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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Western Digital Corporation
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(Exact Name of Registrant as Specified in Charter)
Delaware 95-264-7125
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(State of Incorporation or Organization) (IRS Employer
Identification no.)
8105 Irvine Center Drive, Irvine, California 92618
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(Address of Principal Executive Offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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Preferred Stock Purchase Rights The New York Stock Exchange, Inc.
If this form relates to the registration of a class of securities pursuant to
Section 12(b) of the Exchange Act and is effective pursuant to General
Instruction A.(c), please check the following box. [X]
If this form relates to the registration of a class of securities pursuant to
Section 12(g) of the Exchange Act and is effective pursuant to General
Instruction A.(d), please check the following box. [ ]
Securities Act registration statement file number to which this form
relates: N/A
Securities to be registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
On September 10, 1998 (the "RIGHTS DIVIDEND DECLARATION DATE"), the Board
of Directors of Western Digital Corporation (the "CORPORATION") declared a
dividend of one right (a "RIGHT") to purchase fractions of shares of its Series
A Junior Participating Preferred Stock, having the rights, preferences,
privileges and restrictions described in Paragraph K below (the "PREFERRED
STOCK"), and, under certain circumstances, other securities, for each
outstanding share of the Corporation's common stock, par value $.01 per share
(the "COMMON STOCK"), to be distributed to stockholders of record at the close
of business on November 30, 1998 (the "RECORD DATE"). The description and terms
of the Rights are set forth in a Rights Agreement (the "RIGHTS AGREEMENT") dated
as of October 15, 1998 between the Corporation and American Stock Transfer &
Trust Company, as Rights Agent.
The following is a brief description of the Rights. It is intended to
provide a general description only and is qualified in its entirety by reference
to the Rights Agreement which is attached hereto as Exhibit 99.1.
A. ISSUANCE OF THE RIGHTS
Each share of Common Stock outstanding at the close of business on the
Record Date will receive one Right. In addition, prior to the earliest of the
Distribution Date, a Section 13 Event or the Expiration Date (as each is
hereinafter defined), one additional Right (as such number may be adjusted
pursuant to the provisions of the Rights Agreement) shall be issued with each
share of Common Stock issued after the Record Date. Following the Distribution
Date and prior to the expiration or redemption of the Rights, the Corporation
will issue one Right (as such number may be adjusted pursuant to the provisions
of the Rights Agreement) for each share of Common Stock issued pursuant to the
exercise of stock options or under employee plans or upon the exercise,
conversion or exchange of securities issued by the Corporation prior to the
Distribution Date. A "SECTION 13 EVENT" shall mean any event in which (i) the
Corporation merges or consolidates with another and the Corporation is not the
surviving corporation; (ii) the Corporation merges or consolidates with another,
the Corporation is the surviving corporation, and all or part of the
Corporation's common stock is exchanged for other securities, cash or property;
or (iii) the Corporation sells or transfers more than 50% of its assets or
earning power. The "EXPIRATION Date" shall mean the earliest of (i) October 14,
2008; (ii) the date of redemption of the Rights; (iii) the date the Board orders
an exchange of Rights; or (iv) the date of consummation of a tender offer
approved as fair to and in the best interests of the Corporation and its
stockholders and adequately priced with each stockholder receiving the same
consideration per share in the same manner.
B. COMMON STOCK CERTIFICATES REPRESENT THE RIGHTS PRIOR TO THE DISTRIBUTION
DATE
Prior to the Distribution Date (as hereinafter defined), no separate
Rights certificates will be issued. Instead, the Rights will be evidenced by the
certificates for the Common Stock to which they are attached and will be
transferred with and only with such Common Stock certificates. The surrender for
transfer of any certificates for Common Stock outstanding will
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also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate. New Common Stock certificates issued after the
Record Date will contain a legend incorporating the Rights Agreement by
reference.
C. DISTRIBUTION DATE; ISSUANCE OF RIGHTS CERTIFICATES
The Rights will separate from the Common Stock and become exercisable and
a Distribution Date will occur (the "DISTRIBUTION DATE") upon the earlier of the
close of business on the tenth day after (i) public announcement that a person
or group of affiliated or associated persons has acquired beneficial ownership
of 15% or more of the outstanding shares of Common Stock (an "ACQUIRING PERSON")
or such earlier date as a majority of the directors shall become aware of the
existence of an Acquiring Person (the "STOCK ACQUISITION DATE"), or (ii) the
commencement of a tender or exchange offer by any person or group, if upon
consummation thereof, such person or group of affiliated or associated persons
would be the beneficial owner of 15% or more of the shares of Common Stock then
outstanding. As soon as practicable after the Distribution Date, Rights
certificates will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and, thereafter, the separate Rights
certificates alone will represent the Rights.
D. EXERCISE OF THE RIGHTS
1. RIGHTS INITIALLY NOT EXERCISABLE. Prior to the Distribution Date, the
Rights are not exercisable.
2. EXERCISE OF THE RIGHTS TO PURCHASE PREFERRED STOCK OF THE CORPORATION.
At any time after the Distribution Date but prior to the earlier of the
expiration, exchange or redemption of the Rights, each Right may be exercised at
the stated purchase price of $150 (subject to adjustment, the "EXERCISE PRICE")
for one one-thousandth of a share of the Preferred Stock; provided, however,
that upon the occurrence of any of the events described below the Rights may no
longer be exercised for the Preferred Stock and may only be exercised for
certain other securities described below.
3. EXERCISE OF THE RIGHTS TO PURCHASE COMMON STOCK OF THE CORPORATION. In
the event that at any time following the Rights Dividend Declaration Date, a
person, alone or with affiliates, becomes the beneficial owner of 15% or more of
the then outstanding shares of the Corporation's Common Stock (except pursuant
to an offer for all outstanding shares of Common Stock which is determined by
both (i) the Board of Directors acting by Special Vote, and (ii) a majority of
the Directors who are not associated with an Acquiring Person ("CONTINUING
DIRECTORS") and who are also not employees of the Corporation, to be fair to and
otherwise in the best interests of the Corporation and its stockholders (a
"PERMITTED OFFER")), then each holder of a Right will thereafter have the right
to exercise the Right for Common Stock (or, in certain circumstances, cash,
property or other securities of the Corporation) having a value equal to two
times the Exercise Price of the Right. If the Corporation does not have
sufficient Common Shares available for all Rights to be exercised, the
Corporation may substitute for all or any portion of the Common Stock that would
be issuable upon exercise of the Rights, cash, assets, or other securities
having the same aggregate value as such Common Stock. The Rights are exercisable
as described in this paragraph only after the Corporation's right of redemption
(as
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described below) has expired. Notwithstanding any of the foregoing, following
the occurrence of the event set forth in this paragraph (a "SECTION 11(a)(ii)
EVENT"), all Rights that are, or under certain circumstances specified in the
Rights Agreement were, beneficially owned by an Acquiring Person will be null
and void. A "SPECIAL VOTE" of the Board of Directors is approval by both a
majority of the Continuing Directors and a majority of the entire Board,
including the Continuing Directors.
4. EXERCISE OF THE RIGHTS TO PURCHASE COMMON STOCK OF AN ACQUIRING
CORPORATION. In the event that, at any time following the Stock Acquisition
Date, (i) the Corporation is merged or consolidated with another company in a
business combination transaction in which the Corporation is not the surviving
corporation or in which the Corporation is the surviving corporation and all or
part of the Common Stock of the Corporation is exchanged for stock of any other
person, cash or any other property (other than a merger which follows a
Permitted Offer), or (ii) more than 50% of the assets or earning power of the
Corporation and its subsidiaries (taken as a whole) is sold or transferred, then
each holder of a Right (except Rights which previously have been voided as set
forth above) shall thereafter have the right to exercise the Right for common
stock of the acquiring company having a value equal to two times the Exercise
Price of the Right. (An event described in this paragraph is a "SECTION 13
EVENT.")
5. ADJUSTMENT OF NUMBER OF RIGHTS, PURCHASE PRICE AND NUMBER OF UNITS OF
PREFERRED STOCK. The Exercise Price payable and/or the number of shares of
Preferred Stock or other securities or property issuable upon exercise of the
Rights are subject to proportionate adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, combination
or reclassification of, the Preferred Stock, (ii) in the event holders of the
Preferred Stock are granted certain rights or warrants to subscribe for
Preferred Stock or convertible securities at less than the current market price
of the Preferred Stock, or (iii) upon the distribution to holders of the
Preferred Stock of evidences of indebtedness or assets (excluding certain cash
dividends) or of subscription rights or warrants (other than those referred to
above). If at any time after the Rights Dividend Declaration Date and prior to
the Distribution Date the Corporation declares a stock dividend on, subdivides
or combines the outstanding shares of Common Stock, the number of Rights
associated with each share of Common Stock shall be proportionately adjusted.
E. FRACTIONAL RIGHTS AND FRACTIONAL SHARES
The Corporation is generally not required to issue fractional Rights,
fractions of shares of Preferred Stock (other than fractions which are integral
multiples of one one-thousandth of a share), or fractions of shares of Common
Stock and, in lieu thereof, an adjustment in cash will be made based on the
market price of the Rights, Preferred Stock, or Common Stock, respectively.
F. REDEMPTION OF THE RIGHTS
In general, the Corporation may redeem all (but not less than all) of the
Rights at a price of $.001 per Right (subject to adjustment to reflect stock
splits, stock dividends, or similar transactions), at any time until the earlier
of the tenth day following the Stock Acquisition Date or the close of business
on October 14, 2008 (provided that any redemption after any person becomes an
Acquiring Person may be effected only by the Board of Directors acting by
Special
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Vote). This redemption period may be extended by the Board of Directors by
amending the Rights Agreement as described in Paragraph H below prior to the
time when the Rights become nonredeemable. The redemption price may be paid in
cash, shares of Common Stock, or any other consideration the Board of Directors
deems appropriate. Immediately upon the action of the Board of Directors
ordering redemption of the Rights, the Rights will terminate and the only right
of the holders of Rights will be to receive the $.001 redemption price.
G. EXCHANGE OF THE RIGHTS
At any time after a Section 11(a)(ii) Event or a Section 13 Event and
before any person or group acquires 50% or more of the outstanding Common Stock,
the Board of Directors of the Corporation, acting by Special Vote, may cause the
Corporation to exchange some or all of the outstanding and exercisable Rights
for Common Stock at a one-to-one exchange ratio (appropriately adjusted to
reflect stock splits, dividends or similar transactions). Rights may not be
exercised after the Board orders their exchange. If there is not sufficient
authorized unissued Common Stock to fund an exchange, the Board, acting by
Special Vote, may fund the exchange through other consideration, including
issuance of debt and/or equity. In addition, at any time before any person or
group becomes in Acquiring Person, the Board, acting by Special Vote, may
exchange some or all of the Rights for rights of substantially equivalent value.
H. AMENDMENTS
Other than those provisions relating to the redemption price of the
Rights, any of the provisions of the Rights Agreement may be supplemented or
amended by the Board of Directors of the Corporation prior to the Distribution
Date, without approval of the Rights holders, whether or not a supplement or
amendment is adverse to the Rights holders. From and after the Distribution
Date, any provisions of the Rights Agreement (other than those provisions
relating to the redemption price of the Rights) may be amended by the Board of
Directors acting by Special Vote in order to (i) cure any ambiguous, defective
or inconsistent provision, (ii) shorten or lengthen any time period hereunder,
or (iii) otherwise change a provision which the Board of Directors acting by
Special Vote may deem necessary or desirable and which does not materially and
adversely affect the interests of holders of Rights (other than any Acquiring
Person); provided, the Rights Agreement may not be amended to (A) make the
Rights again redeemable after the Rights have ceased to be redeemable, or (B)
change any other time period unless such change is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the benefits to the
holders of the Rights (other than any Acquiring Person).
I. EXPIRATION
The Rights will expire upon the earliest to occur of the close of business
on October 14, 2008, the exchange or redemption of the Rights by the
Corporation, or the consummation of a Permitted Offer transaction followed by a
merger or consolidation of the Corporation with another company in which all
stockholders of the Corporation receive the same consideration and terms as in
the Permitted Offer.
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J. NO STOCKHOLDER RIGHTS PRIOR TO EXERCISE
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Corporation, including, without limitation, the
right to vote or to receive dividends.
