Date, of any option or other security exercisable or exchangeable for
or convertible into Exchangeable Shares, which option or other such security is
outstanding on the Distribution Date. Notwithstanding anything stated in this
paragraph or the last sentence of the immediately preceding paragraph, a Right
(as such Right may be adjusted pursuant to the provisions of Section 11) shall
not be issuable to a holder of an Exchangeable Share upon the exchange thereof
for Common Shares of the Company if a Distribution Date has occurred and a
separate Right Certificate has been issued or is issuable with respect to such
Exchangeable Share to Secure Computing Canada or at its direction. If a separate
Right Certificate has not been issued, and is not then issuable, to Secure
Computing Canada or at its direction with respect to such Exchangeable Share
prior to the exchange of an Exchangeable Share for Common Shares, the Rights
held by the Trustee for the benefit of Secure Computing Canada with respect to
such Exchangeable Share shall, without any action by the Trustee, Secure
Computing Canada or the Company, be deemed canceled and retired at the time of
such exchange without any consideration, and one Right (as such Right may be
adjusted pursuant to the provisions of Section 11) shall be issued by the
Company with respect to each Common Share that becomes outstanding, upon such
exchange and prior to the earliest of the Distribution Date, Redemption Date or
Final Expiration Date, to the record holder thereof.
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Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
defined in this Agreement) who or which, together with all Affiliates and
Associates (as such terms are defined in this Agreement) of such Person, shall
be the Beneficial Owner (as such term is defined in this Agreement) of 15% or
more of the Common Shares of the Company then outstanding, but shall not include
(i) the Company, (ii) any Subsidiary (as such term is defined in this Agreement)
of the Company, (iii) any employee benefit plan of the Company or of any
Subsidiary of the Company, (iv) any entity holding Common Shares for or pursuant
to the terms of any such plan described in clause (iii) of this sentence, (v)
Montreal Trust Company of Canada ("Montreal Trust") to the extent it may
otherwise be deemed to be the Beneficial Owner of Common Shares by reason of
that certain Voting and Exchange Trust Agreement dated as of August 29, 1996
between the Company, Secure Computing Canada and Montreal Trust (the "Voting
Trust Agreement") or (vi) the Trustee by reason of this Agreement.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person" 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
shares beneficially owned by such Person to 15% or more of the Common Shares of
the Company then outstanding; provided, however, that if a Person shall,
together with all Affiliates or Associates of such Person, become the Beneficial
Owner of 15% or more of the Common Shares of the Company then outstanding by
reason of share acquisitions by the Company and if such Person or such Person's
Affiliates or Associates shall, after such share acquisitions by the Company,
become the Beneficial Owner of any additional Common Shares of the Company, and,
immediately after becoming the Beneficial Owner of such additional Common
Shares, such Person shall, together with all Affiliates and Associates of such
Person, be the Beneficial Owner of 15% or more of the Common Shares of the
Company then outstanding, then such Person (unless such Person shall be (1) the
Company, (2) any Subsidiary of the Company, (3) any employee benefit plan of the
Company or of any Subsidiary of the Company, (4) any entity holding Common
Shares for or pursuant to the terms of any such plan described in clause (3) of
this sentence, (5) the Montreal Trust to the extent it may otherwise be deemed
to be the Beneficial Owner of Common Shares by reason of the Voting Trust
Agreement, or (6) the Trustee by reason of this Agreement) shall be deemed an
"Acquiring Person." For purposes of calculating any Person's percentage of
beneficial ownership of Common Shares of the Company under this Agreement there
shall be included in the number of Common Shares beneficially owned by such
Person the total number of Exchangeable Shares beneficially owned by such Person
and in the number of Common Shares of the Company then outstanding all
Exchangeable Shares then outstanding (other than the Exchangeable Shares owned
by the Company or any Subsidiary). An entity other than the Company or any
Subsidiary of the Company holding Common Shares for or pursuant to the terms of
an employee benefit plan of the Company or of any Subsidiary of the Company and
in addition being the Beneficial Owner of Common Shares that are not held for or
pursuant to the terms of any such plan shall be deemed to constitute an
Acquiring Person, notwithstanding anything herein stated, if, but only if, it,
together with its Affiliates and Associates, shall be the Beneficial Owner of
15% or more, exclusive of those Common Shares held by it for or pursuant to the
terms of any such plan, of the Common Shares then outstanding.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of, and shall
be deemed to "beneficially own" or have "beneficial ownership" of, any
securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, including without
limitation securities with respect to which such Person or any of such Person's
Affiliates or Associates has "beneficial ownership" pursuant to Rule 13d-3 of
the General Rules and Regulations under the Exchange Act;
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(ii) which such Person or any of such Person's Affiliates or
Associates has, directly or indirectly, (A) 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 (other than the
Rights), warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own, or to have
beneficial ownership of, any securities pursuant to subparagraph (i), (ii) or
(iii) of this paragraph (c) solely because such securities are tendered pursuant
to a tender or exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange; or (B) the right to vote or dispose of (including
without limitation pursuant to any agreement, arrangement or understanding
(whether or not in writing)); provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, or to have beneficial
ownership of, any securities pursuant to subparagraph (i), (ii) or (iii) of this
paragraph (c) solely because of the right to vote such securities pursuant to an
agreement, arrangement or understanding if the agreement, arrangement or
understanding to vote such securities (x) arises solely from a revocable proxy
or consent given to such Person or any of such Person's Affiliates or Associates
in response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations under the Exchange Act and
(y) is not also then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report) as being beneficially owned
by such Person; or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which such Person
(or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities) for the purpose of acquiring, holding, voting (except
pursuant to the Voting Trust Agreement, this Agreement or a revocable proxy as
described in the final proviso to subparagraph (ii) of this paragraph (c)) or
disposing of any voting securities of the Company.
Notwithstanding anything in these definitions of Beneficial Owner, beneficially
own or beneficial ownership to the contrary, the phrase "then outstanding," when
used with reference to a Person's beneficial ownership of securities of the
Company, 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 would be deemed to beneficially own under this
Agreement and shall also include Exchangeable Shares owned by any other Person
(other than the Company or its Subsidiaries).
(d) "Business Day" shall mean any day other than a Saturday,
Sunday, holiday, or a day on which banking institutions in San Jose, California,
New York, New York or Toronto, Ontario are authorized or obligated by law or
executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 p.m.,
New York City time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 p.m., New York City time, on the next succeeding
Business Day.
(f) "Common Shares," when used with reference to the Company,
shall mean shares of Common Stock, $.01 par value (as such par value may be
changed from time to time), of the Company. "Common Shares," when used with
reference to any Person other than the Company, shall mean the capital stock (or
equity interest) with the greatest voting power of such other Person.
(g) [intentionally omitted]
(h) "Distribution Date" shall mean the earlier of (i) the Close of
Business on the 15th day after the Shares Acquisition Date or (ii) the Close of
Business on the 15th day (or such later date as may be determined by action of
the Board of Directors of the Company prior to such time as any Person becomes
an Acquiring Person) after the date of the commencement by any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan of
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the Company or of any Subsidiary of the Company or any entity holding Common
Shares for or pursuant to the terms of any such plan) of a tender or exchange
offer the consummation of which would result in such person becoming an
Acquiring person.
(i) "Exchangeable Shares" shall mean the Exchangeable Non-Voting
Shares of Secure Computing Canada.
(j) "Final Expiration Date" shall have the meaning set forth in
Section 7.
(k) "Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by merger or
otherwise) of any such entity.
(l) "Preferred Shares" shall mean Series B Junior Participating
Preferred Shares, $.01 par value (as such par value may be changed from time to
time), of the Company having the rights and preferences set forth in the Form of
Certificate of Powers, Designations, Preferences and Rights attached to this
Agreement as Exhibit A hereto.
(m) "Redemption Date" shall have the meaning set forth in Section 7.
(n) "Section 11(a)(ii) Event" shall mean an event described in the
first sentence of Section 11(a)(ii).
(o) "Section 13 Event" shall mean any event described in clauses
(w), (x) or (y) of Section 13(a).
(p) "Secure Computing Canada" shall mean Securing Computing Canada
Ltd., a corporation amalgamated under the laws of the Province of Ontario.
(q) "Shares Acquisition Date" shall mean the first date of 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.
(r) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or other equity interests entitled to vote in the election of directors (or
Persons with comparable responsibilities if the entity has no directors) is
beneficially owned, directly or indirectly, by such Person, or otherwise
controlled by such Person.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3, shall prior to the Distribution Date also be
the Trustee and the holders of the Common Shares) in accordance with the terms
and conditions of this Agreement, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents as
it may deem necessary or desirable.
SECTION 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the Distribution Date the Rights will be evidenced
(subject to the provisions of Section 3(b)) (x) by the certificates for Common
Shares registered in the names of the holders thereof (which certificates shall
also be deemed to be Right Certificates where the context so requires) and not
by separate Right Certificates and (y) on the books and records of Secure
Computing Canada as being held by the Trustee for the benefit of Secure
Computing Canada in order to effectuate the economic equivalent to the holders
of Exchangeable Shares of the Rights, and (B) the right to receive Right
Certificates will be transferable only in connection with the transfer of Common
Shares and, in the case of Rights held by the Trustee for the benefit of Secure
Computing Canada, at the direction of Secure Computing Canada. Notwithstanding
anything stated in this Section 3 to the contrary, the Distribution Date shall
in no event occur until the authority of the Board of Directors of the Company
to redeem the Rights pursuant to Section 23(a), as such section may be amended
pursuant to Section 27, shall have terminated. As soon as practicable after the
Distribution
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Date, the Company will prepare and execute, the Rights Agent will countersign,
and the Company will send or cause to be sent (and the Rights Agent will, if
requested, send, at the expense of the Company) by first-class, postage-prepaid
mail, to (1) 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 Right Certificates, in substantially the form of Exhibit B
hereto (the "Right Certificates"), evidencing one Right for each Common Share so
held, subject to adjustment pursuant to Section 11(i), and (2) Secure Computing
Canada or as Secure Computing Canada may direct, one or more Right Certificates,
evidencing one Right for each then outstanding Exchangeable Share, subject to
adjustment pursuant to Section 11(i), and the Trustee upon the issuance of such
Right Certificate(s) to Secure Computing Canada or as Secure Computing Canada
may direct shall no longer be deemed to have any interests in the Rights. In the
event that an adjustment in the number of Rights per Common Share has been made
pursuant to Section 11(i), at the time Right Certificates are distributed, the
Company may, to the extent provided in Section 14(a), make the necessary and
appropriate adjustments (as set forth in Section 14(a)) so that Right
Certificates are distributed representing only whole numbers of Rights and pay
cash in lieu of fractional Rights pursuant to Section 14(a). As of and after the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage-prepaid mail, to each record holder of Common Shares as of
the Close of Business on the Record Date, at the address of such holder shown on
the records of the Company and to Secure Computing Canada to send to each record
holder of Exchangeable Shares as of the Close of Business on the Record Date, at
the address of such holder shown on the records of Secure Computing Canada. With
respect to certificates for Common Shares outstanding as of the Record Date,
until the Distribution Date, the Rights will be evidenced by such certificates
registered in the names of the holders thereof, and the registered holders of
the Common Shares shall also be the registered holders of the associated Rights.
