DATRON SYSTEMS INCORPORATED
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C., AS RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF SEPTEMBER 5, 2000
RIGHTS AGREEMENT
This RIGHTS AGREEMENT (the "Agreement") is made effective as
of 5:00 p.m. San Francisco time on the 5th day of September, 2000
by and between Datron Systems Incorporated, a Delaware
corporation (the "Corporation"), and ChaseMellon Shareholder
Services, L.L.C., a New Jersey limited liability company (the
"Rights Agent"), with respect to the following facts and
circumstances.
A. The Board of Directors of the Corporation (the "Board")
has authorized and declared a dividend of one preferred share
purchase right (a "Right") for each share of Common Stock (as
hereinafter defined) of the Corporation outstanding at the Close
of Business (as hereinafter defined) on September 11, 2000 (the
"Record Date"), each Right representing the right to purchase one
one-thousandth (1/1000th) of a share of Preferred Stock (as
hereinafter defined), upon the terms and subject to the
conditions herein set forth.
B. The Board of Directors of the Corporation has further
authorized and directed the issuance of one Right with respect to
each share of Common Stock that shall become outstanding between
the Record Date and the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date (as such terms are
hereinafter defined); provided, however, that Rights may be
issued with respect to shares of Common Stock that shall become
outstanding after the Distribution Date and prior to the earlier
of the Redemption Date and the Final Expiration Date in
accordance with the provisions of Section 22 of this Agreement.
NOW, THEREFORE, in consideration of the foregoing 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:
1.1. "Acquiring Person" means any Person who or which, together
with all Affiliates and Associates of such Person, without the
prior approval of the Corporation's Board of Directors, shall be
the Beneficial Owner of 15% or more of the then outstanding
shares of Common Stock (other than as a result of a Permitted
Offer) or was such a Beneficial Owner at any time after the date
hereof, whether or not such person continues to be the Beneficial
Owner of 15% or more of the then outstanding shares of Common
Stock. Notwithstanding the foregoing: (A) the term "Acquiring
Person" shall not include (i) the Corporation, (ii) any
Subsidiary of the Corporation, (iii) any employee benefit plan of
the Corporation or of any Subsidiary of the Corporation, (iv) 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, or (v) any Person who or which,
together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 15% or more of the then
outstanding shares of Common Stock as a result of the acquisition
of shares of Common Stock directly from the Corporation; and (B)
no Person shall be deemed to be an "Acquiring Person" either (i)
as a result of the acquisition of Common Stock by the Corporation
which, by reducing the number of shares of Common Stock
outstanding, increases the proportional number of shares
beneficially owned by such Person together with all Affiliates
and Associates of such Person; provided, however, that if (X) a
Person would become an Acquiring Person (but for the operation of
this subclause (B)(i)) as a result of the acquisition of shares
of Common Stock by the Corporation, and (Y) after such share
acquisition by the Corporation, such Person, or an Affiliate or
Associate of such Person, becomes the Beneficial Owner of any
additional shares of Common Stock, then such Person shall be
deemed an Acquiring Person, or (ii) if (X) within eight (8) days
after such Person would otherwise have become an Acquiring Person
(but for the operation of this subclause (B)(ii)), such Person
notifies the Board of Directors of the Corporation that such
Person did so inadvertently and (Y) within two (2) Business Days
(as defined in Section 1.8 hereof) after such notification, such
Person is the Beneficial Owner of less than 15% of the
outstanding shares of Common Stock.
1.2. "Act" means the Securities Act of 1933, as amended.
1.3. "Adjusted Number of Shares" and "Adjusted Purchase Price"
have the respective meanings set forth in Section 11.1.3 hereof.
1.4. "Adjustment Shares" has the meaning set forth in Section
11.1.2 hereof.
1.5. "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act.
1.6. The term "current per share market price" shall have the
meaning set forth in Section 11.4.1 hereof when used with respect
to a "Security" (as defined in said Section 11.4.1) and shall
have the meaning set forth in Section 11.4.2 when used with
respect to the Preferred Stock.
1.7. A Person is the "Beneficial Owner" of and "beneficially
owns" any securities which:
1.7.1. such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
1.7.2. such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding, or upon
the exercise of conversion rights, exchange rights, rights (other
than the Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial Owner
of, or to beneficially own, securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or
any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange; or (B) the
right to vote pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or understanding to vote
such security (1) arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange
Act and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
1.7.3. 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 relating to the
acquisition, holding, voting (except to the extent contemplated
by the proviso to subclause (B) of Section 1.7.2), or disposing
of any securities of the Corporation.
Notwithstanding anything in this Section 1.7 to
the contrary, the phrase "then outstanding," when used with
reference to a Person's Beneficial Ownership of securities of the
Corporation, shall mean the number of such securities then issued
and outstanding together with the number of such securities not
then actually issued and outstanding which such Person would be
deemed to own beneficially hereunder.
Notwithstanding anything in this Section 1.7 to
the contrary, no Person shall be deemed to beneficially own any
securities solely by reason of such Person being a party to a
customary agreement pursuant to which such Person acts or agrees
to act as an underwriter with respect to a bona fide public
offering of securities.
No decision reached, or action taken, by the Board
of Directors of the Corporation or any committee thereof shall
cause any Person (or any Affiliate or Associate of such Person)
who is a member of the Board of Directors of the Corporation or
such committee to be deemed, for the purposes of this Agreement,
to be a Beneficial Owner of any securities beneficially owned by
any other Person (or any Affiliate or Associate of such Person)
who is a member of the Board of Directors of the Corporation or
any committee thereof solely by reason of such membership of the
Board of Directors or any committee thereof or participation in
the decisions or actions thereof on the part of either or both of
such Persons.
1.8. "Business Day" means any day other than a Saturday, a
Sunday, a day on which banking institutions in the State of New
York are obligated by law or executive order to close, or a
United States federal holiday.
1.9. "Capital Stock Equivalents" has the meaning set forth in
Section 11.1.3 hereof.
1.10. "Close of Business" on any given date means 5:00 P.M.,
California time, on such date; provided, however, that if such
date is not a Business Day it means 5:00 P.M., California time,
on the next succeeding Business Day.
1.11. "Common Stock" when used with reference to the
Corporation means the Common Stock of the Corporation or, in the
event of a subdivision, combination or consolidation with respect
to such shares of Common Stock, the shares of Common Stock
resulting from such subdivision, combination or consolidation.
"Common Stock" when used with reference to any Person other than
the Corporation means the capital stock (or equity interest) with
the greatest voting power of such other Person or, if such other
Person is a Subsidiary of another Person, the Person or Persons
which ultimately control such first-mentioned Person.
1.12. "Corporation" means Datron Systems Incorporated, a
Delaware corporation, and also means a Principal Party to the
extent provided in Section 13.1 hereof.
1.13. "Distribution Date" has the meaning set forth in
Section 3.1 hereof.
1.14. "Equivalent Preferred Stock" has the meaning set forth
in Section 11.2 hereof.
1.15. "Exchange Act" means the Securities Exchange Act of
1934, as amended.
1.16. "Exchange Ratio" has the meaning set forth in Section
26.1 hereof.
1.17. "Final Expiration Date" has the meaning set forth in
Section 7.1 hereof.
1.18. "Interested Stockholder" means any Acquiring Person or
any Affiliate or Associate of an Acquiring Person or any other
Person in which any such Acquiring Person, Affiliate or Associate
has an interest, or any other Person acting directly or
indirectly on behalf of or in concert with any such Acquiring
Person, Affiliate or Associate.
1.19. "NASDAQ" has the meaning set forth in Section 11.4.1
hereof.
1.20. "Permitted Offer" means a tender or exchange offer
which is for all outstanding shares of Common Stock of the
Corporation at a price and on terms determined, prior to the
purchase of shares under such tender or exchange offer, by at
least a majority of the members of the Board of Directors who are
not officers of the Corporation and who are not Acquiring Persons
or Affiliates, Associates, nominees or representatives of an
Acquiring Person, to be adequate (taking into account all factors
that such directors deem pertinent including, without limitation,
prices that could reasonably be achieved if the Corporation or
its assets were sold on an orderly basis designed to realize
maximum value) and otherwise in the best interests of the
Corporation, its stockholders (other than the Person or any
Affiliate or Associate thereof on whose basis the offer is being
made) and other relevant constituencies, taking into account all
factors that such directors may deem pertinent.
1.21. "Person" means any individual, firm, partnership,
corporation, limited liability company, limited liability
partnership, trust, association, joint venture or other entity,
and includes any successor (by merger or otherwise) of such
entity.
1.22. "Preferred Stock" means shares of the Corporation's
Series RP Preferred Stock, par value $0.01 per share, having the
relative rights, preferences and limitations set forth in the
Form of Certificate of Designation, Preferences and Rights of
Series RP Preferred Stock attached to this Agreement as Exhibit
A.
1.23. "Principal Party" has the meaning set forth in Section
13.2 hereof.
1.24. "Proration Factor" has the meaning set forth in Section
11.1.3 hereof.
1.25. "Purchase Price" has the meaning set forth in Section
4.1 hereof.
1.26. "Record Date" has the meaning set forth in Recital A
hereof.
1.27. "Redemption Date" has the meaning set forth in Section
7.1 hereof.
1.28. "Redemption Price" has the meaning set forth in Section
23.1.1 hereof.
1.29. "Right Certificate" has the meaning set forth in
Section 3.1 hereof.
1.30. "Rights" has the meaning set forth in Recital A hereof.
1.31. "Rights Agent" means ChaseMellon Shareholder Services,
L.L.C., a New Jersey limited liability company, as Rights Agent
hereunder, and, from the time of its succession, any successor
Rights Agent under Section 19 or Section 21 hereof.
1.32. "Section 11.1.2 Event" has the meaning set forth in
Section 11.1.2 hereof.
1.33. "Section 13 Event" means any event described in clause
(x), (y) or (z) of Section 13.1 hereof.
1.34. "Shares Acquisition Date" means the first date of
public announcement (which, for purposes of this definition,
shall include, without limitation, a report filed pursuant to the
Exchange Act) by the Corporation or an Acquiring Person that an
Acquiring Person has become such or that facts exist as a result
of which there exists an Acquiring Person; provided, that, if
such Person is determined by the Board of Directors of the
Corporation not to have become an Acquiring Person pursuant to
subclause (B)(ii) of Section 1.1 hereof, then no Shares
Acquisition Date shall be deemed to have occurred.
1.35. "Subsidiary" of any Person means any corporation or
other Person of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or
indirectly, by such Person.
1.36. "Summary of Rights" has the meaning set forth in
Section 3.2 hereof.
1.37. "Trading Day" has the meaning set forth in Section
11.4.1 hereof.
1.38. "Triggering Event" means any Section 11.1.2 Event or
any Section 13 Event.
1.39. The term "voting securities" has the meaning set forth
in Section 13.1 hereof.
2. Appointment of Rights Agent.
2.1. The Corporation hereby appoints the Rights Agent to act as
agent for the Corporation 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. The
Rights Agent shall have no duty to supervise, and in no event
shall be liable for, the acts or omissions of any such co-Rights
Agent.