K. TERMS OF THE PREFERRED STOCK
The Corporation has initially reserved 500,000 shares of Preferred Stock
for issuance upon exercise of the Rights, such number to be subject to
adjustment from time to time in accordance with the Rights Agreement. The
Preferred Stock will be nonredeemable. The dividend, liquidation and voting
rights, and the rights upon consolidation or merger of the Preferred Stock are
designed so that the value of the one one-thousandth interest in a share of
Preferred Stock purchasable with each Right will approximate the value of one
share of Common Stock. Each whole share of Preferred Stock will be entitled to
receive a quarterly preferential dividend equal to the greater of $.25 or 1,000
times any dividend declared on the Common Stock. In the event of liquidation,
the holders of the Preferred Stock will be entitled to receive a preferential
liquidation payment of $1,000 per share plus the amount of accrued unpaid
dividends thereon, the holders of the Common Stock will then be entitled to
receive a liquidation payment equal to $1.00 per share (subject to proportionate
adjustment to reflect stock splits, dividends or combinations), and the holders
of the Preferred Stock and Common Stock will then share ratably in all assets
remaining available for distribution to stockholders. Each share of Preferred
Stock will have 1,000 votes (subject to proportionate adjustment to reflect
stock splits, dividends and combinations), and will generally vote together with
the Common Stock. Finally, in the event of any merger, consolidation or other
transaction in which shares of Common Stock are exchanged for or changed into
other stock or securities, cash and/or other property, each share of Preferred
Stock will be entitled to receive 1,000 times the amount received per share of
Common Stock (subject to proportionate adjustment to reflect stock splits,
dividends and combinations).
L. ANTI-TAKEOVER EFFECTS
The Rights are designed to protect and maximize the value of stockholders'
interests in the Corporation in the event of an unsolicited takeover attempt in
a manner or on terms not approved by the Board of Directors. Takeover attempts
frequently include coercive tactics to deprive the Board of Directors and
stockholders of any real opportunity to determine the destiny of the
Corporation. The Rights have been declared by the Board in order to deter such
tactics, including a gradual accumulation in the open market of a 15% or greater
position, followed by a merger or a partial or two-tier tender offer that does
not treat all stockholders equally. These tactics can unfairly pressure
stockholders, squeeze them out of their investment without giving them any real
choice and deprive them of the full value of their shares.
The rights may be redeemed by the Corporation as described in Paragraph F,
and accordingly, the Rights should not interfere with any merger or business
combination approved by the Board of Directors.
Issuance of the Rights does not weaken the Corporation or interfere with
its business plans. The issuance of the Rights themselves has no dilutive
effect, will not affect reported earnings per share, should not be taxable to
the Corporation or to its stockholders, and will not
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change the way in which the Corporation's shares are presently traded. The
Corporation's Board of Directors believes that the Rights represent a sound and
reasonable means of addressing the complex issues of corporate policy created by
the current takeover environment.
However, the Rights may have the effect of rendering more difficult or
discouraging an acquisition of the Corporation deemed undesirable by the Board
of Directors. The Rights may cause substantial dilution to a person or group
that attempts to acquire the Corporation on terms or in a manner not approved by
the Corporation's Board of Directors, except pursuant to an offer conditioned
upon the negation, purchase or redemption of the Rights.
ITEM 2. EXHIBITS.
99.1 Rights Agreement dated as of October 15, 1998 between Western
Digital Corporation and American Stock Transfer & Trust
Company, as Rights Agent, which includes as Exhibit B thereto
the Form of Rights Certificate to be distributed to holders of
Rights after the Distribution Date (as that term is defined in
the Rights Agreement).
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereto duly authorized.
Western Digital Corporation
Date: November 18, 1998 By: /s/ DUSTON WILLIAMS
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Duston Williams
Chief Financial Officer
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EXHIBIT INDEX
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EXHIBIT
NUMBER DESCRIPTION
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99.1 Rights Agreement dated as of October 15, 1998 between Western
Digital Corporation and American Stock Transfer & Trust
Company, as Rights Agent, which includes as Exhibit B thereto
the Form of Rights Certificate to be distributed to holders of
Rights after the Distribution Date (as that term is defined in
the Rights Agreement).
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EXHIBIT 99.1
WESTERN DIGITAL CORPORATION
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
AS RIGHTS AGENT
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RIGHTS AGREEMENT
DATED AS OF
OCTOBER 15, 1998
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TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. Certain Definitions................................................................. 1
2. Appointment of Rights Agent......................................................... 5
3. Issue of Rights Certificates........................................................ 6
4. Form of Rights Certificates......................................................... 7
5. Countersignature and Registration................................................... 8
6. Transfer, Split-Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates..................................... 9
7. Exercise of Rights; Purchase Price; Expiration Date of Rights....................... 9
8. Cancellation and Destruction of Rights Certificates................................. 11
9. Reservation and Availability of Capital Stock....................................... 12
10. Preferred Stock Record Date......................................................... 13
11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights......... 14
12. Certificate of Adjusted Purchase Price or Number of Shares.......................... 21
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power................ 21
14. Fractional Rights and Fractional Shares............................................. 24
15. Rights of Action.................................................................... 26
16. Agreement of Rights Holders......................................................... 26
17. Rights Certificate Holder Not Deemed a Stockholder.................................. 27
18. Concerning the Rights Agent......................................................... 27
19. Merger or Consolidation or Change of Name of Rights Agent........................... 27
20. Duties of Rights Agent.............................................................. 28
21. Change of Rights Agent.............................................................. 30
22. Issuance of New Rights Certificates................................................. 31
23. Redemption and Termination.......................................................... 31
24. Exchange............................................................................ 32
25. Notice of Certain Events............................................................ 34
26. Notices............................................................................. 35
27. Supplements and Amendments.......................................................... 35
28. Successors.......................................................................... 36
29. Determination and Actions by the Board of Directors, etc............................ 36
30. Benefits of this Agreement.......................................................... 36
31. Severability........................................................................ 37
32. Governing Law....................................................................... 37
33. Counterparts........................................................................ 37
34. Descriptive Headings; References.................................................... 37
</TABLE>
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RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT (this "AGREEMENT"), dated as of October 15, 1998,
is entered into by and between WESTERN DIGITAL CORPORATION, a Delaware
corporation (the "CORPORATION"), and American Stock Transfer & Trust Company, a
New York corporation (the "RIGHTS AGENT"), with reference to the following
facts:
WHEREAS, on September 10, 1998 (the "RIGHTS DIVIDEND DECLARATION DATE"),
the Board of Directors of the Corporation authorized and declared a dividend
distribution of one Right for each share of Common Stock (as hereinafter
defined) of the Corporation outstanding at the Close of Business on November 30,
1998 (the "RECORD DATE"), and has authorized the issuance of one Right (as such
number may hereinafter be adjusted pursuant to the provisions of Section 11(p))
for each share of Common Stock of the Corporation issued from the Record Date
(whether originally issued or delivered from the Corporation's treasury) until
the earliest of the Distribution Date or a Section 13 Event or the Expiration
Date (each as hereinafter defined), each Right initially representing the right
to purchase one one-thousandth of a share of Series A Junior Participating
Preferred Stock of the Corporation having the rights, preferences, privileges
and restrictions set forth in the form of Amended Certificate of Designation of
Rights, Preferences, Privileges and Restrictions attached hereto as Exhibit A,
upon the terms and subject to the conditions hereinafter set forth (the
"RIGHTS");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "ACQUIRING PERSON" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, without the prior approval of the
Board of Directors of the Corporation, shall become, after the date hereof, the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding,
but shall not include an Exempt Person, or a Person who or which, together with
its Affiliates and Associates, shall become the Beneficial Owner of 15% or more
of the shares of Common Stock then outstanding solely as a result of a reduction
in the number of shares of Common Stock outstanding due to a repurchase of
Common Stock by the Corporation, unless such Person shall thereafter purchase or
otherwise become the Beneficial Owner of additional shares of Common Stock
representing 1% of the shares of Common Stock then outstanding. Notwithstanding
the foregoing, if the Board of Directors of the Corporation determines in good
faith that a Person who would otherwise be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph (a), has become such
inadvertently, and such Person divests as promptly as practicable a sufficient
number of shares of Common Stock so that such Person would no longer be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be an "Acquiring Person"
for any purposes of this Agreement.
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(b) "ACT" shall mean the Securities Act of 1933, as amended.
(c) "ADJUSTMENT SHARES" shall have the meaning set forth in Section
11(a)(ii).
(d) "AFFILIATE" and "ASSOCIATE" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended and in effect on the date of
this Agreement (the "EXCHANGE ACT").
(e) A Person shall be deemed the "BENEFICIAL OWNER" of, and shall be
deemed to "BENEFICIALLY OWN," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "Beneficially Own," (A) securities tendered pursuant to a
tender or exchange offer made by such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for purchase or
exchange, or (B) securities issuable upon exercise of Rights at any time prior
to the occurrence of a Triggering Event, or (C) securities issuable upon
exercise of Rights from and after the occurrence of a Triggering Event which
Rights were acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(a) or Section
22 (the "ORIGINAL RIGHTS") or pursuant to Section 11(i) in connection with an
adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act), including pursuant to any
agreement, arrangement or understanding (whether or not in writing); provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to
"Beneficially Own," any security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding to vote such security if such agreement
arrangement or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor report); or
(iii) which are Beneficially Owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which such Person
(or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described in
the proviso to subparagraph (ii) of this paragraph (e)) or disposing of any
voting securities of the Corporation; provided, however, that nothing in this
paragraph (e) shall cause a person engaged in business as an underwriter of
securities to be the "Beneficial Owner" of, or to "Beneficially
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Own," any securities acquired through such person's participation in good faith
in a firm commitment underwriting until the expiration of 40 days after the date
of such acquisition.
(f) "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the State of California are authorized or
obligated by law or executive order to close.
(g) "CLOSE OF BUSINESS" on any given date shall mean 5:00 P.M.,
California time on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., California time on the next succeeding
Business Day.
(h) "COMMON STOCK" shall mean the common stock, par value $.01 per
share, of the Corporation, except that "Common Stock" when used with reference
to any Person other than the Corporation shall mean the capital stock (or units
of beneficial interest which represent the right to participate in profits,
losses, deductions and credits) of such Person with the greatest voting power,
or the equity securities or other equity interest having power to control or
direct the management, of such Person.
(i) "COMMON STOCK EQUIVALENTS" shall have the meaning set forth in
Section 11(a)(iii).
(j) "CONTINUING DIRECTOR" shall mean (i) any member of the Board of
Directors of the Corporation, while a member of the Board, who is not an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a
representative of an Acquiring Person or of any such Affiliate or Associate, and
who was a member of the Board prior to the date of this Agreement, or (ii) any
Person who subsequently becomes a member of the Board, while a member of the
Board, who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative of an Acquiring Person or of any such
Affiliate or Associate, if such Person's nomination for election or election to
the Board is recommended or approved by a majority of the Continuing Directors.
(k) "CURRENT MARKET PRICE" shall have the meaning set forth in Section
11(d)(i).
(l) "CURRENT VALUE" shall have the meaning set forth in Section
11(a)(iii).
(m) "DISTRIBUTION DATE" shall have the meaning set forth in Section
3(a).
(n) "EQUIVALENT PREFERRED STOCK" shall have the meaning set forth in
Section 11(b).
(o) "EXCHANGE ACT" shall have the meaning set forth in Section 1(d).
(p) "EXEMPT PERSON" shall mean the Corporation, any Subsidiary of the
Corporation, any employee benefit plan or employee stock plan of the Corporation
or any Subsidiary of the Corporation, or any person or entity organized,
appointed, or established by the Corporation or any Subsidiary of the
Corporation, for or pursuant to the terms of any such plan.
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(q) "EXPIRATION DATE" shall mean the earliest of (i) the Final
Expiration Date, (ii) the time at which the Rights are redeemed as provided in
Section 23, (iii) the time at which the Board of Directors orders the exchange
of Rights as provided in Section 24, or (iv) the consummation of a transaction
contemplated by Section 13(d).
(r) "FINAL EXPIRATION DATE" shall mean the Close of Business on October
14, 2008.
(s) "NASDAQ" shall mean the National Market System of the National
Association of Securities Dealers Automated Quotation System.
(t) "PERSON" shall mean any individual, firm, corporation, partnership
or other entity.
(u) "PREFERRED STOCK" shall mean shares of Series A Junior Participating
Preferred Stock, par value $.01 per share, of the Corporation and, to the extent
that there is not a sufficient number of shares of Series A Junior Participating
Preferred Stock authorized to permit the full exercise of the Rights, any other
series of Preferred Stock of the Corporation designated for such purpose
containing terms substantially similar to the terms of the Series A Junior
Participating Preferred Stock.