Until the Distribution Date (or the earlier of the Redemption Date or the Final
Expiration Date), the surrender for transfer of any certificate for Common
Shares outstanding on the Record Date, with or without a copy of the Summary of
Rights attached thereto, shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby.
(c) Certificates for Common Shares which become outstanding after
the Record Date and (i) prior to the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date or (ii) upon the exercise or
conversion, prior to the earlier of the Redemption Date or the Final Expiration
Date, of any option or other security exercisable for or convertible into Common
Shares, which option or other security is outstanding on the Distribution Date,
shall have impressed on, printed on, written on or otherwise affixed to them the
following legend:
This certificate also evidences and entitles
the holder hereof to certain Rights as set forth in an
Amended and Restated Rights Agreement among Secure
Computing Corporation, Norwest Bank Minnesota, National
Association and The Bank of Nova Scotia Trust Company of
New York, dated as of [October 22], 1998 (the "Rights
Agreement"), the terms of which (including restrictions
on the transfer of such Rights) are hereby incorporated
herein by reference and a copy of which is on file with
the Secretary 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 without
charge after receipt of a written request therefor to
its Secretary from such holder. Under certain
circumstances, as set forth in the Rights Agreement,
Rights that are or were acquired or beneficially owned
by an Acquiring Person or any Associate or Affiliate
thereof (as such terms are defined in the Rights
Agreement) may become null and void.
With respect to certificates containing the foregoing legend, until the earliest
of the Distribution Date, the Redemption Date or the Final Expiration Date, the
Rights associated with the Common Shares represented by such certificates shall
be evidenced by such certificates alone, the registered holders of the Common
Shares shall also be the registered holders of the associated Rights and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company purchases or acquires
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any Common Shares after the Record Date but prior to the Distribution 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 which are no longer outstanding.
(d) Certificates for Exchangeable Shares which become outstanding
after the Record Date and (i) prior to the earliest of the Distribution Date,
the Redemption Date or the Final Expiration Date or (ii) upon the exercise or
conversion, prior to the earlier of the Redemption Date or the Final Expiration
Date, of any option or other security exercisable or exchangeable for or
convertible into Exchangeable Shares, which option or other security is
outstanding on the Distribution Date, shall have impressed on, printed on,
written on or otherwise affixed to them the following legend:
Pursuant to an Amended and Restated Rights
Agreement among Secure Computing Corporation ("Secure
Computing US"), Norwest Bank Minnesota, National
Association and The Bank of Nova Scotia Trust Company of
New York (the "Trustee"), dated as of [October 22], 1998
(the "Rights Agreement"), the Board of Directors of
Secure Computing US declared a dividend of one preferred
share purchase right (a "Right") for each outstanding
Common Share of Secure Computing US. The Board of
Directors of Secure Computing US also authorized the
issuance of one Right to the Trustee for the benefit of
Secure Computing Canada Ltd. ("Secure Computing Canada")
for each outstanding Non-Voting Exchangeable Share (the
"Exchangeable Shares") of Secure Computing Canada and
for each Exchangeable Share that becomes outstanding
within time periods specified in the Rights Agreement.
Under certain circumstances, as set forth in the Rights
Agreement, the Rights will no longer be held by the
Trustee on behalf of Secure Computing Canada and
separate certificates evidencing such Rights will be
issued by the Company to Secure Computing Canada, or at
its direction, in order to permit Secure Computing
Canada to fulfill its obligations under that certain
Support Agreement by and between Secure Computing US and
Secure Computing Canada dated as of August 29, 1996 (the
"Support Agreement") to issue or distribute to the
holders of Exchangeable Shares the economic equivalent
on a per share basis of any rights issued or distributed
to the holders of Common Shares of Secure Computing US.
Secure Computing Canada will mail to the holder of this
certificate a copy of the Rights Agreement and the
Support Agreement without charge after receipt of a
written request therefor to its Secretary from such
holder. Under certain circumstances, as set forth in the
Rights Agreement, Rights held by the Trustee on behalf
of Secure Computing Canada with respect to Exchangeable
Shares that are or were acquired or beneficially owned
by an Acquiring Person or any Associate or Affiliate
thereof (as such terms are defined in the Rights
Agreement) may become null and void.
In the event that any certificate for Exchangeable Shares is exchanged for
Common Shares prior to the earliest of the Distribution Date, the Redemption
Date or the Final Expiration Date, the Rights held by the Trustee for the
benefit of Secure Computing Canada with respect to the Exchangeable Shares
associated with such certificate shall be deemed canceled and retired at the
time of such exchange and one Right (as such Right may be adjusted pursuant to
the provisions of Section 11) shall be issued by the Company with respect to
each Common Share that becomes outstanding upon such exchange to the record
holder thereof (and shall be evidenced by the Common Share certificate until the
earliest of the Distribution Date, the Redemption Date or the Final Expiration
Date). In the event that Secure Computing Canada or the Company purchases or
acquires any Exchangeable Shares after the Record Date but prior to the
Distribution Date, any Rights held by the Trustee associated with such
Exchangeable Shares and all interests therein shall be deemed canceled and
retired so that neither Secure Computing Canada or the Company, as the case may
be, nor the Trustee shall be entitled to exercise any Rights associated with the
Exchangeable Shares which have been purchased or acquired by Secure Computing
Canada or the Company.
SECTION 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and
the forms of election to purchase Preferred Shares and of assignment to be
printed on the reverse thereof) shall be in substantially the form of Exhibit B
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
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may be required to comply with any applicable law, rule or regulation
(including, without limitation, any rule or regulation of any stock exchange on
which the Rights may from time to time be listed) or to conform to usage or to
reflect adjustments to the Rights made pursuant to this Agreement. Subject to
the provisions of Section 11 and Section 22, the initial Right Certificates,
whenever distributed, shall entitle the holders thereof to purchase such number
of one one-hundredths of a Preferred Share as shall be set forth therein at the
price per one one-hundredth of a Preferred Share set forth therein (the price
per one-hundredth of a Preferred Share being herein called the "Purchase
Price"), but the amount and type of securities purchasable upon the exercise of
each Right and the Purchase Price shall be subject to adjustment as provided in
this Agreement.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the
Company by any one of its Chairman of the Board, its Chief Executive Officer,
its President, its Chief Financial Officer or any of its Vice Presidents and
shall be attested by the Secretary or Assistant Secretary, either manually or by
facsimile signature. The Right Certificates shall be countersigned, either
manually or by facsimile signature, by the Rights Agent and shall not be valid
for any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Right Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company with
the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the signing of such Right Certificate, shall be a proper officer
of the Company to sign such Right Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or the office or offices designated as
the appropriate place for surrender of Right Certificates upon exercise or
transfer, books for registration and transfer of the Right Certificates. Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; LOST, STOLEN, DESTROYED OR MUTILATED RIGHT CERTIFICATES.
(a) Subject to the provisions of Section 14, at any time after the
Close of Business on the Distribution Date, and at or prior to the Close of
Business on the earlier of the Redemption Date or the Final Expiration Date, any
Right Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section 11(a)(ii) or that
have been exchanged pursuant to Section 24) may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-hundredths
of a Preferred Share as the Right Certificate or Right Certificates surrendered
then entitled such holder (or former holder in the case of a transfer) to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right Certificate
or Right Certificates to be transferred, split up, combined or exchanged at the
office or offices of the Rights Agent designated for such purpose. Thereupon the
Rights Agent shall, subject to Section 14, countersign and deliver to the Person
entitled thereto a Right Certificate or Right Certificates, as the case may be,
as so requested. The Company may require payment by the registered holder of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split-up, combination or exchange of Right
Certificates. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Right Certificate until the registered holder shall have duly completed and
executed the form of assignment on the reverse side of such Right Certificate
and shall have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) of such Right Certificate or
Affiliates or Associates thereof as the Company or the Rights Agent shall
reasonably request.
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(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's 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 Right Certificate if mutilated, the Company will make
and deliver a new Right Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to Section 11(a)(ii), the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as otherwise
provided in this Agreement) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly completed and executed, to
the Rights Agent at the office or offices of the Rights Agent designated for
such purpose, together with payment of the Purchase Price for each one
one-hundredth of a Preferred Share as to which the Rights are exercised, prior
to the earliest of (i) the Close of Business on August 15, 2007 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as provided in
Section 23 (the "Redemption Date"), or (iii) the time at which such Rights are
exchanged as provided in Section 24.
(b) The Purchase Price for each one one-hundredth of a Preferred
Share purchasable pursuant to the exercise of a Right shall initially be $50,
shall be subject to adjustment from time to time as provided in Sections 11 and
13 and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly completed and executed,
accompanied by payment of the Purchase Price for the shares to be purchased and
an amount equal to any applicable transfer tax required to be paid by the holder
of such Right Certificate in accordance with Section 9 in cash, or by certified
check or bank cashier's check or money order payable to the order of the
Company, the Rights Agent shall, subject to Section 20(k), thereupon promptly
(i) (A) requisition from any transfer agent of the Preferred Shares (or make
available, if the Rights Agent is the transfer agent for such shares)
certificates for the number of Preferred Shares to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the total number
of Preferred Shares issuable upon exercise of the Rights under this Agreement
with a depositary agent, requisition from the depositary agent depositary
receipts representing such number of one one-hundredths of a Preferred Share as
are to be purchased (in which case certificates for the Preferred Shares
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company hereby directs the depositary agent to comply
with such request, (ii) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of issuance of fractional interests in shares
in accordance with Section 14, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder and (iv) when appropriate, after receipt,
deliver such cash for fractional interests in shares to or upon the order of the
registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Right
Certificate or to such holder's duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section unless such registered holder shall have
(i) duly completed and executed the form of election to purchase set forth on
the reverse side of the Right Certificate surrendered for such exercise and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) of such Right Certificate or Affiliates or Associates
thereof as the Company shall reasonably request.
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SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split-up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred Shares
or any Preferred Shares held in its treasury, the number of Preferred Shares
that will be sufficient to permit the exercise in full of all outstanding
Rights.
(b) The Company will prepare and file, as soon as practicable
following expiration of the Company's right of redemption pursuant to Section
23, a registration statement under the Securities Act of 1933, as amended (the
"Act"), with respect to the Rights and the Company's securities purchasable upon
exercise of the Rights on an appropriate form, and use its best efforts to cause
such registration statement to (i) become effective as soon as practicable after
such filing, and (ii) remain effective (with a prospectus at all times meeting
the requirements of the Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities or (B) the Final Expiration
Date. The Company will also take such action as may be appropriate under, or to
ensure compliance with, the securities or "blue sky" laws of the various states
in connection with the exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed 90 days after the date the
registration statement is filed, the exercisability of the Rights in order to
permit the registration statement to become effective. Upon any such suspension,
the Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect. The Company will use its
best efforts to qualify the distribution of the Rights to Secure Computing
Canada or as Secure Computing Canada directs and to qualify securities
purchasable upon exercise of such Rights and to qualify any first trades in such
securities under the securities laws of any provinces of Canada where Secure
Computing Canada directs. Such steps may include the filing of a prospectus or
obtaining discretionary relief, if appropriate. Notwithstanding any provision of
this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction if the requisite qualification in such jurisdiction shall not have
been obtained or the exercise thereof is not permitted under applicable law.
