RIGHTS AGREEMENT
DATED AS OF NOVEMBER 1, 2000
BETWEEN
PERFORMANCE TECHNOLOGIES, INCORPORATED
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
RIGHTS AGENT
TABLE OF CONTENTS
Section 1. Certain Definitions. ...........................................1
Section 2. Appointment of Rights Agent. ...................................8
Section 3. Issuance of Rights Certificates.................................8
Section 4. Form of Rights Certificates.....................................9
Section 5. Countersignature and Registration..............................11
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates...................................................11
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights..12
Section 8. Cancellation and Destruction of Rights Certificates ...........13
Section 9. Reservation and Availability of Preferred Stock................14
Section 10. Preferred Stock Record Date....................................15
Section 11. Adjustment of Exercise Price, Number and Kind of Shares or
Number of Rights...............................................16
Section 12. Certificate of Adjusted Exercise Price or Number of Shares.....23
Section 13. Merger, Consolidation or Sale or Transfer of Assets or
Earning Power..................................................24
Section 14. Fractional Rights and Fractional Shares........................25
Section 15. Rights of Action...............................................26
Section 16. Agreement of Rights Holders....................................26
Section 17. Rights Certificate Holder Not Deemed a Shareholder.............27
Section 18. Concerning the Rights Agent....................................27
Section 19. Merger or Change of Name of Rights Agent.......................28
Section 20. Duties of Rights Agent.........................................28
Section 21. Change of Rights Agent.........................................30
Section 22. Issuance of New Rights Certificates............................31
Section 23. Redemption.....................................................31
Section 24. Exchange.......................................................32
Section 25. Notice of Certain Events.......................................33
Section 26. Notices........................................................34
Section 27. Supplements and Amendments.....................................35
Section 28. Determinations and Actions by the Board of Directors, etc......36
Section 29. Successors.....................................................36
Section 30 Benefits of this Agreement.....................................36
Section 31. Severability...................................................37
Section 32. Governing Law..................................................37
Section 33 Counterparts...................................................37
Section 34. Descriptive Headings...........................................37
Section 35. Costs of Enforcement...........................................37
Section 36. Three Year Independent Director Evaluation Mechanism. .........37
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RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT, is made this 1st day of November, 2000 (the
"Agreement"), between PERFORMANCE TECHNOLOGIES, INCORPORATED, a Delaware
corporation (the "Company"), and AMERICAN STOCK TRANSFER & TRUST COMPANY, a New
York corporation (the "Rights Agent").
WHEREAS, subject to the execution of this Agreement and to certain
other conditions, on October 27, 2000 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company (the "Board") (a) authorized and declared
a distribution on November 20, 2000 of one preferred share purchase right (a
"Right") for each share of Common Stock, $.01 par value ("Common Stock"), of the
Company outstanding on November 8, 2000 (the "Record Date"), and has (b)
authorized the issuance of one Right for each share of Common Stock issued or
sold by the Company between the Record Date and the earlier of the Separation
Date or the Expiration Date (as such terms are hereinafter defined), subject to
adjustment, and, to the extent provided in Section 22, each share of Common
Stock issued or sold by the Company after the Separation Date, each Right
representing the right to purchase after the Separation Date one one-thousandth
of a share of Preferred Stock, as hereinafter defined, or such different amount
and/or kind of securities as shall be hereinafter provided.
WHEREAS, subject to the terms and conditions hereof, each Right
entitles the holder thereof, after the Separation Date, to purchase securities
or assets of the Company (or, in certain cases, securities of certain other
entities);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1.Certain Definitions. The following terms have the meanings indicated:
-------------------
(a) "Acquiring Person" means any Person who or which (or who or which, together
with all of such Person's Affiliates and Associates) shall be the Beneficial
Owner of 15% or more of the shares of Common Stock then outstanding (other than
as a result of a Permitted Offer) but shall not include an Exempt Person.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person" as
the result of (i) the acquisition of Common Stock (or other securities
convertible into Common Stock or other rights with respect to Common Stock)
directly from the Company, or (B) an acquisition of Common Stock by the Company
which, by reducing the number of shares outstanding, proportionately increases
the percentage of shares beneficially owned by such Person (alone or together
with all Affiliates and Associates) to 15% or more of the shares of Common Stock
then outstanding; provided, however, that if a Person (together with such
Person's Affiliates and Associates) becomes the Beneficial Owner of 15% or more
of the Common Stock then outstanding as a result of share purchases by the
Company, and such Person (or an Affiliate or Associate) subsequently becomes the
Beneficial Owner of an additional 1% of the outstanding shares of Common Stock
(other than by means of a stock dividend or stock split or by purchase from the
Company), such Person shall then be an "Acquiring Person." Notwithstanding the
foregoing, if the Board of Directors of the Company determines in good faith
that a Person who would otherwise be an "Acquiring Person" has become such
inadvertently, without any plan or intention to seek or affect control of the
Company, and such Person promptly enters into an irrevocable commitment to
divest and thereafter promptly divests (without exercising or retaining any
power, including voting, with respect to such shares) the sufficient number of
shares of Common Stock so that such Person is no longer an "Acquiring Person,"
then such Person shall not be deemed an "Acquiring Person" for purposes of this
Agreement.
(b) "Acquiring/Adverse Person Rights" shall have the meaning set forth in
Section 4(b).
(c) "Adjustment Shares" shall have the meaning set forth in Section 11(a)(ii).
(d) "Adverse Person" is a Person who beneficially owns more than 10% of the
outstanding shares of Common Stock and whose ownership of Common Stock, in the
opinion of the Board, is intended or reasonably likely to cause pressure on the
Company to enter into a transaction which would provide such Person with
short-term financial gain not in the Company's best long-term interest or is
causing or is reasonably likely to cause a material adverse impact on the
Company's business or prospects.
(e) "Affiliate" and "Associate" have the respective meanings given to such terms
in Rule 12b-2 of the Exchange Act, as such rule is in effect on the date of this
Agreement.
(f) A Person shall be deemed the "Beneficial Owner" of and shall be deemed to
"beneficially own" any securities:
(i) of which such Person or any of such Person's Affiliates or Associates
is considered to be a "beneficial owner" under Rules 13d-3 and 13d-5 of
the Exchange Act, as such rules are in effect on the date of this
Agreement;
(ii) which are beneficially owned, directly or indirectly, by any other
Person (or any Affiliate or Associate of such other Person) with which
such Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing) for
the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in subparagraph (i) above) or disposing of
such securities (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities); or
(iii) which such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has the right to acquire (whether such right is
exercisable immediately or only after the passage of time or upon the
satisfaction of conditions) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise;
provided, however, that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," (w) securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange, (x) solely because such Person or any of such Person's
Affiliates or Associates has or shares the power to vote or direct the voting
(A) pursuant to a revocable proxy given in response to a proxy or consent
solicitation made under the Exchange Act and the Exchange Act Regulations, and
(B) is not reportable by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report), (y) securities that may be issued upon
exercise of Rights at any time prior to the occurrence of a Triggering Event, or
(z) securities that may be issued upon exercise of Rights after the occurrence
of a Triggering Event, which Rights were acquired by such Person or any of such
Person's Affiliates or Associates prior to the Separation Date or pursuant to
Section 3(a) or Section 22 (the "Original Rights") or pursuant to Section 11(i)
as an adjustment to any Original Rights.
Notwithstanding anything 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 securities then issued and outstanding plus
the number not then actually issued and outstanding but which such Person is
deemed to own beneficially hereunder, and any calculation of the percentage of
securities Beneficially Owned by such Person shall be subject to the first
sentence of Section 28.
(g) "Business Day" means any day other than a Saturday, a Sunday, or a day on
which banking institutions in the State of New York are authorized or obligated
by law or executive order to close.
(h) "Capital Stock Equivalents" shall have the meaning set forth in Section
11(a)(iii)(B).
(i) "Close of Business" for any given day means 5:00 P.M., Eastern time, on such
date; provided, however, that if such date is not a Business Day it means such
time on the next succeeding Business Day.
(j) "Closing Price" shall have the meaning set forth in Section 11(d).
(k) "common stock" of any Person other than the Company means such Person's
capital stock with the greatest voting power, or, if such Person has no capital
stock, the equity securities or other equity interest having power to control or
direct the management of such Person.
(l) "Common Stock" means the shares of common stock, $.01 par value, of the
Company.
(m) "Current Market Price" shall have the meaning set forth in Section 11(d).
(n) "Current Value" shall have the meaning set forth in Section 11(a)(iii)(A).
(o) "Equivalent Preferred Stock" shall have the meaning set forth in Section
11(b).
(p) "Exchange Act" means the Securities Exchange Act of 1934, as amended, as in
effect on the date hereof.
(q) `"Exchange Act Regulations" means the regulations promulgated under the
Exchange Act, as in effect on the date hereof.
(r) "Exchange Ratio" shall have the meaning set forth in Section 24(a).
(s) "Exempt Person" shall mean (i) the Company, (ii) any Subsidiary of the
Company, (iii) any employee benefit plan of the Company or of any Subsidiary of
the Company and (iv) an entity or trustee holding Common Stock for or pursuant
to the terms of any such plan or for the purpose of funding any such plan or
funding other employee benefits for employees of the Company or of any
Subsidiary of the Company.
(t) "Exercise Price" initially shall be $110 subject to adjustment from time to
time as provided in Sections 11 and 13(a).
(u) "Expiration Date" shall mean the earlier of (i) the Close of Business on the
Final Expiration Date, (ii) the Redemption Date, (iii) the time at which the
Rights are exchanged as provided in Section 24, and (iv) immediately prior to
the effective time of a consolidation, merger or share exchange of the Company
(A) into another corporation or (B) with another corporation in which the
Company is the surviving corporation but Common Stock is converted into cash
and/or securities of another corporation, in each case pursuant to an agreement
entered into by the Company prior to a Stock Acquisition Date.
(v) "Final Expiration Date" shall mean November 1, 2010.
(w) "Flip-in Date" shall mean the tenth Business Day after any Stock Acquisition
Date which is not the result of a Flip-over Event.
(x) "Flip-in Event" shall mean the event which caused a Flip-in Date.
(y) "Flip-over Entity" shall mean:
(i) in the case of any transaction in clause (i) of the definition of a
Flip-over Event, (A) the Person that is the issuer of any securities
into which shares of Common Stock are converted in such transaction,
or, if there is more than one such issuer, the issuer of common stock
that has the highest aggregate Current Market Price and (B) if no
securities are so issued, the Person that is the other party to such
transaction, or, if there is more than one such Person, the Person the
common stock of which has the highest aggregate Current Market Price;
and
(ii) in the case of any transaction described in clause (ii) of the
definition of a Flip-over Event, the Person that receives the largest
portion of the assets or operating income or cash flow being
transferred pursuant to such transaction or, if each Person receives
the same portion of the assets or earning power transferred pursuant to
such transaction or if the Person receiving the largest portion of the
assets or earning power cannot be determined, whichever Person the
common stock of which has the highest aggregate Current Market Price;
provided, however, that in any such case:
(A) If the common stock of such Person is not at such
time, and has not been continuously over the
preceding 12 month period, Registered Common Stock,
or such Person is not a corporation, and such Person
is a direct or indirect Subsidiary of another Person
that has Registered Common Stock outstanding,
"Flip-over Entity" shall refer to such other Person;
(B) If the common stock of such Person is not Registered
Common Stock or such Person is not a corporation,
and (1) such Person is a direct or indirect
Subsidiary of another Person but is not a direct or
indirect Subsidiary of another Person which has
Registered Common Stock outstanding, "Flip-over
Entity" shall refer to the ultimate parent entity of
such first-mentioned Person; or (2) such Person is
directly or indirectly controlled by more than one
Person, and one or more of such other Persons has
Registered Common Stock outstanding, "Flip-over
Entity" shall refer to whichever of such other
Persons is the issuer of the Registered Common Stock
having the highest aggregate Current Market Price; or
(3) such Person is directly or indirectly controlled
by more than one Person, and none of such other
Persons have Registered Common Stock outstanding,
"Flip-over Entity" shall refer to whichever ultimate
parent entity is the corporation having the greatest
shareholders equity or, if no such ultimate parent
entity is a corporation, shall refer to whichever
ultimate parent entity is the entity having the
greatest net assets.
