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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) November 7, 1997
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Lightbridge, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 000-21319 04-3065140
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
67 South Bedford Street, Burlington, Massachusetts 01803
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (781) 359-4000
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. Acquisition or Disposition of Assets.
(a) On November 7, 1997, Lightbridge, Inc. ("Lightbridge") acquired
all of the outstanding capital stock of Coral Systems, Inc., a Delaware
corporation ("Coral"), pursuant to an Agreement and Plan of Reorganization dated
as of September 9, 1997 among Lightbridge, SeeCross Acquisition Corp., a
Delaware corporation and wholly owned subsidiary of Lightbridge ("Acquisition
Corp."), and Coral, as amended by Amendment No. 1 thereto dated October 9, 1997
and Amendment No. 2 thereto dated November 6, 1997 (as so amended, the
"Reorganization Agreement").
The acquisition was effected through a reverse triangular merger (the
"Merger") in which Acquisition Corp. was merged with and into Coral and the
surviving corporation became a wholly owned subsidiary of Lightbridge. Pursuant
to the Merger, each of the outstanding shares of Coral's common stock, $.001 par
value, Series A preferred stock, $.001 par value, Series B preferred stock,
$.001 par value, and Series C preferred stock, $.001 par value, was converted
into a fraction of a share of Lightbridge common stock, $.01 par value ("Common
Stock"), determined as set forth in the Reorganization Agreement. In addition,
as a result of the Merger, all options and warrants to purchase shares of
Coral's common stock became exercisable, when vested, to purchase shares of
Common Stock. Under the Reorganization Agreement, the aggregate number of
shares of Common Stock issuable (and reserved for issuance upon exercises of
outstanding Coral options and warrants) will equal (i) $18,868,625 less the
aggregate amount (the "Adjustment Amount") of certain expenses incurred by Coral
in connection with the Merger and of certain decreases in the amount of working
capital of Coral occurring prior to November 7, 1997, divided by (ii) $17.325.
As contemplated by the Reorganization Agreement, Lightbridge and representatives
of the former Coral stockholders are currently seeking to agree upon the
Adjustment Amount. When the Adjustment Amount has been determined, an amendment
to this Current Report on Form 8-K will be filed to set forth the aggregate
number of shares of Common Stock issued (and reserved for issuance) as a result
of the Merger.
The terms of the Reorganization Agreement, including the number of
shares of Common Stock to be issued in respect of the previously outstanding
Coral capital stock, were the result of arm's-length negotiations between
Lightbridge, on the one hand, and Coral and its former stockholders, on the
other hand. The Merger is being accounted for as a purchase transaction.
The preceding discussion is only a summary and is qualified in its
entirety by reference to the Reorganization Agreement, which is included as
Exhibits 2.1, 2.2 and 2.3 to this Current Report on Form 8-K and is incorporated
by reference herein.
Coral provides client-server software products for the wireless
telecommunications industry that are designed to enable carriers to reduce fraud
and customer turnover, or "churn," and to increase operating efficiencies.
Coral's fraud management software, FraudBuster(R), incorporates a fraud profiler
and subscription fraud monitoring functionality and is designed to combat most
currently identified types of wireless fraud. Coral's churn prevention product,
ChurnAlert(R), allows carriers to analyze and identify potential churn
candidates before they seek customer service assistance or deactivate service.
Coral was incorporated in Colorado in August 1991 and reincorporated in Delaware
in April 1995. Coral's executive offices are located at 1500 Kansas Avenue,
Suite 2E, Longmont, Colorado 80501, and its telephone number is (303) 772-5800.
(b) Not applicable.
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ITEM 5. Other Events.
On November 14, 1997, the Board of Directors of Lightbridge declared a
dividend of one right (each a "Right" and collectively the "Rights") for each
outstanding share of Common Stock. The Rights will be issued to the holders of
record of Common Stock outstanding on November 14, 1997, and with respect to
Common Stock issued thereafter until the Distribution Date (as defined below)
and, in certain circumstances, with respect to shares of Common Stock issued
after the Distribution Date. Each Right, when it becomes exercisable as
described below, will entitle the registered holder to purchase from Lightbridge
one one-hundredth (1/100th) of a share of Series A Participating Cumulative
Preferred Stock, par value $.01 per share, of Lightbridge (the "Preferred
Shares") at a price of $75.00 (the "Purchase Price"). The description and terms
of the Rights are set forth in a Rights Agreement dated as of November 14, 1997
(the "Rights Agreement") between Lightbridge and American Stock Transfer and
Trust Company, as rights agent (the "Rights Agent").
Until the earlier of (i) such date on which Lightbridge learns that a
person or group (including any affiliate or associate of such person or group)
acquired, or obtained the right to acquire, beneficial ownership of fifteen
percent or more of the outstanding shares of Common Stock (such person or group
being called an "Acquiring Person") and (ii) such date, if any, as may be
designated by the Board of Directors of Lightbridge following the commencement
of, or first public disclosure of an intent to commence, a tender or exchange
offer for outstanding shares of Common Stock that could result in the offeror
becoming the beneficial owner of fifteen percent or more of the outstanding
shares of Common Stock (the earlier of such dates being called the "Distribution
Date"), the Rights will be evidenced by the certificates for Common Stock
registered in the names of the holders thereof (which certificates shall also be
deemed to be Right Certificates, as defined below) and not by separate Right
Certificates. Therefore, until the Distribution Date, the Rights will be
transferred with and only with shares of Common Stock.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of Common Stock as of the close of business on the
Distribution Date (and to each initial record holder of certain shares of Common
Stock originally issued after the Distribution Date), and such separate Right
Certificates alone will thereafter evidence the Rights.
The Rights are not exercisable until the Distribution Date and will
expire on November 14, 2007 (the "Expiration Date"), unless earlier redeemed by
Lightbridge as described below.
To preserve the actual or potential economic value of the Rights, the
number of Preferred Shares or other securities issuable upon exercise of a
Right, the Purchase Price and Redemption Price (as defined below) and the number
of Rights associated with each outstanding Common Share are all subject to
adjustment by the Board of Directors as provided in the Rights Agreement in the
event of any change in the Common Stock or Preferred Shares, whether by reason
of stock dividends, stock splits, recapitalizations, mergers, consolidations,
combinations or exchanges of securities, split-ups, split-offs, spin-offs,
liquidations, other similar changes in capitalization, any distribution or
issuance of cash, assets, evidences of indebtedness or subscription rights,
options or warrants to holders of Common Stock or Preferred Shares, as the case
may be (other than distribution of the Rights or regular quarterly cash
dividends) or otherwise.
The Preferred Shares are authorized to be issued in fractions which
are integral multiples of one one-hundredth (1/100th) of a Preferred Share.
Lightbridge may, but is not required to, issue fractions of shares upon the
exercise of Rights, and, in lieu of fractional shares, Lightbridge may issue
certificates or utilize a depository arrangement as provided by the terms of the
Preferred Shares and, in the case of fractions
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other than one one-hundredth (1/100th) of a Preferred Share or integral
multiples thereof, may make a cash payment based on the market price of such
shares.
Upon a person or a group becoming an Acquiring Person, the Rights will
entitle each holder of a Right to purchase, for the Purchase Price, that number
of one one-hundredths (1/100ths) of a Preferred Share equivalent to the number
of shares of Common Stock that at the time of the transaction would have a
market value of twice the Purchase Price.
In the event Lightbridge is acquired in a merger or other business
combination or fifty percent or more of its assets or assets representing fifty
percent or more of its earning power are sold, leased, exchanged or otherwise
transferred (in one or more transactions) to a publicly traded corporation, each
Right will entitle its holder to purchase, for the Purchase Price, that number
of common shares of such corporation which at the time of the transaction would
have a market value of twice the Purchase Price. In the event Lightbridge is
acquired in a merger or other business combination or fifty percent or more of
its assets or assets representing fifty percent or more of the earning power of
Lightbridge are sold, leased, exchanged or otherwise transferred (in one or more
transactions) to an entity that is not a publicly traded corporation, each Right
will entitle its holder to purchase, for the Purchase Price, at such holder's
option, (i) that number of shares of such entity (or, at such holder's option,
of the surviving corporation in such acquisition, which could be Lightbridge)
which at the time of the transaction would have a book value of twice the
Purchase Price or (ii) if such entity has an affiliate which has publicly traded
common shares, that number of common shares of such affiliate which at the time
of the transaction would have a market value of twice the Purchase Price.
Any Rights that are at any time beneficially owned by an Acquiring
Person (or any affiliate or associate of an Acquiring Person) shall be null and
void and nontransferable, and any holder of any such Right (including any
purported transferee or subsequent holder) shall not have any right to exercise
or transfer any such right.
At any time after a person or a group becomes an Acquiring Person, the
Board of Directors of Lightbridge may exchange all or part of the then
outstanding Rights (other than Rights that have become null and void and
nontransferable as described above) for consideration per Right consisting of
one-half of the securities that otherwise would have been issuable to the holder
of each Right upon exercise thereof. The Board of Directors of Lightbridge may
also issue, in substitution for Preferred Shares, shares of Common Stock having
an equivalent market value to the Preferred Shares if, at such time, Lightbridge
has a sufficient number of shares of Common Stock issued but not outstanding or
authorized but unissued.
At any time prior to the earlier of (i) such time as a person becomes
an Acquiring Person and (ii) the Expiration Date, the Board of Directors of
Lightbridge may redeem the Rights in whole, but not in part, at a price (in cash
or in Common Stock or other securities of Lightbridge deemed by the Board of
Directors to be at least equivalent in value) of $.01 per Right (the "Redemption
Price"). Immediately upon the action of the Board of Directors of Lightbridge
electing to redeem the Rights, Lightbridge shall make an announcement thereof,
and, upon such election, the right to exercise the Rights will terminate and the
only right of the holders of Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights therefrom as a stockholder of Lightbridge, including the right to vote or
to receive dividends.
At any time prior to the Distribution Date, Lightbridge may, without
the approval of any holder of the Rights, supplement or amend any provision of
the Rights Agreement (including the date on which the
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Distribution Date shall occur, the time during which the Rights may be redeemed
or the terms of the Preferred Shares), except that no supplement or amendment
shall be made which reduces the Redemption Price or provides for an earlier
Expiration Date.
The Rights have certain antitakeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire Lightbridge
without conditioning the offer on substantially all the Rights being acquired.
The Rights will not interfere with any merger or other business combination or
with a third party approved by the Board of Directors of Lightbridge since the
Board of Directors of Lightbridge may, at its option, at any time prior to any
person becoming an Acquiring Person, redeem all but not less than all of the
then-outstanding Rights at the Redemption Price.
A Registration Statement on Form 8-A with respect to the Rights has
been filed with the Securities and Exchange Commission by Lightbridge. The
preceding discussion is only a summary and is qualified in its entirety by
reference to the Rights Agreement (including the Certificate of Designation of
the Preferred Shares and the form of Right Certificate included as exhibits to
the Rights Agreement), which is included as Exhibit 4.1 to this Current Report
on Form 8-K and is incorporated by reference herein.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
It is impracticable to provide the financial statements required by
Item 7(a) of Form 8-K relative to Lightbridge's acquisition of Coral at the time
this Current Report on Form 8-K is being filed. Such required financial
statements will be filed under cover of Form 8-K/A as soon as practicable, but
not later than January 21, 1998.
(b) Pro Forma Financial Information.
It is impracticable to provide the pro forma financial information
required by Item 7(b) of Form 8-K relative to Lightbridge's acquisition of Coral
at the time this Current Report on Form 8-K is being filed. Such required pro
forma financial information will be filed under cover of Form 8-K/A as soon as
practicable, but not later than January 21, 1998.
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(c) Exhibits.
EXHIBIT
NUMBER DESCRIPTION
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2.1* Agreement and Plan of Reorganization dated as of September 9, 1997
among Lightbridge, Inc., SeeCross Acquisition Corp. and Coral
Systems, Inc., and form of Voting Agreement (Exhibit B), form of
Affiliate's Agreement (Exhibit E), form of Employment Agreements
(Exhibit F), form of Non-Competition Agreement (Exhibit G) and form
of Escrow Agreement (Exhibit H)
2.2** Amendment No. 1 dated as of October 9, 1997 among Lightbridge, Inc.,
SeeCross Acquisition Corp. and Coral Systems, Inc. to Agreement and
Plan of Reorganization filed as Exhibit 2.1
2.3 Amendment No. 2 dated as of November 6, 1997 among Lightbridge, Inc.,
SeeCross Acquisition Corp. and Coral Systems, Inc. to Agreement and
Plan of Reorganization filed as Exhibit 2.1
4.1*** Rights Agreement dated as of November 14, 1997, between Lightbridge,
Inc. and American Stock Transfer and Trust Company and Certificate of
Designation of Series A Participating Cumulative Preferred Stock of
Lightbridge, Inc. (Exhibit A) and form of Right Certificate (Exhibit
B)
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* Incorporated by reference to Registration Statement on Form S-4 of
Lightbridge, Inc. (File No. 333-36801). In accordance with Item 601(b)(2)
of Regulation S-K, Lightbridge, Inc. has omitted certain exhibits and
schedules to the Agreement and Plan of Reorganization from this filing.