(v) "PRINCIPAL PARTY" shall have the meaning set forth in Section 13(b).
(w) "PURCHASE PRICE" shall have the meaning set forth in Section 4(a).
(x) "RATIO OF EXCHANGE" shall have the meaning set forth in Section
24(a).
(y) "RECORD DATE" shall have the meaning set forth in the WHEREAS clause
at the beginning of this Agreement.
(z) "REDEMPTION PRICE" shall have the meaning set forth in Section
23(a).
(aa) "RIGHTS" shall have the meaning set forth in the WHEREAS clause at
the beginning of this Agreement.
(bb) "RIGHTS CERTIFICATES" shall have the meaning set forth in Section
3(a).
(cc) "RIGHTS DIVIDEND DECLARATION DATE" shall have the meaning set forth
in the WHEREAS clause at the beginning of this Agreement.
(dd) "SECTION 11(a)(ii) EVENT" shall mean any event described in Section
11(a)(ii).
(ee) "SECTION 11(a)(ii) TRIGGER DATE" shall have the meaning set forth
in Section 11(a)(iii).
(ff) "SECTION 13 EVENT" shall mean any event described in clause (x),
(y) or (z) of Section 13(a).
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(gg) "SPECIAL VOTE" shall mean an action of the Corporation's Board of
Directors that is taken (and can only be taken) at a time when there are two or
more Continuing Directors, and that is approved by both (i) a majority of the
Continuing Directors, and (ii) a majority of the entire Board of Directors,
including the Continuing Directors.
(hh) "SPREAD" shall have the meaning set forth in Section 11(a)(iii).
(ii) "STOCK ACQUISITION DATE" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report properly filed pursuant to Section 13(d) under the Exchange
Act) by the Corporation or an Acquiring Person that an Acquiring Person has
become such or such earlier date as a majority of the directors shall become
aware of the existence of an Acquiring Person; provided, however, that if such
Person is thereafter determined not to have become an Acquiring Person within
the meaning of Section 1(a), then no Stock Acquisition Date shall be deemed to
have occurred.
(jj) "SUBSIDIARY" shall mean, with reference to any Person, any
corporation or other entity of which securities or other ownership interests
having ordinary voting power sufficient to elect at least a majority of the
directors of such corporation (or other persons performing similar functions) is
Beneficially Owned, directly or indirectly, by such Person, or otherwise
controlled by such Person.
(kk) "SUBSTITUTION PERIOD" shall have the meaning set forth in Section
11(a)(iii).
(ll) "TRADING DAY" shall mean a day on which the principal national
securities exchange or market system on which the shares of Common Stock are
listed or admitted to trading is open for the transaction of business or, if the
shares of Common Stock are not listed or admitted to trading on any national
securities exchange or market system, a Business Day.
(mm) "TRIGGERING EVENT" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
Any determination required by the definitions contained in this Section
1 shall be made by the Board of Directors of the Corporation in its good faith
judgment, which determination shall be binding on the Rights Agent and the
holders of the Rights.
2. APPOINTMENT OF RIGHTS AGENT.
The Corporation hereby appoints the Rights Agent to act as agent for the
Corporation and the holders of the Rights (who, in accordance with Section 3,
shall prior to the Distribution Date also be the holders of the Common Stock) in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Corporation may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable.
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3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the earlier of (i) the Close of Business on the tenth (10th)
day after the Stock Acquisition Date (or, if the tenth (10th) day after the
Stock Acquisition Date occurs before the Record Date, the Close of Business on
the Record Date), or (ii) the Close of Business on the tenth (10th) day after
the date that a tender or exchange offer by any Person (other than an Exempt
Person) is first published or sent or given within the meaning of Rule 14d-2(a)
of the General Rules and Regulations under the Exchange Act, if, upon
consummation thereof, such Person, together with its Affiliates and Associates,
would be the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding (irrespective of whether any shares are actually purchased pursuant
to any such offer) (each of the time periods in (i) and (ii) being subject to
extension as provided in Section 27 and the earliest of (i) and (ii) being
herein referred to as the "DISTRIBUTION DATE"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for the Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y) each Right
will be transferable only in connection with the transfer of the underlying
share of Common Stock (including a transfer to the Corporation). As soon as
practicable after the Distribution Date, the Rights Agent will send to each
record holder of the Common Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Corporation, one or more rights certificates in substantially the form of
Exhibit B hereto (the "RIGHTS CERTIFICATES"), evidencing one Right for each
share of Common Stock so held, subject to adjustment as provided herein. In the
event that an adjustment in the number of Rights per share of Common Stock has
been made pursuant to Section 11(p), at the time of distribution of the Rights
Certificates, the Corporation shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a)) so that Rights Certificates
representing only whole numbers of Rights are distributed and cash is paid in
lieu of any fractional Rights. As of and after the Distribution Date, the Rights
will be evidenced solely by such Rights Certificates.
(b) As promptly as practicable following the Record Date, the
Corporation will send a copy of a Summary of Rights to purchase Preferred Stock,
containing substantially the information set forth in the form attached hereto
as Exhibit C, to each record holder of the Common Stock as of the Close of
Business on the Record Date, at the address of such holder shown on the records
of the Corporation. With respect to certificates for the Common Stock
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates for the Common Stock and the registered
holders of the Common Stock shall also be the registered holders of the
associated Rights. Until the earlier of the Distribution Date or the Expiration
Date, the transfer of any certificates representing shares of Common Stock in
respect of which Rights have been issued shall also constitute the transfer of
the Rights associated with such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of Common Stock that
are issued after the Record Date but prior to the earliest of the Distribution
Date or a Section 13 Event or the Expiration Date. Certificates representing
such shares of Common Stock (including, without
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<PAGE> 9
limitation, certificates issued upon transfer or exchange of Common Stock) shall
also be deemed to be certificates for Rights, and shall bear the following
legend:
This certificate also represents Rights that entitle the holder hereof
to certain rights as set forth in a Rights Agreement between the
Corporation and American Stock Transfer & Trust Company, as Rights
Agent, dated as of October 15, 1998 (the "RIGHTS AGREEMENT"), the terms,
conditions and limitations of which are hereby incorporated herein by
reference and a copy of which is on file at the principal offices of the
Corporation. 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 Corporation will
mail to the holder of this certificate a copy of the Rights Agreement,
as in effect on the date of mailing, without charge promptly after
receipt of a written request therefor. Under certain circumstances set
forth in the Rights Agreement, Rights issued to, or beneficially owned
by, any Person who is, was or becomes an Acquiring Person or any
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such Person or by
any subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend, the
Rights associated with the Common Stock represented by such certificates shall,
until the Distribution Date, be evidenced by such certificates alone and
registered holders of Common Stock shall also be the registered holders of the
associated Rights, and the transfer of any of such certificates shall also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificates. If the Corporation purchases or acquires any
Common Stock after the Record Date but before the Distribution Date, any Rights
associated with such Common Stock shall be deemed canceled and retired.
4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of an election to purchase
and of assignment and of certificates to be printed on the reverse thereof)
when, as and if issued, shall each be substantially in the form set forth in
Exhibit B hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Corporation may
deem appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section 11 and Section 22, the
Rights Certificates, whenever distributed, shall be dated as of the Record Date
and on their face shall entitle the holders thereof to purchase such number of
one one-thousandths of a share of Preferred Stock as shall be set forth therein
at the price set forth therein (such exercise price per one one-thousandth of a
share, the "PURCHASE PRICE"), but the amount and type of securities purchasable
upon the exercise of each Right and the Purchase Price thereof shall be subject
to adjustment as provided herein.
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(b) Notwithstanding any other provision of this Agreement, any Rights
Certificate issued pursuant to Section 3(a) or Section 22 that represents Rights
Beneficially Owned by any Person known to be (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom such Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
that the Board of Directors of the Corporation has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect avoidance
of Section 7(e), and any Rights Certificate issued pursuant to Section 6 or
Section 11 upon transfer, exchange, replacement or adjustment of any other
Rights Certificate referred to in this sentence, shall contain (to the extent
feasible) the following legend, modified as applicable to apply to such Person:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of such Agreement.
5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the
Corporation by its Chairman of the Board, its President or any other officer of
the Corporation designated by the Chairman or President, either manually or by
facsimile signature, and shall have affixed thereto the Corporation's seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Corporation, either manually or by facsimile signature. The
Rights Certificates shall be manually countersigned by the Rights Agent and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Corporation who shall have signed any of the Rights Certificates shall
cease to be such officer of the Corporation before countersignature by the
Rights Agent and issuance and delivery by the Corporation, such Rights
Certificates, nevertheless, may be countersigned by the Rights Agent and issued
and delivered by the Corporation with the same force and effect as though the
person who signed such Rights Certificates had not ceased to be such officer of
the Corporation; and any Rights Certificates may be signed on behalf of the
Corporation by any person who, at the actual date of the execution of such
Rights Certificate shall be a proper officer of the Corporation to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its office or offices designated as the appropriate place for
surrender of Rights Certificates upon
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<PAGE> 11
exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of the Rights Certificates, the number of Rights
evidenced on its face by each of the Rights Certificates and the certificate
number and the date of each of the Rights Certificates.
6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS
CERTIFICATES.
(a) Subject to the provisions of Section 4(b), Section 7(e) and Section
14, at any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the Expiration Date, any Rights Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the registered holder to purchase
a like number of one-thousandths of a share of Preferred Stock (or, following a
Triggering Event, Common Stock, other securities, cash or other assets, as the
case may be) as the Rights Certificate or Certificates surrendered then entitled
such holder (or former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the office or offices of the
Rights Agent designated for such purpose. Neither the Rights Agent nor the
Corporation shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered holder
shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Corporation
shall reasonably request. Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e) and Section 14, countersign and deliver to the Person
entitled thereto a Rights Certificate or Rights Certificates, as the case may
be, as so requested. The Corporation may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Corporation and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to the
Corporation and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Corporation will execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature and delivery
to the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Subject to Section 7(e), Section 23(b) and Section 24(b), the
registered holder of any Rights Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein including, without limitation, the
restrictions on exercisability set forth in Section 9(c),
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Section 11(a)(iii) and Section 23(a)), in whole or in part at any time after the
Distribution Date upon surrender of the Rights Certificate, with the form of
election to purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office or offices of the Rights Agent
designated for such purpose, together with payment of the aggregate Purchase
Price with respect to the total number of one one-thousandths of a share of
Preferred Stock (or other securities, cash or other assets, as the case may be)
as to which such surrendered Rights are then exercisable, at or prior to the
Expiration Date.
(b) The Purchase Price for each one one-thousandth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be $150, and
shall be subject to adjustment from time to time as provided in Section 11 and
Section 13(a) and shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price per one one-thousandth of a share of Preferred Stock (or other shares,
securities, cash or other assets, as the case may be) to be purchased as set
forth below and an amount equal to any applicable transfer tax, the Rights Agent
shall, subject to Section 20(k), thereupon promptly (i) (A) requisition from any
transfer agent of the shares of Preferred Stock (or make available, if the
Rights Agent is the transfer agent for such shares) certificates for the total
number of one one-thousandths of a share of Preferred Stock to be purchased and
the Corporation hereby authorizes its transfer agent to comply with all such
requests, or (B) if the Corporation shall have elected to deposit the total
number of shares of Preferred Stock issuable upon exercise of the Rights
hereunder with a depository agent, requisition from the depository agent
depository receipts representing such number of one one-thousandths of a share
of Preferred Stock as are to be purchased (in which case certificates for the
shares of Preferred Stock represented by such receipts shall be deposited by the
transfer agent with the depository agent) and the Corporation will direct the
depository agent to comply with such request, (ii) requisition from the
Corporation an amount of cash, if any, to be paid in lieu of fractional shares
in accordance with Section 14, (iii) after receipt of such certificates or
depository receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, and (iv) after receipt thereof, deliver
such cash, if any, to or upon the order of the registered holder of such Rights
Certificate. The payment of the Purchase Price (as such amount may be reduced
pursuant to Section 11(a)(iii)) may be made by bank draft, certified bank check
or money order payable to the order of the Corporation. In the event that the
Corporation is obligated to issue other securities (including Common Stock) of
the Corporation, pay cash and/or distribute other property pursuant to Section
11(a), the Corporation will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to, or upon the
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order of, the registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder, subject to the provisions of
Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the occurrence of a Section 11(a)(ii) Event, any Rights Beneficially Owned
by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate of Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) by or for the Acquiring Person to holders of equity interests
in such Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Corporation has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall become null
and void without any further action and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Corporation shall use all reasonable efforts to
insure that the provisions of this Section 7(e) and Section 4(b) are complied
with, but shall have no liability to any holder of Rights Certificates or other
Person as a result of its failure to make any determinations with respect to an
Acquiring Person or any of their respective Affiliates, Associates or
transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Corporation shall be obligated to undertake any action
with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 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 Rights Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Corporation shall reasonably request.