(z) "Flip-over Event" shall mean any transactions or series of transactions,
following a Flip-in Event, in which:
(i) the Company shall consolidate or merge with, or participate in a share
exchange with any other Person if, at the time of the consolidation,
merger or share exchange or at the time the Company enters into any
agreement with respect to any such consolidation, merger or share
exchange, the Acquiring Person or Adverse Person Controls the Board of
Directors of the Company and either (A) any terms of or arrangement
concerning the treatment of shares of capital stock in such
consolidation, merger or share exchange relating to the Acquiring
Person or Adverse Person is not identical to the terms and
arrangements relating to other holders of the Common Stock or (B) the
Person with whom the transaction or series of transactions occurs is
the Acquiring Person or Adverse Person or an Affiliate or Associate of
the Acquiring Person or Adverse Person, or
(ii) The Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer) fifty percent or more of
the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to any Person (other than the Company or one or more of its
wholly owned Subsidiaries) or to two or more such Persons which are
Affiliates or Associates or otherwise acting in concert, if, at the
time of the entry by the Company (or any such Subsidiary) into an
agreement with respect to such sale or transfer or assets, the
Acquiring Person or Adverse Person Controls the Board of Directors of
the Company. For purposes of the foregoing description, (x) the terms
"Acquiring Person" and "Adverse Person" shall include any Acquiring
Person or Adverse Person, as applicable, and their Affiliates and
Associates (other than the Company) and (y) an Acquiring Person or
Adverse Person, as applicable, shall be deemed to Control the Company's
Board of Directors when, following a Flip-in Event, the persons who
were directors of the Company (or persons nominated and/or appointed as
directors by vote of a majority of such persons) before the Stock
Acquisition Date shall cease to constitute a majority of the Company's
Board of Directors.
(aa) "Flip-over Stock" of any Person shall mean the capital stock (or similar
equity interest) with the greatest voting power in respect of the election of
directors (or other persons similarly responsible for direction of the business
and affairs) of the Flip-Over Entity.
(bb) "Nasdaq National Market" shall have the meaning set forth in Section 11(d).
(cc) "Permitted Offer" shall mean a tender or exchange offer which is for all
outstanding shares of Common Stock at a price and on terms determined, prior to
the purchase of shares under such tender or exchange offer, by at least a
majority of the members of the Board who are not officers of the Company and who
are not Acquiring Persons, Adverse Persons or Affiliates, Associates, nominees
or representatives of an Acquiring Person or Adverse Person, to be adequate
(taking into account all factors that such Directors deem relevant including,
without limitation, prices that could reasonably be achieved if the Company or
its assets were sold on an orderly basis designed to realize maximum value) and
otherwise in the best interest of the Company and its stockholders (other than
the Person or any Affiliate or Associate thereof on whose basis the offer is
being made) taking into account all factors that such Directors may deem
relevant.
(dd) "Person" means any individual, partnership, firm, corporation, limited
liability company, association, trust, unincorporated organization or other
entity, as well as any syndicate or group deemed to be a person under Section
14(d)(2) of the Exchange Act.
(ee) "Preferred Stock" shall mean the Series A Junior Participating Preferred
Stock, par value $.01 per share, of the Company.
(ff) "Redemption Date" shall mean the time at which the Rights are redeemed as
provided in Section 23.
(gg) "Redemption Price" shall have the meaning set forth in Section 23(b).
(hh) "Registered Common Stock" shall mean Common Stock registered under Section
12 of the Exchange Act.
(ii) "Registration Date" shall have the meaning set forth in Section 9(b)(ii).
(jj) "Registration Statement" shall have the meaning set forth in Section
9(b)(i).
(kk) "Rights Certificate" shall have the meaning set forth in Section 3(a).
(ll) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth in
Section 11(a)(iii)(B).
(mm) "Securities Act" shall have the meaning set forth in Section 9(b)(i).
(nn) "Separation Date" shall mean the Close of Business on the earlier of:
(i) the Flip-in Date; or
(ii) the Tenth Business Day following the commencement of, or first public
disclosure of an intention to commence, a tender or exchange offer by
any Person (other than by the Company, any Subsidiary of the Company,
any employee benefit plan maintained by the Company or any of its
Subsidiaries, or any trustee or fiduciary for such plan acting in such
capacity or other than a Permitted Offer) if, upon consummation
thereof, such Person would become an Acquiring Person; provided,
however, that if any such tender offer or exchange offer is cancelled,
terminated or otherwise withdrawn prior to the Separation Date without
the purchase of any shares of Common Stock pursuant thereto, such offer
shall be deemed, for purposes of this definition, never to have been
made.
(oo) "Spread" shall have the meaning set forth in Section 11(a)(iii)(A).
(pp) "Stock Acquisition Date" shall mean the first date of public announcement
by the Company that a Person has become an Acquiring Person or an Adverse
Person.
(qq) "Subsidiary" means, as to any Person, any corporation of which an amount of
voting securities sufficient to elect at least a majority of the directors of
such corporation is beneficially owned, directly or indirectly, by such Person,
or otherwise controlled by such Person.
(rr) "Summary of Rights" shall have the meaning set forth in Section 3(b).
(ss) "TIDE Committee" shall have the meaning set forth in Section 36.
(tt) "Trading Day" shall have the meaning set forth in Section 11(d).
(uu) "Transfer" shall have the meaning set forth in Section 6(a).
(vv) "Triggering Event" means any Flip-in Event or any Flip-over Event.
Section 2.........Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with this Agreement,
and the Rights Agent hereby accepts such appointment. The Company may from time
to time appoint Co-Rights Agents, upon ten (10) days' prior written notice to
the Rights Agent. The Rights Agent shall have no duty to supervise, and shall in
no event be liable for, the acts or omissions of any such Co-Rights Agent.
Section 3.........Issuance of Rights Certificates.
(a) Until the Close of Business on the Separation Date, the Rights:
(i) will be evidenced by the certificates for shares of Common Stock as of
and subsequent to the Record Date (which certificates for shares of
Common Stock shall be deemed also to be Certificates for Rights),
whether or not such certificates bear the legend set forth in this
Section 3 and not by separate certificates,
(ii) will be held by the registered holders of the Common Stock, and
(iii) will be transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer to the
Company).
As soon as practicable after the Separation Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Rights Agent
will send by first-class, postage prepaid mail, to each record holder of shares
of Common Stock as of the Close of Business on the Separation Date, at the
address of such holder shown on the records of the Company, a certificate for
Rights, substantially in the form of Exhibit A (the "Rights Certificate"), for
the Rights to which such holder is entitled. As of and after the Separation
Date, the Rights will be evidenced solely by such Rights Certificates.
(b) On the Record Date or as soon as practicable thereafter, the Company will
send a copy of a Summary of Rights Agreement, in substantially the form of
Exhibit B (the "Summary of Rights"), by first-class, postage prepaid mail, to
each record holder of Common Stock as of the Close of Business on the Record
Date at the address of such holder shown on the records of the Company. Until
the earlier of the Separation Date, the Expiration Date and the Final Expiration
Date (as such terms are defined in this Section 3 and in Section 7), (i) the
Rights will be evidenced by such certificates for Common Stock registered in the
names of the holders thereof (together with a copy of the Summary of Rights),
and (ii) the surrender for transfer of any certificate for Common Stock, with or
without a copy of the Summary of Rights attached thereto, shall also constitute
the transfer of the Rights associated with the Common Stock represented thereby.
(c) In the event the Company shall at any time after the Record Date and prior
to the Separation Date issue or sell any shares of Common Stock otherwise than
in an adjustment transaction referred to in Sections 11(a)(i), 11(b) or 11(c),
each such share of Common Stock so issued or sold shall automatically have one
new Right associated with it (which Right shall be evidenced as described in
Section 4). To the extent provided in Section 22, Rights shall be issued by the
Company in respect of shares of Common Stock that are issued or sold by the
Company after the Separation Date.
(d) Rights shall, without any further action, be issued in respect of all shares
of Common Stock which are issued (including any shares of Common Stock held in
treasury) after the Record Date but prior to the earlier of the Separation Date
and the Expiration Date. Certificates representing Common Stock issued after the
Record Date shall bear substantially the following legend:
Until the Separation Date (as defined in the Rights Agreement
referred to below), this certificate also evidences and entitles the
holder hereof to certain rights as set forth in the Rights Agreement
between Performance Technologies, Incorporated (the "Company") and
American Stock Transfer & Trust Company (the "Rights Agent") dated as
of November 1, 2000 (as amended from time to time, the "Rights
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive
offices of the Company. Under certain circumstances, such Rights may be
redeemed, may become exercisable for securities or assets of the
Company or securities of another entity, may be exchanged for shares of
Preferred Stock or other securities or assets of the Company, may
expire, may become void (if they are "Beneficially Owned" by an
Acquiring Person or Adverse Person or any Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement), or by any
transferee of the foregoing), or may be evidenced by separate
certificates and may no longer be evidenced by this certificate. The
Company will mail to the holder of this certificate a copy of the
Rights Agreement, as in effect on the date of mailing, without charge
promptly after receipt of a written request therefor.
(e) Every holder of Rights by accepting the same consents and agrees with the
Company and the Rights Agent and with every other holder of Rights that it is
bound by the terms of this Agreement.
Section 4.........Form of Rights Certificates.
(a) The Rights Certificates each shall be substantially in the form of Exhibit A
attached hereto and may have such marks of identification or designation and
such legends, summaries or endorsements as the Company may deem appropriate and
as are not inconsistent with the provisions of this Agreement or as may be
required to comply with any applicable law or any rule or regulation thereunder
or with any rule or regulation of any stock exchange or market on which the
Rights may from time to time be listed, or to conform to usage. Subject to
Section 11 and Section 22, the Rights Certificates, whenever distributed, shall
be dated as of the Record Date and on their face shall entitle the holders
thereof to purchase such number of one-thousandth shares of Preferred Stock as
shall be set forth therein at the Exercise Price per share set forth therein.
(b) Any Rights Certificate that represents Rights that are beneficially owned
by:
(i) an Acquiring Person or Adverse Person or any Affiliate or Associate of
an Acquiring Person or Adverse Person
(ii) a transferee of an Acquiring Person or Adverse Person (or of any such
Affiliate or Associate) which becomes a transferee after the Acquiring
Person or Adverse Person becomes such, or
(iii) a transferee of an Acquiring Person or Adverse Person (or of any such
Affiliate or Associate) which becomes a transferee prior to or
concurrently with the Acquiring Person or Adverse Person becoming such
and which receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person or Adverse
Person (or any such Affiliate or Associate) to holders of equity
interests therein, or to any Person with whom such Acquiring Person or
Adverse Person (or Affiliate or Associate) has any continuing
agreement, arrangement or understanding regarding the transferred
Rights, shares of Common Stock, or the Company, or (B) a transfer which
a majority of the Board has determined to be part of a plan,
arrangement or understanding which has a primary purpose or effect the
avoidance of Section 7(e) (the Rights held by Persons identified in
(i), (ii) and (iii) collectively, "Acquiring/Adverse Person Rights"),
shall, upon the written direction of a majority of the Board, contain (to the
extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or Adverse Person or an Affiliate or Associate of an
Acquiring Person or Adverse Person (as such terms are defined
in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in
the circumstances specified in such Agreement.