(c) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
Preferred Shares (subject to payment of the Purchase Price and any applicable
transfer taxes), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(d) The Company 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 Right Certificates
or of any Preferred Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax that may be payable in respect of
any transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise, or to issue or to
deliver any certificates or depositary receipts for Preferred Shares upon the
exercise of any Rights, until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time of surrender)
or until it has been established to the Company's satisfaction that no such tax
is due.
SECTION 10 PREFERRED SHARES RECORD DATE. Each person in whose name
any certificate for Preferred Shares is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was
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made; provided, however, that if the date of such surrender and payment is a
date upon which the Preferred Shares transfer books of the Company are closed,
such person shall be deemed to have become the record holder of such shares on,
and such certificate shall be dated, the next succeeding Business Day on which
the Preferred Shares transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right Certificate as
such shall not be entitled to any rights of a holder of Preferred Shares for
which the Rights shall be exercisable, including without limitation, the right
to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES
OR NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the Preferred
Shares payable in Preferred Shares, (B) subdivide the outstanding Preferred
Shares, (C) combine the outstanding Preferred Shares into a smaller number of
Preferred Shares or (D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the
continuing, surviving or acquiring corporation), except as otherwise provided in
this Section 11(a), the Purchase Price in effect at the time of the record date
for such dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock issuable on
such date pursuant to the exercise of the Rights, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall be
entitled to receive, upon payment of the Purchase Price then in effect (and any
applicable transfer taxes), the aggregate number and kind of shares of capital
stock which, if such Right had been exercised immediately prior to such date and
at a time when the Preferred Shares transfer books of the Company were open,
such holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification; provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
of the Company issuable upon exercise of one Right. If an event occurs which
would require an adjustment under both Section 11(a)(i) and Section 11(a)(ii),
the adjustment provided for in this Section 11(a)(i) shall be in addition to,
and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the
event any Person shall become an Acquiring Person, proper provision shall be
made so that each holder of a Right, subject to Section 11(a)(iii), shall
thereafter have a right to receive, upon exercise thereof by payment of the
amount equal to the product of the number of one one-hundredths of a Preferred
Share which would otherwise be issuable upon exercise of a Right and the then
current Purchase Price in accordance with the terms of this Agreement, in lieu
of Preferred Shares, such number of Common Shares of the Company as shall equal
the result obtained by (x) multiplying the then current Purchase Price by the
number of one one-hundredths of a Preferred Share for which a Right is
exercisable immediately prior to the occurrence of the Section 11(a)(ii) Event
and (y) dividing that product by 50% of the current per share market price of
the Company's Common Shares (determined pursuant to Section 11(d)) on the date
of such occurrence.
From and after the first occurrence of a Section 11(a)(ii) Event or
a Section 13 Event, any Rights that are beneficially owned by any Acquiring
Person (or any Associate or Affiliate thereof) or were beneficially owned by any
Acquiring Person (or any Associate or Affiliate thereof) after the Acquiring
Person became an Acquiring Person shall become null and void without any further
action and no holder of such Rights shall thereafter have any rights to exercise
such Rights or any other rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. No Right Certificate shall
be issued pursuant to Section 3 that represents Rights that would be void
pursuant to the preceding sentence; no Right Certificate shall be issued at any
time upon the transfer of any Rights to an Acquiring Person whose Rights would
be void pursuant to the preceding sentence or to any Associate or Affiliate of
such an Acquiring Person or to any nominee of such Acquiring Person, Associate
or Affiliate; and any Right Certificate delivered to the Rights Agent for
transfer to an Acquiring Person or any Associate or Affiliate of such an
Acquiring Person whose Rights would be void pursuant to the preceding sentence
shall be canceled. The Company shall use all reasonable efforts to insure that
the provisions of this Section 11(a)(ii) are complied with, but shall have no
liability to
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any holder of a Right Certificate or other Person as a result of its failure in
good faith to make any determinations with respect to an Acquiring Person or its
Affiliates or Associates.
(iii) If, on the date of the occurrence of a Section 11
(a)(ii) Event (the "Adjustment Date"), the Company does not have sufficient
issued but not outstanding or reserved or authorized, unissued and unreserved
Common Shares available to permit the exercise in full of all Rights that are
exercisable on the Adjustment Date for the number of Common Shares per Right
provided for in Section 11(a)(ii), then the Exercise Price (as defined below)
and the number of Common Shares to be delivered by the Company upon exercise of
a Right shall be further adjusted as provided in this subparagraph (iii).
(1) Definitions:
(A) The "Aggregate Market Value" is the product of (i)
the number of Available Shares and (ii) the current per share market price of
the Common Shares on the Adjustment Date, determined as provided in Section
11(d).
(B) The "Available Shares" are all unreserved Common
Shares which are authorized and unissued or issued but not outstanding
immediately prior to the Adjustment Date.
(C) The "Exercise Price" is the amount of the payment
that must be made by the holder of a Right in connection with the exercise of
one Right immediately prior to the Adjustment Date.
(D) The "Deficiency" is the amount by which (i) two
times the Exercise Price exceeds (ii) the quotient obtained by dividing the
Aggregate Market Value by the number of Rights remaining outstanding immediately
prior to the Adjustment Date (the "Remaining Rights") (which number shall not
include the Rights that are beneficially owned by any Acquiring Person (or any
Associate or Affiliate thereof) or were beneficially owned by any Acquiring
Person (or any Associate or Affiliate thereof) after the Acquiring Person became
an Acquiring Person that shall have become void pursuant to Section 11(a)(ii)).
(2) If the Deficiency is less than or equal to the Exercise Price,
then
(A) the number of Common Shares to be delivered by the
Company upon exercise of a Right shall be adjusted to be equal to the number of
Available Shares divided by the number of Remaining Rights; and
(B) the amount of cash required to be delivered by the
holder of a Right upon the exercise thereof shall be adjusted (the "New Exercise
Price") to equal the Exercise Price minus the Deficiency; provided, however,
that in no event will the New Exercise Price be less than the aggregate par
value of the Common Shares required to be delivered upon the exercise of one
Right pursuant to subparagraph (2)(A) above.
(3) If the Deficiency is greater than the Exercise Price, then
(A) the number of Common Shares to be delivered by the
Company upon exercise of a Right shall be adjusted to equal the quotient
obtained by dividing the Exercise Price by the current per share market price of
the Common Shares on the Adjustment Date;
(B) the New Exercise Price shall equal the aggregate par
value of the Common Shares required to be delivered upon the exercise of one
Right pursuant to subparagraph (3)(A) above; and
(C) in lieu of issuing Common Shares (in whole or in
part upon the exercise of Rights) the Company may issue, upon the exercise of
Rights at the New Exercise Price, other equity securities of the Company
(including, without limitation, shares, or units or fractions of shares, of
preferred stock which the Board of Directors of the Company has determined to
have substantially the same value, voting rights and other rights as Common
Shares
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(such equity securities are herein called "common share equivalents")). To the
extent that such common share equivalents (or fractions thereof) are substituted
for Common Shares upon exercise of the Rights following the occurrence of a
Section 11(a)(ii) Event, they shall be substituted on a pro-rata basis with
respect to all Rights (other than Rights that are beneficially owned by any
Acquiring Person (or any Associate or Affiliate thereof) or were beneficially
owned by any Acquiring Person (or any Associate or Affiliate thereof) after the
Acquiring Person became an Acquiring Person that shall have become void pursuant
to Section 11(a)(ii)). Such common share equivalents shall not be included in
Available Shares, and all of the Available Shares shall be reserved, as of the
Adjustment Date, for issuance, on a pro-rata basis, upon exercise of the Rights
and may not be substituted for with common share equivalents upon the exercise
of any Right except to the extent that the number of Common Shares required to
be delivered under subparagraph (3)(A) upon the exercise of such Right exceeds
the quotient of the number of Available Shares divided by the number of
Remaining Rights.
(4) If, at the time any adjustment is required pursuant to this
Section 11(a)(iii), the Common Shares shall have no par value, then for the
purposes of this Section 11(a)(iii), the par value of the Common Shares shall be
deemed to be $.01 per share.
(5) In the event that there shall not be sufficient issued but not
outstanding or reserved or authorized but unissued and unreserved Common Shares
(or common share equivalents the issuance of which is permitted under Section
11(a)(iii)(3)(C)) to permit the exercise in full of the Rights in accordance
with this subparagraph (iii), the Company shall use its best efforts to cause
the authorization of sufficient additional Common Shares or common share
equivalents to permit such exercise and, if the Board of Directors of the
Company shall determine in good faith that it is likely that sufficient
additional Common Shares or common share equivalents could be authorized to
permit such exercise, the Company may suspend the exercisability of the Rights
for a period not to exceed 90 days in order to seek any authorization of
additional Common Shares or other common share equivalents. In the event of any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the current per share
market price of the Preferred Shares (as determined pursuant to Section 11(d))
on 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 per share market price, and the
denominator of which shall be the number of Preferred Shares outstanding on such
record date, plus the number of additional Preferred Shares and/or equivalent
preferred shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
of the Company issuable upon exercise of one Right. In case such subscription
price may be paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the
Rights Agent and the holders of the Rights. Preferred Shares owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made successively whenever
such a record date is fixed; and in the event that such rights, options or
warrants are not so issued, the Purchase Price shall again be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.
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(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or cash or non-cash assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b)), the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the then current per share market price of the
Preferred Shares (as determined pursuant to Section 11(d)) on such record date,
less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights) of the portion of the evidences of indebtedness or cash
or non-cash assets so to be distributed on, or of such subscription rights or
warrants applicable to, one Preferred Share, and the denominator of which shall
be such then current per share market price of the Preferred Shares; provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
of the Company to be issued upon exercise of one Right. Such adjustments shall
be made successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall again be adjusted to
be the Purchase Price that would then be in effect if such record date had not
been fixed.
(d)(i) For the purpose of any computation hereunder, the "current
per share market price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30 consecutive Trading Days
(as such term is hereinafter defined) immediately prior to such date; provided,
however, that in the event that the current per share market price of the
Security is determined during a period following the announcement by the issuer
of such Security of (A) a dividend or distribution on such Security payable in
such Security or securities convertible into such Security (other than the
Rights) or (B) any subdivision, combination or reclassification of such
Security, and prior to the expiration of 30 Trading Days after the ex-dividend
date for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the current per
share market price shall be appropriately adjusted to reflect the current market
price per share equivalent of such Security. The closing price for each day
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Security is not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Security is listed or admitted to trading or,
if the Security is not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported on the
Nasdaq National Market or the National SmallCap Market or such other system then
in use, or, if on any such day the Security is not so quoted or reported, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Security selected by the Board of Directors
of the Company. Except as provided in Section 11(d)(ii) with respect to
Preferred Shares, if on any such day the Security is not publicly held or no
professional market maker is making a market in the Security, the fair value of
such Security on such day as determined in good faith by the Board of Directors
of the Company (whose determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent and the holders of the
Rights) shall be used in lieu of the closing price for such day. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day.