8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES.
All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the
Corporation or any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent, shall
be canceled by it, and no Rights Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Agreement. The
Corporation shall deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any other Rights Certificate
purchased or acquired by the Corporation otherwise than upon the exercise
thereof. The Rights Agent shall deliver all canceled Rights Certificates to the
Corporation, or shall, at the written request of the Corporation, destroy such
canceled Rights Certificates, and in such case shall deliver a certificate of
destruction thereof to the Corporation.
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9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) The Corporation covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the occurrence of a Triggering Event, out of its
authorized and unissued shares of Common Stock and/or other securities or out of
its authorized and issued shares held in its treasury), the number of shares of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and, or other securities) that, as provided in this Agreement including
Section 11(a)(iii), will be sufficient to permit the exercise in full of all
outstanding Rights; provided, however, that the Corporation shall not be
required to reserve and keep available shares of Preferred Stock, Common Stock
or other securities sufficient to permit the exercise in full of all outstanding
Rights pursuant to the adjustments set forth in Section 11(a)(ii), Section
11(a)(iii) or Section 13 unless, and only to the extent that, the Rights become
exercisable pursuant to such adjustments.
(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) issuable
and deliverable upon the exercise of Rights may be listed on any national
securities exchange, the Corporation shall use its best efforts to cause, from
and after such time as the Rights become exercisable, all shares reserved for
such issuance to be listed on such exchange upon official notice of issuance
upon such exercise.
(c) If necessary to permit the offer and issuance of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or other
securities) issuable and deliverable upon the exercise of Rights, the
Corporation shall use its best efforts to (i) file, as soon as practicable
following the earliest date after the occurrence of a Section 11(a)(ii) Event on
which the consideration to be delivered by the Corporation upon exercise of the
Rights has been determined in accordance with Section 11(a)(iii), or as soon as
is required by law following the Distribution Date, as the case may be, a
registration statement under the Act, with respect to the securities purchasable
upon exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities, and
(B) the date of the expiration of the Rights. The Corporation will also take
such action as may be appropriate under, or to ensure compliance with, the
securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Corporation may temporarily suspend, for a
period of time not to exceed ninety (90) days after the date set forth in clause
(i) of the first sentence of this Section 9(c), the exercisability of the Rights
in order to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Corporation shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction, unless the
requisite qualification in such jurisdiction shall have been obtained and until
a registration statement (if required) has been declared effective.
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(d) The Corporation covenants and agrees that it will take all such
action as may be necessary to ensure that all one one-thousandths of a share of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable.
(e) The Corporation further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Rights Certificates
and of any certificates for a number of one one-thousandths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be)
upon the exercise of Rights. The Corporation shall not, however, be required to
pay any transfer tax which may be payable in respect of any transfer or delivery
of Rights Certificates to a Person other than, or the issuance or delivery of a
number of one one-thousandths of a share of Preferred Stock (or Common Stock
and/or other securities, as the case may be) in respect of a name other than
that of, the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for a number of
one one-thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until such tax shall have been paid (any
such tax being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Corporation's satisfaction
that no such tax is due.
10. PREFERRED STOCK RECORD DATE.
Each person in whose name any certificate for a number of one
one-thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of such fractional
shares of Preferred Stock (or Common Stock and/or other securities, as the case
may be) represented thereby and such certificate shall be dated as of the date
upon which the Rights Certificate evidencing such Rights was duly surrendered
and payment of the Purchase Price (and all applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Stock (or Common Stock and/or other securities, as the case
may be) transfer books of the Corporation are closed, such Person shall be
deemed to have become the record holder of such shares (fractional or otherwise)
on, and such certificate shall be dated, the next succeeding Business Day on
which the Preferred Stock (or Common Stock and/or other securities, as the case
may be) transfer books of the Corporation are open. Prior to the exercise of the
Rights evidenced thereby, the holder of a Rights Certificate, as such, shall not
be entitled to any rights of a stockholder of the Corporation with respect to
shares for which the Rights shall be exercisable, including, without limitation,
the right to vote, to receive dividends or other distributions or to exercise
any preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Corporation, except as provided herein.
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11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR NUMBER
OF RIGHTS.
The Purchase Price, the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a) (i) In the event the Corporation shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable in shares
of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine
the outstanding Preferred Stock into a smaller number of shares, or (D) issue
any shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the Corporation is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a) and Section 7(e), the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification, and the
number and kind of shares of Preferred Stock or capital stock, as the case may
be, issuable on such date, shall be proportionately adjusted so that the holder
of any Right exercised after such time shall be entitled to receive, upon
payment of the Purchase Price then in effect, the aggregate number and kind of
shares of Preferred Stock or capital stock, as the case may be, which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Stock transfer books of the Corporation were open, he would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii),
the adjustment provided for in this Section 11(a)(i) shall be in addition to,
and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii).
(ii) Subject to Section 23(a) and Section 24, in the event any
Person (other than an Exempt Person), alone or together with its Affiliates and
Associates, shall, at any time after the Rights Dividend Declaration Date,
become the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding, unless the event causing the 15% threshold to be crossed is a
transaction set forth in Section 13(a), or is an acquisition of shares of Common
Stock pursuant to a tender offer or an exchange offer for all outstanding shares
of Common Stock at a price and on terms determined by the Board of Directors of
the Corporation acting by Special Vote and by at least a majority of the
Continuing Directors who are not officers of the Corporation, after receiving
advice from one or more investment banking firms, to be (a) at a price which is
fair to stockholders of the Corporation (taking into account all factors which
such members of the Board deem relevant including, without limitation, prices
which could reasonably be achieved if the Corporation or its assets were sold on
an orderly basis designed to realize maximum value) and (b) otherwise in the
best interests of the Corporation and its stockholders, then, proper provision
shall be made so that each holder of a Right (except as provided below and in
Section 7(e)) shall thereafter have the right to receive, upon exercise thereof
at the then current Purchase Price in accordance with the terms of this
Agreement, in lieu of a number of one one-thousandths of a share of Preferred
Stock, such number of shares of Common Stock of the Corporation as shall equal
the result obtained by (x) multiplying the then current Purchase Price by the
then number of one one-thousandths of a share of Preferred Stock
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<PAGE> 17
for which a Right was exercisable immediately prior to the occurrence of a
Section 11(a)(ii) Event, and (y) dividing that product (which, following such
occurrence, shall thereafter be referred to as the "PURCHASE PRICE" for each
Right and for all purposes of this Agreement) by 50% of the Current Market Price
(determined pursuant to Section 11(d)) per share of Common Stock on the date of
such occurrence (such number of shares is herein called the "ADJUSTMENT
SHARES"); provided that the Purchase Price and the number of Adjustment Shares
shall be further adjusted as provided in this Agreement to reflect any events
occurring after the date of such occurrence; and provided, further, that if the
transaction that would otherwise give rise to the foregoing adjustment is also
subject to the provisions of Section 13, then only the provisions of Section 13
shall apply and no adjustment shall be made pursuant to this Section 11(a)(ii).
(iii) In the event that the number of shares of Common Stock
which are authorized by the Corporation's Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights is not sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section 11(a) and the
Rights shall become so exercisable, to the extent permitted by applicable law
and any agreements in effect on the date hereof to which the Corporation is a
party, the Corporation shall (A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the "CURRENT VALUE")
over (2) the Purchase Price (such excess, the "SPREAD"), and (B) with respect to
each Right, make adequate provision to substitute for the Adjustment Shares,
upon payment of the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Common Stock or other equity securities of the Corporation
(including, without limitation, shares, or units of shares, of preferred stock
which the Board of Directors of the Corporation has deemed to have the same
value as shares of Common Stock (such shares of preferred stock, "COMMON STOCK
EQUIVALENTS")), (4) debt securities of the Corporation, (5) other assets, or (6)
any combination of the foregoing, having an aggregate value equal to the Current
Value, where such aggregate value has been determined by the Board of Directors
of the Corporation based upon the advice of a nationally recognized investment
banking firm selected by the Board of Directors of the Corporation; provided,
however, if the Corporation shall not have made adequate provision to deliver
value pursuant to clause (B) above within thirty (30) days following the later
of (x) the occurrence of a Section 11(a)(ii) Event and (y) the date on which the
Corporation's right of redemption pursuant to Section 23(a) expires (the later
of (x) and (y) being referred to herein as the "SECTION 11(a)(ii) TRIGGER
DATE"), then the Corporation shall be obligated to deliver, upon the surrender
for exercise of a Right and without requiring payment of the Purchase Price,
shares of Common Stock (to the extent available) and then, if necessary, cash,
which shares and/or cash have an aggregate value equal to the Spread. If the
Board of Directors of the Corporation shall determine in good faith that it is
likely that sufficient additional shares of Common Stock could be authorized for
issuance upon exercise in full of the Rights, the thirty (30) day period set
forth above may be extended to the extent necessary, but not more than ninety
(90) days after the Section 11(a)(ii) Trigger Date, in order that the
Corporation may seek stockholder approval for the authorization of such
additional shares (such period, as it may be extended, the "SUBSTITUTION
PERIOD"). To the extent that the Corporation determines that some action need be
taken pursuant to the first and/or second sentences of this Section 11(a)(iii),
the Corporation (x) shall provide, subject to Section 7(e), that such action
shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration
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<PAGE> 18
of the Substitution Period in order to seek any authorization of additional
shares and/or to decide the appropriate form of distribution to be made pursuant
to such first sentence and to determine the value thereof. In the event of any
such suspension, the Corporation shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iii), the value of the Common Stock shall be the
Current Market Price (as determined pursuant to Section 11(d)) per share of the
Common Stock on the Section 11(a)(ii) Trigger Date and the value of any "COMMON
STOCK EQUIVALENT" shall be deemed to have the same value as the Common Stock on
such date. The Board of Directors may, but shall not be required to, establish
procedures to allocate the right to receive Common Stock upon the exercise of
Rights pursuant to this Section 11(a)(iii).
(b) In case the Corporation shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of Preferred
Stock entitling them to subscribe for or purchase (for a period expiring within
forty-five (45) calendar days after such record date) Preferred Stock (or shares
having the same rights, privileges and preferences as the shares of Preferred
Stock ("EQUIVALENT PREFERRED STOCK")) or securities convertible into Preferred
Stock or Equivalent Preferred Stock at a price per share of Preferred Stock or
per share of Equivalent Preferred Stock (or having a conversion price per share,
if a security convertible into Preferred Stock or Equivalent Preferred Stock)
less than the Current Market Price (as determined pursuant to Section 11(d)) per
share of Preferred Stock on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of shares of Preferred Stock outstanding on such
record date, plus the number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred Stock (and/or
Equivalent Preferred Stock so to be offered and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such Current Market Price, and the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or Equivalent Preferred Stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price may
be paid by delivery of consideration part or all of which may be in a form other
than cash, the value of such consideration shall be as determined in good faith
by the Board of Directors of the Corporation, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the
Rights Agent and the holders of the Rights. Shares of Preferred Stock owned by
or held for the account of the Corporation shall not be deemed outstanding for
the purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that such rights or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.