Section 7(e) shall be operative whether or not the legend is contained
on any Rights Certificate.
Section 5.........Countersignature and Registration.
(a) Rights Certificates shall be executed on behalf of the Company by any of its
Chairman of the Board, Chief Executive Officer, President, any Vice President,
or Treasurer and shall also be attested by any of its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Rights
Certificates may be manual or facsimile. The Rights Certificates shall be
countersigned by the Rights Agent, by manual signature of an authorized
signatory, and no Rights Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose unless so countersigned. A Rights
Certificate bearing the signatures of individuals who were the proper officers
of the Company at the actual date of execution of such Rights Certificate shall
bind the Company, notwithstanding that any of them ceased to hold such offices
prior to the countersignature of such Rights Certificate or did not hold such
offices on the date of this Agreement. Such countersignature shall be conclusive
evidence, and the only evidence, that such Rights Certificate has been duly
countersigned as required hereunder.
(b) Following the Separation Date, the Rights Agent will keep at its office
designated as the appropriate place for surrender of Rights Certificates upon
exercise or transfer, books for registration and transfer of the Rights
Certificates. Such books shall show the name and address of each holder, the
number of Rights evidenced thereby, and the certificate number and date of each
Rights Certificate.
Section 6.........Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to Sections 4(b), 7(e) and 14, at any time after the Close of
Business on the Separation Date, and at or prior to the Close of Business on the
Expiration Date, any Rights Certificate may be transferred, split up, combined,
or exchanged (collectively, a "Transfer") for Rights Certificates entitling the
registered holder to purchase the number of one-thousandth shares of Preferred
Stock (or, following a Triggering Event, other securities, cash or other assets,
as the case may be) as the Rights Certificate surrendered entitled such holder
to purchase. Any registered holder desiring to Transfer any Rights Certificate
shall make such request in writing delivered to the Rights Agent and shall
execute and surrender such Rights Certificate at the office of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action to transfer any such surrendered Rights Certificate
until the registered holder shall have completed and signed the form of
assignment on the Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner or former Beneficial Owner (or
Affiliates or Associates thereof) of the Rights represented by such Rights
Certificate as the Company shall reasonably request; whereupon the Rights Agent
shall, subject to the provisions of Sections 4(b), 7(e) and 14, countersign and
deliver to the Person entitled thereto the Rights Certificates so requested. The
Company may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed for any Transfer of Rights Certificates.
(b) If a Rights Certificate shall be mutilated, lost, stolen or destroyed, upon
request by the registered holder of the Rights represented thereby, there shall
be issued, in exchange for and upon cancellation of the mutilated Rights
Certificate, or in substitution for the lost, stolen or destroyed Rights
Certificate, a new Rights Certificate, in substantially the form of and of like
tenor and representing the equivalent number of Rights as the prior Rights
Certificate; provided, however, that a new Rights Certificate shall be issued
only upon reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, if such reimbursement is requested by the Company
or the Rights Agent; and provided further, that, in the case of loss, theft or
destruction of a Rights Certificate, a new Rights Certificate shall be issued
only upon receipt of evidence satisfactory to the Company and the Rights Agent
of such loss, theft or destruction and, if requested by the Company or the
Rights Agent, indemnity or security reasonably satisfactory to the Company or
the Rights Agent (as the case may be).
Section 7.........Exercise of Rights; Exercise Price; Expiration Date of Rights.
(a) At any time after the Separation Date and prior to the Expiration Date, the
registered holder of any Rights Certificate may, subject to the provisions of
Section 7(e), exercise the Rights evidenced thereby in whole or in part upon
surrender of the Rights Certificate, with the form of election to purchase duly
executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, together with payment of the aggregate Exercise Price for the
number of one-thousandth shares of Preferred Stock (or, following a Triggering
Event, other securities, cash or other assets, as the case may be) for which
such surrendered Rights are then exercisable.
(b) The purchase price for each one-thousandth share of Preferred Stock upon
exercise of the Rights initially shall be the Exercise Price.
(c) The payment of the Exercise Price (as such amount may be reduced pursuant to
Section 11(a)(iii)) may be made in cash or by certified or bank check or bank
draft payable to the order of the Company. Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment in the manner described above of the Exercise
Price for the one-thousandth shares of Preferred Stock (or, following a
Triggering Event, other securities, cash or other assets, as the case may be) to
be purchased thereby, and of an amount equal to any applicable transfer tax
required to be paid by the holder under Section 6 or evidence satisfactory to
the Company of payment of such tax), the Rights Agent shall, subject to Section
20(j), promptly:
(i) requisition from the transfer agent for the Preferred Stock
certificates for such number of one-thousandth shares of Preferred
Stock as are to be purchased, and the Company will direct the transfer
agent to comply with such request;
(ii) requisition from the Company the amount of cash, if any, to be paid in
lieu of fractional shares under Section 14;
(iii) cause such Preferred Stock certificates to be delivered to or upon the
order of the registered holder of such Rights Certificate, registered
in such names designated by such holder; and
(iv) after receipt thereof of such cash, if any, deliver the same to or upon
the order of the registered holder of such Rights Certificate.
In the event that the Company is obligated to issue other securities of
the Company, pay cash and/or distribute other property pursuant to Section
11(a), the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate.
(d) In the event of an exercise of the Rights by a holder as a result of a
Flip-in Event, the Rights Agent shall return such Rights Certificate to the
registered holder thereof after imprinting, stamping, or otherwise indicating
thereon that the rights represented by such Rights Certificate no longer include
the rights provided by Section 11(a)(ii). In addition, in the event that the
registered holder of any Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate evidencing the Rights
remaining unexercised (and, if some of the Rights exercised were exercised as a
result of a Flip-in Event, indicating by imprint, stamp or otherwise the number
of Rights remaining which continue to include rights provided by Section
11(a)(ii)) shall be issued by the Rights Agent and delivered to, or upon the
order of, the registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder, subject to the provisions of
Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, from and after
the first occurrence of a Flip-in Event, all Acquiring/Adverse Person Rights
shall be null and void without any further action, and no holder of such
Acquiring/Adverse Person Rights shall have any rights whatsoever whether under a
Rights Certificate, this Agreement or otherwise. The Company shall use all
reasonable efforts to ensure that Section 7(e) and Section 4(b) are complied
with, but shall have no liability to any holder of Rights or any other Person as
a result of its failure to make any determination under this Section 7(e) or
Section 4(b) with respect to Acquiring/Adverse Person Rights.
(f) Notwithstanding anything in this Agreement or any Rights Certificate to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action upon any purported exercise by a registered holder unless
such registered holder shall have (i) completed and executed the form of
election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner or former Beneficial Owner (or Affiliates or
Associates thereof) of the Rights represented by such Rights Certificate as the
Company shall reasonably request.
Section 8.........Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for exercise or Transfer shall, if surrendered
to the Company or any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent, shall
be canceled by it, and no Rights Certificates shall be issued in lieu thereof
except as expressly permitted by this Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any Rights Certificates acquired by the Company otherwise
than upon the exercise thereof. The Rights Agent shall deliver all canceled
Rights Certificates to the Company, or, at the written request of the Company,
shall destroy such canceled Rights Certificates and deliver a certificate of
destruction thereof to the Company.
Section 9.........Reservation and Availability of Preferred Stock.
(a) The Company
(i) shall at all times prior to the Expiration Date cause to be reserved
out of its authorized and unissued shares of Preferred Stock, or any
authorized and issued shares of Preferred Stock held in its treasury,
the number of shares of Preferred Stock that, as provided in this
Agreement, including Section 11(a)(iii), will be sufficient to permit
the exchange of all Rights (it being understood that any of the
foregoing shares or securities may also be reserved for other
purposes); and
(ii) at all times following the occurrence of a Flip-in Event, shall so
reserve and keep available a sufficient number of any other securities
that may be required to permit the exercise of the Rights pursuant to
this Agreement.
(b) The Company shall use its best efforts:
(i) as soon as practicable following
(A) the occurrence of a Flip-in Event and a determination
by the Company under Section 11(a)(iii) of the
consideration to be delivered by the Company upon
exercise of the Rights, or
(B) if so required by law, the Separation Date, to file a
registration statement (the "Registration Statement")
on an appropriate form under the Securities Act of
1933, as amended (the "Securities Act"), with respect
to the securities that may be acquired upon exercise
of the Rights;
(ii) to cause the Registration Statement to become effective as soon as
practicable after the date of such filing (such date being the
"Registration Date");
(iii) to cause the Registration Statement to continue to be effective (and to
include a prospectus complying with the requirements of the Securities
Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for the securities covered by the Registration
Statement, and (B) the Expiration Date; and
(iv) as soon as practicable following the Registration Date, to take such
action as may be required to ensure that any acquisition of securities
upon exercise of the Rights complies with any applicable state
securities or "blue sky" laws.
The Company may temporarily suspend the exercisability of the Rights,
for a period not to exceed 90 days after the date set forth in subclause (A) or
(B) of clause (i) of the first sentence of this Section 9(b) to prepare to file
such Registration Statement and permit it to become effective. Upon any such
suspension of exercisability, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended
and, upon termination of such suspension, the Company shall issue a public
announcement stating that the suspension is no longer in effect. In addition, if
the Company shall determine that a Registration Statement is required following
the Separation Date, the Company may temporarily suspend the exercisability of
the Rights until such time as such Registration Statement has been declared
effective. Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction if the requisite
qualification in such jurisdiction shall not have been obtained, the exercise
thereof shall not be permitted under applicable law, or a Registration Statement
shall not have been declared effective.
(c) The Company shall take such action as may be necessary to ensure that all
shares of Preferred Stock (and, following the occurrence of a Triggering Event,
any other securities) that may be delivered upon exercise of Rights shall be, at
the time of delivery of the certificates for such securities, duly and validly
authorized and issued, and fully paid and nonassessable.
(d) So long as the shares of Preferred Stock (and, after the occurrence of a
Triggering Event, any other securities) issuable upon the exercise of the Rights
may be listed on any national securities exchange or market, the Company shall
use its best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such exchange
or market upon official notice of issuance upon such exercise.
(e) The Company may pay or may require the Rights holder to pay any documentary,
stamp or transfer tax imposed for the issuance or delivery of the Rights
Certificates or certificates for shares of Preferred Stock (or, following the
occurrence of a Triggering Event, any other securities or other assets) upon the
exercise of Rights. The Company shall not be required to issue or deliver any
certificates for shares of Preferred Stock (or any other securities, cash or
assets, as the case may be) upon the exercise of any Rights until any such tax
shall have been paid (any such tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction.