3. Issuance of Right Certificates.
3.1. Until the earlier of (i) the Shares Acquisition Date or (ii)
the Close of Business on the tenth (10th) day (or such later date
as may be determined by action of the Corporation's Board of
Directors) after the date of the commencement by any Person
(other than the Corporation, any Subsidiary of the Corporation,
any employee benefit plan of the Corporation or of 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) of, or
after the date of the first public announcement of the intention
of any Person (other than the Corporation, any Subsidiary of the
Corporation, any employee benefit plan of the Corporation or of
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) to commence (which intention to commence remains in
effect for five (5) Business Days after such announcement), a
tender or exchange offer the consummation of which would result
in any Person becoming an Acquiring Person (including, in the
case of both (i) and (ii), any such date which is after the date
of this Agreement and prior to the issuance of the Rights) (the
"Distribution Date"), (x) the Rights will be evidenced (subject
to the provisions of Section 3.2 hereof) by the certificates for
shares of Common Stock registered in the names of the holders
thereof (which certificates shall also be deemed to be Right
Certificates) and not by separate Right Certificates, and (y) the
right to receive Right Certificates will be transferable only in
connection with the transfer of the underlying shares of Common
Stock (including a transfer to the Corporation); provided,
however, that if a tender or exchange offer is terminated prior
to the occurrence of a Distribution Date, then no Distribution
Date shall occur as a result of such tender or exchange offer.
As soon as practicable after the Distribution Date, the
Corporation will prepare and execute, the Rights Agent will
countersign, and the Corporation will send or cause to be sent by
first-class, postage-prepaid mail, to each record holder of
shares of 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, a Right Certificate, substantially in
the form of Exhibit B hereto (a "Right Certificate"), evidencing
one Right for each share of Common Stock so held. As of and
after the Distribution Date, the Rights will be evidenced solely
by such Right Certificates.
3.2. As promptly as practicable following the Record Date, the
Corporation will send a copy of a Summary of Rights to Purchase
Preferred Stock, in substantially the form of Exhibit C hereto
(the "Summary of Rights"), by first-class, postage-prepaid mail,
to each record holder of shares of Common Stock as of the Close
of Business on the Record Date, at the address of such holder
shown on the records of the Corporation. With respect to
certificates for shares of Common Stock outstanding as of the
Record Date, until the Distribution Date the Rights will be
evidenced by such certificates registered in the names of the
holders thereof together with a copy of the Summary of Rights
attached thereto. Until the Distribution Date (or the earlier of
the Redemption Date or the Final Expiration Date), the surrender
for transfer of any certificate for shares of Common Stock
outstanding on the Record Date, with or without a copy of the
Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with such shares of Common
Stock.
3.3. Certificates for shares of Common Stock that become
outstanding (including, without limitation, reacquired shares of
Common Stock referred to in the last sentence of this Section
3.3) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration
Date, shall be deemed also to be certificates for Rights, and
shall bear the following legend:
This certificate also evidences and entitles
the holder hereof to certain rights as set
forth in a Rights Agreement between Datron
Systems Incorporated and ChaseMellon
Shareholder Services, L.L.C., a New Jersey
limited liability company, as Rights Agent,
dated as of September 5, 2000 (the "Rights
Agreement"), the terms of which are hereby
incorporated herein by reference and a copy
of which is on file at the principal
executive offices of Datron Systems
Incorporated. 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. Datron Systems
Incorporated will mail to the holder of this
certificate a copy of the Rights Agreement
without charge after receipt of a written
request therefor. Under certain
circumstances set forth in the Rights
Agreement, Rights issued to, or held by, any
Person who is, was or becomes an Acquiring
Person or an Affiliate or Associate thereof
(as defined in the Rights Agreement) and
certain related persons, 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, until the Distribution Date the Rights associated with
the shares of Common Stock represented by such certificates shall
be evidenced by such certificates alone, and the surrender for
transfer of any such certificate shall also constitute the
transfer of the Rights associated with the shares of Common Stock
represented thereby. In the event that the Corporation purchases
or acquires any shares of Common Stock after the Record Date but
prior to the Distribution Date (or the earlier of the Redemption
Date or the Final Expiration Date), any Rights associated with
such shares of Common Stock shall be deemed cancelled and retired
so that the Corporation shall not be entitled to exercise any
Rights associated with the Common Stock that are no longer
outstanding.
4. Form of Right Certificate.
4.1. The Right Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof)
shall 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 (which may not affect the duties
and responsibilities of the Rights Agent) 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 hereof, the Right Certificates shall
entitle the holders thereof to purchase such number of one one-
thousandths (1/1000ths) of a share of Preferred Stock as shall be
set forth therein at the price per one one-thousandth (1/1000th)
of a share of Preferred Stock set forth therein in accordance
with Section 7.2 hereof (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.
4.2. Any Right Certificate issued pursuant to Section 3.1 or
Section 22 hereof that represents Rights that are null and void
pursuant to Section 7.6 of this Agreement and any Right
Certificate issued pursuant to Section 6 or Section 11 hereof
upon transfer, exchange, replacement or adjustment of any other
Right Certificate referred to in this sentence, shall contain (to
the extent feasible and upon notice by the Corporation to the
Rights Agent that this Section 4.2 has become applicable) the
following legend:
The Rights represented by this Right
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
Right Certificate and the Rights represented
hereby are null and void.
The provisions of Section 7.6 of this Agreement shall be
operative whether or not the foregoing legend is contained on any
such Right Certificate.
5. Countersignature and Registration.
5.1. The Right Certificates shall be executed on behalf of the
Corporation by its President or any Vice President and the
Secretary or an Assistant Secretary, either manually or by
facsimile signature, shall have affixed thereto the Corporation's
seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Corporation, either
manually or by facsimile signature. The Right Certificates shall
be countersigned, either manually or by facsimile signature, by
the Rights Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Corporation who shall
have signed any of the Right Certificates shall cease to be such
officer of the Corporation before countersignature by the Rights
Agent and issuance and delivery by the Corporation, such Right
Certificates may nevertheless 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 Right
Certificates had not ceased to be such officer of the
Corporation; and any Right Certificate may be signed on behalf of
the Corporation by any Person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer of
the Corporation to sign such Right Certificate, although at the
date of the execution of this Rights Agreement any such Person
was not such an officer.
5.2. Following the Distribution Date, and receipt by the Rights
Agent of a list of record holders of Rights, the Rights Agent
will keep or cause to be kept, at its office designated pursuant
to Section 25 hereof as the appropriate place for surrender or
transfer of the Right Certificates, books for registration and
transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of
the Right Certificates, the number of Rights evidenced on the
face of each of the Right Certificates and the certificate number
and the date of each of the Right Certificates.
6. Transfer, Split-Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates.
6.1. Subject to the provisions of Section 4.2, Section 7.6 and
Section 14 hereof, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on
the earlier of the Redemption Date or the Final Expiration Date,
any Right Certificate or Right Certificates may be transferred,
split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a
like number of one one-thousandths (1/1000ths) of a share of
Preferred Stock (or, following a Triggering Event, other
securities, as the case may be) as the Right Certificate or Right
Certificates surrendered then entitled such holder (or former
holder in the case of a transfer) to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any
Right Certificate or Right Certificates shall make such request
in writing delivered to the Rights Agent, and shall surrender the
Right Certificate or Right Certificates to be transferred, split
up, combined or exchanged at the office 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 Right Certificate
until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse
side of such Right Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as
the Corporation or the Rights Agent shall reasonably request.
Thereupon the Rights Agent shall, subject to Section 4.2, Section
7.6 and Section 14 hereof, countersign and deliver to the Person
entitled thereto a Right Certificate or Right 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 Right Certificates. The Rights
Agent may in its sole discretion require the Corporation or the
Person entitled to such Right Certificate to provide evidence
that such payment has been made prior to countersigning and
delivering any Right Certificate pursuant to this Section 6.1.
6.2. Upon receipt by the Corporation and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate, and, in case of
loss, theft or destruction, of indemnity or security satisfactory
to them, and, at the Corporation's request, 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 Right Certificate if mutilated, the
Corporation will make and deliver a new Right Certificate of like
tenor to the Rights Agent for countersignature and delivery to
the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
7.1. Subject to Section 7.6 hereof, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein) in whole or in part at any
time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase and the
certificate on the reverse side thereof duly and properly
executed, to the Rights Agent at the office of the Rights Agent
designated for such purpose, together with payment of the
aggregate Purchase Price for the total number of one one-
thousandths (1/1000ths) of a share of Preferred Stock (or other
securities, as the case may be) as to which such surrendered
Rights are exercised, at or prior to the earlier of (i) the Close
of Business on September 5, 2010 (the "Final Expiration Date"),
or (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof (the "Redemption Date").
7.2. The Purchase Price for each one one-thousandth (1/1000th) of
a share of Preferred Stock pursuant to the exercise of a Right
shall initially be $75.00, shall be subject to adjustment from
time to time as provided in the next sentence and in Sections 11
and 13.1 hereof and shall be payable in accordance with paragraph
7.3 below. Anything in this Agreement to the contrary
notwithstanding, in the event that at any time after the date of
this Agreement and prior to the Distribution Date, the
Corporation shall (i) declare or pay any dividend on the Common
Stock payable in Common Stock or (ii) effect a subdivision,
combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in
shares of Common Stock) into a greater or lesser number of shares
of Common Stock, then, in any such case, each share of Common
Stock outstanding following such subdivision, combination or
consolidation shall continue to have a Right associated therewith
and the Purchase Price following any such event shall be
proportionately adjusted to equal the result obtained by
multiplying the Purchase Price immediately prior to such event by
a fraction the numerator of 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. The adjustment provided
for in the preceding sentence shall be made successively whenever
such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected.
7.3. Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and the certificate
on the reverse side thereof duly and properly executed,
accompanied by payment of the Purchase Price for the Preferred
Stock (or other securities, as the case may be) to be purchased
and an amount equal to any applicable tax or governmental charge
required to be paid by the holder of such Right Certificate in
accordance with Section 6 hereof by certified check, cashier's
check or money order payable to the order of the Corporation, the
Rights Agent shall thereupon promptly (i) (A) requisition from
any transfer agent of the Preferred Stock certificates for the
number of shares of Preferred Stock to be purchased, and the
Corporation hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Corporation, in its
sole discretion, shall have elected to deposit the Preferred
Stock issuable upon exercise of the Rights hereunder into a
depositary, requisition from the depositary agent depositary
receipts representing such number of one one-thousandths
(1/1000ths) of a share of Preferred Stock as are to be purchased
(in which case certificates for the Preferred Stock represented
by such receipts shall be deposited by the transfer agent with
the depositary agent) and the Corporation will direct the
depositary agent to comply with such requests, (ii) when
appropriate, requisition from the Corporation the amount of cash
to be paid in lieu of issuance of fractional shares in accordance
with Section 14 hereof, (iii) after receipt of such certificates
or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate,
registered in such name or names as may be designated by such
holder, and (iv) when appropriate, after receipt thereof, deliver
such cash to or upon the order of the registered holder of such
Right Certificate. In the event that the Corporation is
obligated to issue other securities (including shares of Common
Stock) of the Corporation pursuant to Section 11.1 hereof, the
Corporation will make all arrangements necessary so that such
other securities are available for distribution by the Rights
Agent, if and when necessary to comply with this Agreement.