(c) In case the Corporation shall fix a record date for a distribution
to all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Corporation is the
continuing corporation) of evidences of indebtedness, cash (other than a cash
dividend out of the earnings or retained earnings of the Corporation),
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<PAGE> 19
assets (other than a dividend payable in Preferred Stock, but including any
dividend payable in stock other then Preferred Stock) or subscription rights or
warrants (excluding those referred to in Section 11(b)), the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the Current Market Price (as determined pursuant
to Section 11(d)) per share of Preferred Stock on such record date, less the
fair market value (as determined in good faith by the Board of Directors of the
Corporation, whose determination shall be described in a statement filed with
the Rights Agent) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to a share of Preferred Stock and the denominator of which shall be
such Current Market Price (as determined pursuant to Section 11(d)) per share of
Preferred Stock. Such adjustments shall be made successively whenever such a
record dated is fixed, and in the event that such distribution is not so made,
the Purchase Price shall be adjusted to be the Purchase Price which would have
been in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii), the "CURRENT MARKET PRICE" per
share of Common Stock on any date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the thirty (30) consecutive
Trading Days (as hereinafter defined) immediately prior to such date and for
purposes of computations made pursuant to Section 11(a)(iii), the "CURRENT
MARKET PRICE" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the then
ten (10) consecutive Trading Days immediately following such date; provided,
however, that in the event that the Current Market Price per share of the Common
Stock is determined during a period following the announcement by the issuer of
such Common Stock of (A) a dividend or distribution on such Common Stock payable
in shares of such Common Stock or securities convertible into shares of such
Common Stock (other than the Rights), or (B) any subdivision, combination or
reclassification of such Common Stock, and prior to the expiration of the
requisite thirty (30) Trading Day or ten (10) Trading Day period, as set forth
above, after the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification, then, and in
each such case, the Current Market Price shall be properly adjusted to take into
account ex-dividend trading. The closing price for each day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the shares of Common Stock are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange or the NASDAQ National Market System on which the shares of
Common Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange or the
NASDAQ National Market System the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market, as
reported by NASDAQ or such other system then in use, or, if on any such date the
shares of Common Stock are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Common Stock selected by the Board of
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<PAGE> 20
Directors of the Corporation. If on any such date no market maker is making a
market in the Common Stock, the fair value of such shares on such date as
determined in good faith by the Board of Directors of the Corporation shall be
used. If the Common Stock is not publicly held or not so listed or traded,
Current Market Price per share shall mean the fair value per share as determined
in good faith by the Board of Directors of the Corporation, whose determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the Current
Market Price per share of Preferred Stock shall be determined in the same manner
as set forth above for the Common Stock in clause (i) of this Section 11(d)
(other than the last sentence thereof). If the Current Market Price per share of
Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner described
in clause (i) of this Section 11(d), the Current Market Price per share of
Preferred Stock shall be conclusively deemed to be an amount equal to 1,000 (as
such number may be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock occurring after
the date of this Agreement) multiplied by the Current Market Price per share of
the Common Stock. If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, Current Market Price per share of the
Preferred Stock shall mean the fair value per share as determined in good faith
by the Board of Directors of the Corporation, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for
all purposes. For all purposes of this Agreement, the Current Market Price of
one one-thousandth of a share of Preferred Stock shall be equal to the Current
Market Price of one share of Preferred Stock divided by 1,000.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a share of Common Stock
or other share or one-millionth of a share of Preferred Stock, as the case may
be. Notwithstanding the first sentence of this Section 11(e), an adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which mandates such adjustments, or
(ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
or Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Section 11, and the
provisions of Section 7, Section 9, Section 10, Section 13, and Section 14 with
respect to the Preferred Stock shall apply on like terms to any such other
shares.
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(g) All Rights originally issued by the Corporation subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Corporation shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) and Section 11(c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one
one-thousandths of a share of Preferred Stock (calculated to the nearest one
ten-thousandths) obtained by (i) multiplying (x) the number of one
one-thousandths of a share covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Corporation may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any adjustment in
the number of one one-thousandths of a share of Preferred Stock purchasable upon
the exercise of a Right. Each of the Rights outstanding after the adjustment in
the number of Rights shall be exercisable for the number of one one-thousandths
of a share of Preferred Stock for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such adjustment of
the number of Rights shall become that number of Rights (calculated to the
nearest one-ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Corporation shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Rights Certificates have been issued, shall be at least ten (10) days
later than the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Corporation shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14, the additional Rights to
which such holders shall be entitled as a result of such adjustment, or, at the
option of the Corporation, shall cause to be distributed to such holders of
record in substitution and replacement for the Rights Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, if required
by the Corporation, new Rights Certificates evidencing all the Rights to which
such holders shall be entitled after such adjustment. Rights Certificates so to
be distributed shall be issued executed and countersigned in the manner provided
for herein (and may bear, at the option of the Corporation, the adjusted
Purchase Price) and shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-thousandths of a share of Preferred Stock issuable upon
the exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price
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per one one-thousandths of a share and the number of one one-thousandths of a
share which were expressed in the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause adjustment reducing the
Purchase Price below the then stated value, if any, of the number of one
one-thousandths of a share of Preferred Stock issuable upon exercise of the
Rights, the Corporation shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Corporation may validly
and legally issue fully paid and nonassessable such number of one
one-thousandths of a share of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Corporation may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of one one-thousandths of a share of Preferred Stock and other
capital stock or securities of the Corporation, if any, issuable upon such
exercise over and above the number of one one-thousandths of a share of
Preferred Stock and other capital stock or securities of the Corporation, if
any, issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the Corporation shall deliver
to such holder a due bill or other appropriate instrument evidencing such
holder's right to receive such additional shares (fractional or otherwise) or
securities upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Corporation shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment the Board of Directors of the
Corporation shall determine to be advisable in order that any (i) consolidation
or subdivision of the Preferred Stock, (ii) issuance wholly for cash of any
shares of Preferred Stock at less than the Current Market Price, (iii) issuance
wholly for cash of shares of Preferred Stock or securities which by their terms
are convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Corporation to holders of its Preferred Stock
shall not be taxable to such stockholders.
(n) The Corporation covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Corporation in a transaction which complies with Section
11(o)), (ii) merge with or into any other Person (other than a Subsidiary of the
Corporation in a transaction which complies with Section 11(o)), or (iii) sell
or transfer (or permit any Subsidiary to sell or transfer), in one transaction,
or a series of related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Corporation and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the Corporation
and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o)), if (x) at the time of or immediately after such
consolidation, merger, sale or transfer there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to,
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simultaneously with or immediately after such consolidation, merger, sale or
transfer, the stockholders of the Person who constitutes, or would constitute,
the Principal Party (as hereinafter defined) for purposes of Section 13(a) shall
have received a distribution of Rights previously owned by such Person or any of
its Affiliates and Associates.
(o) The Corporation covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23, Section 24 or Section 27,
take (or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will diminish substantially
or otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Corporation shall at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date (i) declare a dividend on
the outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the numerator which
shall be the total number of shares of Common Stock outstanding immediately
prior to the occurrence of the event and the denominator of which shall be the
total number of shares of Common Stock outstanding immediately following the
occurrence of such event.
12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 and Section 13,
the Corporation 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 Stock and the Common Stock, a copy of such certificate, and (c) mail a
brief summary thereof to each holder of a Rights Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 25. Notwithstanding the foregoing
sentence, the failure of the Corporation to give such notice shall not affect
the validity of or the force or effect of or the requirement for such
adjustment. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained. Any adjustment to be made
pursuant to Section 11 and Section 13 shall be effective as of the date of the
event giving rise to such adjustment.
13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER.
(a) In the event that, following the Stock Acquisition Date, directly or
indirectly, (x) the Corporation shall consolidate with, or merge with and into,
any other Person (other than a Subsidiary of the Corporation in a transaction
which complies with Section 11(o)), and the
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Corporation shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any Person (other than a Subsidiary of the
Corporation in a transaction which complies with Section 11(o)) shall
consolidate with, or merge with or into, the Corporation, and the Corporation
shall be the continuing or surviving corporation of such consolidation or
merger, and, in connection with such consolidation or merger, all or part of the
outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other Person or cash or any other property, or (z)
the Corporation shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one transaction or a series
of related transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Corporation and its Subsidiaries (taken as a
whole) to any Person or Persons (other than the Corporation or any Subsidiary of
the Corporation in one or more transactions each of which complies with Section
11(o)), then, and in each such case, proper provisions shall be made so that (i)
each holder of a Right, except as provided in Section 7(e), shall thereafter
have the right to receive, upon the exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, such number of
validly authorized and issued, fully paid, non-assessable and freely tradable
shares of Common Stock of the Principal Party (as such term is hereinafter
defined), not subject to any liens, encumbrances, rights of first refusal or
other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the then number of one
one-thousandths of a share of Preferred Stock for which a Right was exercisable
immediately prior to the occurrence of such Section 11(a)(ii) Event, and (2)
dividing that product (which, following the first occurrence of a Section 13
Event, shall be referred to as the "PURCHASE PRICE" for each Right and for all
purposes of this Agreement) by 50% of the Current Market Price (determined
pursuant to Section 11(d)(i)) per share of the Common Stock of such Principal
Party on the date of consummation of such Section 13 Event (or the fair market
value on such date of other securities or property of the Principal Party, as
provided for herein); provided, however, that the Purchase Price and the number
of shares of Common Stock of such Principal Party issuable upon exercise of each
Right shall be further adjusted as provided in this Agreement to reflect any
events occurring after the date of the first occurrence of a Section 13 Event;
(ii) such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Section 13 Event, all the obligations and duties of the
Corporation pursuant to this Agreement; (iii) the term "CORPORATION" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 shall apply only to such Principal
Party following the first occurrence of a Section 13 Event; (iv) such Principal
Party shall take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; provided, however, that upon the subsequent occurrence
of any merger, consolidation, sale of all or substantially all assets,
recapitalization, reclassification of shares, reorganization or other
extraordinary transaction in respect of such Principal Party, each holder of a
Right shall thereupon be entitled to receive, upon exercise of a Right and
payment of the Purchase Price, such cash, shares, rights, warrants and other
property which such holder would have been entitled to receive had he, at the
time of such transaction, owned the shares of Common Stock of the Principal
Party purchasable upon the exercise of a Right, and such Principal Party shall
take such steps (including, but not limited to, reservation of
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shares of stock) as may be necessary to permit the subsequent exercise of the
Rights in accordance with the terms hereof for such cash, shares, rights,
warrants and other property; and (v) the provisions of Section 11(a)(ii) shall
be of no effect following the first occurrence of any Section 13 Event.
(b) "PRINCIPAL PARTY" shall mean:
(i) in the case of any transaction described in clause (x) or (y)
of the first sentence of Section 13(a), (A) the Person that is the issuer of any
securities into which shares of Common Stock of the Corporation are converted in
such merger or consolidation, or, if there is more than one such issuer, the
issuer whose issued and outstanding Common Stock has the greatest aggregate
market value or (B) if no securities are so issued, (x) the Person that is the
other party to such merger or consolidation and survives said merger or
consolidation, or, if there is more than one such Person, the Person whose
issued and outstanding Common Stock has the greatest aggregate market value or
(y) if the Person that is the other party to the merger or consolidation does
not survive the merger or consolidation, the Person that does survive the merger
or consolidation (including the Corporation if it survives); and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of such Persons as is
the issuer of Common Stock having the greatest market value of shares
outstanding;
provided, however, that in any such case, (l) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the Common Stock of which is
and has been so registered, "PRINCIPAL PARTY" shall refer to such other Person;
and (2) if such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such persons is the
issuer of the issued and outstanding Common Stock having the greatest aggregate
market value.
(c) The Corporation shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Corporation and such Principal Party
shall have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer mentioned in paragraph (a) of this
Section 13, the Principal Party will:
(i) prepare and file a registration statement under the Act, with
respect to the Rights and the securities purchasable upon exercise of the Rights
on an appropriate form, and
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will use its best efforts to cause such registration statement to (A) become
effective as soon as practicable after such filing and (B) remain effective
(with a prospectus at all times meeting the requirements of the Act) until the
Expiration Date and similarly comply with applicable state securities laws;
(ii) will deliver to holders of the Rights historical financial
statements of the Principal Party and each of its Affiliates which comply in all
respects with the requirements for registration on Form 10 (or any successor
form) under the Exchange Act;
(iii) use its best efforts, if the Common Stock of the Principal
Party shall become listed on a national securities exchange, to list (or
continue the listing of) the Rights and the securities purchasable upon exercise
of the Rights on such securities exchange and, if the Common Stock of the
Principal Party shall not be listed on a national securities exchange, to cause
the Rights and the securities purchasable upon exercise of the Rights to be
reported by NASDAQ or such other system then in use; and
(iv) obtain waivers of any rights of first refusal or preemptive
rights in respect of the shares of Common Stock of the Principal Party subject
to purchase upon exercise of outstanding Rights.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or transfers. In the event that a Section 13
Event shall occur at any time after the occurrence of a Section 11(a)(ii) Event,
the Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the contrary, Section
13 shall not be applicable to a transaction described in subparagraphs (x) and
(y) of Section 13(a) if (i) such transaction is consummated with a Person or
Persons who acquired shares of Common Stock pursuant to a tender offer or
exchange offer for all outstanding shares of Common Stock which complies with
the provisions of Section 11(a)(ii) hereof (or a wholly owned Subsidiary of any
such Person or Persons), (ii) the price per share of Common Stock offered in
such transaction is not less than the price per share of Common Stock paid to
all holders of shares of Common Stock whose shares were purchased pursuant to
such tender offer or exchange offer, and (iii) the form of consideration being
offered to the remaining holders of shares of Common Stock pursuant to such
transaction is the same as the form of consideration paid pursuant to such
tender offer or exchange offer. Upon consummation of any such transaction
contemplated by this Section 13(d), all Rights hereunder shall expire.