Section 10........Preferred Stock Record Date. Each Person in whose name any
certificate for shares of Preferred Stock (or, following the occurrence of a
Triggering Event, other securities) is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of such shares of
Preferred Stock or other securities represented thereby on, and such certificate
shall be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Exercise Price (and any
applicable transfer taxes) was made; provided, however, that if such date is one
upon which the Preferred Stock (or other securities) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such securities on, and such certificate shall be date as of, the next
succeeding Business Day on which the Preferred Stock (or other securities)
transfer books of the Company are open. Prior to exercise, the holder of a
Rights Certificate shall not be entitled to any rights of a stockholder of the
Company as to the securities for which the Rights shall be exercisable,
including 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 Exercise Price, Number and Kind of Shares or
Number of Rights. The Exercise Price, the number and kind of securities covered
by each Right, and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) (i) In the event that the Company, at any time after the
date of this Agreement, shall (A) declare a dividend on the Preferred
Stock payable in shares of Preferred Stock, (B) subdivide the
outstanding Preferred Stock, (C) combine the outstanding Preferred
Stock into a smaller number of shares, or (D) issue any shares of its
capital stock in a reclassification of the Preferred Stock (including
any such reclassification in connection with a share exchange or merger
in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a) and in Section 7(e),
the Exercise Price in effect at the time of the record date of such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of Preferred Stock
or other capital stock, as the case may be, issuable upon 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 Exercise Price then in effect, the aggregate number and
kind of shares of Preferred Stock or other capital stock, as the case
may be, which, if such Right had been exercised immediately prior to
such date, such holder would have owned upon such exercise and been
entitled to receive upon such dividend, subdivision, combination or
reclassification; provided, however, that if the record date for any
such dividend, subdivision, combination or reclassification shall occur
prior to the Separation Date, the Company shall make an appropriate
adjustment to the Exercise Price in lieu of adjusting (as described
above) the number of shares of Preferred Stock (or other capital stock,
as the case may be) issuable upon exercise of the Rights. If an event
occurs which would require an adjustment under both Section 11(a)(i)
and Section 11(a)(ii), the adjustment in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment under
Section 11(a)(ii).
(ii) In the event that prior to the Expiration Date a Flip-in
Date shall occur, then, promptly following the occurrence of such a
Flip-in Event, each holder of a Right (except as provided in Section
11(a)(iii) and in Section 7(e)) shall thereafter have, and proper
provision shall be made so each such holder shall have, the right to
receive, upon proper exercise thereof at a price equal to the then
current Exercise Price multiplied by the number of one-thousandth
shares of Preferred Stock for which a right is then exercisable, in
accordance with the terms of this Agreement and in lieu of shares of
Preferred Stock, such number of shares of Common Stock of the Company
as shall equal the result obtained by (x) multiplying the then Exercise
Price by the number of one one-thousandth shares of Preferred Stock for
which a Right is then exercisable and dividing that product by (y) 50%
of the then Current Market Price on the Flip-in Date (such right to be
appropriately adjusted in the event that on or after the Stock
Acquisition Date events otherwise requiring adjustment to the Preferred
Stock under this Agreement occur) (such number of shares herein
referred to as the "Adjustment Shares"). Notwithstanding anything in
this Agreement to the contrary, however, from and after the Stock
Acquisition Date, any Rights that are beneficially owned by (x) any
Acquiring Person or Adverse Person (or any Affiliate or Associate of
any Acquiring Person or Adverse Person), (y) a transferee of any
Acquiring Person or Adverse Person (or any such Affiliate or Associate)
who becomes a transferee after a Flip-in Event pursuant to either (I) a
transfer from the Acquiring Person or Adverse Person to holders of its
equity securities or to any Person with whom it has any continuing
agreement, arrangement or understanding regarding the transferred
Rights or (II) a transfer which the Board of Directors has determined
is part of a plan, arrangement or understanding which has the purpose
or effect of avoiding the provisions of this paragraph, and subsequent
transferees of such Persons, shall be null and void without any further
action and any holder of such Rights shall thereafter have no rights
whatsoever with respect to such Rights under any provision of this
Agreement.
(iii) In the event that the number of shares of Preferred
Stock which are authorized by the Company's Certificate of
Incorporation but are not outstanding and are not reserved for issuance
other than upon exercise of the Rights are not sufficient to permit the
exercise in full of the Rights in accordance with Section 11(a)(ii),
the Company, by a vote of the majority of the Board, shall:
(A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a
Right (the "Current Value") over (2) the Exercise
Price (such excess being the "Spread"); and
(B) with respect to each Right, make adequate provision
to substitute for the Adjustment Shares, upon payment
of the applicable Exercise Price, (1) cash, (2) a
reduction in the Exercise Price, (3) other equity
securities of the Company (such other equity
securities being referred to as "Capital Stock
Equivalents"), (4) debt securities of the Company,
(5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the
Current Value, where such aggregate value has been
determined by a majority of the Board after receiving
advice from a nationally recognized investment
banking firm;
provided, however, that if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within 30 days following the later of
(x) the first occurrence of a Flip-in Event and (y) the date on which the
Company's right of redemption pursuant to Section 23 expires (the later of (x)
or (y) being referred to herein as the "Section 11(a)(ii) Trigger Date"), then
the Company shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Exercise Price, shares of Common
Stock (to the extent available) and then, if necessary, cash, which shares
and/or cash shall have an aggregate value equal to the Spread. To the extent
that the Company determines that some action need be taken pursuant to the first
sentence of this Section 11(a)(iii), subject to Section 7(e), such action shall
be applied uniformly to all outstanding Rights. For purposes of this Section
11(a)(iii), the value of the Common Stock (and of any Capital Stock Equivalent)
shall be the Current Market Price per share of Common Stock on the Section
11(a)(ii) Trigger Date.
(b) In case the Company shall fix a record date for the issuance of rights,
options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within 45 calendar days after
such record date) Preferred Stock (or shares having the same rights, privileges
and preferences as shares of Preferred Stock ("Equivalent Preferred Stock") or
securities convertible into Preferred Stock or Equivalent Preferred Stock at a
price per share of Preferred Stock or per share of Equivalent Preferred Stock
(or having a conversion price per share, if a security is convertible into
Preferred Stock or Equivalent Preferred Stock) less than the Current Market
Price per share of Preferred Stock on such record date, then the Exercise Price
to be in effect after such record date shall be determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the sum of the number of shares of Preferred
Stock outstanding on such record date plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares of
Preferred Stock and/or Equivalent Preferred Stock so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Current Market Price, and the denominator of
which shall be the number of shares of Preferred Stock outstanding on such
record date plus the number of additional shares of Preferred Stock and/or
Equivalent Preferred Stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible). In
case such subscription price may be paid in a form other than cash, the value of
such noncash consideration shall be as determined in good faith by a majority of
the Board, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders of the
Rights. Shares of Preferred Stock owned by or held for the account of the
Company or any Subsidiary 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 such rights or warrants are not so
issued, the Exercise Price shall be adjusted to be the Exercise Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to all
holders of shares of Preferred Stock (including any such distribution made in
connection with a share exchange or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a regular
quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in shares of Preferred Stock but
including any dividend payable in stock other than Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section 11(b)),
then the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the then Current
Market Price per share of Preferred Stock on such record date less the fair
market value (as determined in good faith by a majority of the Board, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of the Rights) of the
portion of the cash, assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to a share of Preferred Stock
and the denominator of which shall be such Current Market Price per share of
Preferred Stock. Such adjustments shall be made successively, whenever such a
record date is fixed, and in the event that such distribution is not so made,
the Exercise Price shall be adjusted to be the Exercise Price which would have
been in effect if such record date had not been fixed.
(d) (i) The "Current Market Price" per share of Common Stock (or, after
the occurrence of a Triggering Event, any other securities) on any date
shall be the average of the daily closing prices per share of such
Common Stock (or other securities) for the 30 consecutive Trading Days
(as such term is hereinafter defined) immediately prior to such date;
provided, however, that if, prior to the expiration of such requisite
30 Trading Day period, the issuer announces either (A) a dividend or
distribution on such Common Stock (or other securities) payable in such
Common Stock (or other securities) or securities convertible into such
Common Stock (or other securities), other than the Rights, or (B) any
subdivision, combination or reclassification of such Common Stock (or
other securities), then, following the ex-dividend date for such
dividend or the record date for such subdivision, as the case may be,
the "Current Market Price" shall be properly adjusted to take into
account such event. The "Closing Price" for each day shall be, if the
shares of Common Stock (or other securities) are listed and admitted to
trading on a national securities exchange, as reported in the principal
consolidated transaction reporting system for securities listed on the
principal national securities exchange on which such shares are listed
or admitted to trading or, if such shares of Common Stock (or other
securities) are not listed or admitted to trading on any national
securities exchange, the last quoted sales price regular way 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 Stock Market's
National Market (the "Nasdaq National Market") or such other system
then in use, or, if on any such date such shares are not traded, the
average of the high bid and low asked price as reported on the Nasdaq
National Market on the last day traded, or if on any such date such
shares are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market
maker making a market in the shares of Common Stock (or other
securities) selected by a majority of the Board. If on any such date no
market maker is making a market in such shares, the fair value of such
shares on such date, as determined in good faith by a majority of the
Board, shall be used. The term "Trading Day" shall mean a Business Day
or, if such shares are listed or admitted to trading on any national
securities exchange or the Nasdaq National Market, a day on which the
principal national securities exchange on which such shares are listed
or admitted to trading or the Nasdaq National Market is open for the
transaction of business.
(ii) The "Current Market Price" per share of Preferred Stock
shall be determined in accordance with the method set forth in Section
11(d)(i). If the shares of Preferred Stock are not publicly traded, the
"Current Market Price" per share of Preferred Stock shall be
conclusively deemed to be the Current Market Price of the Common Stock
as determined pursuant to Section 11(d)(i) (appropriately reflected to
reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by 1,000. If neither the
Common Stock nor the Preferred Stock is publicly held or so listed or
traded, the "Current Market Price" shall mean the fair value per share
as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the
Rights Agent.
(e) No adjustment in the Exercise Price shall be required unless such adjustment
would require an increase or decrease of at least one percent in the Exercise
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 ten-millionth of a share
of Preferred Stock or one ten-thousandth of a share of Common Stock (or other
securities). Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction which mandates such
adjustment or (ii) the Expiration Date.
(f) If, as a result of an adjustment made pursuant to Section 11(a)(i) or 13(a),
the holder of any Right shall become entitled to receive any shares of capital
stock other than Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Right and the Exercise Price thereof shall be
subject to adjustment from time to time in the manner and on terms as nearly
equivalent as practicable to the Preferred Stock contained in this Section 11
and the provisions of Sections 7, 9, 10, 12, 13 and 14 for the Preferred Stock
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any adjustment
made to the Exercise Price hereunder shall evidence the right to purchase, at
the adjusted Exercise Price, the number of one-thousandth shares of Preferred
Stock (or other securities or amount of cash or combination thereof) that may be
acquired from time to time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in Section
11(i), upon each adjustment of the Exercise Price made in Sections 11(b) and
(c), each Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted Exercise Price,
that number of one-thousandth shares of Preferred Stock or other securities
(calculated to the nearest ten-millionth of a share) obtained by (i) multiplying
(x) the number of one-thousandth shares of Preferred Stock or other securities
covered by a Right immediately prior to this adjustment by (y) the Exercise
Price in effect immediately prior to such adjustment of the Exercise Price; and
(ii) dividing that product by the Exercise Price in effect immediately after
such adjustment of the Exercise Price.
(i) The Company may elect on or after the date of any adjustment of the Exercise
Price to adjust the number of Rights, in lieu of any adjustment in the number of
shares of Preferred Stock (or other securities) that may be acquired upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of shares of Preferred
Stock (or other securities) for which a Right was exercisable immediately prior
to such adjustment. Each Right held of record prior to such adjustment shall
become that number of Rights (calculated to the nearest ten-thousandth) obtained
by dividing the Exercise Price in effect immediately prior to adjustment by the
Exercise Price in effect immediately after adjustment of the Exercise 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 Exercise Price is adjusted or any day thereafter, but, if the
Rights Certificates have been issued, shall be at least ten days later than such
announcement date. If Rights Certificates have been issued, upon each adjustment
of the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 14 hereof, the additional Rights, if any, to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment.