7.4. In addition, in the case of an exercise of the Rights by a
holder pursuant to Section 11.1.2, the Rights Agent shall return
such Right Certificate to the registered holder thereof after
imprinting, stamping or otherwise indicating thereon that the
Rights represented by such Right Certificate no longer include
the rights provided by Section 11.1.2 of the Rights Agreement and
if less than all the Rights represented by such Right Certificate
were so exercised, the Rights Agent shall indicate on the Right
Certificate the number of Rights represented thereby that
continue to include the rights provided by Section 11.1.2.
7.5. In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered
holder of such Right Certificate or to his duly authorized
assigns, subject to the provisions of Section 6 and Section 14
hereof, or the Rights Agent shall place an appropriate notation
on the Right Certificate with respect to those Rights exercised.
7.6. Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Section 11.1.2 Event,
any Rights beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or of any Affiliate or Associate thereof)
who becomes a transferee after the Acquiring Person becomes such,
or (iii) a transferee of an Acquiring Person (or of any Affiliate
or Associate thereof) 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 (or from any Affiliate
or Associate thereof) to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person
has a 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 that has as a primary purpose or
effect the avoidance of this Section 7.6, 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 notify the Rights Agent when this Section 7.6
applies and shall use all reasonable efforts to insure that the
provisions of this Section 7.6 and Section 4.2 hereof are
complied with, but neither the Corporation nor the Rights Agent
shall have any liability to any holder of Right Certificates or
other Person as a result of the Corporation's failure to make any
determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
7.7. 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) properly
completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as
the Corporation or the Rights Agent shall reasonably request.
8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of
exercise, transfer, split up, combination or exchange shall, if
surrendered to the Corporation or to any of its agents, be
delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled
by it, and no Right Certificates shall be issued in lieu thereof
except as expressly permitted by the provisions of this Rights
Agreement. The Corporation shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel
and retire, any other Right Certificate purchased or acquired by
the Corporation otherwise than upon the exercise thereof. The
Rights Agent shall deliver all cancelled Right Certificates to
the Corporation, or shall, at the written request of the
Corporation, destroy such cancelled Right Certificates, and in
such case shall deliver a certificate of destruction thereof to
the Corporation.
9. Reservation and Availability of Preferred Stock.
9.1. The Corporation covenants and agrees that, at all times
prior to the occurrence of a Section 11.1.2 Event, it will cause
to be reserved and kept available out of its authorized and
unissued Preferred Stock, or any authorized and issued Preferred
Stock held in its treasury, the number of shares of Preferred
Stock that will be sufficient to permit the exercise in full of
all outstanding Rights and, after the occurrence of a Section
11.1.2 Event, shall, to the extent reasonably practicable, so
reserve and keep available a sufficient number of shares of
Common Stock (and/or other securities) that may be required to
permit the exercise in full of the Rights pursuant to this
Agreement.
9.2. So long as the shares of Preferred Stock (and, after the
occurrence of a Section 11.1.2 Event, shares of Common Stock or
any other securities) issuable upon the exercise of the Rights
may be listed on any stock exchange, the Corporation shall use
its best efforts to cause, from and after such time as the Rights
become exercisable, all shares or other securities reserved for
such issuance to be listed on such exchange upon official notice
of issuance upon such exercise.
9.3. The Corporation covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of
Preferred Stock (or shares of Common Stock and/or other
securities, as the case may be) delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such
shares or other securities (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid
and non-assessable shares or securities.
9.4. The Corporation covenants and agrees that it will pay when
due and payable any and all taxes and governmental charges that
may be payable in respect of the issuance or delivery of the
Right Certificates or of any shares of Preferred Stock (or shares
of 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 tax or governmental charge that may be
payable in respect of any transfer or delivery of Right
Certificates to a person other than, or the issuance or delivery
of certificates or depositary receipts for the shares of
Preferred Stock (or shares of Common Stock and/or other
securities, as the case may be) in a name other than that of, the
registered holder of the Right Certificate evidencing Rights
surrendered for exercise, or to issue or to deliver any
certificates or depositary receipts for shares of Preferred Stock
(or shares of Common Stock and/or other securities, as the case
may be) upon the exercise of any Rights, until any such tax or
governmental charge shall have been paid (any such tax or
governmental charge being payable by the holder of such Right
Certificate at the time of surrender) or until it has been
established to the Corporation's reasonable satisfaction that no
such tax or governmental charge is due.
9.5. The Corporation shall use its best efforts to (i) file, as
soon as practicable following the Shares Acquisition Date, 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 and
the rules and regulations thereunder) until the date of the
expiration of the period for exercise of the Rights provided by
Section 11.1.2. The Corporation will also take such action as
may be appropriate under the blue sky laws of the various states.
10. Preferred Stock Record Date.
Each Person in whose name any certificate for shares of
Preferred Stock (or shares of 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 the shares of Preferred Stock (or shares of Common
Stock and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable
taxes and governmental charges) was made; provided, however,
that, if the date of such surrender and payment is a date upon
which the shares of Preferred Stock (or shares of 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 on, and such certificate
shall be dated, the next succeeding Business Day on which the
shares of Preferred Stock (or shares of Common Stock and/or other
securities, as the case may be) transfer books of the Corporation
are open.
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.
11.1. Adjustment Events.
11.1.1. 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 Preferred Stock, (B) subdivide the
outstanding Preferred Stock, (C) combine the outstanding
Preferred Stock into a smaller number of Preferred Stock 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 11.1 and Section 7.6
hereof, the Purchase Price in effect at the time of the record
date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and
kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock that, 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, such holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however,
that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value, if
any, of the shares of capital stock of the Corporation issuable
upon exercise of one Right. If an event occurs that would
require an adjustment under both Section 11.1.1 and Section
11.1.2, the adjustment provided for in this Section 11.1.1 shall
be in addition to, and shall be made prior to, any adjustment
required pursuant to Section 11.1.2.
11.1.2. In the event (a "Section 11.1.2 Event") that any
Person, alone or together with its Affiliates and Associates,
shall become an Acquiring Person, then proper provision shall be
made so that each holder of a Right (except as provided below and
in Section 7.6 hereof) shall, for a period of sixty (60) days (or
such longer period as the Corporation's Board of Directors may
determine at any time prior to or during such period of sixty
(60) days) after the later of the occurrence of any such event or
the effective date of an appropriate registration statement under
the Act pursuant to Section 9.5 hereof, have a right to receive,
upon exercise thereof at a price equal to the then current
Purchase Price, in accordance with the terms of this Agreement,
such number of shares of Common Stock (or, in the discretion of
the Corporation's Board of Directors, one one-thousandths
(1/1000ths) of a share of Preferred Stock) as shall equal the
result obtained by (x) multiplying the then current Purchase
Price by the then number of one one-thousandths (1/1000ths) of a
share of Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 11.1.2
Event, and (y) dividing that product by 50% of the then current
per share market price of the Common Stock (determined pursuant
to Section 11.4 hereof) on the date of such first occurrence
(such number of shares being referred to as the "Adjustment
Shares"); provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject
to the provisions of Section 13 hereof, then only the provisions
of Section 13 hereof shall apply and no adjustment shall be made
pursuant to this Section 11.1.2.
11.1.3. In the event that there shall not be sufficient
treasury or authorized but unissued (and unreserved) Common Stock
to permit the exercise in full of the Rights in accordance with
Section 11.1.2 and the Rights become so exercisable (and the
Board of Directors of the Corporation has not determined to make
the Rights exercisable solely into fractions of a share of
Preferred Stock), notwithstanding any other provision of this
Agreement, to the extent necessary and permitted by applicable
law, each Right (except as provided below and in Section 7.6
hereof) shall thereafter represent the right to receive, upon
exercise thereof at the then current Purchase Price in accordance
with the terms of this Agreement, (x) a number of (or fractions
of) shares of Common Stock calculated by dividing the maximum
number of shares of Common Stock that may permissibly be issued
by the number of outstanding Rights and (y) a number of one one-
thousandths (1/1000ths) of shares of Preferred Stock or a number
of, or fractions of, other equity securities of the Corporation
(or, in the discretion of the Board of Directors of the
Corporation, debt) that the Board of Directors of the Corporation
has determined to have an aggregate current market value
(determined pursuant to Section 11.1.1 and Section 11.1.2 hereof,
to the extent applicable) equal to the difference between (1) the
aggregate current market value of the Adjustment Shares (assuming
such shares of Common Stock could be issued pursuant to Section
11.1.2 hereof) and (2) the aggregate current market value of the
shares of Common Stock issued in respect of such Right pursuant
to the preceding clause (x) (such number of, or fractions of,
shares of Preferred Stock, debt or other equity securities or
debt of the Corporation being referred to as a "Capital Stock
Equivalent"); provided, however, if sufficient shares of Common
Stock and/or Capital Stock Equivalents are unavailable, then the
Corporation shall, to the extent permitted by applicable law,
take all such action as may be necessary to authorize additional
shares of Common Stock or Capital Stock Equivalents for issuance
upon exercise of the Rights, including the calling of a meeting
of stockholders; and provided, further, that if the Corporation
is unable to cause sufficient shares of Common Stock and/or
Capital Stock Equivalents to be available for issuance upon
exercise in full of the Rights, then each Right shall thereafter
represent the right to receive the Adjusted Number of Shares upon
exercise at the Adjusted Purchase Price (as such terms are
hereinafter defined). As used herein, the term "Adjusted Number
of Shares" shall be equal to that number of (or fractions of)
shares of Common Stock (and/or Capital Stock Equivalents) equal
to the product of (x) the number of Adjustment Shares and (y) a
fraction, the numerator of which is the number of shares of
Common Stock (and/or Capital Stock Equivalents) available for
issuance upon exercise of the Rights and the denominator of which
is the aggregate number of Adjustment Shares otherwise issuable
upon exercise in full of all Rights (assuming there were a
sufficient number of shares of Common Stock available) (such
fraction being referred to as the "Proration Factor"). The
"Adjusted Purchase Price" shall mean the product of the Purchase
Price and the Proration Factor. The Board of Directors of the
Corporation may, but shall not be required to, establish
procedures to allocate the right to receive shares of Common
Stock and Capital Stock Equivalents upon exercise of the Rights
among holders of Rights.
11.2. 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 (for a period
expiring within 45 calendar days after such record date) to
subscribe for or purchase shares of Preferred Stock (or shares
having the same rights, privileges and preferences as the
Preferred Stock ("Equivalent Preferred Stock")) or securities
convertible into Preferred Stock or Equivalent Preferred Stock at
a price per share of Preferred Stock or Equivalent Preferred
Stock (or having a conversion price per share, if a security
convertible into shares of Preferred Stock or Equivalent
Preferred Stock) less than the then current per share market
price of the Preferred Stock (as determined pursuant to Section
11.4 hereof) 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 that 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 per share 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); provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be
less than the aggregate par value, if any, of the shares of
capital stock of the Corporation issuable upon exercise of one
Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be 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. 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, options or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase
Price that would then be in effect if such record date had not
been fixed.