Lightbridge, Inc. agrees to provide any omitted schedules and exhibits
supplementally to the Securities and Exchange Commission upon request.
** Incorporated by reference to Current Report on Form 8-K of Lightbridge,
Inc. dated October 9, 1997
***Incorporated by reference to Registration Statement on Form 8-A of
Lightbridge, Inc. filed with the Securities and Exchange Commission on
November 21, 1997.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LIGHTBRIDGE, INC.
Date: November 21, 1997 By: /s/ Pamela D.A. Reeve
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Pamela D.A. Reeve
Chief Executive Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE NUMBER IN
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED COPY
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2.1* Agreement and Plan of Reorganization dated as of September 9,
1997 among Lightbridge, Inc., SeeCross Acquisition Corp. and
Coral Systems, Inc., and form of Voting Agreement (Exhibit B),
form of Affiliate's Agreement (Exhibit E), form of Employment
Agreements (Exhibit F), form of Non-Competition Agreement
(Exhibit G) and form of Escrow Agreement (Exhibit H)
2.2** Amendment No. 1 dated as of October 9, 1997 among Lightbridge, Inc.,
SeeCross Acquisition Corp. and Coral Systems, Inc. to Agreement and
Plan of Reorganization filed as Exhibit 2.1
2.3 Amendment No. 2 dated as of November 6, 1997 among Lightbridge, Inc.,
SeeCross Acquisition Corp. and Coral Systems, Inc. to Agreement and
Plan of Reorganization filed as Exhibit 2.1
4.1*** Rights Agreement dated as of November 14, 1997, between
Lightbridge, Inc. and American Stock Transfer and Trust
Company and Certificate of Designation of Series A
Participating Cumulative Preferred Stock of Lightbridge, Inc.
(Exhibit A) and form of Right Certificate (Exhibit B)
</TABLE>
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* Incorporated by reference to Registration Statement on Form S-4 of
Lightbridge, Inc. (File No. 333-36801). In accordance with Item 601(b)(2)
of Regulation S-K, Lightbridge, Inc. has omitted certain exhibits and
schedules to the Agreement and Plan of Reorganization from this filing.
Lightbridge, Inc. agrees to provide any omitted schedules and exhibits
supplementally to the Securities and Exchange Commission upon request.
** Incorporated by reference to Current Report on Form 8-K of Lightbridge,
Inc. dated October 9, 1997
***Incorporated by reference to Registration Statement on Form 8-A of
Lightbridge, Inc. filed with the Securities and Exchange Commission on
November 21, 1997.
<PAGE>
Exhibit 2.3
AMENDMENT NO. 2
TO AGREEMENT AND PLAN OF REORGANIZATION
THIS AMENDMENT NO. 2 dated as of November 6, 1997 (this "Amendment") is
entered into among Lightbridge, Inc., a Delaware corporation ("Lightbridge"),
SeeCross Acquisition Corp., a Delaware corporation and wholly owned subsidiary
of Lightbridge ("Acquisition Corp."), and Coral Systems, Inc., a Delaware
corporation ("Coral"), to amend the Agreement and Plan of Reorganization dated
as of September 9, 1997, as amended by Amendment No. 1 thereto dated as of
October 9, 1997 (as so amended, the "Agreement"). Capitalized terms used but not
defined in this Amendment shall have the respective meanings ascribed to them in
the Agreement.
RECITALS
On September 9, 1997, Lightbridge, Acquisition Corp. and Coral entered into
the Agreement and Plan of Reorganization in order to effect the Merger, pursuant
to which, among other things, issued and outstanding shares of Coral Capital
Stock would be converted into shares of Lightbridge Common. On October 9, 1997,
the parties entered into Amendment No. 1 to such Agreement and Plan of
Reorganization, in order to modify the definition of Calculation Price.
The parties desire to modify certain provisions of the Agreement as set
forth herein.
NOW, THEREFORE, Lightbridge, Acquisition Corp. and Coral hereby agree
as follows:
1. Section 1.10 of the Agreement is hereby deleted in its entirety, and the
following is substituted therefor:
"Section 1.10. Post-Closing Balance Sheet Adjustment.
"1.10.1. Following the Closing Date, the Surviving Corporation, with
the advice and assistance of Price Waterhouse LLP and the Holders' Agent,
will prepare a balance sheet of Coral as of immediately prior to the time
of the Closing (the "Preliminary Closing Balance Sheet"). The Preliminary
Closing Balance Sheet will be prepared in accordance with generally
accepted accounting principles applied on a basis, and using methodologies,
consistent with the Financial Statements (as defined in Section 2.6),
except that the Preliminary Closing Balance Sheet may omit footnotes and
related disclosures normally contained in audited balance sheets prepared
in accordance with generally accepted accounting principles.
"1.10.2. On or before the tenth day following the Closing Date, the
Surviving Corporation and the Holders' Agent will deliver to Lightbridge
the Preliminary Closing Balance Sheet and a proposed statement of the
Preliminary Adjustment Amount. The Preliminary Adjustment Amount shall be
the difference between negative $1,245,500 and the working capital (total
current assets less total current liabilities) of Coral as reflected on the
Preliminary Closing Balance Sheet; provided, however, that the Preliminary
Adjustment Amount shall not reflect any reductions in the working capital
of Coral attributable to any of the items listed in Section 1.10 of the
Schedule.
"1.10.3. Within ten days after its receipt of the Preliminary Closing
Balance Sheet and proposed statement of the Preliminary Adjustment Amount,
Lightbridge shall notify the Surviving Corporation and the Holders' Agent
whether it accepts or disputes the Preliminary Adjustment Amount. If
Lightbridge accepts the Preliminary Closing Balance Sheet and the
Preliminary Adjustment Amount,
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or fails to notify the Surviving Corporation and the Holders' Agent of any
dispute with respect thereto within said ten-day period, the Preliminary
Closing Balance Sheet shall be deemed to be the "Final Closing Balance
Sheet" and the Preliminary Adjustment Amount shall be deemed to be final,
conclusive and binding upon the parties (the "Final Adjustment Amount").
During such ten-day period and until the determination of the Final
Adjustment Amount, Lightbridge will be provided with access to such
financial books and records of Coral as it may reasonably request in order
to confirm the accuracy of the Preliminary Closing Balance Sheet. If
Lightbridge disputes the accuracy of the Preliminary Closing Balance Sheet
or the Preliminary Adjustment Amount, it shall in such notice set forth in
reasonable detail those items that it believes are not fairly presented in
conformity with Section 1.10.1 above and the reasons for its opinion. The
parties shall then meet and in good faith use their best efforts to try to
resolve their disagreements over the disputed items as promptly as
practicable. If the parties resolve their disagreements over the disputed
items in accordance with the foregoing procedure, the Preliminary Closing
Balance Sheet and the Preliminary Adjustment Amount, with those
modifications to which the parties shall have agreed, shall be deemed to be
the Final Closing Balance Sheet and the Final Adjustment Amount. If the
parties have not resolved their disagreements over the disputed items on
the Preliminary Closing Balance Sheet or the Preliminary Adjustment Amount
within ten days after the notice of dispute from Lightbridge, Lightbridge
may request that Deloitte & Touche LLP audit the Preliminary Closing
Balance Sheet and issue its report thereon, which shall be delivered within
forty-five days after the request date. If the Holders' Agent accepts such
audited Preliminary Closing Balance Sheet and the related calculation of
the Preliminary Adjustment Amount, or fails to notify Lightbridge of any
dispute with respect thereto within ten days after receiving a copy
thereof, such audited Preliminary Closing Balance Sheet shall be deemed to
be the Final Closing Balance Sheet and the related Preliminary Adjustment
Amount shall be deemed to be the Final Adjustment Amount. If the parties
have not resolved their disagreements over the disputed items on the
audited Preliminary Closing Balance Sheet or Preliminary Adjustment Amount
within ten days after the Holders' Agent receives a copy thereof, the
parties shall forthwith jointly request an independent, national accounting
firm mutually agreed upon by Lightbridge and the Holders' Agent (the
"Accounting Arbitrator") to make a binding determination of those disputed
items in accordance with this Agreement. The Accounting Arbitrator will
have no more than forty-five days from the date of referral and no more
than thirty days from the final submission of information or testimony by
the parties to render its decision with respect to the disputed items
concerning the Preliminary Closing Balance Sheet and the Preliminary
Adjustment Amount, which decision shall be final and binding upon the
parties and enforceable as an arbitration award pursuant to the
Massachusetts Uniform Arbitration Act for Commercial Disputes, Mass. Gen.
Laws Ann. ch. 251 or the Federal Arbitration Act, 9 U.S.C. (S)(S)1 et seq.
The Preliminary Closing Balance Sheet and the Preliminary Adjustment
Amount, with those adjustments determined by the Accounting Arbitrator to
be necessary, shall be deemed to be the Final Closing Balance Sheet and the
Final Adjustment Amount. The fees and expenses of the Accounting Arbitrator
engaged pursuant to this Section shall be borne equally by the Stockholders
and by Lightbridge (with the portion attributable to the Stockholders being
treated as an additional Offset Expense, further decreasing the Aggregate
Share Number pursuant to Section 1.4.4)."
2. Coral has delivered to Lightbridge on the date hereof an updated version
of the Schedule (the "Updated Schedule"). Lightbridge and Acquisition Corp.
agree that, in the event the Closing occurs, the Updated Schedule shall
supersede the initial Schedule and shall constitute the definitive Schedule for
all purposes of Article 7.
3. Notwithstanding any other provision of the Agreement (including the
Updated Schedule), to the extent that any claims, costs, losses, expenses,
liabilities or other damages suffered or incurred by Lightbridge or the
Surviving Corporation by reason of or otherwise arising out of the claims made
in the notice described in paragraph 2.8(h) of the Updated Schedule exceed
$30,000 and are not reserved for in the
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Final Closing Balance Sheet, the excess shall constitute Damages for which
Lightbridge and the Surviving Corporation shall be indemnified under Article 7
of the Agreement, subject to the provisions of Section 7.4 thereof.
4. Except as contemplated by the preceding paragraph 1, the provisions of
the Agreement shall remain in full force and effect to the same extent as in
force and effect prior to the execution and delivery of this Amendment.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
LIGHTBRIDGE, INC.
By: /s/ Pamela D.A. Reeve
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President and Chief Executive Officer
SEECROSS ACQUISITION CORP.
By: /s/ Pamela D.A. Reeve
-------------------------------------
President
CORAL SYSTEMS, INC.
By: /s/ Timothy P. Hayes
-------------------------------------
Executive Vice President
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Exhibit 4.1
RIGHTS AGREEMENT
Dated as of November 14, 1997
between
LIGHTBRIDGE, INC.