(ii) If the Preferred Shares are not publicly held or traded in a
manner described in Section 11(d)(i), then, notwithstanding anything to the
contrary provided in Section 11(d)(i), the "current per share market price" of
the Preferred Shares shall be conclusively deemed to be the current per share
market price of the Common Shares as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date of this Agreement) multiplied by one
hundred. If neither the Common Shares nor the Preferred Shares are publicly held
or so traded, the "current per share market price" of the Preferred Shares shall
mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination
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shall be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights.
(e) Except as provided in the third 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 one one-millionth of a Preferred Share or
one ten-thousandth of any other share or security, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11, but for the first sentence of this Section 11(e),
shall be made no later than the earlier of (i) three years from the date of the
transaction that requires such adjustment or (ii) the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)
or Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Preferred Shares,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Section 11(a) through (c), 11(e), and 11(h)
through (m), inclusive and the provisions of Sections 7, 9, 10, 13 and 14 with
respect to the Preferred Shares shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price under this Agreement shall evidence the
right to purchase, at the adjusted Purchase Price, the number of one
one-hundredths of a Preferred Share (or other securities) purchasable from time
to time under this Agreement upon exercise of the Rights, all subject to further
adjustment as provided in this Agreement.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Section 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 one
one-hundredths of a Preferred Share (calculated to the nearest one one-millionth
of a Preferred Share) obtained by (i) multiplying (x) the number of one
one-hundredths of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-hundredths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-hundredths of a Preferred Share 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) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement 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 Right
Certificates have been issued on or after the Distribution Date, shall be at
least 10 days later than the date of the public announcement. If Right
Certificates have been issued on or after the Distribution Date, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing, subject
to Section 14, the additional Rights to which such holders shall be entitled as
a result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for in this Agreement, shall bear the
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adjusted Purchase Price, and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of one one-hundredths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore issued may continue
to express the Purchase Price and the number of one one-hundredths of a
Preferred Share which were expressed at the time of the issuance of such Right
Certificates under this Agreement.
(k) Before taking any actions that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par value, if
any, of the Preferred Shares issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.
(l) 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 issuing to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that the Board of Directors of the Company shall determine to be
advisable in order that any (i) consolidation or subdivision of the Preferred
Shares or Common Shares, (ii) issuance wholly for cash of any of the Preferred
Shares or Common Shares at less than the current per share market price, (iii)
issuance wholly for cash of Preferred Shares or Common Shares or securities
which by their terms are convertible into or exchangeable for Preferred Shares
or Common Shares, (iv) stock dividends or (v) issuance of rights, options or
warrants referred to in Section 11(b), hereafter made by the Company to holders
of its Preferred Shares or Common Shares shall not be taxable to such
stockholders.
(n) Anything in this Agreement or the Rights to the contrary
notwithstanding, in the event that at any time after the date of this Agreement
and prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise) into a greater or lesser number of Common Shares,
then in any such case (x) the number of one one-hundredths of a Preferred Share
purchasable after such event upon proper exercise of each Right shall be
determined by multiplying the number of one one-hundredths of a Preferred Share
so purchasable immediately prior to such event by a fraction, the numerator of
which is the number of Common Shares and Exchangeable Shares outstanding
immediately before such event and the denominator of which is the number of
Common Shares and Exchangeable Shares outstanding immediately after such event,
(y) each Common Share outstanding immediately after such event shall have issued
with respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it, and (z) the
Company shall issue to the Trustee with respect to each Exchangeable Share
outstanding immediately after such event that number of Rights held by the
Trustee associated with each Exchangeable Share outstanding immediately prior to
such event. The adjustments provided for in this Section 11(n) shall be made
successively whenever such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected. If an event occurs which would require
an adjustment under Section 11(a)(ii) and this Section 11(n), the adjustments
provided for in this Section 11(n) shall be in addition and prior to any
adjustment required pursuant to Section 11(a)(ii).
(o) If any adjustment in the Purchase Price pursuant to paragraph
(b) or (c) of this Section 11 would not be permitted by law, under the Company's
Certificate of Incorporation or under the Certificate of Powers, Designations,
Preferences and Rights establishing the Preferred Shares, no such issuance of
securities or distribution of evidences of
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indebtedness or other assets or subscription rights or warrants, as the case may
be, that would require such an adjustment but for the limitations established by
law, the Company's Certificate of Incorporation or such Certificate of Powers,
Designations, Preferences and Rights shall be made by the Company.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Sections 11 and 13, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with each transfer agent for the Common Shares or
the Preferred Shares a copy of such certificate and (c) if such adjustment is
made after the Distribution Date, mail a brief summary thereof to each holder of
record of a Right Certificate, in accordance with Section 25. The Rights Agent
shall be fully protected in relying on such certificate and on any adjustment
therein contained.
SECTION 13. CONSOLIDATION, MERGER, SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event, after such time as an Acquiring Person becomes
such, directly or indirectly,
(w) the Company shall consolidate with, or merge with and into,
any other Person (other than a wholly owned subsidiary or the Company in a
transaction the principal purpose of which is to change the state of
incorporation of the Company), and the Company shall not be the continuing or
surviving corporation of such consolidation or merger,
(x) any Person shall consolidate with the Company, or merge with
and into the Company and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding Common Shares of the
Company held by existing stockholders of the Company shall be changed into or
exchanged for stock or other securities of any other Person (or the Company) or
money or any other property (except as a result of the exercise of statutory
dissenters' rights), or
(y) the Company shall sell or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer), in one or a series of
related transactions, assets or earning power aggregating 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person or Persons (other than the Company or one or more of its
wholly-owned Subsidiaries),
then, and in each such case (except as may be contemplated by Section 13(e)),
proper provision shall be made so that (i) each holder of a Right (except as
otherwise provided herein) shall thereafter have the right to receive, upon the
exercise thereof (in accordance with Section 7) by payment of the amount equal
to the product of the number of one one-hundredths of a Preferred Share which
would otherwise be issuable upon exercise of a Right and the then current
Purchase Price in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of validly authorized and issued, fully paid,
nonassessable and freely tradable Common Shares of the Principal Party (as
hereinafter defined), not subject to any liens, encumbrances, rights of first
refusal or adverse claims, as shall be equal to the result obtained by (x)
multiplying the then current Purchase Price by the number of one one-hundredths
of a Preferred Share for which a Right is, immediately prior to the occurrence
of the Section 13 Event, exercisable and (y) dividing that product by 50% of the
then current per share market price of the Common Shares of such Principal Party
(determined pursuant to Section 11(d)) on the date of consummation of such
Section 13 Event; (ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such merger, consolidation, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement; (iii) the term
"Company" shall thereafter be deemed to refer to such Principal Party; and (iv)
such Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares to permit the exercise
of all outstanding Rights) in connection with the consummation of any such
transaction as may be necessary to 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.
(b) "Principal Party" shall mean:
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(i) in the case of any transaction described in clauses (w) or
(x) of the first sentence of Section 13(a), the Person (including, without
limitation, the Company as successor thereto or as the surviving corporation)
that is the issuer of any securities into which Common Shares of the Company are
converted in such merger or consolidation, or 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 clause (y) of
the first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions;
provided, however, that in any such case, (1) if the Common Shares of such
Person are not at such time or have not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, and such Person
is a direct or indirect Subsidiary of another Person the Common Shares of which
are and have been so registered, "Principal Party" shall refer to such other
Person, and (2) in case such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Shares of two or more of which are and have
been so registered, "Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Shares having the greatest aggregate market value.
(c) The Company shall not consummate any Section 13 Event unless the
Principal Party shall have a sufficient number of authorized, unreserved Common
Shares which have not been issued or are held in treasury to permit the exercise
in full of the Rights in accordance with this Section 13 and unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing for the terms set forth
in paragraphs (a) and (b) of this Section 13 and further providing that, as soon
as practicable after the date of any Section 13 Event, the Principal Party will:
(i) prepare and file a registration statement under the Act,
with respect to the Rights and the securities purchasable upon exercise of the
Rights, on an appropriate form, and use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after such
filing and (B) remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (1) the date as of which the
Rights are no longer exercisable for such securities or (2) the Final Expiration
Date;
(ii) take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in the
United States and provinces in Canada in connection with the exercisability of
the Rights; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 under the
Exchange Act.
(d) The Company shall not enter into any transaction of the kind
referred to in this Section 13 if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights.
(e) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in subparagraphs
(w) or (x) of Section 13(a) if (i) such transaction is consummated with a Person
or Persons who acquired Common Shares pursuant to a tender offer or exchange
offer for all outstanding Common Shares and Exchangeable Shares which complies
with the provisions of clause (B) of Section 11(a)(ii) (or a wholly owned
Subsidiary of any such Person or Persons), (ii) the price per Common Share and
Exchangeable Share offered in such transaction is not less than the price per
Common Share paid to all holders of Common Shares and Exchangeable Shares whose
shares were purchased pursuant to such tender offer or exchange offer and (iii)
the form of consideration being offered to the remaining holders of Common
Shares and Exchangeable Shares pursuant to such transaction is the same as the
form of consideration paid pursuant to such tender offer or exchange offer. Upon
consummation of any such transaction contemplated by this Section 13(e), all
Rights hereunder shall expire.
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The provisions of this Section 13 shall similarly apply to
successive mergers, consolidations, or sales or other transfers.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there may be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported on the Nasdaq National Market
or the National SmallCap Market or such other system then in use or, if on any
such date the Rights are not so quoted or reported, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Board of Directors of
the Company shall be used in lieu of the closing price for such day.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions that are integral multiples of one
one-hundredth of a Preferred Share, or, if a Right shall then be exercisable for
a fraction other than one one-hundredth of a Preferred Share, integral multiples
of that fraction) upon exercise of the Rights or to distribute certificates
which evidence fractions of Preferred Shares (other than fractions that are
integral multiples of one one-hundredth of a Preferred Share or, if a Right
shall then be exercisable for a fraction other than one one-hundredth of a
Preferred Share, integral multiples of that fraction). Fractions of Preferred
Shares in integral multiples of one one-hundredth of a Preferred Share or, if a
Right shall then be exercisable for a fraction other than one one-hundredth of a
Preferred Share, integral multiples of that fraction may, at the election of the
Company, be evidenced by depositary receipts pursuant to an appropriate
agreement between the Company and a depositary selected by it, provided, that
such agreement shall provide that the holders of such depositary receipts shall
have all the rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such depositary
receipts. In lieu of fractional Preferred Shares that are not integral multiples
of one one-hundredth of a Preferred Share, or, if a Right shall then be
exercisable for a fraction other than one one-hundredth of a Preferred Share,
integral multiples of that fraction, the Company may pay to the registered
holders of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of one Preferred Share. For purposes of this Section 14(b), the current
market value of a Preferred Share shall be the closing price of a Preferred
Share (as determined pursuant to Section 11(d)(ii)) for the Trading Day
immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Rights expressly
waives such holder's right to receive any fractional Rights or any fractional
shares (except as provided above) upon exercise of a Right.