11.3. In case the Corporation shall fix a record date for the
making of a distribution to all holders of the Preferred Stock
(including any such distribution made in connection with a
consolidation or merger in which the Corporation is the
continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Stock) or subscription rights or
warrants (excluding those referred to in Section 11.2 hereof),
the Purchase Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the then current per share market
price (as determined pursuant to Section 11.4 hereof) of the
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 and shall be binding on the
Rights Agent and the holders of the Rights) of the portion of the
assets or evidences of indebtedness so to be distributed or of
such subscription rights or warrants applicable to one share of
Preferred Stock, and the denominator of which shall be such
current per share market price of the Preferred Stock; provided,
however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value,
if any, of the shares of capital stock of the Corporation to be
issued upon exercise of one Right. Such adjustments shall be
made successively whenever such a record date is fixed; and in
the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price that would
then be in effect if such record date had not been fixed.
11.4. Computation of "Current Per Share Market Price."
11.4.1. For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security"
for the purpose of this Section 11.4.1) on any date shall be
deemed to be the average of the daily closing prices per share of
such Security for the thirty (30) consecutive Trading Days
immediately prior to and not including such date; provided,
however, that in the event that the current per share market
price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security
or securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such Security and
prior to the expiration of thirty (30) Trading Days after (but
not including) the ex-dividend date for such dividend or
distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the
current per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of such
Security. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the
Security is not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Security
is listed or admitted to trading or, if the Security is not
listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or such
other system then in use, or, if on any such date the Security is
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 Security selected by the Board of
Directors of the Corporation. If on any such date no such market
maker is making a market in the Security, the fair value of the
Security on such date as determined in good faith by the Board of
Directors of the Corporation shall be used. The term "Trading
Day" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading
is open for the transaction of business or, if the Security is
not listed or admitted to trading on any national securities
exchange, a Business Day.
11.4.2. For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Stock shall be
determined in accordance with the method set forth in Section
11.4.1. If the shares of Preferred Stock are not publicly
traded, the "current per share market price" of the Preferred
Stock shall be conclusively deemed to be the current per share
market price of the Common Stock as determined pursuant to
Section 11.4.1 (appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the
date hereof), multiplied by 1,000. If neither the Common Stock
nor the Preferred Stock are publicly held or so listed or traded,
"current per share market price" shall mean, with respect to the
Preferred Stock, 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 binding on the Rights Agent and the
holders of the Rights.
11.5. 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 1%
in the Purchase Price; provided, however, that any adjustments
that by reason of this Section 11.5 are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest one one-thousandth
(1/1000th) of a share of Preferred Stock or of any other share or
security as the case may be. Notwithstanding the first sentence
of this Section 11.5, any 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 that mandates such adjustment or
(ii) the Final Expiration Date.
11.6. If as a result of an adjustment made pursuant to
Section 11.1.2 or Section 13.1 hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares
of capital stock of the Corporation other than Preferred Stock,
thereafter the number of other shares so receivable upon exercise
of any Right shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in
Section 11.1 through 11.3, inclusive, and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Preferred Stock
shall apply on like terms to any such other shares.
11.7. 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 (1/1000ths) 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.
11.8. 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
(1/1000ths) of a share of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the
number of one one-thousandths (1/1000ths) 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, and, if known at the time, the amount of the
adjustment to be made, and shall deliver a copy of such public
announcement to the Rights Agent. This record date may be the
date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued,
shall be at least ten (10) days later than the date of the public
announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11.8,
the Corporation shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14
hereof, 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 Right Certificates
held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Corporation, new Right
Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so
to be distributed shall be issued, executed and countersigned in
the manner provided for herein and shall be registered in the
names of the holders of record of Right Certificates on the
record date specified in the public announcement.
11.9. Irrespective of any adjustment or change in the
Purchase Price or the number of one one-thousandths (1/1000ths)
of a share of Preferred Stock issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one
one-thousandths (1/1000ths) of a share of Preferred Stock that
were expressed in the initial Right Certificates issued
hereunder.
11.10. Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of
the number of one one-thousandths (1/1000ths) of a share of
Preferred Stock, share of Common Stock or other securities
issuable upon exercise of the Rights, the Corporation shall take
any corporate action that may, in the opinion of its counsel, be
necessary in order that the Corporation may validly and legally
issue such number of fully paid and non-assessable one one-
thousandths (1/1000ths) of a share of Preferred Stock, share of
Common Stock or other securities at such adjusted Purchase Price.
11.11. 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 of the
Preferred Stock, shares of Common Stock or other securities of
the Corporation, if any, issuable upon such exercise over and
above the Preferred Stock, shares of Common Stock or other
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
upon the occurrence of the event requiring such adjustment and
shall deliver to the Rights Agent a notice describing the terms
of such due bill or other appropriate instrument.
11.12. 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 the Corporation in its sole discretion shall
determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash
of Preferred Stock at less than the current market price, (iii)
issuance wholly for cash of Preferred Stock or securities that by
their terms are convertible into or exchangeable for 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 holders.
11.13. 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 that does not violate Section 11.14 hereof), (ii)
merge with or into any other Person (other than a Subsidiary of
the Corporation in a transaction that does not violate Section
11.14 hereof), 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 does not
violate Section 11.14 hereof), if (x) at the time of or
immediately after such consolidation, merger, sale or transfer,
there are any charter or bylaw provisions or any rights, warrants
or other instruments or securities outstanding or agreements in
effect or other actions taken that would materially diminish or
otherwise eliminate the benefits intended to be afforded by the
Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger, sale or transfer, the stockholders of
the Person who constitutes, or would constitute, the "Principal
Party" for purposes of Section 13.1 hereof shall have received a
distribution of Rights previously owned by such Person or any of
its Affiliates and Associates. The Corporation shall not
consummate any such consolidation, merger, sale or transfer
unless prior thereto the Corporation and such other Person shall
have executed and delivered to the Rights Agent a supplemental
agreement evidencing compliance with this Section 11.13.
11.14. The Corporation covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23
or Section 25.2 hereof, take (or permit any Subsidiary to take)
any action the purpose of which is to, or if at the time such
action is taken it is reasonably foreseeable that the effect of
such action is to, materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
11.15. The exercise of Rights under Section 11.1.2 shall only
result in the loss of rights under Section 11.1.2 to the extent
so exercised and shall not otherwise affect the rights
represented by the Rights under this Agreement, including the
rights represented by Section 13.
12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or
Section 13 hereof, the Corporation shall promptly (a) prepare a
certificate setting forth such adjustment and a brief, reasonably
detailed statement of the facts, computations and methodology
accounting for such adjustment, (b) file with the Rights Agent
and with each transfer agent for the Common Stock and the
Preferred Stock a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate in
accordance with Section 25.1 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any
adjustment therein contained and shall have no duty with respect
to, and shall not be deemed to have knowledge of, such adjustment
unless and until it shall have received such certificate.
13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
13.1. In the event that, on or following the Shares
Acquisition Date, directly or indirectly, (x) the Corporation
shall consolidate with, or merge with and into, any Interested
Stockholder or, if in such merger or consolidation all holders of
shares of Common Stock are not treated alike, any other Person,
(y) the Corporation shall consolidate with, or merge with, any
Interested Stockholder or, if in such merger or consolidation all
holders of shares of Common Stock are not treated alike, any
other Person, and the Corporation shall be the continuing or
surviving corporation of such consolidation or merger (other
than, in a case of any transaction described in (x) or (y), a
merger or consolation that would result in all of the securities
generally entitled to vote in the election of directors of the
Corporation ("voting securities") outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into securities of the surviving entity)
all of the voting securities of the Corporation or such voting
surviving entity outstanding immediately after such merger or
consolidation and the holders of such securities not having
changed as a result of such merger or consolidation), 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 Interested Stockholder or Stockholders or, if in such
transaction all holders of Common Stock are not treated alike,
any other Person (other than the Corporation or any Subsidiary of
the Corporation in one or more transactions each of which does
not violate Section 11.14 hereof), then, and in each such case
(except as provided in Section 13.4 hereof), proper provision
shall be made so that (i) each holder of a Right, except as
provided in Section 7.6 hereof, shall thereafter have the right
to receive, upon the exercise thereof at a price equal to the
then current Purchase Price, in accordance with the terms of this
Agreement and in lieu of Preferred Stock, such number of freely
tradeable shares of Common Stock of the Principal Party, not
subject to any liens, encumbrances, rights of first refusal or
other adverse claims, as shall equal the result obtained by (A)
multiplying the then current Purchase Price by the number of one
one-thousandths (1/1000ths) of a share of Preferred Stock for
which a Right is then exercisable (without taking into account
any adjustment previously made pursuant to Section 11.1.2) and
dividing that product by (B) 50% of the then current per share
market price of the Common Stock of such Principal Party
(determined pursuant to Section 11.4 hereof) on the date of
consummation of such Section 13 Event; (ii) such Principal Party
shall thereafter be liable for, and shall assume, by virtue of
such 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 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13
Event; and (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient
number of its shares of 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 the shares of
Common Stock thereafter deliverable upon the exercise of the
Rights.
13.2. "Principal Party" shall mean:
13.2.1. in the case of any transaction described in clause (x)
or (y) of the first sentence of Section 13.1, 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,
and if no securities are so issued, the Person that is the other
party to such merger or consolidation (including, if applicable,
the Corporation if it is the surviving corporation); and
13.2.2. in the case of any transaction described in clause (z)
of the first sentence of Section 13.1, the Person that is the
party receiving the greatest portion of the assets or earning
power transferred pursuant to such transaction or transactions;
provided, however, that in any of the foregoing cases, (1) 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 shares
of Common Stock of which are and have been so registered,
"Principal Party" shall refer to such other Person; (2) in case
such Person is a Subsidiary, directly or indirectly, of more than
one Person, the shares of Common Stock of two or more of which
are and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common Stock
having the greatest aggregate market value; and (3) in case such
Person is owned, directly or indirectly, by a joint venture
formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in (1) and
(2) above shall apply to each of the chains of ownership having
an interest in such joint venture as if such party were a
"Subsidiary" of both or all of such joint venturers and the
Principal Parties in each such chain shall bear the obligations
set forth in this Section 13 in the same ratio as their direct or
indirect interests in such Person bear to the total of such
interests.
13.3. The Corporation shall not consummate any such
consolidation, merger, sale or transfer unless the Principal
Party shall have a sufficient number of its authorized shares of
Common Stock that 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 Sections 13.1 and 13.2 and further providing that, as soon as
practicable after the date of any consolidation, merger, sale or
transfer mentioned in Section 13.1, the Principal Party at its
own expense shall:
13.3.1. prepare and file a registration statement under the Act
with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its
best efforts to cause such registration statement to (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 Final Expiration Date;
13.3.2. use its best efforts to qualify or register the Rights
and the securities purchasable upon exercise of the Rights under
the blue sky laws of such jurisdictions as may be necessary or
appropriate; and
13.3.3. deliver to holders of the Rights historical financial
statements for the Principal Party that comply in all respects
with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly
apply to successive mergers or consolidations or sales or other
transfers. The rights under this Section 13 shall be in addition
to the rights to exercise Rights and adjustments under Section
11.1.2 and shall survive any exercise thereof.