and
AMERICAN STOCK TRANSFER AND TRUST COMPANY
as Rights Agent
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Table of Contents
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<TABLE>
<CAPTION>
Section Page
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SECTION 1. Certain Definitions........................................................... 1
SECTION 2. Appointment of Rights Agent................................................... 7
SECTION 3. Issue of Rights and Right Certificates........................................ 7
SECTION 4. Form of Right Certificates.................................................... 8
SECTION 5. Execution, Countersignature and Registration.................................. 9
SECTION 6. Transfer, Split-Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates; Uncertificated Rights......... 9
SECTION 7. Exercise of Rights; Expiration Date of Rights................................. 10
SECTION 8. Cancellation and Destruction of Right Certificates............................ 12
SECTION 9. Reservation and Availability of Preferred Shares.............................. 12
SECTION 10. Preferred Shares Record Date.................................................. 13
SECTION 11. Adjustments in Rights After There Is an Acquiring Person; Exchange of Rights
for Shares; Business Combinations............................................. 13
SECTION 12. Certain Adjustments........................................................... 17
SECTION 13. Certificate of Adjustment..................................................... 18
SECTION 14. Additional Covenants.......................................................... 19
SECTION 15. Fractional Rights and Fractional Shares....................................... 19
SECTION 16. Rights of Action.............................................................. 20
SECTION 17. Transfer and Ownership of Rights and Right Certificates....................... 20
SECTION 18. Right Certificate Holder Not Deemed a Stockholder............................. 21
SECTION 19. Concerning the Rights Agent................................................... 21
SECTION 20. Merger or Consolidation or Change of Rights Agent............................. 21
SECTION 21. Duties of Rights Agent........................................................ 22
SECTION 22. Change of Rights Agent........................................................ 24
SECTION 23. Issuance of Additional Rights and Right Certificates.......................... 25
SECTION 24. Redemption and Termination.................................................... 25
SECTION 25. Notices....................................................................... 25
SECTION 26. Supplements and Amendments.................................................... 26
SECTION 27. Successors.................................................................... 27
SECTION 28. Benefits of Rights Agreement; Determinations and Actions by the Board of
Directors, etc................................................................ 27
SECTION 29. Severability.................................................................. 27
SECTION 30. Governing Law................................................................. 28
SECTION 31. Counterparts; Effectiveness................................................... 28
SECTION 32. Descriptive Headings.......................................................... 28
</TABLE>
Exhibits
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A Certificate of Designation
B Form of Right Certificate
<PAGE>
This RIGHTS AGREEMENT, dated as of November 14, 1997, is made between
LIGHTBRIDGE, INC., a Delaware corporation (the "Company"), and American Stock
Transfer and Trust Company, a limited power banking trust company licensed by
the New York State Banking Authority, as Rights Agent (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
distribution of one Right (as hereinafter defined) for each share of Common
Stock, par value $.01 per share, of the Company (the "Common Stock") outstanding
at the Close of Business (as hereinafter defined) on November 14, 1997 (the
"Record Date"), and has authorized the issuance of one Right (as such number may
hereafter be adjusted pursuant to the provisions of this Rights Agreement) with
respect to each share of Common Stock that shall become outstanding between the
Record Date and the earliest of the Distribution Date, the Redemption Date or
the Expiration Date (as such terms are hereinafter defined); provided, however,
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that Rights may be issued with respect to shares of Common Stock that shall
become outstanding after the Distribution Date and prior to the earlier of the
Redemption Date or the Expiration Date in accordance with the provisions of
Section 23. Each Right shall initially represent the right to purchase one one-
hundredth (1/100th) of a share of Series A Participating Cumulative Preferred
Stock, par value $.01 per share, of the Company (the "Preferred Shares"), having
the powers, rights and preferences set forth in the Certificate of Designation
attached as Exhibit A.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
SECTION 1. Certain Definitions. For purposes of this Rights Agreement,
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the following terms have the meanings indicated:
"Acquiring Person" shall mean any Person who or which, alone or together
----------------
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of Common Shares then outstanding that equals or exceeds such Person's Ownership
Threshold, but shall not include (A) the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any of its Subsidiaries, or any
Person holding Common Shares for or pursuant to the terms of any such employee
benefit plan, or (B) any such Person who or which has become such a Beneficial
Owner solely because (i) of a change in the aggregate number of Common Shares
outstanding since the last date on which such Person acquired Beneficial
Ownership of any Common Shares or (ii) it acquired such Beneficial Ownership in
the good faith belief that such acquisition would not cause such Beneficial
Ownership to exceed such Person's Ownership Threshold and such Person relied in
good faith in computing the percentage of its Beneficial Ownership on publicly
filed reports or documents of the Company which are inaccurate or out-of-date.
Notwithstanding clause (B) of the immediately preceding sentence, if any Person
that is not an Acquiring Person due to such clause (B) does not reduce its
percentage of Beneficial Ownership of Common Shares to an amount less than such
Person's Ownership Threshold by the Close of Business on the fifth Business Day
after notice from the Company (the date of notice being the first day) that such
Person's Beneficial Ownership of Common Shares so exceeds such Person's
Ownership Threshold, such Person shall, at the end of such
-1-
<PAGE>
five Business Day period, become an Acquiring Person (and such clause (B) shall
no longer apply to such Person). For purposes of this definition, the
determination whether any Person acted in "good faith" shall be conclusively
determined by the Board of Directors of the Company.
"Affiliate" and "Associate", when used with reference to any Person, shall
--------- ---------
have the respective meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act, as in effect on the date of this
Rights Agreement.
A Person shall be deemed the "Beneficial Owner" of, and shall be deemed to
----------------
"beneficially own", and shall be deemed to have "Beneficial Ownership" of, any
---------------- --------------------
securities:
(i) which such Person or any of such Person's Affiliates or
Associates is deemed to "beneficially own" within the meaning of Rule 13d-3
of the General Rules and Regulations under the Exchange Act, as in effect
on the date of this Rights Agreement;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (written or oral), or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person shall
-------- --------
not be deemed the Beneficial Owner of, or to beneficially own, or to have
Beneficial Ownership of, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange thereunder, or (B) the right to vote pursuant to any
agreement, arrangement or understanding (written or oral); provided,
--------
however, that a Person shall not be deemed the Beneficial Owner of, or to
-------
beneficially own, any security if (1) the agreement, arrangement or
understanding (written or oral) to vote such security arises solely from a
revocable proxy or consent given to such Person pursuant to a definitive
proxy statement filed with the Securities and Exchange Commission and
otherwise in accordance with, the applicable rules and regulations under
the Exchange Act and (2) the beneficial ownership of such security is not
also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (written or
oral) for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in clause (ii)(B) of this definition) or
disposing of any securities of the Company.
Notwithstanding the foregoing, nothing contained in this definition shall cause
a Person ordinarily engaged in business as an underwriter of securities to be
the "Beneficial Owner" of, or to "beneficially own", any securities acquired in
a bona fide firm commitment underwriting pursuant to an underwriting agreement
with the Company.
-2-
<PAGE>
"Book Value", when used with reference to Common Shares issued by any
----------
Person, shall mean the amount of equity of such Person applicable to each Common
Share, determined (i) in accordance with generally accepted accounting
principles in effect on the date as of which such Book Value is to be
determined, (ii) using all the consolidated assets and all the consolidated
liabilities of such Person on the date as of which such Book Value is to be
determined, except that no value shall be included in such assets for goodwill
arising from consummation of a business combination, and (iii) after giving
effect to (A) the exercise of all rights, options and warrants to purchase such
Common Shares (other than the Rights), and the conversion of all securities
convertible into such Common Shares, at an exercise or conversion price, per
Common Share, which is less than such Book Value before giving effect to such
exercise or conversion (whether or not exercisability or convertibility is
conditioned upon occurrence of a future event), (B) all dividends and other
distributions on the capital stock of such Person declared prior to the date as
of which such Book Value is to be determined and to be paid or made after such
date, and (C) any other agreement, arrangement or understanding (written or
oral), or transaction or other action prior to the date as of which such Book
Value is to be determined which would have the effect of thereafter reducing
such Book Value.
"Business Combination" shall have the meaning set forth in Section
--------------------
11(c)(I).
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
------------
Friday which is not a day on which banking institutions in Boston,
Massachusetts, or the city in which the principal office of the Rights Agent is
located, are authorized or obligated by law or executive order to close.
"Certificate of Designation" shall mean the Certificate of Designation of
--------------------------
Series A Participating Cumulative Preferred Stock setting forth the powers,
preferences, rights, qualifications, limitations and restrictions of Series A
Participating Cumulative Preferred Stock of the Company, a copy of which is
attached as Exhibit A.
"Close of Business" on any given date shall mean 5:00 p.m., Boston time, on
-----------------
such date; provided, however, that, if such date is not a Business Day, "Close
-------- -------
of Business" shall mean 5:00 p.m., Boston, Massachusetts time, on the next
succeeding Business Day.
"Common Shares", when used with reference to the Company prior to a
-------------
Business Combination, shall mean the shares of Common Stock or any other shares
of capital stock of the Company into which the Common Stock shall be
reclassified or changed. "Common Shares", when used with reference to any
Person (other than the Company prior to a Business Combination), shall mean
shares of capital stock of such Person (if such Person is a corporation) of any
class or series, or units of equity interests in such Person (if such Person is
not a corporation) of any class or series, the terms of which do not limit (as a
maximum amount and not merely in proportional terms) the amount of dividends or
income payable or distributable on such class or series or the amount of assets
distributable on such class or series upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person and do not provide that
such class or series is subject to redemption at the option of such Person, or
any shares of capital stock or units of equity interests into which the
foregoing shall be reclassified or changed; provided, however, that, if at any
-------- --------
time there shall be more than one such class or series of capital stock or
equity interests of such Person, "Common Shares"
-3-
<PAGE>
of such Person shall include all such classes and series substantially in the
proportion of the total number of shares or other units of each such class or
series outstanding at such time.
"Common Stock" shall have the meaning set forth in the introductory
------------
paragraph of this Rights Agreement.
"Company" shall have the meaning set forth in the heading of this Rights
-------
Agreement; provided, however, that if there is a Business Combination, "Company"
-------- --------
shall have the meaning set forth in Section 11(c)(III).
The term "control" with respect to any Person shall mean the power to
-------
direct the management and policies of such Person, directly or indirectly, by or
through stock ownership, agency or otherwise, or pursuant to or in connection
with an agreement, arrangement or understanding (written or oral) with one or
more other Persons by or through stock ownership, agency or otherwise; and the
terms "controlling" and "controlled" shall have meanings correlative to the
foregoing.
"Distribution Date" shall have the meaning set forth in Section 3(b).
-----------------
"Exchange Act" shall mean the Securities Exchange Act of 1934, as in effect
------------
on the date in question, unless otherwise specifically provided.
"Exchange Consideration" shall have the meaning set forth in Section
----------------------
11(b)(I).
"Expiration Date" shall have the meaning set forth in Section 7(a).
---------------
"Formula Number" shall have the meaning set forth in Section 2 of the
--------------
Certificate of Designation.
"Major Part", when used with reference to the assets of the Company and its
----------
Subsidiaries as of any date, shall mean assets (i) having a fair market value
aggregating 50% or more of the total fair market value of all the assets of the
Company and its Subsidiaries (taken as a whole) as of the date in question, (ii)
accounting for 50% or more of the total value (net of depreciation and
amortization) of all the assets of the Company and its Subsidiaries (taken as a
whole) as would be shown on a consolidated or combined balance sheet of the
Company and its Subsidiaries as of the date in question, prepared in accordance
with generally accepted accounting principles then in effect, or (iii)
accounting for 50% or more of the total amount of earnings before interest,
taxes, depreciation and amortization or revenues of the Company and its
Subsidiaries (taken as a whole) as would be shown on, or derived from, a
consolidated or combined statement of income of the Company and its Subsidiaries
for the period of 12 months ending on the last day of the Company's monthly
accounting period next preceding the date in question, prepared in accordance
with generally accepted accounting principles then in effect.
"Market Value", when used with reference to any class of Common Shares on
------------
any date, shall be deemed to be the average of the daily closing prices, per
share, of any such class for the period which is the shorter of (1) 30
consecutive Trading Days immediately prior to the date in question or
-4-
<PAGE>
(2) the number of consecutive Trading Days beginning on the Trading Day
immediately after the date of the first public announcement of a Business
Combination with an Acquiring Person or Affiliate or Associate of an Acquiring
Person requiring a determination of the Market Value and ending on the Trading
Day immediately prior to the record date of such Business Combination; provided,
--------
however, that, in the event that the Market Value of such class of Common Shares
- -------
is to be determined in whole or in part during a period following the
announcement by the issuer of such class of Common Shares of any action of the
type described in Section 12(a) that would require an adjustment thereunder,
then, and in each such case, the Market Value of such class shall be
appropriately adjusted to reflect the effect of such action on the market price
of such class. The closing price for each Trading Day shall be the closing price
quoted on the composite tape for securities listed on the New York Stock
Exchange, or, if such securities are not quoted on such composite tape or if
such securities are not listed on such exchange, on the principal United States
securities exchange registered under the Exchange Act (or any recognized foreign
stock exchange) on which such securities are listed, or, if such securities are
not listed on any such exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market with
respect to a share of such securities as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such other
system then in use, or if no such quotations are available, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in such securities selected by the Board of Directors of the Company.
If on any such Trading Day no market maker is making a market in such securities
for any reason, the closing price of such securities on such Trading Day shall
be deemed to be the fair value of such securities as determined in good faith by
the Board of Directors of the Company (whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights
Agent, the holders of Rights and all other Persons); provided, however, that for
-------- -------
the purpose of determining the closing price of the Preferred Shares for any
Trading Day on which there is no such market maker for the Preferred Shares the
closing price on such Trading Day shall be deemed to be the Formula Number times
the closing price of the Common Stock of the Company on such Trading Day.
"Ownership Threshold" shall mean, with respect to any Person, Beneficial
-------------------
Ownership of the greater of (A) 15% of the Common Shares at any time outstanding
-------
or (B) the percentage of the outstanding Common Shares Beneficially Owned by
such Person on the date of this Rights Agreement, plus in the case of this
clause (B) 1% of the Common Shares outstanding on such date.
"Person" shall mean an individual, corporation, partnership, joint venture,
------
association, trust, unincorporated organization or other entity.
"Preferred Shares" shall have the meaning set forth in the introductory
----------------
paragraph of this Rights Agreement. Any reference in this Rights Agreement to
Preferred Shares shall be deemed to include any authorized fraction of a
Preferred Share, unless the context otherwise requires.
"Preferred Stock" shall mean the Preferred Stock, par value $.10 per share,
---------------
of the Company.