(j) Irrespective of any adjustment or change in the Exercise Price or the number
of one-thousandth shares of Preferred Stock (or other securities) issuable upon
the exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Exercise Price per share and the number of
one-thousandth shares of Preferred Stock (or other securities) which were
expressed in the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Exercise Price below one-thousandth of the then par value, if any, of the
Preferred Stock (or other securities) 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
such fully paid and nonassessable number of shares of Preferred Stock (or other
securities) at such adjusted Exercise Price.
(l) In any case in which this Section 11 shall require an adjustment in the
Exercise Price be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuance of
that number of shares of Preferred Stock and shares of other capital stock or
securities of the Company, if any, issuable to any holder of a Right exercised
after such record date that is over and above the number of shares of Preferred
Stock and shares of other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Exercise Price in effect prior
to such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the Company
shall be entitled to make such reductions in the Exercise Price, in addition to
those adjustments expressly required by this Section 11, as and to the extent
that in their good faith judgment a majority of the Board shall determine to be
advisable in order that any (i) consolidation or subdivision of the Preferred
Stock, (ii) issuance wholly for cash of any shares of Preferred Stock at less
than the Current Market Price, (iii) issuance wholly for cash of shares of
Preferred Stock or securities which by their terms are convertible into or
exchangeable for shares of Preferred Stock, (iv) dividends on Preferred Stock
payable in shares of Preferred Stock or (v) issuance of rights, options or
warrants referred to in this Section 11 hereafter made by the Company to holders
of its Preferred Stock, shall not be taxable to such holders or shall reduce the
taxes payable by such holders.
(n) In the event that at any time after the date of this Agreement and prior to
the Separation Date, the Company shall (i) declare or pay any dividend on the
Common Stock payable in shares of Common Stock or (ii) effect a subdivision,
combination or consolidation of the Common Stock (by reclassification or
otherwise other than by payment of dividends in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in any such case (i)
the number of one-thousandth shares of Preferred Stock purchasable after such
event upon proper exercise of each Right shall be determined by multiplying the
number of one-thousandth shares of Preferred Stock so purchasable immediately
prior to such event by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately before such event and the
denominator of which is the number of shares of Common Stock outstanding
immediately after such event, and (ii) each share of Common Stock outstanding
immediately after such event shall have issued with respect to it that number of
Rights which each share of Common Stock outstanding immediately prior to such
event had issued with respect to it. The adjustments provided for in this
Section 11(n) shall be made successively whenever such a dividend is declared or
paid or such a subdivision, combination or consolidation is effected.
(o) The Company shall not, at any time after the Separation Date:
(i) effect a share exchange with any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(p));
(ii) merge with or into or consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section
11(p)); or
(iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other Persons (other
than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(p));
if
(x) at the time of or immediately after such share exchange,
merger, consolidation or sale, there are any rights, warrants
or other instruments or securities outstanding our agreements
in effect which would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights;
or
(y) prior to, simultaneously with, or immediately after such share
exchange, merger, consolidation or sale, the Person which
constitutes, or would constitute, the "Flip-over Entity" for
purposes of Section 13(a) shall have distributed or otherwise
transferred to its shareholders (or other persons holding an
equity interest in such Person) Rights previously owned by
such Person or any of its Affiliates and Associates;
provided, however, that this Section 11(o) shall not affect the ability of any
Subsidiary of the Company to effect a share exchange with, merge with or into,
consolidate with or sell or transfer assets or earning power to, any other
Subsidiary of the Company or the Company.
(p) After the Separation Date, the Company shall not, except as permitted by
Section 23, Section 24 or Section 27, take (or permit any Subsidiary to take)
any action if at the time such action is taken it is reasonably foreseeable that
such action will materially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.
Section 12........Certificate of Adjusted Exercise Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 and Section 13, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent, and with each transfer agent for the Common Stock or
Preferred Stock, a copy of such certificate, and (c) mail a brief summary
thereof to each holder of a Rights Certificate (or, if prior to the Separation
Date, to each holder of a certificate representing shares of Common Stock) in
accordance with Section 26 hereof. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained and
shall not be deemed to have knowledge of any such adjustment unless and until it
shall have received such certificate.
Section 13.Merger, Consolidation or Sale or Transfer of Assets or Earning Power.
(a) Prior to the Expiration Date, the Company shall not enter into any agreement
with an Acquiring Person or Adverse Person with respect to, consummate or permit
to occur any Flip-over Event unless and until it shall have entered into a
supplemental agreement with the Flip-over Entity, for the benefit of the holders
of the Rights, providing that, upon consummation or occurrence of the Flip-over
Event: (i) each Right shall thereafter constitute the right to purchase from the
Flip-over Entity, upon exercise thereof in accordance with the terms hereof at a
price equal to the then current Exercise Price multiplied by the number of
one-thousandth shares of Preferred Stock for which the Right is then
exercisable, and in lieu of shares of Preferred Stock, that number of shares of
Flip-over Stock of the Flip-over Entity as shall equal the result obtained by
(x) multiplying the then current Exercise Price by the number of one-thousandth
shares of Preferred Stock for which a Right is then exercisable and dividing
that product by (y) 50% of the then Current Market Price of the common stock of
such Flip-over Entity (determined pursuant to Section 11(d) hereof) on the date
of consummation of such Flip-over Event (such right to be appropriately adjusted
in order to protect the interests of the holders of Rights generally in the
event that after such date of consummation or occurrence an event of a type
analogous to any of the events described in Sections 11(a)(i), (b), and (c)
shall have occurred with respect to the Flip-over Stock) and (ii) the Flip-over
Entity shall thereafter be liable for, and shall assume, by virtue of such
Flip-over Event and such supplemental agreement, all the obligations and duties
of the Company pursuant to this Agreement.
(b) The Company shall not consummate any Flip-over Event unless the Flip-over
Entity shall have a sufficient number of authorized shares of its common stock
which have not been issued or reserved for issuance to permit the exercise in
full of the Rights in accordance with this Section 13, and unless the
supplemental agreement further provides that the Flip-over Entity will:
(i) (A) file on an appropriate form, as soon as practicable following the
execution of such agreement, a registration statement under the
Securities Act with respect to the common stock that may be acquired
upon exercise of the Rights;
(B) cause such registration statement to remain effective (and to
include a prospectus complying with the requirement of the Securities
Act) until the Expiration Date; and
(C) as soon as practicable following the execution of such agreement,
take such action as may be required to ensure that any acquisition of
such common stock upon the exercise of the Rights complies with any
applicable state securities or "blue sky" laws; and
(ii) deliver to holders of the Rights historical financial statements for
the Flip-over Entity and each of its Affiliates which comply in all
respects with the requirements for registration on Form 10 under the
Exchange Act.
(c) In case the Flip-over Entity which is to be a party to a transaction
referred to in this Section 13 has a provision in any of its authorized
securities or in its Certificate of Incorporation or By-laws or other instrument
governing its corporate affairs, which provision would have the effect of
(i) causing such Flip-over Entity to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this
Section 13, shares of common stock of such Flip-over Entity at less
than the then Current Market Price per share or securities exercisable
for, or convertible into, common stock of such Flip-over Entity at less
than such then Current Market Price (other than to holders of Rights
under this Section 13); or
(ii) providing for any special payment, tax or similar provisions for the
issuance of the common stock of such Flip-over Entity pursuant to
Section 13;
then, in such event, the Company shall not consummate any such transactions
unless prior thereto the Company and such Flip-over Entity shall have executed
and delivered to the Rights Agent a supplemental agreement providing that such
provision shall have been canceled, waived or amended, or that the authorized
securities shall be redeemed, so that the applicable provision will have no
effect in connection with, or as a consequence of, the consummation of the
proposed transaction.
(d) This Section 13 shall similarly apply to successive mergers, consolidations,
or share exchanges or sales or other transfers. In the event that a Flip-over
Event shall occur at any time after the occurrence of a Flip-in Event, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue or distribute Rights which
evidence fractional Rights. In lieu of such fractional Rights, there shall be
paid an amount in cash equal to such fraction of the market value of a whole
Right. For purposes of this Section 14(a), the market value of a whole Right
shall be the closing price (as the term "Closing Price" is used in Section
11(d)) of the Rights for the Trading Day immediately prior to the date on which
such fractional Rights would have been otherwise issuable.
(b) The Company shall not be required to issue or distribute fractions of shares
of Preferred Stock (or other securities), other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock, upon
exercise of the Rights. In lieu of such fractional shares of Preferred Stock (or
other securities) that are not integral multiples of one one-thousandth of a
share of Preferred Stock, the Company shall pay to each registered holder of
Rights Certificate(s) at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the then Current Market Value of
one share of Preferred Stock (or other securities) as the fraction of one share
of Preferred Stock that such holder would otherwise receive upon the exercise of
the aggregate number of Rights exercised by such holder. For purposes of this
Section 14(b), the Current Market Value of the one share of Preferred Stock (or
other securities) shall be the Closing Price (as the term "Closing Price" is
used in Section 11(d)) of one share of Preferred Stock (or other securities) for
the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right, by the acceptance of the Right, expressly waives the
right to receive any fractional Rights or any fractional shares upon exercise of
a Right, except as permitted by this Section 14.
Section 15. Rights of Action. Subject to Section 7(e), all rights of action in
respect of this Agreement, other than rights of action vested in the Rights
Agent pursuant to Section 18 and Section 20 hereof, are vested in the respective
registered holders of the Rights Certificates (and, prior to the Separation
Date, the registered holders of certificates representing shares of Common
Stock), and any registered holder of a Rights Certificate (or, prior to the
Separation Date, of a certificate representing shares of Common Stock), without
the consent of the Rights Agent or of the holder of any other Rights Certificate
(or, prior to the Separation Date, of a certificate representing shares of
Common Stock), may, in his own behalf and for his own benefit, enforce (and may
institute and maintain any suit, action or proceeding against the Company or any
other Person to enforce) his right to exercise the Rights evidenced by such
Rights Certificate. Without limiting the foregoing or any remedies available to
the holders of Rights, it is acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and shall be
entitled to specific performance of the obligations hereunder and injunctive
relief against actual or threatened violations of the obligations hereunder of
any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right, by accepting
the same, consents and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) prior to the Separation Date, the Rights shall be transferable only in
connection with the transfer of Common Stock;
(b) after the Separation Date, the Rights Certificates are transferable only on
the registry books of the Rights Agent if surrendered at the office of the
Rights Agent designated for such purpose, duly endorsed or accompanied by a
proper instrument of transfer and duly executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company and the Rights
Agent may deem and treat the person in whose name a Rights Certificate (or,
prior to the Separation Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights Certificate
or the associated Common Stock Certificate made by anyone other than the Company
or the Rights Agent), and neither the Company (subject to the last sentence of
Section 7(e) hereof) nor the Rights Agent shall be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither the
Company nor the Rights Agent shall have any liability to any holder of a Right
or any other Person as a result of its inability 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; provided, however, that the Company must use its
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as promptly as practicable.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No holder, as
such, of any Rights Certificate shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of the shares of Preferred Stock, Common
Stock or any other securities of the Company which may at any time be issuable
on the exercise of the Rights; nor shall anything contained herein or in any
Rights Certificate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any manner submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or, except as provided in Section 25 hereof, to receive notice
of meetings or other actions affecting stockholders, or to receive dividends or
subscription rights, or otherwise, until the Rights evidenced by such Rights
Certificate shall have been duly exercised.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable compensation for
all services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses, including reasonable fees and
disbursements of its counsel, incurred in connection with the execution and
administration of this Agreement and the exercise and performance of its duties
hereunder. The Company shall indemnify the Rights Agent, its officers,
employees, agents and directors for, and hold each of them harmless against, any
losses, expenses, claims, damages or liabilities incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent or such other indemnified party in
connection with the acceptance or administration of this Agreement and
performance hereunder, including the costs and expenses of defending against any
claim of liability therefrom, directly or indirectly, and will promptly
reimburse the Rights Agent for legal and other expenses reasonably incurred in
defending any such claim.