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, except the rights of action given to the Rights Agent under
Section 18, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares, the Trustee and Secure Computing Canada); and any registered
holder of any Right Certificate (or, prior to the Distribution Date, the
registered holder of any Common Share, or the Trustee or Secure Computing
Canada), without the consent of the Rights Agent or of the holder of any other
Right Certificate (or, prior to the Distribution Date, the registered holder of
any Common Share, or the Trustee or Secure Computing Canada), may, in such
holder's or the Trustee's own behalf and for such holder's or the
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Trustee's own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
such holder's or the Trustee's right to exercise the Rights evidenced by such
Right Certificate (or, prior to the Distribution Date, the associated Common
Shares certificate or on the books and records of Secure Computing Canada) in
the manner provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights or the
Trustee, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and will be
entitled to specific performance of the obligations under, and injunctive relief
against actual or threatened violations of the obligations of any Person subject
to, this Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares or in the case of
Rights held by the Trustee for the benefit of Secure Computing Canada, at the
direction of Secure Computing Canada;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer;
(c) subject to Sections 6 and 7(e) hereof, the Company and the
Rights Agent may deem and treat the person in whose name the Right Certificate
is registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificate
or the associated Common Shares certificate or any Exchangeable Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary;
(d) the Company may issue Rights after the Record Date as provided
in this Agreement; and
(e) notwithstanding anything in this Agreement or the Rights to the
contrary, the Company, the Rights Agent, the Trustee and the Board of Directors
of the Company shall not have any liability to any holder of a Right, Secure
Computing Canada, or other Person as a result of the inability of the Company,
the Rights Agent or the Trustee 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. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.
Neither the Trustee nor any holder, as such, of any Right Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose the holder of
the Preferred Shares or any other securities of the Company which may at any
time be issuable on the exercise of the Rights represented thereby, nor shall
anything contained in this Agreement or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 25), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions of this Agreement.
SECTION 18. CONCERNING THE RIGHTS AGENT AND THE TRUSTEE
(a) The Company agrees to pay to the Rights Agent and the Trustee
reasonable compensation for all services rendered by them under this Agreement
and, from time to time, on demand of the Rights Agent or the Trustee, their
reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this
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Agreement and the exercise and performance of their duties under this Agreement.
The Company also agrees to indemnify the Rights Agent and the Trustee for, and
to hold them harmless against, any loss, liability or expense (including the
costs and expenses of defending against any claim of liability), incurred
without negligence, bad faith or willful misconduct on the part of the Rights
Agent or the Trustee, for anything done or omitted by the Rights Agent or the
Trustee in connection with the acceptance and administration of this Agreement
and the exercise and performance of their duties under this Agreement.
(b) Each of the Trustee and the Rights Agent may conclusively rely
upon and shall be protected and shall incur no liability for, or in respect of
any action taken, suffered or omitted by it in connection with, its
administration of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred Shares or Common Shares or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons, or otherwise upon the advice of its counsel as set forth in
Section 20.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT OR TRUSTEE.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent or the Trustee or any successor Trustee may be merged or with which
it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent or the
Trustee or any successor Trustee shall be a party, or any corporation succeeding
to the corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent or to the trust business of the Trustee or any successor
Trustee, shall be the successor to the Rights Agent or the Trustee, as the case
may be, under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties to this Agreement; provided,
however, that such corporation would be eligible for appointment as a successor
Rights Agent or successor Trustee under the provisions of Section 21. If at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT AND TRUSTEE. The Rights Agent and
Trustee undertake the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates (or, prior to the Distribution Date, holders of the Common
Shares certificates and Secure Computing Canada), by their acceptance of the
Rights or interest in Rights, as the case may be, shall be bound:
(a) The Rights Agent and the Trustee may consult with legal counsel
(who may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent and
the Trustee as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent or the Trustee shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any Acquiring
Person and the determination of the "current per share market price" or the
identity and address of the record holders of Exchangeable Shares and the number
of Exchangeable Shares held by each of them) be proved or established by the
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Company prior to taking or suffering any action under this Agreement, such fact
or matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board, the Chief Executive
Officer, the President, the Chief Financial Officer, any Vice President,
Secretary or Assistant Secretary of the Company and delivered to the Rights
Agent or the Trustee, as the case may be; and such certificate shall be full
authorization to the Rights Agent or the Trustee, as the case may be, for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent or the Trustee shall be liable hereunder to the
Company and any other Person only for its own negligence, bad faith or willful
misconduct.
(d) Neither the Rights Agent nor the Trustee shall be liable for or
by reason of any of the statements of fact or recitals contained in this
Agreement or in the Right Certificates (except, in the case of the Rights Agent,
its countersignature thereof) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the Company
only.
(e) Neither the Rights Agent nor the Trustee shall be under any
responsibility in respect of the validity of this Agreement or the execution and
delivery of this Agreement (except the due execution by the Rights Agent and the
Trustee) or in respect of the validity or execution of any Right Certificate
(except in the case of the Rights Agent, its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 11(a)(ii)) or any adjustment in the
terms of the Rights (including the manner, method or amount thereof) provided
for in Section 3, 11, 13, 23 or 24, or the ascertaining of the existence of
facts that would require any such change or adjustment (except by the Rights
Agent with respect to the exercise of Rights evidenced by Right Certificates
after actual notice that such change or adjustment is required); nor shall it by
any act under this Agreement be deemed to make any representation or warranty as
to the authorization or reservation of any Preferred Shares or Common Shares to
be issued pursuant to this Agreement or any Right Certificate or as to whether
any Preferred Shares or Common Shares will, when issued, be validly authorized
and issued, fully paid and nonassessable.
(f) The Company 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 or the Trustee for the carrying out or performing
by the Rights Agent or the Trustee of the provisions of this Agreement.
(g) The Rights Agent and the Trustee are hereby authorized and
directed to accept instructions with respect to the performance of their duties
in administering this Agreement from any one of the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Financial Officer, any Vice
President, Secretary or any Assistant Secretary of the Company, and to apply to
such officers for advice or instructions in connection with their duties, and
they shall not be liable for any action taken or suffered to be taken by them in
good faith in accordance with instructions of any such officer or for delay in
acting while waiting for those instructions.
(h) The Rights Agent and the Trustee and any stockholder,
director, officer or employee of the Rights Agent or the Trustee may buy, sell
or deal in any of the Rights or other securities of the Company or Secure
Computing Canada or become pecuniarily interested in any transaction in which
the Company or its Subsidiaries may be interested, or contract with or lend
money to the Company or its Subsidiaries or otherwise act as fully and freely as
though it were not Rights Agent or Trustee under this Agreement. Nothing in this
Agreement shall preclude the Rights Agent or the Trustee from acting in any
other capacity for the Company or its Subsidiaries or for any other legal
entity.
(i) The Rights Agent and the Trustee may execute and exercise any
of the rights or powers hereby vested in them or perform any duty under this
Agreement either themselves or by or through their attorneys or agents, and the
Rights Agent and the Trustee shall not be answerable or accountable for any act,
default, neglect or misconduct of any
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such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent or
the Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties under this Agreement or in the
exercise of its rights or powers if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification against such
risk or liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the form of assignment or form of
election to purchase, as the case may be, has either not been duly completed and
executed or indicates an affirmative response to enumerated clause 1 and/or 2 on
the reverse side of the applicable Right Certificate, the Rights Agent shall not
take any further action with respect to such requested exercise or transfer
without first consulting with the Company.
(l) The Trustee acknowledges and agrees that it shall hold all
Rights issued to it in trust for Secure Computing Canada until the Distribution
Date and that such Rights will not be evidenced by separate Right Certificates
but will be evidenced on the books and records of Secure Computing Canada (with
one Right for each outstanding Exchangeable Share). Upon the Distribution Date,
the Trustee acknowledges that the Company will issue Right Certificates
representing one Right for each then outstanding Exchangeable Share directly to
Secure Computing Canada or as Secure Computing Canada may direct and the Trustee
shall no longer be deemed to have any interest in the Rights. The Company and,
by its acceptance of the Rights or interests in the Rights, Secure Computing
Canada agree that the Trustee shall have no obligations hereunder after the
issuance of Right Certificates to Secure Computing Canada (or at its direction)
in accordance with this Agreement.
(m) The Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement with respect to it and no
implied obligations or duties shall be read into this Agreement against the
Trustee. As to any matters not expressly provided for herein (including, without
limitation, enforcement of rights of action under Section 15), the Trustee shall
not be required to exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of Secure Computing
Canada and if only furnished with indemnity satisfactory to the Trustee by the
Persons making the request; provided that the Trustee shall not be required to
take any action that exposes it to personal liability or that is contrary to
this Agreement or applicable law.
SECTION 21. CHANGE OF RIGHTS AGENT OR TRUSTEE.
(a) The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common Shares and
Preferred Shares by registered or certified mail, at the expense of the Company,
and, if such notice is mailed after the Distribution Date, to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon 30 days' notice in writing mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Shares and Preferred Shares by registered or certified mail,
and, if such notice is mailed after the Distribution Date, to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit such holder's Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be (i) a corporation organized and doing business under the
laws of the United States or of the State of Minnesota or New York (or of any
other state of the United States so long as such corporation is authorized to do
business as a banking institution in the State of Minnesota or New York), in
good standing, having an office in the State of Minnesota or New York which is
authorized under such
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laws to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million or (ii) an affiliate of a corporation described in clause (i)
of this sentence. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it under this Agreement, and execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment, the Company
shall file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Shares and Preferred Shares, and, if such notice is
filed after the Distribution Date, mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give any notice
provided for in this Section, however, or any defect therein, shall not affect
the legality or validity of the resignation or removal of the Rights Agent or
the appointment of the successor Rights Agent, as the case may be.
(b) The Trustee or any successor Trustee may resign and be
discharged from its duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to the Rights Agent. The Company may remove the
Trustee or any successor Trustee upon 30 days' notice in writing mailed to the
Trustee or successor Trustee, as the case may be, and to the Rights Agent. If
the Trustee shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Trustee. 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 Trustee, then the
Trustee or Secure Computing Canada may apply to any court of competent
jurisdiction for the appointment of a new Trustee. After appointment, the
successor Trustee shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Trustee without further
act or deed; but the predecessor Trustee shall deliver and transfer to the
successor Trustee any property at the time held by it under this Agreement, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Failure to give any notice provided for in this section, however,
or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Trustee or the appointment of the successor
Trustee, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any
of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by
its Board of Directors to reflect any adjustment or change in the
Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made
in accordance with the provisions of this Agreement.
SECTION 23. REDEMPTION.
(a) Subject to the provisions of Section 27, the Board of Directors
of the Company may, at its option, at any time prior to the earlier of (x) the
Close of Business on the 20th day after the Shares Acquisition Date or (y) the
Close of Business on the Final Expiration Date, redeem all but not less than all
of the then outstanding Rights at a redemption price of $.001 per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date of this Agreement (such redemption price
being hereinafter referred to as the "Redemption Price"). 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 authority of the Board of Directors of the Company to redeem the
Rights pursuant to this Section 23(a), as such section may be amended pursuant
to Section 27, shall have terminated. The Redemption Price shall be payable in
cash by the Company. The redemption of the Rights by the Board of Directors of
the Company may be made effective at such time and on such basis and with such
conditions as the Board of Directors of the Company in its sole discretion may
establish. Except for the obligation to pay the Redemption Price, the Board of
Directors and the Company shall not have any liability to any Person as a result
of the redemption of Rights pursuant to the terms of this Section 23. In the
case of the Redemption of any Rights held by the Trustee in trust for Secure
Computing Canada, the Redemption Price shall be payable directly to Secure
Computing Canada (or at Secure Computing Canada's direction) and not to the
Trustee.