13.4. Notwithstanding anything in this Agreement to the
contrary, the foregoing provisions of this Section 13 shall not
be applicable to a transaction described in clauses (x) and (y)
of Section 13.1 if: (i) such transaction is consummated with a
Person or Persons who acquired shares of Common Stock pursuant to
a Permitted Offer (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 Permitted Offer; and
(iii) the form of consideration offered in such transaction is
the same as the form of consideration paid pursuant to such
Permitted Offer. Upon consummation of any such transaction
contemplated by this Section 13.4, all Rights hereunder shall
expire.
14. Fractional Rights and Fractional Shares.
14.1. The Corporation shall not be required to issue
fractions of Rights or to distribute Right Certificates that
evidence fractional Rights. In lieu of such fractional Rights,
there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would
otherwise be issuable an amount in cash equal to the same
fraction of the current market value of a whole Right. For the
purposes of this Section 14.1, the current market value of a
whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The
closing price for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not
listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted
to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported 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.
14.2. The Corporation shall not be required to issue
fractions of shares of Preferred Stock (other than fractions that
are one one-thousandth (1/1000th) or integral multiples of one
one-thousandth (1/1000th) of a share of Preferred Stock) upon
exercise of the Rights or to distribute certificates that
evidence fractional shares of Preferred Stock (other than
fractions that are one one-thousandth (1/1000th) or integral
multiples of one one-thousandth (1/1000th) of a share of
Preferred Stock). Fractions of shares of Preferred Stock in
integral multiples of one one-thousandth (1/1000th) of a share of
Preferred Stock may, at the election of the Corporation, be
evidenced by depositary receipts, pursuant to an appropriate
agreement between the Corporation and a depositary selected by
it; provided that such agreement shall provide that the holders
of such depositary receipts shall have the rights, privileges and
preferences to which they are entitled as beneficial owners of
the Preferred Stock represented by such depositary receipts. In
lieu of fractional shares of Preferred Stock that are not one one-
thousandth (1/1000th) or integral multiples of one one-thousandth
(1/1000th) of a share of Preferred Stock, the Corporation shall
pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash
equal to the same fraction of the current market value of one
share of Preferred Stock. For the purposes of this Section 14.2,
the current market value of a share of Preferred Stock shall be
the closing price of a share of Preferred Stock (as determined
pursuant to Section 11.4.2 hereof) for the Trading Day
immediately prior to the date of such exercise.
14.3. Following the occurrence of one of the transactions or
events specified in Section 11 giving rise to the right to
receive shares of Common Stock, Capital Stock Equivalents (other
than Preferred Stock) or other securities upon the exercise of a
Right, the Corporation shall not be required to issue fractions
of shares or units of such shares of Common Stock, Capital Stock
Equivalents or other securities upon exercise of the Rights or to
distribute certificates that evidence fractions of such shares of
Common Stock, Capital Stock Equivalents or other securities. In
lieu of fractional shares or units of such shares of Common
Stock, Capital Stock Equivalents or other securities, the
Corporation may pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the
current market value of a share or unit of such shares of Common
Stock, Capital Stock Equivalents or other securities. For
purposes of this Section 14.3, the current market value shall be
determined in the manner set forth in Section 11.4 hereof for the
Trading Day immediately prior to the date of such exercise and,
if such Capital Stock Equivalent is not traded, each such Capital
Stock Equivalent shall have the value of one one-thousandth
(1/1000th) of a share of Preferred Stock.
14.4. The holder of a Right by the acceptance of the Right
expressly waives such holder's right to receive any fractional
Rights or any fractional share upon exercise of a Right (except
as provided above). The Rights Agent shall not be deemed to have
knowledge of, and shall have no duty in respect of, the issuance
of fractional Rights or fractional shares unless and until it
shall have received instructions from the Corporation concerning
the issuance of such fractional Rights or fractional shares.
15. Rights of Action.
All rights of action in respect of this Agreement, excepting
the rights of action given to the Rights Agent under Section 18
hereof, are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the
registered holders of shares of the Common Stock); and any
registered holder of any Right Certificate (or, prior to the
Distribution Date, of shares of the Common Stock), without the
consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of shares of the
Common Stock), may, in such registered holder's own behalf and
for such registered holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the
Corporation to enforce, or otherwise act in respect of, such
registered holder's right to exercise the Rights evidenced by
such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it
is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement
and will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this
Agreement. Nothing in this Section 15 is intended to modify or
limit the authority of the Board of Directors under Section 25.3.
16. Agreement of Right 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:
16.1. prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the
associated shares of Common Stock;
16.2. after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of
transfer and with the appropriate form fully executed;
16.3. subject to Section 6 and Section 7.7 hereof, the
Corporation and the Rights Agent may deem and treat the Person in
whose name the Right 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
Right Certificate or the associated Common Stock certificate made
by anyone other than the Corporation or the Rights Agent) for all
purposes whatsoever, and neither the Corporation nor the Rights
Agent, subject to the last sentence of Section 7.6 hereof, shall
be required to be affected by any notice to the contrary; and
16.4. 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 a beneficial interest
in 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,
judgment or ruling (whether interlocutory or final) issued by a
court of competent jurisdiction or by a governmental, regulatory
or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, that the
Corporation must use its best efforts to have any such order,
decree, judgment or ruling lifted or otherwise overturned as soon
as practicable.
17. Right Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Right Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose
the holder of shares of the Preferred Stock or any other
securities of the Corporation that may at any time be issuable on
the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the 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 24 hereof), or to receive
dividends or other distributions or to exercise any preemptive or
subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
18. Concerning the Rights Agent.
18.1. The Corporation agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements
incurred in the administration, preparation, delivery, amendment
and execution of this Agreement and the exercise and performance
of its duties hereunder. The Corporation also agrees to
indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, damage, judgment, fine, penalty, claim,
demand, settlement, cost or expense incurred without gross
negligence, bad faith or willful misconduct on the part of the
Rights Agent, for any action taken, suffered or omitted by the
Rights Agent in connection with the acceptance and administration
of this Agreement, including without limitation the costs and
expenses of defending against any claim of liability arising
therefrom, directly or indirectly. The costs and expenses of
enforcing this right of indemnification shall also be paid by the
Corporation. The indemnity provided for herein shall survive the
expiration of the Rights and the termination of this Agreement.
18.2. The Rights Agent may conclusively rely upon and shall
be authorized and protected and shall incur no liability for, or
in respect of, any action taken, suffered or omitted by it in
connection with the acceptance and administration of this
Agreement in reliance upon any Right Certificate or certificate
for shares of 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, or otherwise upon the advice of counsel as set forth
in Section 20 hereof. The Rights Agent shall not be deemed to
have knowledge of, and shall have no duty in respect of, any fact
contained in such Right Certificate or certificate for shares of
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 unless and
until it shall have received the same.
18.3. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Rights Agent be liable for
special, indirect, punitive, incidental or consequential loss or
damage of any kind whatsoever (including but not limited to lost
profits), even if the Rights Agent has been advised of the
likelihood of such loss or damage and regardless of the form of
the action.
19. Merger or Consolidation or Change of Name of Rights Agent.
19.1. Any Person into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated,
or any Person resulting from any merger or consolidation to which
the Rights Agent or any successor Rights Agent shall be a party,
or any Person succeeding to the stock transfer or all or
substantially all of the shareholder services 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 that such Person would be
eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof.
19.2. In case at any time the name of the Rights Agent shall
be changed and at such time any of the Right Certificates shall
have been countersigned but not delivered, the Rights Agent may
adopt the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in
its prior name or in its changed name; and in all such cases such
Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
20. Duties of Rights Agent.
20.1. The Rights Agent undertakes those duties and
obligations, and only the duties and obligations, expressly
imposed by this Agreement (and no implied duties or obligations)
upon the following terms and conditions, and no implied duties or
obligations shall be read into this Agreement against the Rights
Agent, by all of which the Corporation and the holders of Right
Certificates, by their acceptance thereof, shall be bound.
20.2. Before the Rights Agent acts or refrains from acting,
the Rights Agent may consult with legal counsel (who may be legal
counsel for the Corporation), and the advice or opinion of such
counsel shall be full and complete authorization and protection
to the Rights Agent, and the Rights Agent shall incur no
liability for or in respect of any action taken, suffered or
omitted by it in good faith and in accordance with such advice or
opinion.
20.3. 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 an Acquiring Person and the determination of the
current market price of any security) be proved or established by
the Corporation prior to taking, suffering or omitting any action
hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by
any one of the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Treasurer or the
Secretary of the Corporation and delivered to the Rights Agent;
and such certificate shall be full authorization and protection
to the Rights Agent and the Rights Agent shall incur no liability
for or in respect of any action taken, suffered or omitted in
good faith by it under the provisions of this Agreement in
reliance upon such certificate.
20.4. The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
20.5. The Rights Agent shall not be liable for, or by reason
of, any of the statements of fact or recitals contained in this
Agreement or in the Right Certificates (except its
countersignature on such Right Certificates) or be required to
verify the same, but all such statements and recitals are and
shall be deemed to have been made by the Corporation only.
20.6. The Rights Agent shall not be under any liability or
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 Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the
Corporation of any covenant or condition contained in this
Agreement or in any Rights Certificate; nor shall it be
responsible for any change in the exercisability of the Rights
(including the Rights becoming null and void pursuant to Section
7.6 hereof) or any adjustment required under the provisions of
Section 11, Section 13 or Section 26 hereof or responsible for
the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after receipt of the certificate
described in Section 12 hereof); 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 Preferred Stock
or shares of Common Stock to be issued pursuant to this Agreement
or any Right Certificate or as to whether any Preferred Stock or
shares of Common Stock will, when issued, be validly authorized
and issued, fully paid and non-assessable.
20.7. 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.
20.8. The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President or the
Secretary of the Corporation, and to apply to such officers for
advice or instructions in connection with its duties, and such
instructions shall be full authorization and protection of the
Rights Agent and the Rights Agent shall incur no liability for or
in respect of any action taken, suffered or omitted by it in good
faith or lack of action in accordance with instructions of any
such officer or for any delay in acting while waiting for those
instructions. The Rights Agent shall incur no liability for or
in respect of its reliance upon the most recent instructions
received by any such officer. Any application by the Rights
Agent for written instructions from the Corporation may, at the
option of the Rights Agent, set forth in writing any action
proposed to be taken, suffered or omitted by the Rights Agent
under this Agreement and the date on or after which such action
shall be taken or suffered or such omission shall be effective.