14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The CORPORATION shall not be required to issue fractions of Rights,
except prior to the Distribution date as provided in Section 11(p), or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the Current Market
Value of a whole Right. For purposes of this Section 14(a), the current market
value of a whole Right shall be the
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closing price of the Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable. The closing
price of the Rights for any day shall be the last sale price, regular way, or,
in case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Rights are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange or the NASDAQ National
Market System on which the Rights are listed or admitted to trading, or if the
Rights are not listed or admitted to trading on any national securities exchange
or the NASDAQ National Market System, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use or, if on any
such date the Rights are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Rights selected by the Board of Directors of the Corporation. If
on any such date no such market maker is making a market in the Rights the fair
value of the Rights on such date as determined in good faith by the Board of
Directors of the Corporation shall be used.
(b) The Corporation shall not be required to issue fractions of shares
of Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-thousandth of a share of Preferred Stock,
the Corporation may pay to the registered holders of Rights Certificates at the
time such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the Current Market Value of one one-thousandth of a share of
Preferred Stock. For purposes of this Section 14(b), the Current Market Value of
one one-thousandth of a share of Preferred Stock shall be one one-thousandth of
the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii)) for the Trading Day immediately prior to the date of such
exercise.
(c) Following the occurrence of a Triggering Event, the Corporation
shall not be required to issue fractions of shares of Common Stock upon exercise
of the Rights or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Corporation may
pay to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
Current Market Value of one (1) share of Common Stock. For purposes of this
Section 14(c), the Current Market Value of one share of Common Stock shall be
the closing price of one share of Common Stock (as determined pursuant to
Section 11(d)(i)) for the Trading Day immediately prior to the date of such
exercise.
(d) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
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15. RIGHTS OF ACTION.
All rights of action in respect of this Agreement, other than rights of
action vested in the Rights Agent pursuant to Section 18, are vested in the
respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock); and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
of the Common Stock), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Corporation to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
16. AGREEMENT OF RIGHTS HOLDERS.
Every holder of a Right by accepting the same consents and agrees with
the Corporation and the Rights Agent and with every other holder of a Right
that:
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f), the Corporation and the
Rights Agent may deem and treat the person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Stock certificate made by anyone other
than the Corporation or the Rights Agents) for all purposes whatsoever, and
neither the Corporation nor the Rights Agent, subject to the last sentence of
Section 7(e), shall be required to be affected by any notice to the contrary;
and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Corporation nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided,
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however, the Corporation must use its best efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as possible.
17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.
No holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purposes the holder of the number of one
one-thousandths of a share of Preferred Stock or any other securities of the
Corporation which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Corporation or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Rights Certificate shall
have been exercised in accordance with the provisions hereof.
18. CONCERNING THE RIGHTS AGENT.
(a) The Corporation agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder as set forth in a
separately executed written fee agreement. The Corporation also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without gross negligence or willful misconduct
on the part of the Rights Agent, for anything done or omitted by the Rights
Agent in connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of liability in
the premises.
(b) The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
its administration of this Agreement in reliance upon any Rights Certificate or
certificate for Common Stock or for other securities of the Corporation,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided, however, that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights
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Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
20. DUTIES OF RIGHTS AGENT.
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the
Corporation and the holders of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Corporation), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of Current Market Price) be proved or established by the
Corporation prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, the Chief Executive Officer,
the President, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Corporation and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Corporation only.
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(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any adjustment required under the provisions of
Section 11 or Section 13 or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after receipt of the certificate described in Section 12
setting forth any such adjustment); nor shall it by any act hereunder be deemed
to make any representation or warranty as to the authorization or reservation of
any shares of Common Stock or Preferred Stock to be issued pursuant to this
Agreement or any Rights Certificates or as to whether any shares of Common Stock
or Preferred Stock will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Corporation agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board or the President of the Corporation or any other officer
of the Corporation designated to the Rights Agent in writing by the Chairman of
the Board, the Chief Executive Officer, or the President of the Corporation, and
to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Corporation or become pecuniarily interested in any
transaction in which the Corporation may be interested, or contract with or lend
money to the Corporation or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Corporation 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 or any such attorneys or
agents or for any loss to the Corporation resulting from any such act, default,
neglect or misconduct; provided, however, reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
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(k) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Corporation.
21. CHANGE OF RIGHTS AGENT.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty (30) days' notice in
writing mailed to the Corporation, and to each transfer agent of the Common
Stock and Preferred Stock by registered or certified mail, and to the holders of
the Rights Certificates by first-class mail. The Corporation may remove the
Rights Agent or any successor Rights Agent (with or without cause) upon thirty
(30) days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Stock and
Preferred Stock, by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Corporation shall
appoint a successor to the Rights Agent. If the Corporation shall fail to make
such appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Corporation), then the incumbent Rights Agent or any
registered holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Corporation or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of any other state of the United States in good standing, which is authorized
under such laws to exercise corporate trust or stock transfer powers and is
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus deemed by the Corporation's Board of Directors to be reasonable under
the circumstances. 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 Corporation shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock and the Preferred Stock, and mail a notice thereof in
writing to the registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agents as the case may
be.
22. ISSUANCE OF NEW RIGHTS CERTIFICATES.
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Notwithstanding any of the provisions of this Agreement or of the Rights
to the contrary, the Corporation may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities or property purchasable
under the Rights Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale of shares of
Common Stock following the Distribution Date and prior to the redemption or
expiration of the Rights, the Corporation (a) shall, with respect to shares of
Common Stock so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Corporation, and (b) may, in
any other case, if deemed necessary or appropriate by the Board of Directors of
the Corporation, issue Rights Certificates representing the appropriate number
of Rights in connection with such issuance or sale; provided, however, that (i)
no such Rights Certificate shall be issued if, and to the extent that, the
Corporation shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Corporation or the
Person to whom such Rights Certificate would be issued, and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
23. REDEMPTION AND TERMINATION.
(a) The Board of Directors of the Corporation may, at its option, at any
time prior to the earlier of (i) the Close of Business on the tenth (10th) day
following the Stock Acquisition Date (or, if the Stock Acquisition Date shall
have occurred prior to the Record Date, the Close of Business on the tenth
(10th) day following the Record Date), subject to extension as provided in
Section 27 or (ii) the Close of Business on the Final Expiration Date, redeem
all but not less than all the then outstanding Rights at a redemption price of
$.001 per Right, as such amount may be appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "REDEMPTION
PRICE"). Notwithstanding anything contained in this Agreement to the contrary,
the Rights shall not be exercisable after the occurrence of an event described
in Section 11(a)(ii) until such time as the Corporation's right of redemption
hereunder has expired. The Corporation may, at its option, pay the Redemption
Price in cash, shares of Common Stock (based on the Current Market Price, as
defined in Section 11(d)(i), of the Common Stock at the time of redemption) or
any other form of consideration deemed appropriate by the Board of Directors.
Such redemption of the Rights by the Corporation may be made effective at such
time, on such basis and with such conditions as the Board of Directors in its
sole discretion may establish; provided, however, that any redemption of Rights
occurring as of or after the time a Person becomes an Acquiring Person may be
effected, and the method of payment of the redemption price and conditions to
redemption may be determined, only by the Corporation's Board of Directors
acting by Special Vote.
(b) Immediately upon the action of the Board of Directors of the
Corporation 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 for each Right so held, without any interest thereon. Promptly
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after the action of the Board of Directors ordering the redemption of the
Rights, the Corporation shall give notice of such redemption to the Rights Agent
and the holders of the then outstanding Rights by mailing such notice to all
such holders at each holder's last address as it appears upon the registry books
of the Rights Agent or, prior to the Distribution Date, on the registry books of
the Transfer Agent for the Common Stock. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. The failure to give notice
required by this Section 23(b) or any defect therein shall not affect the
legality or validity of the action taken by the Corporation.
24. EXCHANGE.
(a) Subject to applicable laws, rules and regulations, and subject to
subsection (c) below, at any time after the occurrence of a Triggering Event,
the Board of Directors of the Corporation, acting by Special Vote, may cause the
Corporation to exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant to the
provisions of Section 7(e)) for Common Stock at an exchange ratio of one share
of Common Stock per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "RATIO OF EXCHANGE").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than an Exempt Person),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors ordering the
exchange of any Rights pursuant to subsection (a) of this Section 24 and without
any further action and without any notice, the right to exercise such Rights
shall terminate and the only right thereafter of a holder of such Rights shall
be to receive that number of shares of Common Stock equal to the number of such
Rights held by such holder multiplied by the Ratio of Exchange. The Corporation
shall give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Corporation shall mail a notice of any such exchange to all
of the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
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 Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights that will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(e)) held by each
holder of Rights.
(c) In the event that there shall not be sufficient Common Stock
authorized but unissued to permit any exchange of Rights as contemplated in
accordance with Section 24(a), the Corporation shall either take such action as
may be necessary to authorize additional shares of Common Stock for issuance
upon exchange of the Rights or alternatively, at the option of the Board of
Directors acting by Special Vote, with respect to each Right (i) pay cash in an
amount
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equal to the Current Value (as hereinafter defined), in lieu of issuing Common
Stock in exchange therefor, or (ii) issue debt or equity securities or a
combination thereof, having a value equal to the Current Value, in lieu of
issuing Common Stock in exchange for each such Right, where the value of such
securities shall be determined by a nationally recognized investment banking
firm selected by the Board of Directors acting by Special Vote, or (iii) deliver
any combination of cash, property, Common Stock and/or other securities having a
value equal to the Current Value in exchange for each Right. For purposes of
this Section 24(c) only, the "CURRENT VALUE" shall mean the product of the
current per share market price of Common Stock (determined pursuant to Section
11(d) on the date of the occurrence of the event described above in subparagraph
(a)) multiplied by the number of shares of Common Stock for which the Right
otherwise would be exchangeable if there were sufficient shares available. To
the extent that the Corporation determines that some action need be taken
pursuant to clauses (i), (ii), or (iii) of this Section 24(c), the Board of
Directors acting by Special Vote may temporarily suspend the exercisability of
the Rights for a period of up to sixty (60) days following the date on which the
event described in Section 24(a) shall have occurred, in order to seek any
authorization of additional Common Stock and/or to determine the appropriate
form of distribution to be made pursuant to the above provision and to determine
the value thereof. In the event of any such suspension, the Corporation shall
issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended.
(d) The Corporation shall not be required to issue fractions of Common
Stock or to distribute certificates that evidence fractional Common Stock. In
lieu of such fractional Common Stock, there shall be paid to the registered
holders of the Rights Certificates with regard to which such fractional Common
Stock would otherwise be issuable, an amount in cash equal to the same fraction
of the current per share market value of a whole Common Stock (as determined
pursuant to the second sentence of Section 11(d)).
(e) The Corporation may, at the option of the Board of Directors acting
by Special Vote, at any time before any Person has become an Acquiring Person,
exchange all or part of the then outstanding Rights for rights of substantially
equivalent value, as determined reasonably and with good faith by the Board of
Directors acting by Special Vote, based upon the advice of one or more
nationally recognized investment banking firms.
(f) Immediately upon the action of the Board of Directors acting by
Special Vote ordering the exchange of any Rights pursuant to subsection (e) of
this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of rights in exchange
therefore as has been determined by the Board of Directors in accordance with
subsection (e) above. The Corporation shall give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Corporation shall
mail a notice of any such exchange to all of the holders of such Rights at their
last addresses as they appear upon the registry books of the transfer agent for
the Common Stock of the Corporation. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the Rights will be effected.