"Principal Party" shall mean the Surviving Person in a Business
---------------
Combination; provided, however, that, if such Surviving Person is a direct or
-------- --------
indirect Subsidiary of any other Person, "Principal Party" shall mean the Person
which is the ultimate parent of such Surviving Person and
-5-
<PAGE>
which is not itself a Subsidiary of another Person. In the event ultimate
control of such Surviving Person is shared by two or more Persons, "Principal
Party" shall mean that Person that is immediately controlled by such two or more
Persons.
"Purchase Price" with respect to each Right shall mean $75.00, as such
--------------
amount may from time to time be adjusted as provided herein, and shall be
payable in lawful money of the United States of America. All references herein
to the Purchase Price shall mean the Purchase Price as in effect at the time in
question.
"Record Date" shall have the meaning set forth in the introductory
-----------
paragraph of this Rights Agreement.
"Redemption Date" shall have the meaning set forth in Section 24(a).
---------------
"Redemption Price" with respect to each Right shall mean $.01, as such
----------------
amount may from time to time be adjusted in accordance with Section 12. All
references herein to the Redemption Price shall mean the Redemption Price as in
effect at the time in question.
"Registered Common Shares" shall mean Common Shares which are, as of the
-------------------------
date of consummation of a Business Combination, and have continuously been for
the 12 months immediately preceding such date, registered under Section 12 of
the Exchange Act.
"Right Certificate" shall mean a certificate evidencing a Right in
-----------------
substantially the form attached as Exhibit B.
"Rights" shall mean the rights to purchase Preferred Shares (or other
------
securities) as provided in this Rights Agreement.
"Securities Act" shall mean the Securities Act of 1933, as in effect on the
--------------
date in question, unless otherwise specifically provided.
"Subsidiary" shall mean a Person, at least a majority of the total
----------
outstanding voting power (being the power under ordinary circumstances (and not
merely upon the happening of a contingency) to vote in the election of directors
of such Person (if such Person is a corporation) or to participate in the
management and control of such Person (if such Person is not a corporation)) of
which is owned, directly or indirectly, by another Person or by one or more
other Subsidiaries of such other Person or by such other Person and one or more
other Subsidiaries of such other Person.
"Surviving Person" shall mean (1) the Person which is the continuing or
----------------
surviving Person in a consolidation or merger specified in Section 11(c)(I)(i)
or 11(c)(I)(ii) or (2) the Person to which the Major Part of the assets of the
Company and its Subsidiaries is sold, leased, exchanged or otherwise transferred
or disposed of in a transaction specified in Section 11(c)(I)(iii); provided,
--------
however, that, if the Major Part of the assets of the Company and its
- -------
Subsidiaries is sold, leased, exchanged or otherwise transferred or disposed of
in one or more related transactions specified in Section 11(c)(I)(iii) to more
than one Person, the "Surviving Person" in such case shall mean the Person that
-6-
<PAGE>
acquired assets of the Company and/or its Subsidiaries with the greatest fair
market value in such transaction or transactions.
"Trading Day" when used with reference to the Market Value of a security,
-----------
shall mean a day on which the principal national securities exchange (or
principal recognized foreign stock exchange, as the case may be) on which such
securities are listed or admitted to trading is open for the transaction of
business or, if such securities in question are not listed or admitted to
trading on any national securities exchange (or recognized foreign stock
exchange, as the case may be), a Business Day.
SECTION 2. Appointment of Rights Agent. The Company hereby appoints the
---------------------------
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint one or more co-Rights Agents as it may
deem necessary or desirable (the term "Rights Agent" being used herein to refer,
collectively, to the Rights Agent together with any such co-Rights Agents). In
the event the Company appoints one or more co-Rights Agents, the respective
duties of the Rights Agent and any co-Rights Agents shall be as the Company
shall determine.
SECTION 3. Issue of Rights and Right Certificates. (a) One Right shall be
--------------------------------------
associated with each Common Share outstanding on the Record Date, each
additional Common Share that shall become outstanding between the Record Date
and the earliest of the Distribution Date, the Redemption Date or the Expiration
Date and each additional Common Share with which Rights are issued after the
Distribution Date but prior to the earlier of the Redemption Date or the
Expiration Date as provided in Section 23, in each case subject to the
provisions of Section 12.
(b) Until the earlier of (i) such time as the Company learns that a Person
has become an Acquiring Person or (ii) the Close of Business on such date, if
any, as may be designated by the Board of Directors of the Company following the
commencement of, or first public disclosure of an intent to commence, a tender
or exchange offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any of its Subsidiaries,
or any Person holding Common Shares for or pursuant to the terms of any such
employee benefit plan) for outstanding Common Shares, if upon consummation of
such tender or exchange offer such Person's Beneficial Ownership of Common
Shares then outstanding could equal or exceed such Person's Ownership Threshold
(the Close of Business on the earlier of such dates being the "Distribution
Date"), (x) the Rights will be evidenced by the certificates for Common Shares
registered in the names of the holders thereof and not by separate Right
Certificates and (y) the Rights, including the right to receive Right
Certificates, will be transferable only in connection with the transfer of
Common Shares. As soon as practicable after the Distribution Date, the Rights
Agent will send, by first-class, postage-prepaid mail, to each record holder of
Common Shares as of the Distribution Date, at the address of such holder shown
on the records of the Company, a Right Certificate evidencing the Rights to
which such holder is entitled. As of and after the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
(c) With respect to any certificate for Common Shares, until the earliest
of the Distribution Date, the Redemption Date or the Expiration Date, the Rights
associated with the Common Shares
-7-
<PAGE>
represented by any such certificate shall be evidenced by such certificate
alone, the registered holders of the Common Shares shall also be the registered
holders of the associated Rights and the surrender for transfer of any such
certificate shall also constitute the transfer of the Rights associated with the
Common Shares represented thereby.
(d) Certificates issued for Common Shares after the Record Date (including,
without limitation, upon transfer or exchange of outstanding Common Shares), but
prior to the earliest of the Distribution Date, the Redemption Date or the
Expiration Date, may have printed on, written on or otherwise affixed to them
the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement dated as of November 14,
1997, as it may be amended from time to time (the "Rights Agreement"),
between Lightbridge, Inc. (the "Company") and American Stock Transfer &
Trust Company, as Rights Agent (the "Rights Agent"), 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, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this certificate a
copy of the Rights Agreement without charge after receipt of a written
request therefor. Rights beneficially owned by Acquiring Persons or their
Affiliates or Associates (as such terms are defined in the Rights
Agreement) and by any subsequent holder of such Rights are null and void
and nontransferable.
Notwithstanding this paragraph (d), the omission of a legend shall not affect
the enforceability of any part of this Rights Agreement or the rights of any
holder of Rights.
SECTION 4. Form of Right Certificates. The Right Certificates (and the
--------------------------
form of election to purchase and form of assignment to be printed on the reverse
side thereof) shall be in substantially the form set forth as Exhibit B and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Rights Agreement, or as may be required
to comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may, from time to time be listed, or to conform to usage. Subject to the
provisions of Sections 7, 11 and 23, the Right Certificates, whenever issued,
shall be dated as of the Distribution Date, and on their face shall entitle the
holders thereof to purchase such number of Preferred Shares as shall be set
forth therein for the Purchase Price set forth therein, subject to adjustment
from time to time as herein provided.
-8-
<PAGE>
SECTION 5. Execution, Countersignature and Registration. (a) The Right
--------------------------------------------
Certificates shall be executed on behalf of the Company by the Chief Executive
Officer, the President, the Chief Financial Officer, the Treasurer or a Vice
President (whether preceded by any additional title) of the Company, either
manually or by facsimile signature, and have affixed thereto the Company's seal
or a facsimile thereof which shall be attested by the Secretary, an Assistant
Secretary or a Vice President (whether preceded by any additional title,
provided that such Vice President shall not have also executed the Right
Certificates) of the Company, either manually or by facsimile signature. The
Right Certificates shall be manually countersigned by the Rights Agent and shall
not be valid or obligatory for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Right Certificates shall
cease to be such an officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates may
nevertheless be countersigned by the Rights Agent and issued and delivered by
the Company with the same force and effect as though the person who signed such
Right Certificates had not ceased to be such an officer of the Company; and any
Right Certificate may be signed on behalf of the Company by any person who, at
the actual date of execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
execution of this Rights Agreement any such person was not such an officer of
the Company.
(b) Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its office in Brooklyn, New York, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced by each of the Right Certificates, the certificate
number of each of the Right Certificates and the date of each of the Right
Certificates.
SECTION 6. Transfer, Split-Up, Combination and Exchange of Right
-----------------------------------------------------
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates;
- ----------------------------------------------------------------------
Uncertificated Rights. (a) Subject to the provisions of Sections 7(e) and 15,
- ---------------------
at any time after the Distribution Date, and at or prior to the Close of
Business on the earlier of the Redemption Date or the Expiration Date, any Right
Certificate or Right Certificates may be transferred, split-up, combined or
exchanged for another Right Certificate or Right Certificates representing, in
the aggregate, the same number of Rights as the Right Certificate or Right
Certificates surrendered then represented. Any registered holder desiring to
transfer, split-up, combine or exchange any Right Certificate shall make such
request in writing delivered to the Rights Agent and shall surrender the Right
Certificate or Right Certificates to be transferred, split-up, combined or
exchanged at the office of the Rights Agent; provided, however, that neither the
-------- -------
Rights Agent nor the Company shall be obligated to take any action whatsoever
with respect to the transfer of any Right Certificate surrendered for transfer
until the registered holder shall have completed and signed the certification
contained in the form of assignment on the reverse side of such Right
Certificate and shall have provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request. Thereupon the Rights Agent
shall, subject to Sections 7(e) and 15, countersign and deliver to the Person
entitled thereto a Right Certificate or Right Certificates, as the case may be,
as so requested. The Company may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer, split-up, combination or exchange of Right Certificates.
-9-
<PAGE>
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a valid
Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make a new Right
Certificate of like tenor and deliver such new Right Certificate to the Rights
Agent for countersignature and delivery to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
(c) Notwithstanding any other provision hereof, the Company and the Rights
Agent may amend this Rights Agreement to provide for uncertificated Rights in
addition to or in place of Rights evidenced by Right Certificates.
SECTION 7. Exercise of Rights; Expiration Date of Rights. (a) Subject to
-------------------------------------- ------
Section 7(e) and except as otherwise provided herein (including Section 11),
each Right shall entitle the registered holder thereof, upon exercise thereof as
provided herein, to purchase for the Purchase Price, at any time after the
Distribution Date and at or prior to the earlier of (i) the Close of Business on
the 10th anniversary of the date of this Rights Agreement (the Close of Business
on such date being the "Expiration Date") or (ii) the Redemption Date, one one-
hundredth (1/100th) of a Preferred Share, subject to adjustment from time to
time as provided in Sections 11 and 12.
(b) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date, upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the office of the Rights Agent in
Brooklyn, New York, together with payment of the Purchase Price for each one-
hundredth (1/100th) of a Preferred Share as to which the Rights are exercised,
at or prior to the earlier of (i) the Expiration Date or (ii) the Redemption
Date.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase duly executed, accompanied by payment of
the Purchase Price for the Preferred Shares to be purchased together with an
amount equal to any applicable transfer tax, in lawful money of the United
States of America, in cash or by certified check or money order payable to the
order of the Company, the Rights Agent shall thereupon (i) either (A) promptly
requisition from any transfer agent of the Preferred Shares (or make available,
if the Rights Agent is the transfer agent) certificates for the number of
Preferred Shares to be purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests or (B) if the Company shall
have elected to deposit the Preferred Shares with a depositary agent under a
depositary arrangement, promptly requisition from the depositary agent
depositary receipts representing the number of one-hundredths (1/100ths) of a
Preferred Share to be purchased (in which case certificates for the Preferred
Shares to be represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company will direct the depositary
agent to comply with all such requests, (ii) when appropriate, promptly
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional shares in accordance with Section 15, (iii) promptly after receipt
of such certificates or depositary receipts, cause the same to be delivered to
or upon the order of the registered holder of such Right
-10-
<PAGE>
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt promptly deliver such cash to or
upon the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall exercise
fewer than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to the registered holder of such Right Certificate or
to his duly authorized assigns, subject to the provisions of Section 15.
(e) Notwithstanding anything in this Rights Agreement to the contrary, any
Rights that are at any time beneficially owned by an Acquiring Person or any
Affiliate or Associate of an Acquiring Person shall be null and void and
nontransferable, and any holder of any such Right (including any purported
transferee or subsequent holder) shall not have any right to exercise or
transfer any such Right.