The Rights Agent shall not be liable for any action taken or
suffered by, or omission of, the Rights Agent in accordance with
a proposal included in any such application on or after the date
specified in such application (which date shall not be less than
five (5) Business Days after the date any officer of the
Corporation actually receives such application, unless any such
officer shall have consented in writing to an earlier date)
unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received
written instruction in response to such application specifying
the action to be taken, suffered or omitted.
20.9. The Rights Agent and any stockholder, affiliate,
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 Person or
legal entity.
20.10. 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, negligence or misconduct of any such attorneys
or agents or for any loss to the Corporation or any other Person
resulting from any such act, default, negligence or misconduct,
absent gross negligence, bad faith or willful misconduct in the
selection and continued employment thereof.
20.11. 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 it believes that
repayment of such funds or adequate indemnification against such
risk or liability is not reasonably assured to it.
20.12. 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 not been completed, the Rights
Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the
Corporation.
20.13. The Rights Agent shall not be required to take notice
or be deemed to have notice of any fact, event or determination
(including, without limitation, any dates or events defined in
this Agreement or the designee of a Person as an Acquiring
Person, Affiliate or Associate), under this Agreement unless and
until the Rights Agent shall be specifically notified in writing
by the Corporation of such fact, event or determination.
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 or Preferred Stock by
registered or certified mail, and, at the expense of the
Corporation, to the holders of the Right Certificates by first-
class mail. The Corporation may remove the Rights Agent or any
successor Rights Agent upon sixty (60) 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 or
Preferred Stock by registered or certified mail, and to holders
of the Right Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become
incapable of acting, the Corporation shall appoint a successor to
the Rights Agent. If the Corporation shall fail to make such
appointment within a period of sixty (60) days after giving
notice of such removal or after it has been notified in writing
of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Corporation), then the
registered holder of any Right Certificate may apply to any court
of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the
Corporation or by such a court, shall be (i) a Person organized
and doing business under the laws of the United States or of any
of the States of New York, New Jersey or California (or of any
other state of the United States so long as such Person is
authorized to do business in any of the States of New York, New
Jersey or California), in good standing, having an office in any
of such States, which is subject to supervision or examination by
federal or state authority and which (or the parent corporation
of which) has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000 or (ii) an
affiliate of such Person. 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. In case at the time such successor Rights Agent
shall succeed to the agency created by this Agreement, any of the
Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates
either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement. 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 or Preferred Stock, and mail a
notice thereof in writing to the registered holders of the Right
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 Agent, as the
case may be.
22. Issuance of New Right Certificates.
22.1. Notwithstanding any of the provisions of this Agreement
or of the Rights to the contrary, the Corporation may, at its
option, issue new Right Certificates evidencing Rights in such
form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind
or class of shares or other securities or property purchasable
under the Right Certificates made in accordance with the
provisions of this Agreement.
22.2. In connection with the issuance or sale of Common Stock
following the Distribution Date and prior to the earlier of the
Redemption Date and the Final Expiration Date, 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, notes or debentures 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 Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided,
however, that (i) the Corporation shall not be obligated to issue
any such Right Certificates 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 Right Certificate
would be issued, and (ii) no Right 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.
23.1. Redemption.
23.1.1. The Board of Directors of the Corporation may, at its
option, redeem all but not less than all of the then outstanding
Rights at a redemption price of $0.001 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"), at any time prior to the earlier of the
occurrence of a Section 11.1.2 Event or the Final Expiration
Date. The Corporation may, at its option, pay the Redemption
Price either in shares of Common Stock (based on the current per
share market price of the Common Stock at the time of redemption)
or cash; provided that if the Corporation elects to pay the
Redemption Price in shares of Common Stock, the Corporation shall
not be required to issue any fractional shares of Common Stock
and the number of shares of Common Stock issuable to each holder
of Rights shall be rounded down to the next whole share.
23.1.2. In addition, the Board of Directors of the Corporation
may, at its option, at any time following the occurrence of a
Section 11.1.2 Event and the expiration of any period during
which the holder of Rights may exercise the Rights under Section
11.1.2 but prior to any Section 13 Event redeem all but not less
than all of the then outstanding Rights at the Redemption Price
(x) in connection with any merger, consolidation or sale or other
transfer (in one transaction or in a series of related
transactions) of assets or earning power aggregating 50% or more
of the earning power of the Corporation and its Subsidiaries
(taken as a whole) in which all holders of shares of Common Stock
are treated alike and not involving (other than as a holder of
shares of Common Stock being treated like all other such holders)
an Interested Stockholder or (y) (i) if and for so long as the
Acquiring Person is not thereafter the Beneficial Owner of 15% or
more of the Common Stock, and (ii) at the time of redemption no
other Persons are Acquiring Persons.
23.2. In the case of a redemption permitted under Section
23.1.1, immediately upon the date for redemption set forth in (or
determined in the manner specified in) a resolution 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. In the case of a
redemption permitted only under Section 23.1.2, the right to
exercise the Rights will terminate and represent only the right
to receive the Redemption Price upon the later of ten (10)
Business Days following the giving of such notice or the
expiration of any period during which the Rights may be exercised
under Section 11.1.2. The Corporation shall promptly give public
notice of any such redemption with prompt notice thereof to the
Rights Agent; provided, however, that the failure to give, or any
defect in, any such notice shall not affect the validity of such
redemption. Within ten (10) days after such date for redemption
set forth in a resolution of the Board of Directors of the
Corporation ordering the redemption of the Rights, the
Corporation shall mail a notice of redemption to the Rights Agent
and all the holders of the then outstanding Rights at (in the
case of notice to holders) their addresses as they appear upon
the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent
for the Common 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. Neither the Corporation nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights
at any time in any manner other than as specifically set forth in
this Section 23 and other than in connection with the purchase of
shares of Common Stock prior to the Distribution Date.
23.3. The Corporation may, at its option, discharge all of
its obligations with respect to the Rights by (i) issuing a press
release announcing the manner of redemption of the Rights in
accordance with this Agreement and (ii) mailing payment of the
Redemption Price to the registered holders of the Rights at their
addresses as they appear on the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books
of the Transfer Agent of the Common Stock, and upon such action,
all outstanding Rights and Right Certificates shall be null and
void without any further action by the Corporation.
24. Notice of Certain Events.
24.1. In case the Corporation shall propose (i) to pay any
dividend payable in stock of any class to the holders of its
Preferred Stock or to make any other distribution to the holders
of its Preferred Stock (other than a regular quarterly cash
dividend), (ii) to offer to the holders of its Preferred Stock
rights or warrants to subscribe for or to purchase any additional
Preferred Stock or shares of stock of any class or any other
securities, rights or options, (iii) to effect any
reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding
Preferred Stock), (iv) to effect any consolidation or merger into
or with any other Person (other than a Subsidiary of the
Corporation in a transaction which does not violate Section 11.14
hereof), or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other
transfer) in one or more transactions, of 50% or more 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 does not violate Section 11.14
hereof), or (v) to effect the liquidation, dissolution or winding
up of the Corporation, then, in each such case, the Corporation
shall give the Rights Agent and to each holder of a Right
Certificate, in accordance with Section 25 hereof, a notice of
such proposed action which shall specify the record date for the
purposes of such stock dividend or distribution of rights or
warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution
or winding up is to take place and the date of participation
therein by the holders of the 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 twenty
(20) days prior to the record date for determining holders of the
Preferred Stock for purposes of such action, and in the case of
any such other action, at least twenty (20) days prior to the
date of the taking of such proposed action or the date of
participation therein by the holders of the Preferred Stock,
whichever shall be the earlier.
24.2. In case of a Section 11.1.2 Event, then (i) the
Corporation shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 25.1.3
hereof, a notice of the occurrence of such event, which notice
shall describe such event and the consequences of such event to
holders of Rights under Section 11.1.2 hereof, and (ii) all
references in the preceding Section 24.1 to Preferred Stock shall
be deemed thereafter to refer also to shares of Common Stock
and/or, if appropriate, other securities of the Corporation.
25. Miscellaneous.
25.1. Notices.
25.1.1. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Corporation shall be sufficiently given
or made if sent by registered or certified mail and shall be
deemed given upon receipt, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Datron Systems Incorporated
3030 Enterprise Court
Vista, California 92083
Attention: Corporate Secretary
25.1.2. Subject to the provisions of Section 21 hereof, any
notice or demand authorized by this Agreement to be given or made
by the Corporation or by the holder of any Right Certificate to
or on the Rights Agent shall be sufficiently given or made if
sent registered or certified mail and shall be deemed given upon
receipt, addressed (until another address is filed in writing
with the Corporation) as follows:
ChaseMellon Shareholder Services, L.L.C.
400 South Hope Street, 4th Floor
Los Angeles, California 90071
Attention: Relationship Manager
25.1.3. Notices or demands authorized by this Agreement to be
given or made by the Corporation or the Rights Agent to the
holder of any Right 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 Corporation.
25.2. Supplements and Amendments. The Corporation may from
time to time supplement or amend any provision of this Agreement
without the approval of any holders of Rights in order to cure
any ambiguity, to correct, supplement or amend any provision
herein, or to make any other provision with respect to the Rights
which the Corporation may deem necessary or desirable, any such
supplement or amendment to be evidenced by a writing signed by
the Corporation and the Rights Agent; provided, however, that
from and after any Shares Acquisition Date this Agreement shall
not be amended in any manner which will adversely affect the
interests of the holders of Rights. 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 25.2, and, if requested by the
Rights Agent, an opinion of counsel, the Rights Agent shall
execute such supplement or amendment. Prior to the Distribution
Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of shares of Common
Stock. This Agreement shall not be amended, without the prior
written consent of the Rights Agent, in any manner that changes
or increases the duties, liabilities or obligations of the Rights
Agent.
25.3. Determination and Actions by the Board of Directors,
etc. The Board of Directors of the Corporation shall have the
exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board,
or 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,
without limitation, a determination to redeem or not redeem the
Rights or to amend the Agreement and whether any proposed
amendment adversely affects the interests of the holders of Right
Certificates). For all purposes of this Agreement, any
calculation of the number of shares of Common Stock or other
securities outstanding at any particular time, including for
purposes of determining the particular percentage of such
outstanding shares of Common Stock or any other securities 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 as in effect
on the date of this Agreement. All such actions, calculations,
interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing)
which are done or made by the Board in good faith, shall (x) be
final, conclusive and binding on the Corporation, the Rights
Agent, the holders of the Right Certificates and all other
Persons, and (y) not subject the Board to any liability to the
holders of the Right Certificates. The Rights Agent shall be
fully protected and shall incur no liability for or in respect of
its reliance on the good faith of the Corporation's Board of
Directors with respect to actions done or made in connection with
such calculation. The Rights Agent may also assume the Board of
Directors acted in good faith. Nothing in Section 15 hereof is
intended to modify or limit this Section 25.3.
25.4. 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.
25.5. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person or corporation other
than the Corporation, the Rights Agent and the registered holders
of the Right Certificates (and, prior to the Distribution Date,
the shares of Common Stock) any legal or equitable right, remedy
or claim under this Agreement. This Agreement shall be for the
sole and exclusive benefit of the Corporation, the Rights Agent
and the registered holders of the Right Certificates (and, prior
to the Distribution Date, the shares of Common Stock).