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(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of 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 and Secure Computing Canada (or its designees) shall be to receive the
Redemption Price for each Right so held. Promptly after the action of the Board
of Directors of the Company ordering the redemption of the Rights, the Company
shall give notice of such redemption to the Rights Agent, the Trustee, Secure
Computing Canada, and the holders of the then outstanding Rights by mailing such
notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Shares; provided, however,
that the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. Any notice which is mailed in the manner provided
in this paragraph shall be deemed given whether or not the holder or other
Person receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made. Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner except as specifically set forth in
this Section or in Section 24 or in connection with the purchase of Common
Shares or Exchangeable Shares prior to the Distribution Date.
SECTION 24. EXCHANGE
(a) The Board of Directors of the Company may, at its option, at any
time after any Person becomes an Acquiring Person,, exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 11(a)(ii)) for Common
Shares, with each Right to be exchanged for such number of Common Shares as
shall equal the result obtained by dividing (x) the Exercise Price (as defined
in Section 11(a)(iii)) by (y) the current per share market price of the Common
Shares (determined pursuant to Section 11(d)) on the date any Person becomes an
Acquiring Person (such number of shares being hereinafter referred to as the
"Exchange Ratio"). The Exchange Ratio shall be appropriately adjusted to reflect
any stock split, stock dividend or similar transaction affecting the Common
Shares that occurs after the date any Person becomes an Acquiring Person.
Notwithstanding the foregoing, the Board of Directors of the Company shall not
be empowered to effect such exchange at any time after any Person (other than
(1) the Company, (2) any Subsidiary of the Company, (3) any employee benefit
plan of the Company or of any Subsidiary of the Company or (4) any entity
holding Common Shares for or pursuant to the terms of any plan described in
clause (3) of this sentence), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the Common Shares
then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company shall promptly mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder or other Person receives the notice. Each such notice of exchange
will state the method by which the exchange of the Common Shares for Rights will
be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become void pursuant to
the provisions of Section 11(a)(ii)) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with Section 24(a), the Company shall
either take such action as may be necessary to authorize additional Common
Shares for issuance upon exchange of the Rights or alternatively, of the option
of a majority of the Board of Directors, with respect to each Right (i) pay cash
in an amount equal to the Current Value (as herein defined), in lieu of issuing
Common Shares in exchange therefor, or (ii) issue debt or equity securities or a
combination thereof, having a value equal to the Current Value in lieu of
issuing Common Shares in exchange for each such Right, where the value of such
securities shall be determined by a nationally recognized investment banking
firm selected by majority vote of the Board of Directors, or (iii) deliver any
combination
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of cash, property, Common Shares and/or other securities having a value equal to
the Current Value in exchange for each Right. For purposes of this Section 24(c)
only, the Current Value shall mean the product of the "current per share market
price" (as defined in Section 11(d); hereof) of Common Shares on the date of the
occurrence of the event described above in subparagraph (a), multiplied by the
number of Common Shares for which the Right otherwise would be exchangeable if
there were sufficient shares available. To the extent that the Company
determines that some action need be taken pursuant to clauses (i), (ii) or (iii)
of this Section 24(c), the Board of Directors may temporarily suspend the
exercisability of the Rights for a period of up to sixty (60) days following the
date on which the event describe in Section 24(a) shall have occurred, in order
to seek any authorization of additional Common Shares and/or to decide the
appropriate form of distribution to be made pursuant to the above provision and
to determine the value thereof. In the event of any such suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended.
(d) The Company may, at its option, by majority vote of the Board of
Directors, at any time before any person has become an Acquiring Person,
exchange all or part of the then outstanding Rights for rights or substantially
equivalent value, as determined reasonably and with good faith by the Board of
Directors, based upon the advice of one or more nationally recognized investment
banking firms.
(e) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares. In
lieu of such fractional Common Shares, the Company may pay to the registered
holders of the Right Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share. For the purposes of this
paragraph (e), the current market value of a whole Common Share shall be the
closing price of a Common Share (as determined pursuant to the second sentence
of Section 11(d)(i)) for the Trading Day immediately prior to the date of
exchange pursuant to this Section. The Board of Directors and the Company shall
not have any liability to any Person as a result of the exchange of Rights
pursuant to the terms of this Section.
(f) Immediately upon the action of the Board of Directors ordering
the exchange of any Rights pursuant to subsection 24(d) of this Section 24 and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of rights in exchange therefor as has been
determined by the Board of Directors in accordance with subsection 24(d) above.
The Company shall give public notice of any such exchange; provided, however,
that the failure to give, or any defect in , such notice shall not affect the
validity of such exchange. The Company 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 transfer agent for the Common Shares of the Company.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the Rights will be effected.
SECTION 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of its Preferred Shares or to make any other distribution to the holders
of its Preferred Shares (other than a regular quarterly cash dividend), or (ii)
to offer to the holders of its Preferred Shares rights or warrants to subscribe
for or to purchase any additional Preferred Shares or shares of stock of any
class or any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Shares (other than a reclassification
involving only the subdivision of outstanding Preferred Shares), or (iv) to
effect any consolidation or merger into or with any other Person, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or a series of related transactions,
of 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person or Persons (other than the
Company and/or any of its wholly owned Subsidiaries), or (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or pay
any dividend on the Common Shares payable in Common Shares or to effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise), then, in each such case, the Company shall give
to each holder of a Right Certificate, to the extent feasible and in accordance
with Section 26, a notice of such proposed
25
<PAGE>
action, which shall specify the record date for the purposes of such stock
dividend or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 10 days prior to the record date
for determining holders of the Preferred Shares for purposes of such action, and
in the case of any such other action, at least 10 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Common Shares and/or Preferred Shares, whichever shall be the
earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then, in any
such case, the Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice of
the occurrence of such event, which shall specify the event and the consequences
of the event to holders of Rights under Section 11(a)(ii).
SECTION 26. NOTICES. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent, by the Trustee, by the holder of any
Right Certificate or by Secure Computing Canada to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage-prepaid,
addressed (until another address is filed in writing with the Rights Agent) as
follows:
Secure Computing Corporation
One Almaden Boulevard
Suite 400
San Jose, CA 95113
Attention: Chief Financial Officer
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company, by the Trustee, by the holder of
any Right Certificate or by Secure Computing Canada to or on the Rights Agent
shall be sent by first-class mail, postage-prepaid, addressed (until another
address is filed in writing with the Company) as follows:
Norwest Bank Minnesota, National Association
161 North Concord Exchange
South St. Paul, Minnesota 55075
Attention: Stock Transfer Manager
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Rights Agent, by the Company, by the holder
of any Right Certificate or by Secure Computing Canada to or on the Trustee
shall be sent by first-class mail, postage-prepaid, addressed (until another
address if filed in writing with the Company) as follows:
The Bank of Nova Scotia Trust Company of New York
One Liberty Plaza
New York, New York 10006
Attention: Secretary
Notices or demands authorized by this Agreement to be given or made by the
Company, the Trustee (in the case of Secure Computing Canada) or the Rights
Agent to the holder of any Right Certificate shall be sufficiently given or made
if sent by first-class mail, postage-prepaid, addressed to such holder at the
address of such holder as shown on the registry books of the Company or, in the
case of Secure Computing Canada, to the address for the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. Prior to the occurrence of a
Distribution Date, the Company may supplement or amend this Agreement in any
respect without the approval of any holders of Rights or Common Shares, Secure
Computing or any holder of Exchangeable Shares, and the Rights Agent and the
Trustee shall, if the
26
<PAGE>
Company so directs, execute such supplement or amendment. From and after the
occurrence of a Distribution Date, the Company and the Rights Agent may from
time to time supplement or amend this Agreement without the approval of any
holders of Rights in order to (i) cure any ambiguity, (ii) correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provisions herein, (iii) shorten or lengthen any time period hereunder or
(iv) to change or supplement the provisions hereunder in any manner that the
Company may deem necessary or desirable and that shall not adversely affect the
interests of the holders of Rights (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person); provided, this Agreement may not
be supplemented or amended to lengthen, pursuant to clause (iii) or this
sentence, (a) a time period relating to when the Rights may be redeemed at such
time as the Rights are not then redeemable or (b) any other time period unless
such lengthening is for the purpose of protecting, enhancing or clarifying the
Rights of, and/or the benefits to, the holders of Rights (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person). Upon the
delivery of a certificate from an appropriate officer of the Company that states
that the proposed supplement or amendment is in compliance with the terms of
this Section 27, the Rights Agent shall execute such supplement or amendment.
Prior to the Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Shares.
SECTION 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company, the Rights Agent or the Trustee
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 29. BENEFITS OF THIS AGREEMENT.
(a) Nothing in this Agreement shall be construed to give to any
Person other than the Company, the Rights Agent, the Trustee, the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
registered holders of Common Shares or Secure Computing Canada) any legal or
equitable right, remedy or claim under this Agreement. This Agreement shall be
for the sole and exclusive benefit of the Company, the Rights Agent, the
Trustee, the registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of Common Shares and Secure Computing
Canada).
(b) The Board of Directors of the Company shall have the exclusive
power and total and complete authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board of Directors or
the Company or necessary or advisable in the administration of this Agreement,
including without limitation the right and power to interpret this Agreement and
to make conclusively all determinations deemed necessary or advisable for the
administration of this Agreement. All such acts, calculations, interpretations
and determinations (including, for purposes of clause (y) below, all omissions
with respect to the foregoing) that are done or made by the Board of Directors
in good faith shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the Trustee, Secure Computing Canada and the holders of the Rights
and all other parties and (y) not subject the Board of Directors to any
liability to the holders of the Rights or any other party.
SECTION 30. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines, in their good faith judgment, that severing
the invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 shall
be reinstated and shall not expire until the close of business on the tenth day
following the date of such determination by the Board of Directors.
SECTION 31. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts to be
made and performed entirely within such state, except for Sections 18, 19, 20
and 21, which shall be governed by and construed in accordance with (i) the laws
of
27
<PAGE>
the State of Minnesota, in the case of the Rights Agent, and (ii) the laws of
the State of New York, in the case of the Trustee.