(f) Notwithstanding anything in this Rights Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of any Right Certificates upon the
occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the certificate contained
in the form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
(g) The Company may temporarily suspend, for a period of time not to exceed
90 calendar days after the Distribution Date, the exercisability of the Rights
in order to prepare and file a registration statement under the Securities Act,
on an appropriate form, with respect to the Preferred Shares purchasable upon
exercise of the Rights and permit such registration statement to become
effective; provided, however, that no such suspension shall remain effective
-------- -------
after, and the Rights shall without any further action by the Company or any
other Person become exercisable immediately upon, the effectiveness of such
registration statement. Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended and shall issue a further public announcement at such time
as the suspension is no longer in effect. Notwithstanding any provision herein
to the contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification under the blue sky or securities laws of such
jurisdiction shall not have been obtained or the exercise of the Rights shall
not be permitted under applicable law.
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<PAGE>
SECTION 8. Cancellation and Destruction of Right Certificates. All Right
------------------------------------- ------------
Certificates surrendered or presented for the purpose of exercise, transfer,
split-up, combination or exchange shall, and any Right Certificate representing
Rights that have become null and void and nontransferable pursuant to Section
7(e) surrendered or presented for any purpose shall, if surrendered or presented
to the Company or to any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered or presented to the Rights
Agent, shall be canceled by it, and no Right Certificates shall be issued in
lieu thereof except as expressly permitted by this Rights Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement, and
the Rights Agent shall so cancel and retire, any Right Certificate purchased or
acquired by the Company. The Rights Agent shall deliver all canceled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such canceled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
SECTION 9. Reservation and Availability of Preferred Shares. (a) The
------------------------------------------------
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Preferred Shares or any authorized
and issued Preferred Shares held in its treasury, free from preemptive rights or
any right of first refusal, a number of Preferred Shares sufficient to permit
the exercise in full of all outstanding Rights.
(b) In the event that there shall not be sufficient Preferred Shares issued
but not outstanding or authorized but unissued to permit the exercise or
exchange of Rights in accordance with Section 11, the Company covenants and
agrees that it will take all such action as may be necessary to authorize
additional Preferred Shares for issuance upon the exercise or exchange of Rights
pursuant to Section 11; provided, however, that if the Company is unable to
-------- -------
cause the authorization of additional Preferred Shares, then the Company shall,
or in lieu of seeking any such authorization, the Company may, to the extent
necessary and permitted by applicable law and any agreements or instruments in
effect prior to the Distribution Date to which it is a party, (A) upon surrender
of a Right, pay cash equal to the Purchase Price in lieu of issuing Preferred
Shares and requiring payment therefor, (B) upon due exercise of a Right and
payment of the Purchase Price for each Preferred Share as to which such Right is
exercised, issue equity securities having a value equal to the value of the
Preferred Shares which otherwise would have been issuable pursuant to Section
11, which value shall be determined by a nationally recognized investment
banking firm selected by the Board of Directors of the Company or (C) upon due
exercise of a Right and payment of the Purchase Price for each Preferred Share
as to which such Right is exercised, distribute a combination of Preferred
Shares, cash and/or other equity and/or debt securities having an aggregate
value equal to the value of the Preferred Shares which otherwise would have been
issuable pursuant to Section 11, which value shall be determined by a nationally
recognized investment banking firm selected by the Board of Directors of the
Company. To the extent that any legal or contractual restrictions (pursuant to
agreements or instruments in effect prior to the Distribution Date to which it
is party) prevent the Company from paying the full amount payable in accordance
with the foregoing sentence, the Company shall pay to holders of the Rights as
to which such payments are being made all amounts which are not then restricted
on a pro rata basis as such payments become permissible under such legal or
contractual restrictions until such payments have been paid in full.
-12-
<PAGE>
(c) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Shares delivered upon exercise or
exchange of Rights shall, at the time of delivery of the certificates for such
Preferred Shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
(d) So long as the Preferred Shares issuable upon the exercise or exchange
of Rights are to be listed on any national securities exchange, the Company
covenants and agrees to use its best efforts to cause, from and after such time
as the Rights become exercisable or exchangeable, all Preferred Shares reserved
for such issuance to be listed on such securities exchange upon official notice
of issuance upon such exercise or exchange.
(e) The Company further covenants and agrees that it will pay when due and
payable any and all Federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of Right Certificates or of any
Preferred Shares or other securities upon the exercise or exchange of the
Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or delivery of Right
Certificates to a Person other than, or in respect of the issuance or delivery
of certificates for the Preferred Shares or other securities, as the case may
be, in a name other than that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or exchange or to issue or deliver
any certificates for Preferred Shares or other securities, as the case may be,
upon the exercise or exchange of any Rights until any such tax shall have been
paid (any such tax being payable by the holder of such Right Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
SECTION 10. Preferred Shares Record Date. Each Person in whose name any
----------------------------
certificate for Preferred Shares or other securities is issued upon the exercise
or exchange of Rights shall for all purposes be deemed to have become the holder
of record of the Preferred Shares or other securities, as the case may be,
represented thereby on, and such certificate shall be dated, the date upon which
the Right Certificate evidencing such Rights was duly surrendered and payment of
any Purchase Price (and any applicable transfer taxes) was made; provided,
--------
however, that, if the date of such surrender and payment is a date upon which
- -------
the transfer books of the Company for the Preferred Shares or other securities,
as the case may be, are closed, such Person shall be deemed to have become the
record holder of such Preferred Shares or other securities, as the case may be,
on, and such certificate shall be dated, the next succeeding Business Day on
which the transfer books of the Company for the Preferred Shares or other
securities, as the case may be, are open.
SECTION 11. Adjustments in Rights After There Is an Acquiring Person;
---------------------------------------------------------
Exchange of Rights for Shares; Business Combinations. (a) Upon a Person
- --------------------------------------- ------------
becoming an Acquiring Person, proper provision shall be made so that each holder
of a Right, except as provided in Section 7(e), shall thereafter have a right to
receive, upon exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, such number of one-hundredths (1/100ths) of a
Preferred Share as shall equal the result obtained by multiplying the Purchase
Price by a fraction, the numerator of which is the number of one-hundredths
(1/100ths) of a Preferred Share for which a Right is then exercisable and the
denominator of which is 50% of the Market Value of the Common Stock on the date
on which a Person becomes an Acquiring Person. As soon as practicable after a
Person becomes an
-13-
<PAGE>
Acquiring Person (provided the Company shall not have elected to make the
exchange permitted by Section 11(b)(I) for all outstanding Rights), the Company
covenants and agrees to use its best efforts to:
(I) prepare and file a registration statement under the Securities
Act, on an appropriate form, with respect to the Preferred Shares purchasable
upon exercise of the Rights;
(II) cause such registration statement to become effective as soon as
practicable after such filing;
(III) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the Expiration Date; and
(IV) qualify or register the Preferred Shares purchasable upon
exercise of the Rights under the blue sky or securities laws of such
jurisdictions as may be necessary or appropriate.
(b) (I) The Board of Directors of the Company may, at its option, at any
time after a Person becomes an Acquiring Person, mandatorily exchange all or
part of the then outstanding and exercisable Rights (which shall not include
Rights that shall have become null and void and nontransferable pursuant to the
provisions of Section 7(e)) for consideration per Right consisting of one-half
of the securities that would be issuable at such time upon the exercise of one
Right in accordance with Section 11(a) or, if applicable, Section 9(b) (the
consideration issuable per Right pursuant to this Section 11(b)(I) being the
"Exchange Consideration"). The Board of Directors of the Company may, at its
option, issue, in substitution for Preferred Shares, shares of Common Stock in
an amount per Preferred Share equal to the Formula Number if there are
sufficient shares of Common Stock issued but not outstanding or authorized but
unissued. If the Board of Directors of the Company elects to exchange all the
Rights for Exchange Consideration pursuant to this Section 11(b)(I) prior to the
physical distribution of the Rights Certificates, the Corporation may distribute
the Exchange Consideration in lieu of distributing Right Certificates, in which
case for purposes of this Rights Agreement holders of Rights shall be deemed to
have simultaneously received and surrendered for exchange Right Certificates on
the date of such distribution.
(II) Any action of the Board of Directors of the Company ordering the
exchange of any Rights pursuant to Section 11(b)(I) shall be irrevocable and,
immediately upon the taking of such action and without any further action and
without any notice, the right to exercise any such Right pursuant to Section
11(a) shall terminate and the only right thereafter of a holder of such Right
shall be to receive the Exchange Consideration in exchange for each such Right
held by such holder or, if the Exchange Consideration shall not have been paid
or issued, to exercise any such Right pursuant to Section 11(c)(I). 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 promptly shall mail a notice of any such exchange
to all holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the Rights for the Exchange Consideration will be effected and, in
the event of any partial exchange,
-14-
<PAGE>
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 shall
have become null and void and nontransferable pursuant to the provisions of
Section 7(e)) held by each holder of Rights.
(c) (I) In the event that, following a Distribution Date, directly or
indirectly, any transactions specified in the following clause (i), (ii) or
(iii) of this Section 11(c) (each such transaction being a "Business
Combination") shall be consummated:
(i) the Company shall consolidate with, or merge with and into, any
Acquiring Person or any Affiliate or Associate of an Acquiring Person;
(ii) any Acquiring Person or any Affiliate or Associate of an
Acquiring Person shall merge with and into the Company and, in connection
with such merger, all or part of the Common Shares shall be changed into or
exchanged for capital stock or other securities of the Company or of any
Acquiring Person or Affiliate or Associate of an Acquiring Person or cash
or any other property; or
(iii) the Company shall sell, lease, exchange or otherwise transfer
or dispose of (or one or more of its Subsidiaries shall sell, lease,
exchange or otherwise transfer or dispose of), in one or more transactions,
the Major Part of the assets of the Company and its Subsidiaries (taken as
a whole) to any Acquiring Person or any Affiliate or Associate of an
Acquiring Person,
then, in each such case, proper provision shall be made so that each holder of a
Right, except as provided in Section 7(e), shall thereafter have the right to
receive, upon the exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, the securities specified below (or, at such
holder's option, the securities specified in Section 11(a)):
(A) If the Principal Party in such Business Combination has Registered
Common Shares outstanding, each Right shall thereafter represent the right
to receive, upon the exercise thereof for the Purchase Price in accordance
with the terms of this Rights Agreement, such number of Registered Common
Shares of such Principal Party, free and clear of all liens, encumbrances
or other adverse claims, as shall have an aggregate Market Value equal to
the result obtained by multiplying the Purchase Price by two;
(B) If the Principal Party involved in such Business Combination does
not have Registered Common Shares outstanding, each Right shall thereafter
represent the right to receive, upon the exercise thereof for the Purchase
Price in accordance with the terms of this Rights Agreement, at the
election of the holder of such Right at the time of the exercise thereof,
any of:
(1) such number of Common Shares of the Surviving Person in such
Business Combination as shall have an aggregate Book Value
immediately after giving effect to such Business Combination equal to
the result obtained by multiplying the Purchase Price by two;
-15-
<PAGE>
(2) such number of Common Shares of the Principal Party in such
Business Combination (if the Principal Party is not also the Surviving
Person in such Business Combination) as shall have an aggregate Book
Value immediately after giving effect to such Business Combination
equal to the result obtained by multiplying the Purchase Price by two;
or
(3) if the Principal Party in such Business Combination is an
Affiliate of one or more Persons which has Registered Common Shares
outstanding, such number of Registered Common Shares of whichever of
such Affiliates of the Principal Party has Registered Common Shares
with the greatest aggregate Market Value on the date of consummation
of such Business Combination as shall have an aggregate Market Value
on the date of such Business Combination equal to the result obtained
by multiplying the Purchase Price by two.
(II) The Company shall not consummate any Business Combination unless
each issuer of Common Shares for which Rights may be exercised, as set forth in
this Section 11(c), shall have sufficient authorized Common Shares that have not
been issued or reserved for issuance (and which shall, when issued upon exercise
thereof in accordance with this Rights Agreement, be validly issued, fully paid
and nonassessable and free of preemptive rights, rights of first refusal or any
other restrictions or limitations on the transfer or ownership thereof) to
permit the exercise in full of the Rights in accordance with this Section 11(c)
and unless prior thereto:
(i) a registration statement under the Securities Act on an
appropriate form, with respect to the Rights and the Common Shares of such
issuer purchasable upon exercise of the Rights, shall be effective under
the Securities Act; and
(ii) the Company and each such issuer shall have:
(A) executed and delivered to the Rights Agent a supplemental
agreement providing for the assumption by such issuer of the
obligations set forth in this Section 11(c) (including the obligation
of such issuer to issue Common Shares upon the exercise of Rights in
accordance with the terms set forth in Sections 11(c)(I) and
11(c)(III)) and further providing that such issuer, at its own
expense, will use its best efforts to:
(1) cause a registration statement under the Securities Act
on an appropriate form, with respect to the Rights and the Common
Shares of such issuer purchasable upon exercise of the Rights, to
remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date;
(2) qualify or register the Rights and the Common Shares of
such issuer purchasable upon exercise of the Rights under the
blue sky or securities laws of such jurisdictions as may be
necessary or appropriate; and
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<PAGE>
(3) list the Rights and the Common Shares of such issuer
purchasable upon exercise of the Rights on each national
securities exchange on which the Common Shares were listed prior
to the consummation of the Business Combination or, if the Common
Shares were not listed on a national securities exchange prior to
the consummation of the Business Combination, on a national
securities exchange;
(B) furnished to the Rights Agent a written opinion of
independent counsel stating that such supplemental agreement is a
valid, binding and enforceable agreement of such issuer; and
(C) filed with the Rights Agent a certificate of a nationally
recognized firm of independent accountants setting forth the number
of Common Shares of such issuer which may be purchased upon the
exercise of each Right after the consummation of such Business
Combination.