25.6. 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.
25.7. Governing Law. This Agreement, each Right and each
Right Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with
the laws of such State applicable to contracts to be made and
performed entirely within such State; except that all provisions
regarding the rights, duties and obligations of the Rights Agent
shall be governed and construed in accordance with the laws of
the State of New York applicable to contracts made and to be
performed entirely within such state.
25.8. 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.
25.9. Descriptive Headings. Descriptive headings of the
several sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction
of any of the provisions hereof.
26. Exchange.
26.1. Notwithstanding any other provision hereof, the Board
of Directors of the Corporation may, at its option, at any time
after any Person becomes an Acquiring Person, exchange all or
part of the then outstanding and exercisable Rights (which shall
not include Rights that have become null and void pursuant to the
provisions of Section 7.6 hereof) for shares of Common Stock of
the Corporation at an exchange ratio determined by dividing the
then-applicable exercise price of the Rights determined under
Section 7.2 by the "current per share market price" as defined in
Section 11.4.1 (such exchange ratio being hereinafter referred to
as the "Exchange Ratio"). Notwithstanding the foregoing, the
Corporation's Board of Directors shall not be empowered to effect
such exchange at any time after any Person (other than the
Corporation, any Subsidiary of the Corporation, any employee
benefit plan of the Corporation or any such Subsidiary, or any
Person organized, appointed or established by the Corporation for
or pursuant to the terms of any such plan or any trustee,
administrator or fiduciary of such a plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial
Owner of more than 50% of the Common Stock then outstanding.
26.2. Immediately upon the action of the Board of Directors
of the Corporation ordering the exchange of any Rights pursuant
to Section 26.1 and without any further action and without any
notice, the right to exercise such rights shall terminate and the
only right thereafter of the holder of such Rights (other than a
holder of Rights that have become null and void pursuant to the
provisions of Section 7.6 hereof) shall be to receive that number
of shares of Common Stock equal to the number of such Rights held
by such holder multiplied by the Exchange Ratio. The Corporation
shall promptly give public notice, and shall promptly give notice
to the Rights Agent, 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 promptly
shall mail a notice of any such exchange to all of the holders of
such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange
shall 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 which will be exchanged. Any
partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to
the provisions of Section 7.6) held by each holder of Rights.
26.3. In the event that there shall not be sufficient shares
of Common Stock issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in
accordance with this Section 26, the Corporation shall take all
such action as may be necessary to issue additional shares of
Common Stock, Preferred Stock and/or Capital Stock Equivalents
with an aggregate current market value (as determined by the
Board of Directors of the Corporation) equal to the aggregate
current market value of a number of shares of Common Stock equal
to the Exchange Ratio.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the date
and year first above written.
DATRON SYSTEMS INCORPORATED
Attest:
By: WILLIAM L. STEPHAN
Name: WILLIAM L. STEPHAN
Title: Vice President and Chief
Financial Officer
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,
as Rights Agent
By: J. CANNATA
Name: JOSEPH CANNATA
Title: Assistant Vice President
Exhibit A
Certificate of Designation, Preferences and
Rights of Series RP Preferred Stock
of
Datron Systems Incorporated
(Pursuant to 151 of the Delaware General Corporation Law)
I, Penny M. Felicioni, Assistant Secretary of Datron Systems
Incorporated (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103
thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Restated Certificate of
Incorporation of the Corporation, the said Board of Directors on
September 5, 2000, adopted the following resolutions creating a
series of 10,000 shares of Preferred Stock designated as Series
RP Preferred Stock.
RESOLVED, that pursuant to the authority granted to and
vested in the Board of Directors of the Corporation in accordance
with the provisions of the Restated Certificate of Incorporation
of the Corporation, the Board of Directors hereby creates a
series of Series RP Preferred Stock, with a par value of $0.01
per share, of the Corporation and hereby states the designation
and number of shares, and fixes the relative rights, preferences
and limitations thereof as follows (the following provisions
being intended to operate in addition to any other provisions of
said Restated Certificate of Incorporation applicable to any
series of Preferred Stock):
Series RP Preferred Stock
Section 1. Designation, Par Value and Amount. The shares of
such series shall be designated as "Series RP Preferred Stock"
(hereinafter referred to as "Series RP Preferred Stock"), the
shares of such series shall be with par value of $0.01 per share,
and the number of shares constituting such series shall be
10,000; provided, however, that, if more than a total of 10,000
shares of Series RP Preferred Stock shall be issuable upon the
exercise of Rights (the "Rights") issued pursuant to the Rights
Agreement, dated as of September 5, 2000, between the Corporation
and ChaseMellon Shareholder Services, L.L.C., as Rights Agent (as
amended from time to time, the "Rights Agreement"), the Board of
Directors of the Corporation shall direct by resolution or
resolutions that a certificate be properly executed, acknowledged
and filed providing for the total number of shares of Series RP
Preferred Stock authorized to be issued to be increased (to the
extent that the Restated Certificate of Incorporation then
permits) to the largest number of whole shares (rounded up to the
nearest whole number) issuable upon exercise of the Rights.
Section 2. Dividends and Distributions.
2.1 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 RP Preferred Stock with respect
to dividends, the holders of shares of Series RP Preferred Stock
shall be entitled to receive, when, as and if declared by the
Board of Directors out of assets legally available for the
purpose, quarterly dividends payable in cash on the first
business day of March, June, September and September in each year
(each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a
share of Series RP Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $1.00
or (b) subject to the provision for adjustment set forth in
Section 6.1, 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, par value $0.01 per share, of the Corporation (the "Common
Stock") or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on 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 RP Preferred Stock.
2.2 The Corporation shall declare a dividend or distribution on
the Series RP Preferred Stock as provided in Section 2.1 above
immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution
shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00
per share on the Series RP Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
2.3 Dividends shall begin to accrue and be cumulative on
outstanding shares of Series RP Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue
of such shares of Series RP 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 RP 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
RP 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 RP Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date
shall be not more than 30 days prior to the date fixed for the
payment thereof.
Section 3. Voting Rights. The holders of shares of Series RP
Preferred Stock shall have the following voting rights:
3.1 Except as provided in Section 3.3 and subject to the
provision for adjustment hereinafter set forth, each share of
Series RP Preferred Stock shall entitle the holder thereof to
1,000 votes on all matters submitted to a vote of the
stockholders of the Corporation.
3.2 Except as otherwise provided herein or by law, the holders
of shares of Series RP Preferred Stock and the holders of shares
of Common Stock shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
3.3 The following additional provisions shall apply with respect
to the voting of shares of Series RP Preferred Stock:
3.3.1 If, on the date used to determine stockholders of
record for any meeting of stockholders for the election of
directors, a default in preference dividends (as defined in
Section 3.3.5 below) on the Series RP Preferred Stock shall
exist, the holders of the Series RP Preferred Stock shall have
the right, voting as a class as described in Section 3.3.2 below,
to elect two directors (in addition to the directors elected by
holders of Common Stock of the Corporation). Such right may be
exercised (a) at any meeting of stockholders for the election of
directors or (b) at a meeting of the holders of shares of Voting
Preferred Stock (as hereinafter defined), called for the purpose
in accordance with the Bylaws of the Corporation, until all such
cumulative dividends (referred to above) shall have been paid in
full or until non-cumulative dividends have been paid regularly
for at least one year.
3.3.2 The right of the holders of Series RP Preferred Stock
to elect two directors, as described above, shall be exercised as
a class concurrently with the rights of holders of any other
series of Preferred Stock upon which voting rights to elect such
directors have been conferred and are then exercisable. The
Series RP Preferred Stock and any additional series of Preferred
Stock that the Corporation may issue and that may provide for the
right to vote with the foregoing series of Preferred Stock are
collectively referred to herein as "Voting Preferred Stock."
3.3.3 Each director elected by the holders of shares of
Voting Preferred Stock shall be referred to herein as a
"Preferred Director." A Preferred Director shall continue to
serve as such for a term of one year, except that upon any
termination of the right of all holders of Voting Preferred Stock
to vote as a class for Preferred Directors, the term of office of
Preferred Directors then serving shall terminate. Any Preferred
Director may be removed by, and shall not be removed except by,
the vote of the holders of record of a majority of the
outstanding shares of Voting Preferred Stock then entitled to
vote for the election of directors, present (in person or by
proxy) and voting together as a single class (a) at a meeting of
the stockholders, or (b) at a meeting of the holders of shares of
such Voting Preferred Stock, called for the purpose in accordance
with the Bylaws of the Corporation.
3.3.4 So long as a default in any preference dividends of the
Series RP Preferred Stock shall exist or the holders of any other
series of Voting Preferred Stock shall be entitled to elect
Preferred Directors, (a) any vacancy in the office of a Preferred
Director may be filled (except as provided in the following
clause (b)) by an instrument in writing signed by the remaining
Preferred Director and filed with the Corporation and (b) in the
case of the removal of any Preferred Director, the vacancy may be
filled by the vote or written consent of the holders of a
majority of the outstanding shares of Voting Preferred Stock then
entitled to vote for the election of directors, present (in
person or by proxy) and voting together as a single class, at
such time as the removal shall be effected. Each director
appointed as aforesaid by the remaining Preferred Director shall
be deemed, for all purposes hereof, to be a Preferred Director.
Whenever (x) no default in preference dividends on the Series RP
Preferred Stock shall exist and (y) the holders of other series
of Voting Preferred Stock shall no longer be entitled to elect
such Preferred Directors, then the number of directors
constituting the Board of Directors of the Corporation shall be
reduced by two.
3.3.5 For purposes hereof, a "default in preference
dividends" on the Series RP Preferred Stock shall be deemed to
have occurred whenever the amount of cumulative and unpaid
dividends on the Series RP Preferred Stock shall be equivalent to
six full quarterly dividends or more (whether or not
consecutive), and, having so occurred, such default shall be
deemed to exist thereafter until, but only until, all cumulative
dividends on all shares of the Series RP Preferred Stock then
outstanding shall have been paid through the last Quarterly
Dividend Payment Date or until, but only until, non-cumulative
dividends have been paid regularly for at least one year.
3.4 Except as set forth herein (or as otherwise required by
applicable law), holders of Series RP Preferred Stock shall have
no general or special voting rights and their consent shall not
be required for taking any corporate action.
Section 4. Certain Restrictions.
4.1 Whenever quarterly dividends or other dividends or
distributions payable on the Series RP 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 RP Preferred Stock outstanding
shall have been paid in full, the Corporation shall not:
4.1.1 declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to
the Series RP Preferred Stock;
4.1.2 declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series RP Preferred Stock, except dividends paid ratably
on the Series RP 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;
4.1.3 redeem or purchase or otherwise acquire for
consideration (except as provided in Section 4.1.4 below) shares
of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series RP
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 RP Preferred Stock;
4.1.4 redeem or purchase or otherwise acquire for
consideration any shares of Series RP Preferred Stock, or any
shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series RP
Preferred Stock, except in accordance with a purchase offer made
in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective
series or classes.