33
<PAGE> 36
25. NOTICE OF CERTAIN EVENTS.
(a) In case the Corporation shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a cash dividend out of earnings or retained earnings
of the Corporation), or (ii) to offer to the holders of Preferred Stock rights
or warrants to subscribe for or to purchase any additional shares of Preferred
Stock or shares of stock of any class or any other securities, rights or
options, or (iii) to effect any reclassification of its Preferred Stock (other
than a reclassification involving only the subdivision of outstanding shares of
Preferred Stock), or (iv) to effect any consolidation or merger into or with any
other Person (other than a Subsidiary of the Corporation in a transaction which
complies with Section 11(o)), or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any sale or other transfer), in
one transaction or a series of related transactions, of more than 50% of the
assets or earning power of the Corporation and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Corporation and/or any of
its Subsidiaries in one or more transactions each of which complies with Section
11(o)), or (v) to effect the liquidation, dissolution or winding up of the
Corporation, then, in each such case, the Corporation shall give to each holder
of a Rights Certificate, to the extent feasible and in accordance with Section
26, a notice of such proposed action, which shall specify the record date for
the purposes of such stock dividend, distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Preferred Stock, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least ten (10) days prior to the
record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least ten
(10) days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Preferred Stock whichever
shall be the earlier. The failure to give notice required by this Section 25 or
any defect therein shall not affect the legality or validity of the action taken
by the Corporation or the vote upon any such action.
(b) In case any of the events set forth in Section 11(a)(ii) shall
occur, then, in any such case, (i) the Corporation shall as soon as practicable
thereafter give to each holder of a Rights Certificate, to the extent feasible
and in accordance with Section 26, a notice of the occurrence of such event,
which shall specify the event and the consequences of the event to holders of
Rights under Section 11(a)(ii), and (ii) all references in the preceding
paragraph to Preferred Stock shall be deemed thereafter to refer to Common Stock
and/or, if appropriate, other securities.
26. NOTICES.
Notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the holder of any Rights Certificate to or on the
Corporation 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:
34
<PAGE> 37
Western Digital Corporation
8105 Irvine Center Drive
Irvine, California 92618
Attention: President
Subject to the provisions of Section 21, any notice or demand authorized
by this Agreement to be given or made by the Corporation or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Corporation) as follows:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be given or made by
the Corporation or the Rights Agent to the holder of any Rights Certificate (or,
if prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Transfer Agent.
27. SUPPLEMENTS AND AMENDMENTS.
Prior to the Distribution Date and subject to the penultimate sentence
of this Section 27, the Board of Directors of the Corporation may, in its sole
and absolute discretion and the Rights Agent shall, if the Board of Directors so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing shares of Common Stock,
whether or not such supplement or amendment is adverse to any holders of Rights.
From and after the Distribution Date, and subject to the penultimate sentence of
this Section 27, the Board of Directors acting by Special Vote may, and the
Rights Agent shall, if the Board of Directors acting by Special Vote so directs,
supplement or amend this Agreement without the approval of any holders of Rights
Certificates in order to (i) cure any ambiguity, (ii) correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions hereunder, (iii) shorten or lengthen any time period hereunder, or
(iv) otherwise change or supplement the provisions hereunder in any manner which
the Board of Directors acting by Special Vote may deem necessary or desirable
and which shall not materially and adversely affect the interests of the holders
of Rights Certificates (other than an Acquiring Person or an Affiliate or
Associate of any such Person); provided, however, this Agreement may not be
supplemented or amended after the Distribution Date to (A) make the Rights again
redeemable after the Rights have ceased to be redeemable, or (B) change any
other time period unless such change is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to the holders of Rights (other
than any Acquiring Person and its Associates or Affiliates). Upon the delivery
of a certificate from an appropriate officer of the Corporation which states
that the proposed supplement or amendment is in compliance with the terms of
this Section 27, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained
35
<PAGE> 38
in this Agreement to the contrary, no supplement or amendment shall be made
which changes the Redemption Price. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the interests
of the holders of Common Stock.
28. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the benefit
of the Corporation or the Rights Agent shall bind and inure to the benefit of
their respective successors and assigns hereunder.
29. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
For all purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act. The Board of Directors of the
Corporation (acting by Special Vote where specifically provided for herein)
shall have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board of Directors of
the Corporation or to the Corporation, or as may be necessary or advisable in
the administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including, but not limited to, a determination to redeem or not
redeem the Rights, or to amend this Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
of Directors of the Corporation in good faith, shall (x) be final, conclusive
and binding on the Corporation, the Rights Agent, the holders of the Rights and
all other parties, and (y) not subject any member of the Board of Directors to
any liability to the holders of the Rights or to any other Person.
30. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any Person other
than the Corporation, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, registered holders of the
Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Corporation, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, registered holders of the
Common Stock).
31. SEVERABILITY.
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
36
<PAGE> 39
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Corporation
(acting by Special Vote) determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23, if
lapsed, shall be reinstated and shall not expire until the Close of Business on
the tenth (10th) Business Day following the date of such determination by the
Board of Directors of the Corporation.
32. GOVERNING LAW.
This Agreement, each Right and each Rights Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of Delaware
and for all purposes shall be governed by and construed in accordance with the
laws of such State applicable to contracts made and to be performed entirely
within such State.
33. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
34. DESCRIPTIVE HEADINGS; REFERENCES.
Descriptive headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof. References herein to Sections and
Exhibits shall, unless otherwise specified, be to the referenced section or
exhibit hereof or hereto.
37
<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
The "Corporation":
WESTERN DIGITAL CORPORATION
By: /s/ MICHAEL A. CORNELIUS
-----------------------------------
Name: Michael A. Cornelius
Its: Vice President, Law and
Administration and Secretary
The "Rights Agent":
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ JOSEPH WOLF
-----------------------------------
Name: Joseph Wolf
Its: Vice President
38
<PAGE> 41
EXHIBIT A
FORM OF
AMENDED CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
WESTERN DIGITAL CORPORATION
The undersigned, Charles A. Haggerty, the President of WESTERN DIGITAL
CORPORATION, a Delaware corporation (the "CORPORATION"), does hereby certify
that:
1. The original Certificate of Designation, Preferences and Rights of
Series A Junior Participating Preferred Stock of the Corporation (the "ORIGINAL
SERIES A CERTIFICATE") was filed with the Delaware Secretary of State on
December 14, 1988.
2. No shares of Series A Junior Participating Preferred Stock of the
Corporation have been issued.
3. Pursuant to the authority conferred upon the Board of Directors by
the Amended and Restated Certificate of Incorporation of the Corporation, and
Section 151(g) of the Delaware General Corporation Law, on September 10, 1998,
the Board of Directors adopted the following resolutions amending the Original
Series A Certificate in its entirety, and hereby fixes the relative rights,
preferences and limitations of the Series A Junior Participating Preferred
Stock, par value $0.01, as follows:
RESOLVED, that pursuant to Section 151(g) of the Delaware General
Corporation Law, the Board of Directors hereby acknowledges that no
shares of Series A Junior Participating Preferred Stock of the
Corporation have been issued or are outstanding; and
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation by the Amended and Restated Certificate of
Incorporation, the Board of Directors hereby amends the Certificate of
Designation, Preferences and Rights of Series A Junior Participating
Preferred Stock of the Corporation, filed with the Delaware Secretary of
State on December 14, 1988, and currently reflected as Article V of the
Corporation's Amended and Restated Certificate of Incorporation, as
follows:
1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "SERIES A JUNIOR PARTICIPATING PREFERRED STOCK" and the
number of shares constituting such series shall be 500,000. Such number
of shares may be increased or decreased by resolution of the Board of
Directors; provided, that no decrease shall reduce the number of shares
of Series A Junior Participating Preferred Stock to a number less than
the number of shares then outstanding plus
<PAGE> 42
the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series
A Junior Participating Preferred Stock.
2. DIVIDENDS AND DISTRIBUTIONS.
(a) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior
to the shares of Series A Junior Participating Preferred Stock with
respect to dividends, the holders of shares of Series A Junior
Participating Preferred Stock shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the 15th day of
January, April, July and October of each year (each a "QUARTERLY
DIVIDEND PAYMENT DATE"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share
of Series A Junior Participating Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $0.25 or (b)
subject to the provision for adjustment hereinafter set forth, 1,000
times the aggregate per share amount of all cash dividends, and 1,000
times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable in shares
of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the common stock,
par value $0.01 per share, of the Corporation (the "COMMON STOCK") 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 Junior
Participating Preferred Stock. In the event the Corporation shall at any
time after September 10, 1998 (the "RIGHTS DECLARATION DATE") (i)
declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each
such case the amount to which holders of shares of Series A Junior
Participating Preferred Stock were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on
the Series A Junior Participating Preferred Stock as provided in
paragraph (a) above as a condition to declaration of a dividend or
distribution on the Common Stock (other than a dividend payable in
shares of Common Stock); provided that, in the event that no dividend or
distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date, a dividend of $0.25
per share on the Series A Junior Participating Preferred Stock
2
<PAGE> 43
shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from
the Quarterly Dividend Payment Date next preceding the date of issue of
such shares of Series A Junior Participating Preferred Stock, unless the
date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or unless
the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of
Series A Junior Participating 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. The Board of Directors may fix a
record date for the determination of holders of shares of Series A
Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no
more than 30 days prior to the date fixed for the payment thereof.
3. VOTING RIGHTS. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Junior Participating Preferred Stock shall
entitle the holder thereof to 1,000 votes on all matters submitted to a
vote of the stockholders of the Corporation. In the event the
Corporation shall at any time after the Rights Declaration Date (i)
declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each
case the number of votes per share to which holders of shares of Series
A Junior Participating Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.
(b) Except as otherwise provided herein or by law, holders of
Series A Junior Participating Preferred Stock shall have no special
voting rights and the holders of shares of Series A Junior Participating
Preferred Stock and the holders
3
<PAGE> 44
of shares of Common Stock shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
4. CERTAIN RESTRICTIONS.
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating 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 Junior Participating Preferred Stock outstanding
shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other
distribution 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 Junior
Participating 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 Junior Participating Preferred Stock, except dividends paid
ratably on the Series A Junior Participating 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;
(iii) redeem or purchase or otherwise acquire for
consideration any shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series
A Junior Participating Preferred Stock, provided that the Corporation
may at any time redeem, purchase or otherwise acquire shares of any such
junior 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 Junior Participating Preferred Stock;
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Junior Participating Preferred
Stock, or any shares of stock ranking on a parity with the Series A
Junior Participating Preferred Stock, except (i) 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 Junior
Participating Preferred Stock, or (ii) 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
4
<PAGE> 45
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.
5. REACQUIRED SHARES. Any shares of Series A Junior Participating
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 and may be
reissued as Series A Junior Participating Preferred Stock or as part of
a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the
holders of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of
shares of Series A Junior Participating Preferred Stock shall have
received $1,000 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the
date of such payment (the "SERIES A LIQUIDATION PREFERENCE"). Following
the payment of the full amount of the Series A Liquidation Preference,
no additional distributions shall be made to the holders of shares of
Series A Junior Participating Preferred Stock unless, prior thereto, the
holders of shares of Common Stock shall have received an amount per
share (the "COMMON ADJUSTMENT") equal to the quotient obtained by
dividing (i) the Series A Liquidation Preference by (ii) 1,000 (as
appropriately adjusted as set forth in subparagraph (c) below to reflect
such events as stock splits, stock dividends and recapitalizations with
respect to the Common Stock) (such number in clause (ii), the
"ADJUSTMENT NUMBER"). Following the payment of the full amount of the
Series A Liquidation Preference and the Common Adjustment in respect of
all outstanding shares of Series A Junior Participating Preferred Stock
and Common Stock, respectively, holders of Series A Junior Participating
Preferred Stock and holders of shares of Common Stock shall receive
their ratable and proportionate share of remaining assets to be
distributed in the ratio of the Adjustment Number to one (1) with
respect to such Preferred Stock and Common Stock, on a per share basis,
respectively.
(b) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other series of
Preferred Stock, if any, which rank on a parity with the Series A Junior
Participating Preferred Stock, then such remaining assets shall be
distributed ratably to the holders of such parity shares in proportion
to their respective liquidation preferences. In the event that there are
5
<PAGE> 46
not sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably to
the holders of Common Stock.
(c) In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction
in which the shares of Common Stock are exchanged for or changed into
other stock or securities, cash and/or any other property, then in any
such case the shares of Series A Junior Participating Preferred Stock
shall at the same time be similarly exchanged or changed in an amount
per share (subject to the provision for adjustment hereinafter set
forth) equal to 1,000 times the aggregate amount of stock, securities,
cash and/or any other property (payable in kind), as the case may be,
into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Series A
Junior Participating Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
8. NO REDEMPTION. The shares of Series A Junior Participating
Preferred Stock shall not be redeemable.
9. RANKING. The Series A Junior Participating Preferred Stock
shall rank junior to all other series of the Corporation's preferred
stock, if any, as to the payment of dividends and the distribution of
assets, unless the terms of any such series shall provide otherwise.