(III) After consummation of any Business Combination and subject to
the provisions of Section 11(c)(II), (i) each issuer of Common Shares for which
Rights may be exercised as set forth in this Section 11(c) shall be liable for,
and shall assume, by virtue of such Business Combination, all the obligations
and duties of the Company pursuant to this Rights Agreement, (ii) the term
"Company" shall thereafter be deemed to refer to such issuer, (iii) each such
issuer shall take such steps in connection with such consummation as may be
necessary to assure that the provisions hereof (including the provisions of
Sections 11(a) and 11(c)) shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter deliverable upon
the exercise of the Rights, and (iv) the number of Common Shares of each such
issuer thereafter receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of Sections 11 and 12, and the provisions of
Section 7, 9 and 10 with respect to the Preferred Shares shall apply, as nearly
as reasonably may be, on like terms to any such Common Shares.
SECTION 12. Certain Adjustments. (a) To preserve the actual or potential
-------------------
economic value of the Rights, if at any time after the date of this Rights
Agreement there shall be any change in the Common Shares or the Preferred
Shares, whether by reason of stock dividends, stock splits, recapitalizations,
mergers, consolidations, combinations or exchanges of securities, split-ups,
split-offs, spin-offs, liquidations, other similar changes in capitalization,
any distribution or issuance of cash, assets, evidences of indebtedness or
subscription rights, options or warrants to holders of Common Shares or
Preferred Shares, as the case may be (other than distribution of the Rights or
regular quarterly cash dividends) or otherwise, then, in each such event the
Board of Directors of the Company shall make such appropriate adjustments in the
number of Preferred Shares (or the number and kind of other securities) issuable
upon exercise of each Right, the Purchase Price and Redemption Price in effect
at such time and the number of Rights outstanding at such time (including the
number of Rights or fractional Rights associated with each Common Share) such
that following such adjustment such event shall not have had the effect of
reducing or limiting the benefits the holders of the Rights would have had
absent such event.
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<PAGE>
(b) If, as a result of an adjustment made pursuant to Section 12(a), the
holder of any Right thereafter exercised shall become entitled to receive any
securities other than Preferred Shares, thereafter the number of such securities
so receivable upon exercise of any Right shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions of Sections 11 and 12, and the provisions of Sections 7, 9 and 10
with respect to the Preferred Shares shall apply, as nearly as reasonably may
be, on like term, to any such other securities.
(c) All Rights originally issued by the Company subsequent to any
adjustment made to the amount of Preferred Shares or other securities relating
to a Right shall evidence the right to purchase, for the Purchase Price, the
adjusted number and kind of securities purchasable from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as provided
herein.
(d) Irrespective of any adjustment or change in the Purchase Price or the
number of Preferred Shares or number or kind of other securities issuable upon
the exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the terms which were expressed in the initial
Right Certificates issued hereunder.
(e) In any case in which action taken pursuant to Section 12(a) requires
that an adjustment be made effective as of a record date for a specified event,
the Company may elect to defer until the occurrence of such event the issuing to
the holder of any Right exercised after such record date the Preferred Shares
and/or other securities, if any, issuable upon such exercise over and above the
Preferred Shares and/or other securities, if any, issuable before giving effect
to such adjustment; provided, however, that the Company shall deliver to such
-------- -------
holder a due bill or other appropriate instrument evidencing such holder's right
to receive such additional securities upon the occurrence of the event requiring
such adjustment.
SECTION 13. Certificate of Adjustment. Whenever an adjustment is made as
-------------------------
provided in Section 11 or 12, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the Preferred Shares a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Right Certificate (or, prior to
the Distribution Date, of the Common Shares) in accordance with Section 25. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained.
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<PAGE>
SECTION 14. Additional Covenants. (a) Notwithstanding any other provision
--------------------
of this Rights Agreement, no adjustment to the number of Preferred Shares (or
fractions of a share) or other securities for which a Right is exercisable or
the number of Rights outstanding or associated with each Common Share or any
similar or other adjustment shall be made or be effective if such adjustment
would have the effect of reducing or limiting the benefits the holders of the
Rights would have had absent such adjustment, including, without limitation, the
benefits under Sections 11 and 12, unless the terms of this Rights Agreement are
amended so as to preserve such benefits.
(b) The Company covenants and agrees that, after the Distribution Date,
except as permitted by Section 26, it will not take (or permit any Subsidiary of
the Company to take) any action if at the time such action is taken it is
intended or reasonably foreseeable that such action will reduce or otherwise
limit the benefits the holders of the Rights would have had absent such action,
including, without limitation, the benefits under Sections 11 and 12. Any
action taken by the Company during any period after any Person becomes an
Acquiring Person but prior to the Distribution Date shall be null and void
unless such action could be taken under this Section 14(b) from and after the
Distribution Date. The Company shall not consummate any Business Combination if
any issuer of Common Shares for which Rights may be exercised after such
Business Combination in accordance with Section 11(c) shall have taken any
action that reduces or otherwise limits the benefits the holders of the Rights
would have had absent such action, including, without limitation, the benefits
under Sections 11 and 12.
SECTION 15. Fractional Rights and Fractional Shares. (a) The Company may,
---------------------------------------
but shall not be required to, issue fractions of Rights or distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, the Company may pay to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole
Right. For purposes of this Section 15(a), the current market value of a whole
Right shall be the closing price of the Rights (as determined in a manner
similar to that of Common Stock pursuant to the second and third sentences of
the definition of Market Value contained in Section 1) for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable.
(b) The Company may, but shall not be required to, issue fractions of
Preferred Shares upon exercise of the Rights or distribute certificates which
evidence fractional Preferred Shares. In lieu of fractional Preferred Shares,
the Company may elect to (i) utilize a depository arrangement as provided by the
terms of the Preferred Shares or (ii) in the case of a fraction of a Preferred
Share (other than one one-hundredth (1/100th) of a Preferred Share or any
integral multiple thereof), pay to the registered holders of Right Certificates
at the time such Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of one Preferred Share, if any
are outstanding and publicly traded (or the Formula Number times the current
market value of one share of Common Stock if the Preferred Shares are not
outstanding and publicly traded). If, as a result of an adjustment made
pursuant to Section 12(a), the holder of any Right thereafter exercised shall
become entitled to receive any securities other than Preferred Shares, the
provisions of this Section 15(b) shall apply, as nearly as reasonably may be, on
like terms to such other securities.
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<PAGE>
(c) The Company may, but shall not be required to, issue fractions of
shares of Common Stock upon exchange of Rights pursuant to Section 11(b), or to
distribute certificates which evidence fractional shares of Common Stock. In
lieu of such fractional shares of Common Stock, the Company may pay to the
registered holders of the Right Certificates with regard to which such
fractional shares of Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the current Market Value of one share of Common
Stock as of the date on which a Person became an Acquiring Person.
(d) The holder of Rights by the acceptance of the Rights expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right except as provided in this Section 15.
SECTION 16. Rights of Action. (a) All rights of action in respect of this
----------------
Rights Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares) may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Rights Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Rights Agreement and shall be entitled to specific
performance of the obligations of any Person under, and injunctive relief
against actual or threatened violations of the obligations of any Person subject
to, this Rights Agreement.
(b) Any holder of Rights who prevails in an action to enforce the
provisions of this Rights Agreement shall be entitled to recover the reasonable
costs and expenses, including attorneys' fees, incurred in such action.
SECTION 17. Transfer and Ownership of Rights and Right Certificates. (a)
-------------------------------------------------------
Prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of the Common Shares.
(b) After the Distribution Date, the Right Certificates will be
transferable, subject to Section 7(e), only on the registry books of the Rights
Agent if surrendered at the office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer.
(c) The Company and the Rights Agent may deem and treat the Person in whose
name a Right Certificate (or, prior to the Distribution Date, the associated
Common Shares certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated certificate for Common
Shares made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
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<PAGE>
SECTION 18. Right Certificate Holder Not Deemed a Stockholder. No holder,
-------------------------------------------------
as such, of any Right Certificate shall be entitled to vote or receive dividends
or be deemed, for any purpose, the holder of the Preferred Shares or of any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company,
including, without limitation, 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, or to receive dividends or other
distributions or subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance with
the provisions hereof.
SECTION 19. Concerning the Rights Agent. (a) The Company agrees to pay
---------------------------
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Rights Agreement and the exercise and performance of its
duties hereunder.
(b) The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered or omitted by it in connection with its
administration of this Rights Agreement in reliance upon any Right Certificate
or certificate for the Common Shares or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
SECTION 20. Merger or Consolidation or Change of Rights Agent. (a) Any
-------------------------------------------------
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Rights Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto; provided that such corporation would be eligible for
--------
appointment as a successor Rights Agent under the provisions of Section 22. In
case, at the time such successor Rights Agent shall succeed to the agency
created by this Rights Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and, in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may
-21-
<PAGE>
adopt the countersignature under its prior name and deliver Right Certificates
so countersigned; and, in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Rights Agreement.
SECTION 21. Duties of Rights Agent. The Rights Agent undertakes the
----------------------
duties and obligations imposed by this Rights Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates (or, prior to the Distribution Date, of the Common Shares), by
their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken, suffered or omitted by it in good faith and in accordance with
such advice or opinion.
(b) Whenever in the performance of its duties under this Rights Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person) be proved
or established by the Company prior to taking, refraining from taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the Chief Executive Officer, the President, the Chief
Operating Officer, the Chief Financial Officer, the Treasurer, a Vice President
(whether preceded by any additional title) or the Clerk of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Rights Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or wilful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Rights Agreement or in the
Right Certificates (except as to its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Rights Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 or 12 or responsible for the manner, method or amount
of any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such adjustment); nor
shall it by any act hereunder be deemed to make any
-22-
<PAGE>
representation or warranty as to the authorization or reservation of any
Preferred Shares or Common Shares to be issued pursuant to this Rights Agreement
or any Right Certificate or as to whether any Preferred Shares or Common Shares
will, when so issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chief Executive Officer, the President, the Chief Financial
Officer, the Treasurer, a Vice President (whether preceded by any additional
title) or the Secretary of the Company, in connection with its duties and it
shall not be liable for any action taken or suffered to be taken by it in good
faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not the Rights Agent under
this Rights Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, 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 provided reasonable care was exercised in the selection
and continued employment thereof.
(j) The Company agrees to indemnify and to hold the Rights Agent harmless
against any loss, liability, damage or expense (including reasonable fees and
expenses of legal counsel) which the Rights Agent may incur resulting from its
actions as Rights Agent pursuant to this Rights Agreement; provided, however,
-------- -------
that the Rights Agent shall not be indemnified or held harmless with respect to
any such loss, liability, damage or expense incurred by the Rights Agent as a
result of, or arising out of, its own gross negligence, bad faith or wilful
misconduct. In no case shall the Company be liable with respect to any action,
proceeding, suit or claim against the Rights Agent unless the Rights Agent shall
have notified the Company, by letter or by facsimile confirmed by letter, of the
assertion of any action, proceeding, suit or claim against the Rights Agent,
promptly after the Rights Agent shall have notice of any such assertion of an
action, proceeding, suit or claim or have been served with the summons or other
first legal process giving information as to the nature and basis of the action,
proceeding, suit or claim. The Company shall be entitled to participate at its
own expense in the defense of any such action, proceeding, suit or claim, and,
if the Company so elects, the Company shall assume the defense of any such
action, proceeding, suit or claim. In the event that the Company assumes such
defense, the Company shall not thereafter be liable for the fees and
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<PAGE>
expenses of any additional counsel retained by the Rights Agent, so long as the
Company shall retain counsel satisfactory to the Rights Agent, in the exercise
of its reasonable judgment, to defend such action, proceeding, suit or claim.
The Rights Agent agrees not to settle any litigation in connection with any
action, proceeding, suit or claim with respect to which it may seek
indemnification from the Company without the prior written consent of the
Company.
SECTION 22. Change of Rights Agent. The Rights Agent or any successor
----------------------
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares and the Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates (or, prior to the
Distribution Date, of the Common Shares) by first-class mail, postage prepaid.