SECTION 32. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
SECTION 33. DESCRIPTIVE HEADINGS. Descriptive headings of the
several sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions of
this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
SECURE COMPUTING CORPORATION
By: ___________________________________________
Its: __________________________________________
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Rights Agent
By: ___________________________________________
Its: __________________________________________
THE BANK OF NOVA SCOTIA TRUST
COMPANY OF NEW YORK,
as Trustee
By: ___________________________________________
Its: __________________________________________
29
<PAGE>
EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF POWERS, DESIGNATIONS, PREFERENCES AND RIGHTS
OF SERIES B JUNIOR PARTICIPATING PREFERRED SHARES
OF
SECURE COMPUTING CORPORATION
(PURSUANT TO SECTION 151 OF THE DELAWARE GENERAL CORPORATION LAW)
Secure Computing Corporation, a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Corporation"),
hereby certifies that the following resolution providing for a series of 500,000
Preferred Shares, $.01 par value, designated as Series B Junior Participating
Preferred Shares, was adopted by the Board of Directors of the Corporation in
accordance with the provisions of Section 151 of the General Corporation Law at
a meeting duly called and held on [October 22], 1998:
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of this Corporation in accordance with the provisions of
its Restated Certificate of Incorporation, as amended, a series of Preferred
Stock of this Corporation be, and it hereby is, created, and that the
designation and amount thereof and the relative rights, preferences and
limitations of the shares of such series, are as follows:
1. Designation and Amount. The shares of such series shall be
designated as "Series B Junior Participating Preferred Shares" (the "Series B
Preferred Shares"), and the number of shares constituting such series shall be
Five Hundred Thousand 500,000. The number of shares constituting such series
may, unless prohibited by the Certificate of Incorporation or by applicable law
of the State of Delaware, be increased or decreased by resolution of the Board
of Directors; provided, that no decrease shall reduce the number of Series B
Preferred Shares to a number less than the number of shares then outstanding
plus the number of shares issuable upon the exercise of outstanding options,
rights or warrants or upon the conversion of any outstanding securities issued
by the Corporation convertible into Series B Preferred Shares.
2. Dividends and Distributions.
(i) The holders of Series B Preferred Shares, in preference to
the holders of Common Shares and of any other junior stock, shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the last
business day of March, June, September and December in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"), commencing on
the first Quarterly Dividend Payment Date after the first issuance of a Series B
Preferred Share, or fraction thereof, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1.00 or (b) subject to the provision
for adjustment hereinafter set forth, one hundred (100) times the aggregate per
share amount of all cash dividends, and one hundred (100) times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in Common Shares or a subdivision
of the outstanding Common Shares (by reclassification or otherwise), declared on
the Common Shares since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any Series B Preferred Share, or fraction thereof. In the
event the Corporation shall at any time after August 15, 1997 declare or pay any
dividend on Common Shares payable in Common Shares, or effect a subdivision or
combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise) into a greater or lesser number of Common Shares,
then in each such case the amount to which holders of Series B Preferred Shares
were entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of Common Shares outstanding immediately after
such event and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.
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<PAGE>
(ii) The Corporation shall declare a dividend or distribution
on the Series B Preferred Shares as provided in subparagraph (i) of this
paragraph 2 simultaneously with its declaration of a dividend or distribution on
the Common Shares (other than a dividend payable in Common Shares or a
subdivision of the outstanding Common Shares); provided that, in the event no
dividend or distribution shall have been declared on the Common Shares during
the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series B
Preferred Shares shall nevertheless be payable, out of funds legally available
for such purpose, on such subsequent Quarterly Dividend Payment Date.
(iii) Dividends shall begin to accrue and be cumulative on
outstanding Series B Preferred Shares from the Quarterly Dividend Payment Date
immediately preceding the date of issue of such Series B Preferred Shares,
unless the date of issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or unless the date
of issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of Series B Preferred Shares entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the Series B Preferred Shares in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all such
shares outstanding at that time. The Board of Directors may fix a record date
for the determination of holders of Series B Preferred Shares entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than sixty (60) days prior to the date fixed for the
payment thereof.
3. Voting Rights. The holders of Series B Preferred Shares shall
have the following voting rights:
(i) Subject to the provision for adjustment hereinafter set
forth, each Series B Preferred Share shall entitle the holder thereof to one
hundred (100) votes on all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at any time after August 15,
1997 declare or pay any dividend on Common Shares payable in Common Shares, or
effect a subdivision or combination or consolidation of the outstanding Common
Shares (by reclassification or otherwise) into a greater or lesser number of
Common Shares, then in each such case the number of votes per share to which
holders of Series B Preferred Shares were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction, the numerator
of which is the number of Common Shares outstanding immediately after such event
and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.
(ii) Except as otherwise provided herein, in any other
Certificate of Powers, Designations, Preferences and Rights creating a series of
Preferred Stock or by law, the holders of Series B Preferred Shares and the
holders of Common Shares, Series A Preferred Stock and any other capital shares
of the Corporation having general voting rights shall vote together as one class
on all matters submitted to a vote of the stockholders of the Corporation.
(iii) Except as otherwise provided herein or by law, the
holders of Series B Preferred Shares shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Shares, Series A Preferred Stock and any other
capital stock of the Corporation having general voting rights as set forth
herein) for taking any corporate action.
4. Certain Restrictions.
(i) Whenever quarterly dividends or other dividends or
distributions payable on the Series B Preferred Shares as provided in paragraph
2 hereof are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on Series B Preferred Shares
outstanding shall have been paid in full, the Corporation shall not:
(a) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series B Preferred Shares;
2
<PAGE>
(b) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series B
Preferred Shares, except dividends paid ratably on the Series B Preferred Shares
and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are then
entitled;
(c) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series B Preferred Shares,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of stock of the
Corporation ranking junior (both as to dividends and upon liquidation,
dissolution or winding up) to the Series B Preferred Shares; or
(d) redeem or purchase or otherwise acquire for
consideration any Series B Preferred Shares, or any shares of stock ranking on a
parity with the Series B Preferred Shares, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.
(ii) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under subparagraph (i) of
this paragraph 4, purchase or otherwise acquire such shares at such time and in
such manner.
5. Reacquired Shares. Any Series B Preferred Shares purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be retired
and canceled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued Preferred Shares and may be
reissued as part of a new series of Preferred Stock by resolution or resolutions
of the Board of Directors, subject to the conditions and restrictions on
issuance set forth herein, in the Certificate of Incorporation, or in any other
Certificate of Powers, Designations, Preferences and Rights creating a series of
Preferred Stock or as otherwise required by law.
6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (a)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series B Preferred Shares unless,
prior thereto, the holders of Series B Preferred Shares shall have received the
greater of (i) $100 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, or (ii) an aggregate amount per share, subject to the provision
for adjustment hereinafter set forth, equal to one hundred (100) times the
aggregate amount to be distributed per share to holders of Common Shares, or (b)
to the holders of shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series B Preferred Shares,
except distributions made ratably on the Series B Preferred Shares and all other
such parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up. In
the event the Corporation shall at any time after August 15, 1997 declare or pay
any dividend on the Common Shares payable in Common Shares, or effect a
subdivision or combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise) into a greater or lesser number of Common Shares,
then in each such case the aggregate amount to which holders of Series B
Preferred Shares were entitled immediately prior to such event under clause
(a)(ii) of the preceding sentence shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is the number of
Common Shares that were outstanding immediately prior to such event.
7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination, or other transaction in which the
Common Shares are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case the Series B Preferred Shares
shall at the same time be similarly exchanged or changed into an amount per
share (subject to the provision for adjustment hereinafter set forth) equal to
one hundred (100) times the aggregate amount of stock, securities, money and/or
any other property (payable in
3
<PAGE>
kind), as the case may be, into which or for which each Common Share is changed
or exchanged. In the event the Corporation shall at any time after August 15,
1997 declare or pay any dividend on Common Shares payable in Common Shares, or
effect a subdivision or combination or consolidation of the outstanding Common
Shares (by reclassification or otherwise) into a greater or lesser number of
Common Shares, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of Series B Preferred Shares
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of Common Shares outstanding immediately after such event
and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.
8. No Redemption. The Series B Preferred Shares shall not be
redeemable.
9. Rank. The Series B Preferred Shares shall rank senior to the
Series A Preferred Stock and junior in terms of dividend and liquidation,
dissolution and winding up rights to all other series of the corporation's
Preferred Stock hereafter issued that specifically provide that they shall rank
senior to the Series B Preferred Shares.
10. Fractional Shares. Series B Preferred Shares may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to receive dividends, participate in distributions
and to have the benefit of all other rights of holders of Series B Preferred
Shares.
4
<PAGE>
IN WITNESS WHEREOF, this Certificate of Powers, Designations,
Preferences and Rights is executed on behalf of the Corporation by its
_____________________ and attested by its Secretary, all as of the ______ day of
__________________, 1998.
By:
------------------------------------------
-----------------------------------------------
-----------------------------------------------
Attest:
By:
-----------------------------
Jeffrey D. Saper
5
<PAGE>
EXHIBIT B
[FORM OF RIGHT CERTIFICATE]
Certificate No. R- ______ _____ Rights
NOT EXERCISABLE AFTER AUGUST 15, 2007 OR SUCH EARLIER DATE AS THE
BOARD OF DIRECTORS ORDERS REDEMPTION OR EXCHANGE OF THE RIGHTS. THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.001 PER RIGHT (SUBJECT
TO ADJUSTMENT) AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS THAT ARE
OR WERE ACQUIRED OR BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) MAY BECOME NULL AND VOID.
Right Certificate
SECURE COMPUTING CORPORATION
This certifies that _________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the
Amended and Restated Rights Agreement dated as of [October 22], 1998 (the
"Rights Agreement") among Secure Computing Corporation, a Delaware corporation
(the "Company"), Norwest Bank Minnesota, National Association (the "Rights
Agent"), and The Bank of Nova Scotia Trust Company of New York (the "Trustee"),
to purchase from the Company at any time after the Distribution Date (as such
term is defined in the Rights Agreement) and prior to 5:00 P.M. (Minneapolis,
Minnesota time) on August 15, 2007 at the office or offices of the Rights Agent
designated for such purpose, or of its successor as Rights Agent, one
one-hundredth of a fully paid, nonassessable Series B Junior Participating
Preferred Share, $.01 par value, of the Company (the "Preferred Shares"), at a
purchase price of $50 per one one-hundredth of a Preferred Share (the "Purchase
Price"), upon presentation and surrender of this Right Certificate with the Form
of Election to Purchase duly completed and executed. The number of Rights
evidenced by this Right Certificate (and the number of one one-hundredths of a
Preferred Share which may be purchased upon exercise thereof) set forth above,
and the Purchase Price set forth above, are, except for adjustments required
pursuant to the Rights Agreement, the number and Purchase Price as of August 15,
1997, based on the Preferred Shares as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the
number of one one-hundredths of a Preferred Share which may be purchased upon
the exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and which
contains a full description of the rights, limitations of rights, obligations,
duties and immunities hereunder of the Rights Agent, the Company and the holders
of the Right Certificates (which limitations of rights include the voiding of
the Rights under certain circumstances specified in the Rights Agreement).
Copies of the Rights Agreement are on file with the Secretary of the Company at
its principal executive office and will be mailed without charge by the Company
or the Rights Agent to the holder of this certificate promptly following receipt
by the Company or the Rights Agent of a written request therefor.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), any Rights evidenced by this Right Certificate
that are beneficially owned by an Acquiring Person or an Associate or Affiliate
of such Acquiring Person (as such terms are defined in the Rights Agreement) or
were beneficially owned by an Acquiring Person or an Associate or Affiliate of
such Acquiring Person after the Acquiring Person becomes an Acquiring Person
shall be null and void from and after the occurrence of such Section 11(a)(ii)
Event.