(b) The Rights Agent shall incur no liability for any action taken, suffered or
omitted by it in connection with its administration of this Agreement or the
performance of its duties hereunder in reliance upon any Rights Certificate or
certificate for Preferred Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement or other paper or
document believed by it to be genuine and to have been signed, executed and,
where necessary, verified or acknowledged by the proper Person.
Section 19. Merger or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or consolidated or with which it may effect a share exchange, or
any corporation resulting from any merger, consolidation or share exchange to
which the Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the corporate trust or shareholder services businesses
of the Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any
document or any further act on the part of any of the parties hereto; provided,
however, that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case, at the time
such successor Rights Agent becomes Rights Agent, any of the Rights Certificates
shall have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights Agent and deliver such
Rights Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificate either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and at
such time any of the Rights Certificate shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, the Rights Agent
may countersign such Rights Certificate either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations expressly imposed by this Agreement (and no implied duties or
obligations shall be read into this Agreement against the Rights Agent) upon the
following terms and conditions:
(a) The Rights Agent may consult with legal counsel (who may be legal counsel
for the Company), and the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the Rights
Agent shall deem it necessary or desirable that any fact or matter be proved or
established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be specified
herein) may be deemed to be conclusively proved and established by a certificate
signed by any person reasonably believed by the Rights Agent to be any of the
Chairman of the Board, the Chief Executive Officer, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent and such
certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by the Rights Agent in reliance upon such certificate.
(c) The Rights Agent shall not be liable for any of the statements of fact or
recitals contained in this Agreement or in the Rights Certificate or be required
to verify the same (except as to its countersignature on such Rights
Certificates).
(d) The Rights Agent is serving as an administrative agent and, accordingly,
shall not have any responsibility for the validity or legality of this Agreement
or the execution and delivery hereof (except the due execution hereof by the
Rights Agent) or for the validity, legality or execution of any Rights
Certificate (except its countersignature thereof); nor shall it be responsible
for any breach of the Company of any covenant or failure by the Company to
satisfy conditions contained in this Agreement or in any Rights Certificate; nor
shall it be responsible for any adjustment required under Section 11 or Section
13 or for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except after receipt by the Rights Agent of the certificate describing any such
adjustment contemplated by Section 12); nor shall it be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Preferred Stock, Common Stock or any other securities to be issued pursuant
to this Agreement or any Rights Certificate or as to whether any shares of
Preferred Stock, Common Stock or any other securities will, when so issued, be
validly authorized and issued, fully paid and nonassessable.
(e) The Company shall perform, execute, acknowledge and deliver all such further
acts, instruments and assurance as may reasonably be required for the
performance by the Rights Agent of its duties under this Agreement.
(f) The Rights Agent is hereby authorized and directed to accept instructions
for the performance of its duties hereunder from any person reasonably believed
by the Rights Agent to be the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties; and
it shall not be liable to the Company, the holder of any Rights Certificate or
any other Person for any action taken or suffered to be taken by it in good
faith in accordance with such instructions or for any delay in acting while
awaiting instructions.
(g) The Rights Agent and any stockholder, director, officer or employee of the
Rights Agent may buy, sell or deal in any of the Rights or offer securities of
the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.
(h) The Rights Agent may execute and exercise any of the rights or powers hereby
vested in it or perform any duty hereunder either itself or by or through its
attorneys or agents, and the Rights Agent shall not be answerable or accountable
for any act, default, neglect or misconduct of any such attorneys or agents or
for any loss to the Company resulting from any such act, default, neglect or
misconduct if reasonable care was exercised in the selection of such attorneys
and agents and continued employment thereof.
(i) The Rights Agent shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
or in the exercise of its rights hereunder if the Rights Agent shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to it.
(j) If, with respect to any Rights Certificate surrendered to the Rights Agent
for exercise or transfer, the certificate attached to the form of assignment or
form of election to purchase, as the case may be, either has not been completed,
has not been signed, or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action on such requested
exercise or transfer without first consulting the Company. If such certificate
has been completed and signed, the Rights Agent may assume without further
inquiry that the Rights Certificate is not owned by a person described in
Section 4(b) or Section 7(e).
(k) The Rights Agent shall be liable hereunder to the Company and any other
Person only for its own gross negligence, bad faith or willful misconduct.
Section 21. Change of Rights Agent. The 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 Stock and
Preferred Stock by registered or certified mail, and to the holders of Rights
Certificates by first-class mail. The Company may remove the Rights Agent upon
30 days' notice in writing mailed to the Rights Agent and to each transfer agent
of the Common Stock and Preferred Stock by registered or certified mail, and to
the holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Rights Certificate
(who shall, with such notice, submit its Rights Certificate for inspection by
the Company), then any registered holder of any Rights Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the United
States of any state of the United States, in good standing, and may be the
Company or a Subsidiary of the Company. After appointment, the successor Rights
Agent shall be vested with the same powers, rights, duties and responsibilities
as if had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and shall execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment, the Company
shall file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock, and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to give any notice
provided for in Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or the Rights to the contrary, the Company may, at
its option, issue new Rights Certificates evidencing Rights in such form as may
be approved by a majority of the Board to reflect any change made in accordance
with this Agreement in the Exercise Price or the number or kind or class of
shares or other securities or property that may be acquired under the Rights
Certificates. In addition, in connection with the issuance or sale of shares of
Common Stock following the Separation Date and prior to the Expiration Date, the
Company:
(a) shall, with respect to shares of Common Stock so issued or sold pursuant to
the exercise of stock options or under any employee plan or arrangement, or upon
the exercise, conversion or exchange of securities hereinafter issued by the
Company, and
(b) may, in any other case, if deemed necessary or appropriate by the Board,
issue Rights Certificates representing the appropriate number of Rights in
connection with such issuance or sale;
provided, however, that no such Rights Certificate shall be issued if,
and to the extent, that (x) the Company shall be advised by counsel that such
issuance would create a significant risk of material adverse tax consequences to
the Company or the Person to whom such Rights Certificate would be issued, (y)
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof, and (z) the Company shall have no obligation to distribute Rights
Certificates to any Acquiring Person or Adverse Person or Affiliate or Associate
of any Acquiring Person or Adverse Person or any transferee of any of the
foregoing.
Section 23. Redemption.
(a) The rights may be redeemed by action of the Board pursuant to this Section
23 and Section 31 and shall not be redeemed in any other manner. Notwithstanding
anything contained or implied in this Agreement to the contrary, the Rights
shall not be exercised after the occurrence of a Flip-in Event until the
Company's right of redemption has expired.
(b) The Board may, at its option, at any time prior to the Close of Business on
the Flip-in 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 hereof (such redemption price being hereinafter referred to as the
"Redemption Price"). 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 Redemption Price shall be payable, at the
option of the Company, in cash, shares of Common Stock, or such other form of
consideration as the Board of Directors shall determine; provided that if the
Company elects to pay the Redemption Price in shares of Common Stock, the
Company shall not be required to issue fractional shares of Common Stock. In
lieu of such fractional shares of Common Stock, the Company shall pay an amount
of cash equal to the same fraction of the Current Market Price of a share of
Common Stock.
(c) Immediately upon the action of the Board ordering the redemption of the
Rights (or, if the resolution of the Board of Directors electing to redeem the
Rights states that the redemption will not be effective until the occurrence of
a specified future time or event, upon the occurrence of such future time or
event), without any notice or further action, the right to exercise the Rights
will terminate and the only right thereafter of the holders of Rights shall be
to receive the Redemption Price. The Company shall promptly give public notice
of any such redemption; provided, however, that the failure to give, or any
defect in, any such notice shall not affect the validity of such redemption.
Within 10 days after the Board ordering the redemption of the Rights, the
Company shall mail a notice of redemption to the Rights Agent and to all the
holders of the then outstanding Rights by mailing such notices in accordance
with Section 26. 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 other than that specifically set forth in this
Section 23 or in Section 24 hereof and other than in connection with the
purchase of shares of Common Stock prior to the Separation Date.
Section 24. Exchange.
(a) The Board may, at its option, at any time after the Flip-in Date, elect to
exchange all or any part of the then outstanding and exercisable Rights (which
shall not include Rights that have become void pursuant to the provisions of
Section 7(e) or Section 11(a)(ii)) for shares of Common Stock at an exchange
ratio of one share of Common Stock per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after an Acquiring Person or
Adverse Person shall have become the Beneficial Owner of shares of Common Stock
aggregating 50% or more of the shares of Common Stock then outstanding. From and
after the occurrence of a Flip-over Event, any Rights that theretofore have not
been exchanged pursuant to this Section 24(a) shall thereafter be exercisable
only in accordance with Section 13 and may not be exchanged pursuant to this
Section 24(a). The exchange of the Rights by the Board of Directors 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.
(b) Immediately upon the effectiveness of the action of the Board ordering the
exchange of any Rights, and without any notice or further action, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights (other than holders of Rights that have become void pursuant to
the provisions of Section 7(c) or Section 11(a)(ii)) shall be to receive that
number of shares of Common Stock 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 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 receives the notice. Each such notice of
exchange will state the method by which the exchange of the shares of Common
Stock for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 7(e) or Section 11(a)(ii)) held by each
holder of Rights.
(c) In the event that there shall not be sufficient shares of Common Stock,
Preferred Stock or other Capital Stock Equivalents authorized but unissued to
permit the exchange of Rights, the Company shall take all such action as may be
necessary to authorize additional shares of Common Stock, Preferred Stock or
other Capital Stock Equivalents for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue or distribute certificates which
evidence fractional shares of Common Stock. In lieu of such fractional shares of
Common Stock, the Company may pay an amount in cash equal to the same fraction
of the Current Market Price of a share of Common Stock. For the purposes of this
paragraph (d), the Current Market Price of a share of Common Stock shall be the
Closing Price of a share of Common Stock (as the term "Closing Price" is used in
Section 11(d)) for the Trading Day immediately prior to the date of exchange.
(e) The Company may at its option substitute shares of Preferred Stock or
Capital Stock Equivalents for each share of Common Stock that would otherwise be
issuable upon exchange of a Right, at the initial rate of one one-thousandth of
a share of Preferred Stock (or the appropriate number of Capital Stock
Equivalents), as appropriately adjusted to reflect adjustments in the voting
rights of the Preferred Stock pursuant to the terms thereof, so that the
fraction of a share of Preferred Stock delivered in lieu of each share of Common
Stock shall have the same voting rights as one share of Common Stock.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the Separation Date,
and prior to the Expiration Date,
(i) to pay any dividend payable in stock of any class or to make other
distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the
Company);
(ii) to offer to the holders of Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of Preferred Stock,
Common Stock or shares of stock of any class or any other securities,
rights or options;
(iii) to effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares
of Preferred Stock);
(iv) to effect any share exchange, consolidation or merger into or with any
other Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(p)), or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of more than 50%
of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each
of which complies with Section 11(p)); or
(v) to effect the liquidation, dissolution or winding up of the Company;
then, in each such case, the Company shall give to each holder of a Rights
Certificate, to the extent feasible and in accordance with Section 26, a notice
of such proposed action (which shall specify the record date for the purposes of
such stock dividend or distribution of rights or warrants, or the date on which
such reclassification, share exchange, merger, consolidation, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Common Stock and/or
Preferred Stock, if any such date is to be fixed), and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at least 20
days prior to the record date for determining holders of the shares of Preferred
Stock for purposes of such action, and in the case of any such other action, at
least 20 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the shares of Preferred Stock,
whichever shall be the earlier; provided, however, that no such notice shall be
required if any Subsidiary of the Company effects a share exchange,
consolidation or merger with or into, or effects a sale or other transfer of
assets or earning power to, any other Subsidiary of the Company.