The Company may remove the Rights Agent or any successor Rights Agent upon 30
days' notice in writing, mailed to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent of the Common Shares and the
Preferred Shares by registered or certified mail, and to the holders of the
Right Certificates (or, prior to the Distribution Date, of the Common Shares) by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (or, prior to
the Distribution Date, of the Common Shares) (who shall, with such notice,
submit his Right Certificate or, prior to the Distribution Date, the certificate
representing his Common Shares, for inspection by the Company), then the
registered holder of any Right Certificate (or, prior to the Distribution Date,
of the Common Shares) may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of any state of the
United States, in good standing, which is authorized under such laws to exercise
stock transfer or corporate trust powers and is subject to supervision or
examination by Federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000; provided that the principal transfer agent for the Common Shares
--------
shall in any event be qualified to be the Rights Agent. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares and the Preferred Shares, and mail
a notice thereof in writing to the registered holders of the Right Certificates
(or, prior to the Distribution Date, of the Common Shares). Failure to give any
notice provided for in this Section 22, however, or any defect therein shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
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<PAGE>
SECTION 23. Issuance of Additional Rights and Right Certificates.
----------------------------------------------------
Notwithstanding any of the provisions of this Rights Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change made in accordance with the provisions of this
Rights Agreement. In addition, in connection with the issuance or sale of
Common Shares following the Distribution Date and prior to the earlier of the
Redemption Date and the Expiration Date, the Company (a) shall, with respect to
Common Shares 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, notes or debentures issued by the Company, and (b) may,
in any other case, if deemed necessary or appropriate by its Board of Directors,
issue Right Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that (i) no such Right
-------- -------
Certificate shall be issued if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Right Certificate would be issued, and (ii) no such Right Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
SECTION 24. Redemption and Termination. (a) The Board of Directors of the
--------------------------
Company may, at its option, at any time prior to the earlier of (i) such time as
a Person becomes an Acquiring Person and (ii) the Expiration Date, order the
redemption of all, but not fewer than all, the then outstanding Rights at the
Redemption Price (the date of such redemption being the "Redemption Date"), and
the Company, at its option, may pay the Redemption Price either in cash or
Common Shares or other securities of the Company deemed by the Board of
Directors of the Company, in the exercise of its sole discretion, to be at least
equivalent in value to the Redemption Price.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights, and without any further action and
without any notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price. Within 10 Business Days after the action of the Board of Directors of
the Company ordering the redemption of the Rights, the Company shall give notice
of such redemption to the holders of the then outstanding Rights by mailing such
notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Shares. Each such notice of
redemption will state the method by which payment of the Redemption Price will
be made. The notice, if mailed in the manner herein provided, shall be
conclusively presumed to have been duly given, whether or not the holder of
Rights receives such notice. In any case, failure to give such notice by mail,
or any defect in the notice, to any particular holder of Rights shall not affect
the sufficiency of the notice to other holders of Rights.
SECTION 25. Notices. Notices or demands authorized by this Rights
-------
Agreement to be given or made by the Rights Agent or by the holder of a Right
Certificate (or, prior to the Distribution Date, of the Common Shares) to or on
the Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:
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<PAGE>
Lightbridge, Inc.
67 South Bedford Street
Burlington, Massachusetts 01803
Attention of Chief Executive Officer
Subject to the provisions of Section 22, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of a Right
Certificate (or, prior to the Distribution Date, of the Common Shares) to or on
the Rights Agent shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Company) as follows:
American Stock Transfer and Trust Company
6201 15th Avenue, 3rd Floor
Brooklyn, New York 11219
Attention of Vice President, Administration
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to any holder of a Right Certificate (or, prior
to the Distribution Date, of the Common Shares) 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 Rights Agent
or, prior to the Distribution Date, on the registry books of the transfer agent
for the Common Shares.
SECTION 26. Supplements and Amendments. At any time prior to the
--------------------------
Distribution Date and subject to the last sentence of this Section 26, the
Company may, and the Rights Agent shall if the Company so directs, supplement or
amend any provision of this Rights Agreement (including, without limitation, the
date on which the Distribution Date shall occur, the time during which the
Rights may be redeemed pursuant to Section 24 or any provision of the
Certificate of Designation) without the approval of any holder of the Rights.
From and after the Distribution Date and subject to applicable law, the Company
may, and the Rights Agent shall if the Company so directs, amend this Rights
Agreement without the approval of any holders of Right Certificates (i) to cure
any ambiguity or to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provision of this Rights
Agreement or (ii) to make any other provisions in regard to matters or questions
arising hereunder which the Company may deem necessary or desirable and which
shall not adversely affect the interests of the holders of Right Certificates
(other than an Acquiring Person or an Affiliate or Associate of an Acquiring
Person). Any supplement or amendment adopted during any period after any Person
has become an Acquiring Person but prior to the Distribution Date shall be null
and void unless such supplement or amendment could have been adopted under the
prior sentence from and after the Distribution Date. Any supplement or
amendment to this Rights Agreement duly approved by the Company that does not
amend Sections 19, 20, 21 or 22 in a manner adverse to the Rights Agent shall
become effective immediately upon execution by the Company, whether or not also
executed by the Rights Agent. In addition, notwithstanding anything to the
contrary contained in this Rights Agreement, no supplement or amendment to this
Rights Agreement shall be made which (a) reduces the Redemption Price (except as
required by Section 12(a)) or (b) provides for an earlier Expiration Date.
-26-
<PAGE>
SECTION 27. Successors. All the covenants and provisions of this Rights
----------
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 28. Benefits of Rights Agreement; Determinations and Actions by
-----------------------------------------------------------
the Board of Directors, etc. (a) Nothing in this Rights Agreement shall be
- ----------------------------
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, of the Common Shares) any legal or equitable right, remedy or claim under
this Rights Agreement; but this Rights Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, of the Common
Shares).
(b) Except as explicitly otherwise provided in this Rights Agreement, the
Board of Directors of the Company shall have the exclusive power and authority
to administer this Rights Agreement and to exercise all rights and powers
specifically granted to the Board of Directors of the Company or to the Company,
or as may be necessary or advisable in the administration of this Rights
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Rights Agreement and (ii) make all determinations deemed
necessary or advisable for the administration of this Rights Agreement
(including, without limitation, a determination to redeem or not redeem the
Rights or to amend this Rights Agreement and a determination of whether there is
an Acquiring Person).
(c) Nothing contained in this Rights Agreement shall be deemed to be in
derogation of the obligation of the Board of Directors of the Company to
exercise its fiduciary duty. Without limiting the foregoing, nothing contained
herein shall be construed to suggest or imply that the Board of Directors shall
not be entitled to reject any tender offer, or to recommend that holders of
Common Shares reject any tender offer, or to take any other action (including,
without limitation, the commencement, prosecution, defense or settlement of any
litigation and the submission of additional or alternative offers or other
proposals) with respect to any tender offer that the Board of Directors believes
is necessary or appropriate in the exercise of such fiduciary duty.
SECTION 29. Severability. If any term, provision, covenant or restriction
------------
of this Rights 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 Rights Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
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<PAGE>
SECTION 30. Governing Law. This Rights Agreement and each Right
-------------
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the law of such state applicable to contracts to be
made and performed entirely within such state.
SECTION 31. Counterparts; Effectiveness. This Rights Agreement may be
---------------------------
executed in any number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument. This Rights Agreement
shall be effective as of the Close of Business on the date hereof.
SECTION 32. Descriptive Headings. Descriptive headings of the several
--------------------
Sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions of
this Rights Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to
be duly executed as of the day and year first above written.
LIGHTBRIDGE, INC.
By:
--------------------------------------
Name:
Title:
AMERICAN STOCK TRANSFER AND TRUST
COMPANY as Rights Agent
By:
--------------------------------------
Name:
Title:
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<PAGE>
EXHIBIT A
CERTIFICATE OF THE VOTING POWERS,
DESIGNATIONS, PREFERENCES AND RELATIVE
PARTICIPATING, OPTIONAL AND OTHER SPECIAL
RIGHTS AND QUALIFICATIONS, LIMITATIONS
OR RESTRICTIONS OF SERIES A
PARTICIPATING CUMULATIVE
PREFERRED STOCK OF
LIGHTBRIDGE, INC.
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware, Lightbridge, Inc. (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, in
accordance with the provisions of Section 103 thereof, DOES HEREBY CERTIFY:
That, pursuant to the authority conferred upon the Board of Directors of
the Corporation by Paragraph B of Article FOURTH of the Certification of
Incorporation of the Corporation (the "Certificate of Incorporation"), the Board
of Directors of the Corporation on November 14, 1997, adopted the following
resolution creating a series of Preferred Stock designated as Series A
Participating Cumulative Preferred Stock:
RESOLVED, that, pursuant to the authority vested in the Board of Directors
of the Corporation in accordance with the provisions of the Certificate of
Incorporation of the Corporation, a series of Preferred Stock of the Corporation
is hereby created and that the designation and number of shares thereof and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereof are as follows:
SECTION 1. Designation and Number of Shares. The shares of such series
---------------------------------
shall be designated as "Series A Participating Cumulative Preferred Stock" (the
"Series A Preferred Stock"), par value $.01 per share. The number of shares
initially constituting the Series A Preferred Stock shall be 600,000; provided,
--------
however, that, if more than a total of 600,000 shares of Series A Preferred
- -------
Stock shall be issuable upon the exercise of Rights (the "Rights") issued
pursuant to the Rights Agreement dated as of November 14, 1997, between the
Corporation and American Stock Transfer and Trust Company, a limited power
banking trust company licensed by the New York State Banking Authority, as
Rights Agent (the "Rights Agreement"), the Board of Directors of the
Corporation, pursuant to Section 151(g) of the General Corporation Law of the
State of Delaware, shall direct by resolution or resolutions that a certificate
be properly executed, acknowledged, filed and recorded, in accordance with the
provisions of Section 103 thereof, providing for the total number of shares of
Series A Preferred Stock authorized to be issued to be increased (to the extent
that the Certificate of Incorporation then permits) to the largest number of
whole shares (rounded up to the nearest whole number) issuable upon exercise of
such Rights.
<PAGE>
SECTION 2. Dividends or Distributions. (a) Subject to the prior and
--------------------------
superior rights of the holders of shares of any other series of Preferred Stock
or other class of capital stock of the Corporation ranking prior and superior to
the shares of Series A Preferred Stock with respect to dividends, the holders of
shares of the Series A Preferred Stock shall be entitled to receive, when, as
and if declared by the Board of Directors, out of the assets of the Corporation
legally available therefor, (1) quarterly dividends payable in cash on the last
day of each fiscal quarter in each year, or such other dates as the Board of
Directors of the Corporation shall approve (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or a
fraction of a share of Series A Preferred Stock, in the amount of $1.00 per
whole share (rounded to the nearest cent) less the amount of all cash dividends
declared on the Series A Preferred Stock pursuant to the following clause (2)
since the immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock (the total of which
shall not, in any event, be less than zero) and (2) dividends payable in cash on
the payment date for each cash dividend declared on the Common Stock in an
amount per whole share (rounded to the nearest cent) equal to the Formula Number
(as hereinafter defined) then in effect times the cash dividends then to be paid
on each share of Common Stock. In addition, if the Corporation shall pay any
dividend or make any distribution on the Common Stock payable in assets,
securities or other forms of noncash consideration (other than dividends or
distributions solely in shares of Common Stock), then, in each such case, the
Corporation shall simultaneously pay or make on each outstanding whole share of
Series A Preferred Stock a dividend or distribution in like kind equal to the
Formula Number then in effect times such dividend or distribution on each share
of the Common Stock. As used herein, the "Formula Number" shall be 100;
provided, however, that if at any time after November 14, 1997, the Corporation
- -------- -------
shall (i) declare or pay any dividend on the Common Stock payable in shares of
Common Stock or make any distribution on the Common Stock in shares of Common
Stock, (ii) subdivide (by a stock split or otherwise) the outstanding shares of
Common Stock into a larger number of shares of Common Stock or (iii) combine (by
a reverse stock split or otherwise) the outstanding shares of Common Stock into
a smaller number of shares of Common Stock, then in each such event the Formula
Number shall be adjusted to a number determined by multiplying the Formula
Number in effect immediately prior to such event by a fraction, the numerator of
which is the number of shares of Common Stock that are outstanding immediately
after such event and the denominator of which is the number of shares of Common
Stock that are outstanding immediately prior to such event (and rounding the
result to the nearest whole number); and provided further, that, if at any time
----------------
after November 14, 1997, the Corporation shall issue any shares of its capital
stock in a merger, reclassification, or change of the outstanding shares of
Common Stock, then in each such event the Formula Number shall be appropriately
adjusted to reflect such merger, reclassification or change so that each share
of Series A Preferred Stock continues to be the economic equivalent of a Formula
Number of shares of Common Stock prior to such merger, reclassification or
change.
(b) The Corporation shall declare a dividend or distribution on the Series
A Preferred Stock as provided in Section 2(a) immediately prior to or at the
same time it declares a dividend or distribution on the Common Stock(other than
a dividend or distribution solely in shares of Common Stock); provided, however,
-------- -------
that, in the event no dividend or distribution (other than a dividend or
distribution in shares of Common Stock) shall have been declared on the Common
Stock during the
-2-
<PAGE>
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a dividend or distribution declared thereon, which record date shall be
the same as the record date for any corresponding dividend or distribution on
the Common Stock.