10. AMENDMENT. If there is any Series A Junior Participating
Preferred Stock outstanding, the Amended and Restated Certificate of
Incorporation of the Corporation shall not be further amended in any
manner
6
<PAGE> 47
which would materially alter or change the powers, preferences or
special rights of the Series A Junior Participating Preferred Stock so
as to affect them adversely without the affirmative vote of the holders
of a majority or more of the outstanding shares of Series A Junior
Participating Preferred Stock, voting separately as a class.
11. FRACTIONAL SHARES. Series A Junior Participating Preferred
Stock may be issued in fractions of a share, which shall entitle the
holder, in proportion to such holder's fractional shares, to exercise
voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A Junior
Participating Preferred Stock.
RESOLVED FURTHER, that the Chief Executive Officer, the President
or any Vice President and the Secretary or any Assistant Secretary of
the Corporation be, and they hereby are, authorized and directed to
prepare and file an Amended Certificate of Designation, Preferences and
Rights in accordance with the foregoing resolution and the provisions of
Delaware law and to take such actions as they may deem necessary or
appropriate to carry out the intent of the foregoing resolution."
IN WITNESS WHEREOF, this Amended Certificate of Designation is executed
on ____________, 1998.
WESTERN DIGITAL CORPORATION,
a Delaware corporation
By:
----------------------------------
Charles A. Haggerty
Chairman of the Board, President
and Chief Executive Officer
7
<PAGE> 48
EXHIBIT B
FORM OF RIGHTS CERTIFICATE
CERTIFICATE NO. R______________ ______________ RIGHTS
NOT EXERCISABLE AFTER OCTOBER 14, 2008 OR EARLIER IF REDEEMED OR
EXCHANGED BY THE CORPORATION. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE CORPORATION, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, 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 ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE
AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.*]
RIGHTS CERTIFICATE
WESTERN DIGITAL CORPORATION
This certifies that ___________________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of October 15, 1998 (the "RIGHTS
AGREEMENT"), between Western Digital Corporation, a Delaware corporation (the
"CORPORATION"), and American Stock Transfer & Trust Company, a New York
corporation (the "RIGHTS AGENT"), to purchase from the Corporation at any time
prior to 5:00 P.M. (California time) on October 14, 2008 at the office or
offices of the Rights Agent designated for such purpose, or its successors as
Rights Agent, one one-thousandth of a fully paid, non-assessable share of Series
A Junior Participating Preferred Stock (the "PREFERRED STOCK") of the
Corporation, at a purchase price of $150 per one one-thousandth of a share (the
"PURCHASE PRICE"), upon presentation and surrender of this Rights Certificate
with the Form of Election to Purchase and related Certificate duly executed. The
Purchase Price may be paid by bank draft, certified bank check or money order
payable to the order of the Corporation.
- --------
* The portion of the legend in brackets shall be inserted only if applicable,
shall be modified to apply to an Acquiring Person, and shall replace the
preceding sentence.
<PAGE> 49
The number of Rights evidenced by this Rights Certificate (and the
number of shares which may be purchased upon exercise thereof) set forth above,
and the Purchase Price per share set forth above, are the number and Purchase
Price as of October 15, 1998, based on the Preferred Stock as constituted at
such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate an Acquiring of Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of an Acquiring Person, (or of any such Associate
or Affiliate), or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such, such Rights shall become null and void and no holder
hereof shall have any right with respect to such Rights from and after the
occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities which may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are subject
to modification and adjustment upon the happening of certain events, including
Triggering Events (as such term is defined in the Rights Agreement).
The Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the Rights,
limitations of Rights, and obligations, duties and immunities of the Rights
Agent, the Corporation and the holders of the Rights Certificates, which
limitations of Rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the office of the Rights Agent and
are also available upon written request to the Corporation.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate or Rights Certificates
of like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate amount of securities as the Rights evidenced by the Rights Certificate
or Rights Certificates surrendered shall have entitled such holder to purchase.
If this Rights Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be (i) redeemed by the Corporation at its option at a
redemption price of $.001 per Right or (ii) exchanged by the Corporation in
whole or part for Common Shares, substantially equivalent rights, or other
consideration as determined by the Corporation.
No fractional shares of Preferred Stock will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth
2
<PAGE> 50
of a share of Preferred Stock, which may, at the election of the Corporation, be
evidenced by depository receipts), but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the Corporation 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 Corporation or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action, or,
to receive notice of meeting or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
The Rights 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
Corporation and its corporate seal.
Dated as of _____________, 19___
The "Corporation":
(Seal) WESTERN DIGITAL CORPORATION, a
Delaware corporation
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
3
<PAGE> 51
The "Rights Agent":
AMERICAN STOCK TRANSFER & TRUST COMPANY, a
New York corporation
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
4
<PAGE> 52
[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED _____________________________________ hereby sells,
assigns and transfers unto ____________________________________________________
____________________________________________________
____________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _____________________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Corporation with full power of substitution.
DATED:
---------------- ----------------------------------------
(Signature)
SIGNATURE GUARANTEED:
----------------------------------------
(Signature)
<PAGE> 53
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) This Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Person (as such terms are defined pursuant to
the Rights Agreement);
(2) After due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of any such Person.
DATED:
---------------- ----------------------------------------
(Signature)
SIGNATURE GUARANTEED:
----------------------------------------
(Signature)
<PAGE> 54
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
<PAGE> 55
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate)
TO: WESTERN DIGITAL CORPORATION
The undersigned hereby irrevocably elects to exercise
_______________________ Rights represented by this Rights Certificate to
purchase the number of one one-thousandths of a share of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Corporation or of any other Person which may be issuable upon the exercise of
the Rights) and requests that certificates for such shares be issued in the name
of and delivered to:
Name and Address: _______________________________________
_______________________________________
_______________________________________
Social Security or
Other Identifying Number: _______________________________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Name and Address: _______________________________________
_______________________________________
_______________________________________
Social Security or
Other Identifying Number: _______________________________________
DATED: _____________________ _______________________________________
(Signature)
SIGNATURE GUARANTEED:
_______________________________________
(Signature)
<PAGE> 56
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) This Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Person (as such terms are defined pursuant to
the Rights Agreement);
(2) After due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of any such Person.
DATED:
---------------- ----------------------------------------
(Signature)
SIGNATURE GUARANTEED:
----------------------------------------
(Signature)
<PAGE> 57
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
<PAGE> 58
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
OF
WESTERN DIGITAL CORPORATION
On September 10, 1998 (the "RIGHTS DIVIDEND DECLARATION DATE") the Board
of Directors of Western Digital Corporation (the "CORPORATION") declared a
dividend of one Right (a "RIGHT") for each outstanding share of Corporation
Common Stock to be distributed to stockholders of record at the close of
business on November 30, 1998. Each Right entitles the registered holder to
purchase from the Corporation one one-thousandth of a share (a "UNIT") of Series
A Junior Participating Preferred Stock (the "PREFERRED STOCK") at a "PURCHASE
PRICE" of $150, subject to adjustment. The description and terms of the Rights
are set forth in a Rights Agreement (the "RIGHTS AGREEMENT") between the
Corporation and American Stock Transfer & Trust Company, as Rights Agent.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
_______________, 1998. A copy of the Rights Agreement is available free of
charge from the Corporation. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is incorporated herein by reference. A more detailed
summary is also attached to the Form 8-A and to the Corporation's current report
on Form 8-K filed with the Securities and Exchange Commission in connection with
the adoption of the rights plan, and can be viewed on the Securities and
Exchange Commission's web site at www.sec.gov or obtained from the Corporation
upon request.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed.
Until the Distribution Date (as described below), (i) the Rights will be
evidenced by the Common Stock certificates and will be transferred with and only
with such Common Stock certificates, (ii) new Common Stock certificates issued
after November 30, 1998 will contain a notation incorporating the Rights
Agreement by reference and (iii) the surrender for transfer of any certificates
for Common Stock outstanding will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on October 14, 2008, unless earlier redeemed or
exchanged by the Corporation as described below.
The Rights will separate from the Common Stock and a Distribution Date
will occur (the "DISTRIBUTION DATE") upon the earlier of 10 days (or such longer
time as may be determined by the Corporation's board, acting with the approval
of a majority of the Continuing Directors as defined below) following (i) a
public announcement (or determination by the Corporation's
<PAGE> 59
board) that a person or group of affiliated or associated persons (an "ACQUIRING
PERSON") has acquired, or obtained the right to acquire, beneficial ownership of
15% or more of the outstanding shares of Common Stock (the "STOCK ACQUISITION
DATE"), or (ii) the commencement of a tender offer or exchange offer that would
result in a person or group beneficially owning 15% or more of such outstanding
shares of Common Stock.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights.
In the event that on or at any time following the Rights Dividend
Declaration Date, a person becomes the beneficial owner of more than 15% of the
then outstanding shares of Common Stock (except pursuant to an offer for all
outstanding shares of Common Stock which the Continuing Directors determine to
be fair to and otherwise in the best interests of the Corporation and its
stockholders), then each holder of a Right will thereafter have the right to
receive, upon exercise, Common Stock (or, in certain circumstances, cash,
property or other securities of the Corporation) having a value equal to two
times the Purchase Price of the Right. Rights are exercisable following the
occurrence of the foregoing only after such time as the Rights are no longer
redeemable by the Corporation, as set forth below. Notwithstanding any of the
foregoing, following the occurrence of the event set forth in this paragraph,
all Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person will be null and
void.
In the event that, at any time following the Stock Acquisition Date, (i)
the Corporation is acquired in a merger or other business combination
transaction in which the Corporation is not the surviving corporation or in
which the Corporation's outstanding Common Stock is exchanged for cash, stock or
other property (other than a merger which follows an offer for all outstanding
shares described in the preceding paragraph), or (ii) 50% or more of the
Corporation's assets or earning power is sold or transferred, each holder of a
Right (except Rights which previously have been voided as set forth above) shall
thereafter have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the Purchase Price of the
Right.
The Purchase Price payable, and the number of Units of Preferred Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution, as set forth in the
Rights Agreement. With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least 1% of the
Purchase Price. No fractional Rights, fractions of shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share), or fractional shares of Common Stock will be issued and, in lieu
thereof, an adjustment in cash will be made based on the market price of the
Rights, Preferred Stock, or Common Stock, respectively, on the last trading date
prior to the date of exercise.
In general, the Corporation may redeem the Rights in whole, but not in
part, at a price of $.001 per Right, at any time until ten days following the
Stock Acquisition Date (or such later
2
<PAGE> 60
date as may be determined by the Corporation's board, acting with the approval
of a majority of the Continuing Directors, as defined below). Immediately upon
the action of the Board of Directors ordering redemption of the Rights, the
Rights will terminate and the only right of the holders of Rights will be to
receive the $.001 redemption price.
At any time after a person becomes beneficial owner of 15% or more of
the Common Stock then outstanding, and prior to the first date upon which that
person becomes the beneficial owner of at least 50% of the outstanding Common
Stock, the Corporation may, by majority vote of each of the board of directors
and the Continuing Directors, exchange some or all of the outstanding Rights
(other than those that have become void) for shares of Common Stock at an
exchange ratio of one share of Common Stock per Right, appropriately adjusted
for splits, dividends, and similar transactions (the "RATIO OF EXCHANGE").
Immediately upon the action of the Board of Directors ordering the exchange of
the Rights, the Rights will terminate and the only right of the holders of
Rights will be to receive the number of Common Shares equal to the Ratio of
Exchange.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Corporation, including, without limitation, the
right to vote or to receive dividends.
Other than those provisions relating to the redemption price of the
Rights, any of the provisions of the Rights Agreement may be supplemented or
amended by the Board of Directors prior to the Distribution Date, without
approval of the Rights holders, whether or not a supplement or amendment is
adverse to the Rights holders. After the Distribution Date, the provisions of
the Rights Agreement (other than the provisions relating to the redemption price
or the final expiration date of the Rights) may be amended by the Board of
Directors, with the approval of a majority of the Continuing Directors, in order
to make changes which do not materially and adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person), provided,
however, that the Rights Agreement may not be amended to (i) make the Rights
again redeemable after the Rights have ceased to be redeemable, or (ii) change
any other time period unless such change is for the benefit of the holders
(excluding any Acquiring Person).
"CONTINUING DIRECTOR" means a member of the Board of Directors of the
Corporation who is not an Acquiring Person or an affiliate or representative of
an Acquiring Person.
3