(b) In case a Flip-in Event shall occur, the Company shall as soon as
practicable give to each holder of a Rights Certificate, to the extent feasible
and in accordance with Section 26, 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. All notices and other communications provided for hereunder
shall, unless otherwise stated herein, be in writing (including by facsimile,
electronic mail, telex, telegram or cable) and be mailed or sent or delivered,
if to the Company, at the following address (until another address is filed in
writing by the Company):
Performance Technologies, Incorporated
315 Science Parkway
Rochester, New York 14620
Attention: Donald L. Turrell, President
and, if to the Rights Agent, at the following address (until another address is
filed in writing by the Rights Agent):
American Stock Transfer & Trust Company
59 Maiden Lane
New York, New York 10038
Attention: Susan Silber
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Separation Date, to the holder of certificates representing shares
of Common Stock) 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. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice.
Section 27. Supplements and Amendments. Prior to the Separation Date and subject
to the penultimate sentence of this Section 27, the Company and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement without the
approval of any holders of certificates representing shares of Common Stock.
From and after the Separation Date and subject to the penultimate sentence of
this Section 27, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Rights Certificates in order:
(i) to cure any ambiguity;
(ii) to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provision herein;
(iii) to shorten or lengthen any time period hereunder; or
(iv) to change or supplement the provisions hereunder in any manner which
the Company may deem necessary or desirable and which shall be
consistent with, and for the purpose of fulfilling, the objectives of
the Board in adopting this Agreement, including any change in the
number or class of shares of capital stock of the Company for which the
Rights are potentially exercisable prior to a Triggering Event;
provided, however, that from and after such time as a Flip-in Event occurs, this
Agreement shall not be amended in any manner which would adversely affect the
interests of the holders of Rights; and provided, further, that this Agreement
may not be supplemented or amended to lengthen, pursuant to clause (iii) of this
sentence (A), subject to Section 31, 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. Without limiting the foregoing, the Company may at any time prior to a
Flip-in Event, amend this Agreement to change the Exercise Price hereunder. Upon
the delivery of a certificate from an appropriate officer of the Company or, so
long as any Person is an Acquiring Person or Adverse Person , from the majority
of the Board, which states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agents shall execute
such supplement or amendment. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment which changes the rights
and duties of the Rights Agent under this Agreement shall be effective without
the consent of the Rights Agent, and no supplement or amendment shall be made
which changes the Redemption Price, the Exercise Price, the Expiration Date or
the number of shares of Preferred Stock (or other securities) for which a Right
is exercisable without the approval of a majority of the Board. Prior to the
Separation Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
Section 28. Determinations and Actions by the Board of Directors, etc. Any
calculations of the number of shares of Common Stock or other securities
outstanding at any particular time, including for purposes of determining the
particular percentage of outstanding shares of Common Stock of which any Person
is deemed the Beneficial Owner pursuant to this Agreement, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Exchange Act
Regulations as in effect on the date hereof; provided, however, that any
references in such regulation to a holding period for Beneficial Ownership shall
not apply to this Agreement. Except as otherwise specifically provided herein,
the Board shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board, or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including the right and power (i) to interpret
the provisions of this Agreement, and (ii) to make all determinations deemed
necessary or advisable for the administration of this Agreement. All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board or by a majority of the Board in good faith (x)
shall be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and (y) shall not subject the Board
or any member thereof to any liability to the holders of the Rights.
Section 29. Successors. All the covenants and provisions of this Agreement by or
for the benefit of the Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give any Person other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Separation
Date, registered holders of shares of Common Stock) any legal or equitable
right, remedy or claim under this Agreement. This Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Separation Date,
registered holders of shares of Common Stock).
Section 31. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; provided,
however, that notwithstanding anything in this Agreement to the contrary, if (i)
any such term, provision, covenant or restriction is held by such court or
authority to be invalid, void or unenforceable, and a majority of the Board
determines in its good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose of effect of this Agreement;
and (ii) at the time of such holding by such court or authority, the Rights are
not redeemable, then 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 a majority of the Board as described
above.
Section 32. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be governed by, and construed in accordance
with, the laws of the State of Delaware.
Section 33. Counterparts. This Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed to be an original, but
all of which taken together shall constitute one and the same instrument.
Section 34. Descriptive Headings. The headings contained in this Agreement are
for descriptive purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 35. Costs of Enforcement. The Company agrees that if the Company or any
other Person the securities of which are purchasable upon exercise of Rights
fails to fulfill any of its obligations pursuant to this Agreement, then the
Company or such Person will reimburse the holder of any Rights for the costs and
expenses (including legal fees) incurred by such holder in actions to enforce
such holder's rights pursuant to any Rights or this Agreement.
Section 36. Three-Year Independent Director Evaluation Mechanism. The Company
intends to establish a committee of the Board of Directors of the Company that
shall be comprised of no less than two members of the Board of Directors who
shall not be either officers, employees or affiliates (the "TIDE Committee").
The TIDE Committee shall meet not less than every three years during the term of
this Agreement for the purpose of reviewing the terms and conditions of this
Agreement. If a majority of such TIDE Committee shall conclude that termination
or modification of this Agreement is appropriate, such Committee shall make
recommendations to the Board of Directors for their consideration.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the date first above written.
PERFORMANCE TECHNOLOGIES, INCORPORATED
By:
-----------------------------------
Name: Donald L. Turrell
Title: President
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
-----------------------------------
Name: ___________________________________
Title: ___________________________________
EXHIBIT A
[Form of Rights Certificate]
Certificate No. R- Rights
-------------------------- -----------------
THE RIGHTS EVIDENCED BY THIS CERTIFICATE ARE NOT EXERCISABLE AFTER THE
EXPIRATION DATE (AS DEFINED IN THE RIGHTS AGREEMENT). THE RIGHTS ARE SUBJECT TO
REDEMPTION OR MANDATORY EXCHANGE, AT THE OPTION OF THE COMPANY, ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN THE
RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS OR ADVERSE
PERSONS (AS DEFINED IN THE RIGHTS AGREEMENT) OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON OR ADVERSE PERSON OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR
ADVERSE PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON OR ADVERSE
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN
THE CIRCUMSTANCES SPECIFIED IN SUCH AGREEMENT.]
Rights Certificate
PERFORMANCE TECHNOLOGIES, INCORPORATED
This certifies that ___________________, or registered assigns, is the
registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms and conditions of
the Rights Agreement dated as of November 1, 2000 (the "Rights Agreement")
between PERFORMANCE TECHNOLOGIES, INCORPORATED, a Delaware corporation (the
"Company"), and AMERICAN STOCK TRANSFER & TRUST COMPANY, as Rights Agent (the
"Rights Agent", which term shall include any successor Rights Agent under the
Rights Agreement), to purchase from the Company at any time after the Separation
Date (as such term is defined in the Rights Agreement) and prior to 5:00 p.m.,
New York time, on the Expiration Date (as such term is defined in the Rights
Agreement) at the office of the Rights Agent or its successor designated for
such purpose, one one-thousandth of a fully paid, nonassessable share of Series
A Junior Participating Preferred Stock, $.01 par value, of the Company (the
"Preferred Stock ") at the Exercise Price initially of $110.00 per Right, upon
presentation and surrender of this Rights Certificate with the Election of
Purchase duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of one one-thousandth shares of Preferred Stock
which may be purchased upon exercise thereof) set forth above and the Purchase
Price per Right set forth above shall be subject to adjustment in certain events
as provided in the Rights Agreement.
Upon the occurrence of a Flip-in Event (as such term is defined in the
Rights Agreement), if the Rights evidenced by this Rights Certificate are
beneficially owned by an Acquiring Person or Adverse Person or an Affiliate or
Associate of any such Acquiring Person or Adverse Person (as such terms are
defined in the Rights Agreement) or, under certain circumstances described in
the Rights Agreement, a transferee of any such Acquiring Person, Adverse Person
Associate or Affiliate, such Rights shall become null and void and no such
holder shall have any right with respect to such Rights from and after the
occurrence of such Flip-in Event.
In certain circumstances describe in the Rights Agreement, the rights
evidenced hereby may entitle the registered holder thereof to purchase shares of
capital stock of an entity other than the Company or to receive cash or other
assets, all as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms and conditions
of the Rights Agreement, which terms and conditions are hereby incorporated by
reference and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of the
Rights Certificates. Copies of the Rights Agreement are on file at the principal
office of the Rights Agent and are available from the Company upon written
request.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate of like tenor and date
evidencing an aggregate number of Rights equal to the aggregate number of rights
evidenced by the Rights Certificates surrendered. If this Rights Certificate
shall be exercised in part, the registered holder shall be entitled to receive,
upon surrender hereof, another Rights Certificate for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be (i) redeemed by the Company under certain
circumstances at its option at a redemption price of $.001 per Right payable at
the Company's option in cash, in Common Stock, or other consideration, or (ii)
exchanged by the Company under certain circumstances at its option for shares of
the Corporation's Common Stock, par value $.01, or shares of Preferred Stock or
other consideration, in each case subject to adjustment in certain events as
provided in the Rights Agreement.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth of a share of Preferred Stock), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Preferred
Stock or of any other securities 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, 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 Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
Witness the signature of the proper officers of the Company:
ATTEST: PERFORMANCE TECHNOLOGIES,
INCORPORATED
By: By:
--------------------------------- -----------------------------
Name: Name: Donald L. Turrell
-------------------------------
Title: Title: President
------------------------------
Countersigned:
AMERICAN STOCK TRANSFER &
TRUST COMPANY
as Rights Agent
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Rights Certificate)
FOR VALUE RECEIVED _______________________ hereby sells, assigns
and transfers unto_______________________________________________ (Please print
name and address of transferee) this Rights Certificate, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint __________________________ Attorney, to transfer the within Rights
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: ____________________ Signature______________________________
NOTICE
The signatures to the foregoing Assignment and following Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
The signature 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.
In the event the certification set forth above is not completed, the
Company will deem the acquiring person of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
<PAGE>
CERTIFICATE
The undersigned hereby certificates by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an
Acquiring Person or Adverse Person or an Affiliate or
Associate of any such Acquiring Person or Adverse Person (as
such terms are defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the
Rights evidenced by this Rights Certificate from any Person
who is, was or subsequently became an Acquiring Person or
Adverse Person or an Affiliate or Associate of any such
Acquiring Person or Adverse Person.
Dated: ____________________ Signature___________________________________
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if the register holder desires to exercise
Rights represented by the Rights Certificate)
To: PERFORMANCE TECHNOLOGIES, INCORPORATED
The undersigned hereby irrevocably elects to exercise ________________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other Person which may be issuable upon the
exercise of the Rights) and requests that certificates for such shares be issued
in the name of and delivered to:
(Please print name and address)
-----------------------------------------------
Please insert social security
-------------------------------------------------
or other identifying number:
--------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
(Please print name and address)
-----------------------------------------------
Please insert social security
-------------------------------------------------
or other identifying number:
--------------------------------------------------
Dated: ____________________ Signature___________________________________
NOTICE
The signatures to the foregoing Election to Purchase and following
Certificate must conform to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
The signature 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.