(c) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series A Preferred Stock from and after the Quarterly Dividend Payment Date
next preceding the date of original issue of such shares of Series A Preferred
Stock; provided, however, that dividends on such shares which are originally
-------- -------
issued after the record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a quarterly dividend and on or
prior to the next succeeding Quarterly Dividend Payment Date shall begin to
accrue and be cumulative from and after such Quarterly Dividend Payment Date.
Notwithstanding the foregoing, dividends on shares of Series A Preferred Stock
which are originally issued prior to the record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive a quarterly
dividend on the first Quarterly Dividend Payment Date shall be calculated as if
cumulative from and after the last day of the fiscal quarter next preceding the
date of original issuance of such shares. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding.
(d) So long as any shares of the Series A Preferred Stock are outstanding,
no dividends or other distributions shall be declared, paid or distributed, or
set aside for payment or distribution, on the Common Stock unless, in each case,
the dividend required by this Section 2 to be declared on the Series A Preferred
Stock shall have been declared.
(e) The holders of the shares of Series A Preferred Stock shall not be
entitled to receive any dividends or other distributions except as provided
herein.
SECTION 3. Voting Rights. The holders of shares of Series A Preferred
-------------
Stock shall have the following voting rights:
(a) Each holder of Series A Preferred Stock shall be entitled to a number
of votes equal to the Formula Number then in effect, for each share of Series A
Preferred Stock held of record on each matter on which holders of the Common
Stock or stockholders generally are entitled to vote, multiplied by the maximum
number of votes per share which any holder of the Common Stock or stockholders
generally then have with respect to such matter (assuming any holding period or
other requirement to vote a greater number of shares is satisfied).
(b) Except as otherwise provided herein or by applicable law, the holders
of shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as one class for the election of directors of the
Corporation and on all other matters submitted to a vote of stockholders of the
Corporation.
-3-
<PAGE>
(c) If, at the time of any annual meeting of stockholders for the election
of directors, the equivalent of six quarterly dividends (whether or not
consecutive) payable on any share or shares of Series A Preferred Stock are in
default, the number of directors constituting the Board of Directors of the
Corporation shall be increased by two. In addition to voting together with the
holders of Common Stock for the election of other directors of the Corporation,
the holders of record of the Series A Preferred Stock, voting separately as a
class to the exclusion of the holders of Common Stock, shall be entitled at said
meeting of stockholders (and at each subsequent annual meeting of stockholders),
unless all dividends in arrears have been paid or declared and set apart for
payment prior thereto, to vote for the election of two directors of the
Corporation, the holders of any Series A Preferred Stock being entitled to cast
a number of votes per share of Series A Preferred Stock equal to the Formula
Number. Until the default in payments of all dividends which permitted the
election of said directors shall cease to exist, any director who shall have
been so elected pursuant to the next preceding sentence may be removed at any
time, either with or without cause, only by the affirmative vote of the holders
of the shares of Series A Preferred Stock at the time entitled to cast a
majority of the votes entitled to be cast for the election of any such director
at a special meeting of such holders called for that purpose, and any vacancy
thereby created may be filled by the vote of such holders. If and when such
default shall cease to exist, the holders of the Series A Preferred Stock shall
be divested of the foregoing special voting rights, subject to revesting in the
event of each and every subsequent like default in payments of dividends. Upon
the termination of the foregoing special voting rights, the terms of office of
all persons who may have been elected directors pursuant to said special voting
rights shall forthwith terminate, and the number of directors constituting the
Board of Directors shall be reduced by two. The voting rights granted by this
Section 3(c) shall be in addition to any other voting rights granted to the
holders of the Series A Preferred Stock in this Section 3.
(d) Except as provided herein, in Section 11 or by applicable law, holders
of Series A Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for authorizing or taking any
corporate action.
SECTION 4. Certain Restrictions. (a) Whenever quarterly dividends or
--------------------
other dividends or distributions payable on the Series A Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of Series
A Preferred Stock outstanding shall have been paid in full, the Corporation
shall not
(i) declare or pay dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
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<PAGE>
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock;
provided that the Corporation may at any time redeem, purchase or otherwise
--------
acquire shares of any such parity stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity with
the Series A Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors)
to all holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(b) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
SECTION 5. Liquidation Rights. Upon the liquidation, dissolution or
------------------
winding up of the Corporation, whether voluntary or involuntary, no distribution
shall be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received an amount equal to the accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, plus an amount equal to the greater of (x) $10.00 per whole share
or (y) an aggregate amount per share equal to the Formula Number then in effect
times the aggregate amount to be distributed per share to holders of Common
Stock or (2) to the holders of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series A Preferred
Stock, except distributions made ratably on the Series A Preferred Stock and all
other such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up.
SECTION 6. Consolidation, Merger, etc.. In case the Corporation shall
---------------------------
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash or any other property, then in any such case the then
outstanding shares of Series A Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share equal to the Formula
Number then in effect times the aggregate amount of stock, securities, cash or
any other property (payable in kind), as the case may be, into which or for
which each share of Common Stock is exchanged or changed. In the event both
this Section 6 and Section 2 appear to apply to a transaction, this Section 6
will control.
SECTION 7. No Redemption; No Sinking Fund. (a) The shares of Series A
------------------------------
Preferred Stock shall not be subject to redemption by the Corporation or at the
option of any holder of Series A Preferred Stock; provided, however, that the
-------- -------
Corporation may purchase or otherwise acquire
-5-
<PAGE>
outstanding shares of Series A Preferred Stock in the open market or by offer to
any holder or holders of shares of Series A Preferred Stock.
(b) The shares of Series A Preferred Stock shall not be subject to or
entitled to the operation of a retirement or sinking fund.
SECTION 8. Ranking. The Series A Preferred Stock shall rank junior to all
-------
other series of Preferred Stock of the Corporation, unless the Board of
Directors shall specifically determine otherwise in fixing the powers,
preferences and relative, participating, optional and other special rights of
the shares of such series and the qualifications, limitations and restrictions
thereof.
SECTION 9. Fractional Shares. The Series A Preferred Stock shall be
-----------------
issuable upon exercise of the Rights issued pursuant to the Rights Agreement in
whole shares or in any fraction of a share that is one one-hundredth (1/100th)
of a share or any integral multiple of such fraction which shall entitle the
holder, in proportion to such holder's fractional shares, to receive dividends,
exercise voting rights, participate in distributions and to have the benefit of
all other rights of holders of Series A Preferred Stock. In lieu of fractional
shares, the Corporation, prior to the first issuance of a share or a fraction of
a share of Series A Preferred Stock, may elect (1) to make a cash payment as
provided in the Rights Agreement for fractions of a share other than one one-
hundredth (1/100th) of a share or any integral multiple thereof or (2) to issue
depository receipts evidencing such authorized fraction of a share of Series A
Preferred Stock pursuant to an appropriate agreement between the Corporation and
a depository selected by the Corporation; provided that such agreement shall
--------
provide that the holders of such depository receipts shall have all the rights,
privileges and preferences to which they are entitled as holders of the Series A
Preferred Stock.
SECTION 10. Reacquired Shares. Any shares of Series A Preferred Stock
-----------------
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock, without designation as to series until such shares are once
more designated as part of a particular series by the Board of Directors
pursuant to the provisions of Paragraph B of Article FOURTH of the Certificate
of Incorporation.
SECTION 11. Amendment. None of the powers, preferences and relative,
---------
participating, optional and other special rights of the Series A Preferred Stock
as provided herein or in the Certificate of Incorporation shall be amended in
any manner which would alter or change the powers, preferences, rights or
privileges of the holders of Series A Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of at least 66-2/3% of the
outstanding shares of Series A Preferred Stock, voting as a separate class;
provided, however, that no such amendment approved by the holders of at least
- -------- -------
66-2/3% of the outstanding shares of Series A Preferred Stock shall be deemed to
apply to the powers, preferences, rights or privileges of any holder of shares
of Series A Preferred Stock originally issued upon exercise of the Rights after
the time of such approval without the approval of such holder.
-6-
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be duly
executed in its corporate name on this 14th day of November, 1997.
LIGHTBRIDGE, INC.
By:
--------------------------------------
Name:
Title:
Attest:
- -------------------------
Name:
Title:
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<PAGE>
EXHIBIT B
[Form of Right Certificate]
Certificate No. [R]-
______________ Rights
NOT EXERCISABLE AFTER NOVEMBER 14, 2007, OR EARLIER IF REDEEMED BY THE COMPANY.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER
RIGHT, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. RIGHTS BENEFICIALLY
OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND BY ANY SUBSEQUENT HOLDER
OF SUCH RIGHTS ARE NULL AND VOID AND NONTRANSFERABLE.
Right Certificate
LIGHTBRIDGE, INC.
This certifies that , or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner, thereof, subject to the terms, provisions and conditions of
the Rights Agreement dated as of November 14, 1997 (the "Rights Agreement"),
between Lightbridge, Inc., a Delaware corporation (the "Company"), and American
Stock Transfer and Trust Company, a limited power banking trust company licensed
by the New York State Banking Authority, as Rights Agent (the "Rights Agent"),
unless the Rights evidenced hereby shall have been previously redeemed by the
Company, to purchase from the Company at any time after the Distribution Date
(as defined in the Rights Agreement) and prior to 5:00 p.m., Boston time, on the
10th anniversary of the date of the Rights Agreement (the "Expiration Date"), at
the office of the Rights Agent, or its successors as Rights Agent, in Brooklyn,
New York, one one-hundredth (1/100th) of a fully paid, nonassessable share of
Series A Participating Cumulative Preferred Stock, par value $.01 per share, of
the Company (the "Preferred Shares"), at a purchase price per one one-hundredth
(1/100th) of a share equal to $75.00 (the "Purchase Price") payable in cash,
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed.
The Purchase Price and the number and kind of shares which may be purchased
upon exercise of each Right evidenced by this Right Certificate, as set forth
above, are the Purchase Price and the number and kind of shares which may be so
purchased as of November 14, 1997. As provided in the Rights Agreement, the
Purchase Price and the number and kind of shares which may be purchased upon the
exercise of each Right evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
<PAGE>
If the Rights evidenced by this Right Certificate are at any time
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement), such
Rights shall be null and void and nontransferable and the holder of any such
Right (including any purported transferee or subsequent holder) shall not have
any right to exercise or transfer any such Right.
This Right Certificate is subject to all the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
reference to the Rights Agreement is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Right Certificates. Copies
of the Rights Agreement are on file at the above-mentioned office of the Rights
Agent and are also available from the Company upon written request.
This Right Certificate, with or without other Right Certificates, upon
surrender at the stock transfer or corporate trust office of the Rights Agent,
may be exchanged for another Right Certificate or Right Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number and kind of shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall entitle such holder to
purchase. If this Right Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Right Certificate or
Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Right Certificate may be redeemed by the Company at its option at a
redemption price (in cash or shares of Common Stock or other securities of the
Company deemed by the Board of Directors to be at least equivalent in value) of
$.01 per Right (which amount shall be subject to adjustment as provided in the
Rights Agreement) at any time prior to the earlier of (i) such time as a Person
becomes an Acquiring Person and (ii) the Expiration Date.
The Company may, but shall not be required to, issue fractions of Preferred
Shares or distribute certificates which evidence fractions of Preferred Shares
upon the exercise of any Right or Rights evidenced hereby. In lieu of issuing
fractional shares, the Company may elect to make a cash payment as provided in
the Rights Agreement for fractions of a share other than one one-hundredth
(1/100th) of a share or any integral multiple thereof or to issue certificates
or utilize a depository arrangement as provided in the terms of the Rights
Agreement and the Preferred Shares.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company, including, without limitation, 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 other
distributions or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right
-2-
<PAGE>
Certificate shall have been exercised as provided in accordance with the
provisions of the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of:
LIGHTBRIDGE, INC.
By:
-----------------------------------
Name:
Title:
Attest:
- --------------------------------------
Name:
Title:
Countersigned:
American Stock Transfer and Trust Company
as Rights Agent,
By:
-----------------------------------
Authorized Signatory
-3-
<PAGE>
[On Reverse Side of Right Certificate]
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed by the registered holder if
such holder desires to exercise the Rights
represented by this Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise ____________ Rights
represented by this Right Certificate to purchase the Preferred Shares (or other
shares) issuable upon the exercise of such Rights and requests that certificates
for such shares be issued in the name of:
Please insert social security or other identifying
number________________________________________________________
(Please print name and address)_________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
Please insert social security or other identifying number_______________________
(Please print name and address)_________________________________________________
Dated:___________, ____
-----------------------------------------
Signature
Signature Guaranteed:
NOTICE
------
The signature on the foregoing Form of Election to Purchase must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
-4-