<PAGE>
This Right Certificate, with or without other Right Certificates,
upon surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of one one-hundredths of a Preferred Share as the Rights
evidenced by the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. If this Right Certificate shall be exercised
in part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Right Certificates for the number of Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may, but are not required to, be redeemed by
the Company at a redemption price of $.001 per Right, subject to adjustment as
provided in the Rights Agreement, payable in cash and (ii) may, but are not
required to, be exchanged by the Company in whole or in part for Common Shares
or other shares of capital stock of the Company. The Board of Directors of the
Company and the Company shall not have any liability to any person as a result
of the redemption or exchange of the Rights pursuant to the provisions of the
Rights Agreement.
No fractional Preferred Shares will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractional shares which are
integral multiples of one one-hundredth of a Preferred Share or, if a Right
shall then be exercisable for a fraction other than one one-hundredth of a
Preferred Share, integral multiples of that fraction, which may, at the election
of the Company, be evidenced by depositary receipts), if in lieu thereof a cash
payment is made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of the
Preferred Shares or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
<PAGE>
WITNESS the manual or facsimile signature of the proper officer of
the Company.
Dated: SECURE COMPUTING CORPORATION
By:
-------------------------------------------
Its:
-------------------------------------------
ATTEST:
- ---------------------------------
Countersigned:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By:
-----------------------------
Authorized Manual or
Facsimile Signature
<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Right Certificate.)
FOR VALUE RECEIVED ___________________ hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _____________________ Attorney,
to transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated:
----------------
-------------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States or Canada or by an eligible guarantor
institution (bank, stockbroker, savings and loan association or credit union
with membership in an approved signature guarantee medallion program), pursuant
to Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934, as
amended.
<PAGE>
CERTIFICATE
The undersigned hereby certifies (after due inquiry and to the best
of its knowledge) by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate
[ ] are
or
[ ] are not
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement); and
(2) the undersigned
[ ] did
or
[ ] did not
acquire the Rights evidenced by this Right Certificate from any Person who, at
any time that such Person beneficially owned such Rights, is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
-------------------------------------------
Signature
NOTICE
The signature of the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
<PAGE>
FORM OF ELECTION TO EXERCISE
(To be executed if holder desires to exercise Rights represented by the Right
Certificate.)
TO: SECURE COMPUTING CORPORATION
The undersigned hereby irrevocably elects to exercise __________
Rights represented by this Right Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights (or such other securities of the
Company or of any other person which may be issuable upon exercise of the
Rights) and requests that certificates for such shares be issued in the name of:
Please insert social security or other identifying number
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address)
Dated:
------------------
---------------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States or Canada or by an eligible guarantor
institution (bank, stockbroker, savings and loan association or credit union
with membership in an approved signature guarantee medallion program), pursuant
to Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934, as
amended.
<PAGE>
CERTIFICATE
The undersigned hereby certifies (after due inquiry and to the best
of its knowledge) by checking the appropriate boxes that:
(1) he Rights evidenced by this Right Certificate
[ ] are
or
[ ] are not
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement); and
(2) the undersigned
[ ] did
or
[ ] did not
acquire the Rights evidenced by this Right Certificate from any Person who, at
any time that such Person beneficially owned such Rights, is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
---------------------------------------------
Signature
NOTICE
The signature of the foregoing Election to Exercise and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
OF
SECURE COMPUTING CORPORATION
On July 24, 1997, the Board of Directors of Secure Computing
Corporation (the "Company"), declared a dividend of one preferred share purchase
right (a "Right") for each outstanding Common Share, $.01 par value (the "Common
Shares"), of the Company. The dividend is payable on August 15, 1997 (the
"Record Date") to stockholders of record on that date. The Board also authorized
the issuance of one Right for each Non-Voting Exchangeable Share (the
"Exchangeable Shares") of Secure Computing Canada Ltd. ("Secure Computing
Canada") outstanding on the Record Date. Rights issued with respect to the
Exchangeable Shares will be issued to The Bank of Nova Scotia Trust Company of
New York, as trustee (the "Trustee") for the benefit of Secure Computing Canada,
in order to enable Secure Computing Canada to effectuate the economic equivalent
to the holders of Exchangeable Shares of the Rights issued to the holders of
Common Shares as required under the Support Agreement by and between the Company
and Secure Computing Canada, dated as of August 29, 1996.
Each Right entitles the registered holder to purchase from the
Company one one-hundredth of a Series B Junior Participating Preferred Share,
$.01 par value (the "Preferred Shares"), of the Company at a price of $50 per
one one-hundredth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in an Amended
and Restated Rights Agreement (the "Rights Agreement"), dated as of [October
22], 1998, among the Company, Norwest Bank Minnesota, National Association, as
Rights Agent (the "Rights Agent") and the Trustee.
Initially, the Rights will attach to all certificates representing
Common Shares and will be held by the Trustee for the benefit of Secure
Computing Canada with respect to Exchangeable Shares then outstanding and no
separate Right Certificates will be distributed. The Rights will separate from
the Common Shares, will no longer be held by the Trustee for the benefit of
Secure Computing Canada and a Distribution Date for the Rights will occur upon
the earlier of:
(i) the close of business on the fifteenth day
following a public announcement that a person or group of affiliated or
associated persons has become an "Acquiring Person" (i.e., has become, subject
to certain exceptions, the beneficial owner of 15% or more of the outstanding
Common Shares, including Exchangeable Shares), or
(ii) the close of business on the fifteenth day
following the commencement or public announcement of a tender offer or
exchange offer the consummation of which would result in a person or group of
affiliated or associated persons becoming, subject to certain exceptions, the
beneficial owner of 15% or more of the outstanding Common Shares, including
Exchangeable Shares (or such later date as may be determined by the Board of
Directors of the Company prior to a person or group of affiliated or associated
persons becoming an Acquiring Person).
Until the Distribution Date,
(i) the Rights will be evidenced by the Common Share
certificates and on the books and records of Secure Computing Canada and will be
transferred with and only with the Common Shares and, in the case of Rights held
by the Trustee for the benefit of Secure Computing Canada, at the direction of
Secure Computing Canada,
(ii) new Common Share certificates and Exchangeable
Share certificates issued after the Record Date upon transfer or new
issuance of the Common Shares or Exchangeable Shares will contain a notation
incorporating by reference, or in the case of Exchangeable Shares denoting, the
Rights Agreement, and
<PAGE>
(iii) the surrender for transfer of any Common Share
certificate, even without such notation or a copy of this Summary of
Rights attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate.
As promptly as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and to Secure Computing Canada or as Secure Computing Canada
directs and such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on August 15, 2007, unless extended or earlier redeemed or
exchanged by the Company as described below.
The Purchase Price payable, and the number of Preferred Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution:
(i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Shares,
(ii) upon the grant to holders of the Preferred Shares
of certain rights, options or warrants to subscribe for or purchase
Preferred Shares or convertible securities at less than the then current market
price of the Preferred Shares, or
(iii) upon the distribution to holders of the Preferred
Shares of evidences of indebtedness or assets (excluding regular
periodic cash dividends or dividends payable in Preferred Shares) or of
subscription rights or warrants (other than those described in clause (ii)
hereof).
The number of Preferred Shares issuable upon the exercise of a Right is also
subject to adjustment in the event of a dividend on Common Shares payable in
Common Shares, or a subdivision, combination or consolidation of the Common
Shares.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. No fractional Preferred Shares will be issued (other than
fractional shares which are integral multiples of one one-hundredth (subject to
adjustment) of a Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts) if in lieu thereof a payment in cash is made
based on the closing price (pro-rated for the fraction) of the Preferred Shares
on the last trading date prior to the date of exercise.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person (unless such person first becomes an
Acquiring Person pursuant to a tender offer or exchange offer for all
outstanding Common Shares, including Exchangeable Shares, at a price and on
terms determined by the Board of Directors of the Company (prior to any change
in control of the Board of Directors) to be fair to the stockholders and
otherwise in the best interests of the Company and its stockholders and which
the Board of Directors recommends to the stockholders), proper provision shall
be made so that each holder of a Right, other than Rights that are or were
beneficially owned by the Acquiring Person (which will thereafter be void), will
thereafter have the right to receive upon exercise thereof at the then current
exercise price of the Right that number of Common Shares having a market value
of two times the exercise price of the Right, subject to certain possible
adjustments.
In the event that, after an Acquiring Person becomes such, the
Company is acquired in certain mergers or other business combination
transactions (other than a transaction for at least the same per-share
consideration with a person who acquired Common Shares through a tender offer or
exchange offer for all outstanding Common Shares, including Exchangeable Shares,
approved by the Board of Directors in accordance with the preceding paragraph or
any wholly owned subsidiary of any such person) or 50% or more of the assets or
earning power of the Company and its subsidiaries (taken as a whole) are sold
after the Distribution Date or within 15 days prior thereto in one or a series
of related
<PAGE>
transactions, each holder of a Right (other than Rights which have become void
under the terms of the Rights Agreement) will thereafter have the right to
receive, upon exercise thereof at the then current exercise price of the Right,
that number of common shares of the acquiring company (or, in certain cases, one
of its affiliates) having a market value of two times the exercise price of the
Right.
In certain events specified in the Rights Agreement, the Company is
permitted to temporarily suspend the exercisability of the Rights.
At any time after a person or group of affiliated or associated
persons becomes an Acquiring Person (subject to certain exceptions) and prior to
the acquisition by a person or group of affiliated or associated persons of 50%
or more of the outstanding Common Shares, including Exchangeable Shares, the
Board of Directors of the Company may exchange all or part of the Rights (other
than Rights which have become void under the terms of the Rights Agreement) for
Common Shares or equivalent securities at an exchange ratio per Right equal to
the result obtained by dividing the exercise price of a Right by the current per
share market price of the Common Shares, subject to adjustment.
At any time prior to the close of business on the twentieth day
after a public announcement that a person or group of affiliated or associated
persons has become an Acquiring Person, the Board of Directors of the Company
may redeem the Rights in whole, but not in part, at a price of $.001 per Right,
subject to adjustment (the "Redemption Price"), payable in cash; provided,
however, that such redemption may occur after any person becomes an Acquiring
Person only if there has not been a change in control of the Board of Directors
of the Company. The period of time during which the Rights may be redeemed may
be extended by the Board of Directors of the Company if no such change of
control has occurred or if no person has become an Acquiring Person. The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish. The Board of Directors and the Company shall not have any liability
to any person as a result of the redemption or exchange of the Rights pursuant
to the provisions of the Rights Agreement. The Rights are not exercisable for
Common Shares or Preferred Shares, and the Distribution Date shall not occur,
until the Company's right to redeem the Rights shall have expired.
The terms of the Rights may be amended by the Board of Directors of
the Company, subject to certain limitations after the Distribution Date, without
the consent of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form
8-A/A-1 dated [October 22], 1998. A copy of the Rights Agreement is available
free of charge from the Company by contacting the Chief Financial Officer at
Secure Computing Corporation, One Almaden Boulevard, Suite 400, San Jose,
California 95113. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.