In the event the certification set forth above is not completed, the
Company will deem the acquiring person of the Right evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and will not issue the shares of Preferred
Stock issuable upon the exercise of the Rights (or such other securities of the
Company or of any other Person which may be issuable upon the exercise of the
Rights).
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ]
are not beneficially owned by an Acquiring Person or Adverse
Person or an Affiliate or an Associate of any such Acquiring
Person or Adverse Person (as defined in the Rights Agreement);
and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the
Rights evidenced by this Rights Certificate from any Person
who is, was or subsequently became an Acquiring Person or
Adverse Person or an Affiliate or Associate of any such
Acquiring Person or Adverse Person.
Dated: ____________________ Signature___________________________________
EXHIBIT B
SUMMARY OF RIGHTS AGREEMENT
Each holder of shares of PERFORMANCE TECHNOLOGIES, INCORPORATED Common
Stock as of November 8, 2000 (the "Record Date") will receive a distribution on
November 20, 2000 (the "Distribution Date") of one Preferred Stock purchase
right (a "Right") per share of Common Stock in accordance with and pursuant to a
Rights Agreement between the Company and American Stock Transfer & Trust
Company, dated as of November 1, 2000. A Right will also accompany each share of
Common Stock issued following the Record Date. Each Right, if it first becomes
exercisable, entitles the holder to purchase from Performance Technologies,
Incorporated one one-thousandth share of Series A Junior Participating Preferred
Stock at an initial exercise price of $110 per Right (the "Exercise Price"),
subject to adjustment.
Exercisability of Rights. Initially, the Rights will not be exercisable
or transferable apart from the shares of Common Stock with respect to which they
will be distributed, and will be evidenced only by the certificates representing
such shares of Common Stock. The Rights will become exercisable and transferable
apart from the Common Stock on a date (the "Separation Date") that is the
earlier of (i) the close of business on the tenth business day after a Stock
Acquisition Date, defined as the first date of a public announcement by the
Company that a person or group of affiliated or associated persons has become an
Acquiring Person or Adverse Person (each as described below), or (ii) the close
of business on the tenth business day following the commencement of, or first
public disclosure of an intention to commence, a tender or exchange offer by any
person (other than a Permitted Offer as described below) if, upon consummation
of that offer, such person would become an Acquiring Person (as described
below). The Rights will be exercisable from the Separation Date until the
Expiration Date, which is the earlier of (i) the close of business on the
ten-year anniversary of the date of the Rights Agreement (the "Final Expiration
Date"), (ii) the date the Rights are redeemed by the Company, (iii) the date the
Rights are exchanged by the Company, or (iv) immediately prior to the effective
time of a consolidation, merger or share exchange of the Company (A) into
another corporation or (B) with another corporation in which the Company is the
surviving corporation but Common Stock is converted into cash and/or securities
of another corporation, in each case pursuant to an agreement entered into by
the Company prior to a Stock Acquisition Date, at which time the Rights will
expire.
A person or group becomes an Acquiring Person under the Rights
Agreement when such person or group acquires or obtains the right to acquire
beneficial ownership of 15% or more of the then outstanding shares of the
Company's Common Stock, with certain exceptions described in the Rights
Agreement (including exceptions for shares owned by the Company or a subsidiary
or employee benefit plan of the Company, and for shares owned by any person who
the Board determines inadvertently reached such 15% beneficial ownership level
and who promptly divests sufficient shares such that 15% or greater beneficial
ownership ceases). An Adverse Person under the Rights Agreement is a person who
beneficially owns more than 10% of the then outstanding shares of the Company's
Common Stock and whose ownership of that stock, in the opinion of the Board, is
intended or reasonably likely to cause pressure on the Company to enter into a
transaction which would provide that person with short-term financial gain not
in the Company's best long-term interest or is causing or reasonably likely to
cause a material adverse impact on the Company's business or prospects.
A Permitted Offer under the Rights Agreement is a tender or exchange
offer for all outstanding shares of the Company's Common Stock at a price and on
terms determined, prior to the purchase of shares under such tender or exchange
offer, by at least a majority of the members of the Board who are not officers
of the Company and who are not Acquiring Persons or Adverse Persons to be
adequate and otherwise in the best interests of the Company and its
stockholders.
Transferability of Rights. Prior to the Separation Date, the Rights
will not be transferable apart from the shares of Common Stock to which they are
attached. Thus, the surrender or transfer of any Common Stock certificate prior
to that date will also constitute the transfer of the Rights associated with the
shares represented by such certificate. Until the Separation Date (or earlier
redemption, exchange or expiration of the Rights), new Common Stock certificates
issued after the Record Date, upon transfer or new issuance of shares of Common
Stock, will contain a notation incorporating the Rights Agreement by reference.
Until the Separation Date (or earlier redemption, exchange or expiration of the
Rights), the surrender for transfer of any certificates for shares of Common
Stock, outstanding as of the Record Date, even without such notation or a copy
of a Summary of Rights being attached thereto, will also constitute the transfer
of the Rights associated with the shares of Common Stock represented by such
certificate. As soon as practicable after a Separation Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
each record holder of shares of Common Stock as of the close of business on such
Separation Date and, in certain circumstances, holders of certain shares issued
after such Separation Date. Until exercised, the holders of Rights will not have
any rights as holders of Preferred Stock, including any rights to vote or
receive dividends on the Preferred Stock.
Flip-In Rights. It is at the time that the "flip-in" right is triggered
that the Rights have a real economic value. Upon the tender for or the
acquisition of 15% of the Common Stock by an Acquiring Person or the
determination and announcement by the Board that a person has become an Adverse
Person (a "Flip-In Event"), each holder of a Right will thereafter have the
right (the "Flip-In Right") to receive, upon exercise and payment of the
Exercise Price, the number of shares of Preferred Stock having a market value
immediately prior to the Flip-In Event equal to two times the then current
Exercise Price of the Right. Any Right that is (or, in certain circumstances
specified in the Rights Agreement, was) beneficially owned by an Acquiring
Person or Adverse Person (or any of its affiliates or associates, as defined)
will become null and void upon the occurrence of the Flip-In Event. Cash will be
paid in lieu of fractional shares.
For example, at the Exercise Price of $110 per Right, if any person
becomes the Acquiring Person of 15% or more of the outstanding Common Stock of
the Company or is determined to be an Adverse Person, thereafter each Right
(other than Rights owned by such 15% Acquiring Person or Adverse Person or any
of its affiliates or associates, which will have become void) would entitle its
holder to purchase $220 worth of the Company's Preferred Stock for $110.
Assuming that each one one-thousandth share of Preferred Stock is the economic
equivalent of one share of Common Stock and further assuming that the Common
Stock had a per share value of $11.00 at such time, each Right would effectively
entitle its holder to purchase twenty one-thousandth shares of the Company's
Preferred Stock for $110.
Flip-Over Rights. If, at any time following a Flip-in Event, either (i)
the Company is acquired in a merger or other business combination transaction,
the Acquiring Person or Adverse Person controls the Board of the Company and
either (A) the investment of the shares owned by those other than the Acquiring
Person or Adverse Person are not identified to the shares owned by the Acquiring
Person or Adverse Person or (B) the transaction is with the Acquiring Person or
Adverse Person or a related party; or (ii) the Company sells or otherwise
transfers more than 50% of its aggregate assets or earning power to a related
party if approved by Company after the Acquiring Person or Adverse Person
controls the Board of the Company, each holder of a Right (except Rights
previously voided as described above) will thereafter have the right (the
"Flip-Over Right") to receive, upon exercise, shares of common stock of the
Acquiring Person or Adverse Person having a value equal to twice the Exercise
Price of the Right. The Flip-Over Right will be exercisable apart from, and
regardless of the exercise or surrender of, the Flip-In Right.
Again, as with the flip-in trigger, because the Acquiring Person or
Adverse Person is not able to exercise its rights, the Acquiring Person or
Adverse Person and (assuming that the Acquiring Person or Adverse Person is the
party acquiring the Company) its stockholders are significantly diluted as a
result of the triggering of the flip-over event.
Exercise Price for Rights. The Exercise Price is intended to represent
the Board's informed prediction as to the likely market price of one share of
the Company's Common Stock at the end of the term of the Rights Agreement, and
is not an expression as to what would be a fair or adequate price for the sale
of the Company.
Redemption of the Rights. At any time prior to the close of business on
the tenth business day following a public announcement that a party is an
Acquiring Person or Adverse Person, the Board may redeem the Rights in whole but
not in part at a Redemption Price of $.001 per Right. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption Price.
Exchange of the Rights. At any time after a Flip-in Event, the Board
may exchange the Rights (other than Rights owned by such Acquiring Person or
Adverse Person or any of its affiliates or associates which have become void),
in whole or in part, for Common Stock at an exchange ratio of one share of
Common Stock per Right.
Adjustments. The Exercise Price payable, and the number of shares of
Preferred Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of the Preferred Stock, (ii) upon the grant to holders of the
Preferred Stock of certain rights, options or warrants to subscribe for or
purchase Common Stock at a price, or securities convertible into Preferred Stock
with a conversion price, less than the then current market price of the Common
Stock, or (iii) upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular periodic cash dividends
paid out of earnings or retained earnings or dividends payable in shares of
Preferred Stock) or of subscription rights or warrants (other than those
referred to above). The number of Rights associated with each share of Common
Stock is also subject to adjustment in the event of a stock split of the Common
Stock or stock dividend on the Common Stock payable in Common Stock or
subdivisions, consolidations or combinations of the Common Stock occurring, in
any such case, prior to the Separation Date.
Reserved Shares/Substitution of Assets. The Rights Agreement
contemplates that the Company will reserve a sufficient number of authorized but
unissued shares of Preferred Stock to permit the exercise of the right to
exchange the Rights should the Rights become exercisable. The Board may (and
under certain circumstances is obligated to) issue other equity securities or
assets upon the exercise of the Rights if sufficient shares of Preferred Stock
are not available for issuance should the Rights become exercisable. The Board
may make adequate provision to substitute for the shares of stock which are not
available for issuance upon exercise of such Rights either cash, other equity
securities of the Company (including, without limitation, shares of preferred
stock of the Company), debt securities of the Company, other assets, or a
combination of the foregoing, having an aggregate value (as determined by a
majority of the Board after receiving advice from a nationally recognized
investment banking firm) equal to the value of the shares of Preferred Stock
unavailable for issuance upon exercise of the Rights. In addition, the Board,
subject to certain limitations, may amend the Rights to change the Exercise
Price and therefore the number of shares of Preferred Stock issuable upon
exercise of the Rights. If the Company does not take such action within 30 days
following the later of a Flip-In Event or the date on which the Company's right
of redemption with respect to the Rights expires, then the Company will be
required to deliver cash as the substitute for the unavailable authorized shares
of Preferred Stock.
Amendment of the Rights Agreement. The terms of the Rights and the
Rights Agreement may be amended by the Board without the consent of the holders
of the Rights, except that from and after such time as any Person becomes an
Acquiring Person or Adverse Person no such amendment may adversely affect the
interests of the holders of the Rights (other than the Acquiring Person, the
Adverse Person or their Affiliates and Associates.
Independent Director Review. The Rights Agreement final expiration date
is ten years from the date of the Rights Agreement. However, a committee of the
Company's Directors who are neither officers, employees or affiliates of the
Company will review the Rights Plan at least every three years and, if a
majority of these Directors deems it appropriate, may recommend a modification
or termination of the Rights Agreement.