4.2 The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration
any shares of stock of the Corporation unless the Corporation
could, under Section 4.1, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series RP
Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and
cancelled 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 part of
a new series of Preferred Stock subject to the conditions and
restrictions on issuance set forth herein, in the Certificate of
Incorporation, in any other Certificate of Amendment creating a
series of Preferred Stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up.
6.1 Subject to the prior and superior rights of holders of any
shares of any series of Preferred Stock ranking prior and
superior to the shares of Series RP Preferred Stock with respect
to rights upon liquidation, dissolution or winding up (voluntary
or otherwise), 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 RP
Preferred Stock unless, prior thereto, the holders of shares of
Series RP Preferred Stock shall have received per share an amount
equal to the greater of 1,000 times $75.00 or 1,000 times the
payment made per share of Common Stock, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment (the "Series RP
Liquidation Preference"). Following the payment of the full
amount of the Series RP Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series RP
Preferred Stock unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the
"Capital Adjustment") equal to the quotient obtained by dividing
(i) the Series RP Liquidation Preference by (ii) 1,000 (as
appropriately adjusted as set forth in Section 6.3 to reflect
such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number
in clause (ii) being hereafter referred to as the "Adjustment
Number"). Following the payment of the full amount of the Series
RP Liquidation Preference and the Capital Adjustment in respect
of all outstanding shares of Series RP Preferred Stock and Common
Stock, respectively, holders of Series RP Preferred Stock and
holders of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in
the ratio of the Adjustment Number to 1 with respect to such
Preferred Stock and Common Stock, on a per share basis,
respectively.
6.2 In the event, however, that there are not sufficient assets
available to permit payment in full of the Series RP Liquidation
Preference and the liquidation preferences of all other series of
preferred stock, if any, which rank on a parity with the Series
RP Preferred Stock, then such remaining assets shall be
distributed ratably to the holders of Series RP Preferred Stock
and the holders of such parity shares in proportion to their
respective liquidation preferences. In the event, however, that
there are not sufficient assets available to permit payment in
full of the Capital Adjustment, then such remaining assets shall
be distributed ratably to the holders of Common Stock.
6.3 In the event the Corporation shall (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.
Section 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 RP Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share equal to
the Adjustment Number (as appropriately adjusted as set forth in
Section 6.3 to reflect such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock)
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.
Section 8. No Redemption. The shares of Series RP Preferred
Stock shall not be redeemable.
Section 9. Ranking. The Series RP Preferred Stock shall rank
junior to all other series of the Corporation's Preferred Stock
as to the payment of dividends and the distribution of assets,
unless the terms of any such other series shall provide
otherwise.
Section 10. Amendment. The Restated Certificate of
Incorporation of the Corporation shall not be further amended in
any manner that would materially alter or change the powers,
preferences or special rights of the Series RP 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
RP Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. Series RP 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 have the benefit of all other rights of holders of Series RP
Preferred Stock.
RESOLVED, that the proper officers of the Corporation be,
and each of them hereby is, authorized to execute a Certificate
of Designation with respect to the Series RP Preferred Stock
pursuant to Section 151 of the General Corporation Law of the
State of Delaware and to take all appropriate action to cause
such Certificate to become effective, including, but not limited
to, the filing and recording of such Certificate with and/or by
the Secretary of State of the State of Delaware.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, I have executed and subscribed to this
Certificate and do affirm the foregoing as true under penalty of
perjury this 5th day of September, 2000.
By:
Name:
Title:
Exhibit B
Form of Right Certificate
Certificate No. RP- _____
Rights
NOT EXERCISABLE AFTER SEPTEMBER 5, 2010 OR
EARLIER IF REDEEMED BY THE CORPORATION. THE
RIGHTS ARE SUBJECT TO REDEMPTION AT $0.001
PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT.
Right Certificate
DATRON SYSTEMS INCORPORATED
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
September 5, 2000 (the "Rights Agreement"), between Datron
Systems Incorporated, a Delaware corporation (the "Corporation"),
and ChaseMellon Shareholder Services, L.L.C., a New Jersey
limited liability company, (the "Rights Agent") to purchase from
the Corporation at any time after the Distribution Date (as such
term is defined in the Rights Agreement) and prior to 5:00 P.M.,
California time, on September 5, 2010, unless the Rights
evidenced hereby shall have been previously redeemed by the
Corporation, at the principal office or offices of the Rights
Agent designated for such purpose, or at the office of its
successor as Rights Agent, one one-thousandth (1/1000th) of a
fully paid non-assessable share of Series RP Preferred Stock (the
"Preferred Stock") of the Corporation, at a purchase price of
$75.00 per one one-thousandth (1/1000th) of a share of Preferred
Stock (the "Purchase Price"), upon presentation and surrender of
this Right Certificate with the Form of Election to Purchase duly
executed. The number of Rights evidenced by this Right
Certificate (and the number of one one-thousandths (1/1000ths) of
a share of Preferred Stock that may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above,
are the number and Purchase Price as of September 11, 2000, based
on the Preferred Stock as constituted at such date.
Upon the occurrence of a Section 11.1.2 Event (as such term
is defined in the Rights Agreement), if the Rights evidenced by
this Right Certificate are beneficially owned by (i) an Acquiring
Person or an Affiliate or Associate of an Acquiring Person, (ii)
a transferee of an Acquiring Person (or of any Affiliate or
Associate thereof) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person
(or of an Affiliate or Associate thereof) 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 (or from any Affiliate or Associate thereof) to holders of
equity interests in such Acquiring Person or to any Person with
whom the Acquiring Person has a 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 that
has as a primary purpose or effect the avoidance of Section 7.6
of the Rights Agreement, shall become null and void without any
further action and no holder hereof shall have any rights
whatsoever with respect to such Rights, whether under any
provision of the Rights Agreement or otherwise.
As provided in the Rights Agreement, the Purchase Price and
the number of one one-thousandths (1/1000ths) of a share of
Preferred Stock or other securities that may be purchased upon
the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of
certain events, including Triggering Events (as such term is
defined in the Rights Agreement).
This Right Certificate is subject to all of the terms,
covenants and restrictions of the Rights Agreement, which terms,
covenants and restrictions 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, obligations, duties and immunities
hereunder of the Rights Agent, the Corporation and the holders of
the Right 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 principal
executive offices of the Corporation and the office of the Rights
Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the designated office of the
Rights Agent, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of
shares of Preferred Stock or other securities as the Rights
evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be redeemed by the
Corporation at a redemption price of $0.001 per Right (subject to
adjustment as provided in the Rights Agreement) payable in cash.
No fractional shares of Preferred Stock will be issued upon
the exercise of any Right or Rights evidenced hereby (other than
fractions that are one one-thousandth (1/1000th) or integral
multiples of one one-thousandth (1/1000th) 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 Right Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder
of shares of the Preferred Stock or of any other securities of
the Corporation that 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
meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or
other distributions or to exercise any preemptive or subscription
rights, or otherwise, until the Right or Rights evidenced by this
Right Certificate shall have been exercised as provided in the
Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights
Agent.
WITNESS the facsimile signature of the proper officers of
the Corporation and its corporate seal. Dated as of __________,
_____.
[SEAL]
ATTEST: DATRON SYSTEMS INCORPORATED
By By
Name Name
Title Title
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By
Name
Title
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the Right
Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of
transferee)
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint _______________ Attorney-in-Fact, to transfer the within
Right Certificate on the books of the within-named Corporation,
with full power of substitution.
Dated:__________, _____
Signature
Signature Guaranteed:
______________________________
Signatures must be guaranteed by an "Eligible Guarantor
Institution" as defined in Rule 17Ad-15 (or any successor rule or
regulation) promulgated pursuant to the Securities Exchange Act
of 1934, as amended (this term means, in general, banks, stock
brokers, savings and loan associations, and credit unions, in
each case with membership in an approved signature guarantee
medallion program).
The undersigned hereby certifies that (1) the Rights
evidenced by this Right Certificate are not being sold, assigned
or transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement), (2) this Right
Certificate is not being sold, assigned or transferred to or on
behalf of any such Acquiring Person, Affiliate or Associate, and
(3) after due inquiry and to the best knowledge of the
undersigned, the undersigned did not acquire the Rights evidenced
by this Right Certificate from any Person who is or was an
Acquiring Person or an Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement).
Signature
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if
such holder desires to exercise Rights
represented by the Right Certificate)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise
______________ Rights represented by this Right Certificate to
purchase the shares of Preferred Stock, shares of Common Stock or
other securities issuable upon the exercise of such Rights and
requests that certificates for such shares of Preferred Stock,
shares of Common Stock or other securities be issued in the name
of:
Please insert social security number
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights
evidenced by this Right Certificate, a new Right Certificate for
the balance remaining of such Rights shall be registered in the
name of and delivered to:
Please insert social security number
or other identifying number
(Please print name and address)
Dated: __________, _____
Signature
Signature Guaranteed:
______________________________
Signatures must be guaranteed by an "Eligible Guarantor
Institution" as defined in Rule 17Ad-15 (or any successor rule or
regulation) promulgated pursuant to the Securities Exchange Act
of 1934, as amended (this term means, in general, banks, stock
brokers, savings and loan associations, and credit unions, in
each case with membership in an approved signature guarantee
medallion program).
Form of Reverse Side of Right Certificate -- continued
The undersigned hereby certifies that (1) the Rights
evidenced by this Right Certificate are not being exercised by or
on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement), (2) this Right Certificate is not being sold,
assigned or transferred by or on behalf of any such Acquiring
Person, Affiliate or Associate, and (3) after due inquiry and to
the best knowledge of the undersigned, the undersigned did not
acquire the Rights evidenced by this Right Certificate from any
Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights
Agreement).
Signature
Notice
The signature on the foregoing Forms of Assignment and
Election and certificates must conform to the name as written
upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form
of Assignment or the Form of Election to Purchase, as the case
may be, is not completed, the Corporation and the Rights Agent
will deem the Beneficial Owner of the Rights evidenced by this
Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Right
Agreement) and such Assignment or Election to Purchase will not
be honored.
Exhibit C
DATRON SYSTEMS INCORPORATED
3030 Enterprise Court
Vista, California 92083
SUMMARY OF RIGHTS TO PURCHASE
SERIES RP PREFERRED SHARES
On August 29, 2000, the Board of Directors (the
"Board") of Datron Systems Incorporated (the "Corporation")
declared a dividend distribution of one preferred share purchase
right (a "Right") for each outstanding share of Common Stock (the
"Common Stock") of the Corporation. The dividend is payable to
the stockholders of record on September 11, 2000 (the "Record
Date"), and with respect to shares of Common Stock issued
thereafter until the Distribution Date (as defined below) and, in
certain circumstances, with respect to shares of Common Stock
issued after the Distribution Date. Except as set forth below,
each Right, when it becomes exercisable, entitles the registered
holder to purchase from the Corporation one one-thousandth
(1/1000th) of a share of Series RP Preferred Stock, $0.01 par
value per share (the "Preferred Stock"), of the Corporation at a
price of $75.00 per one one-thousandth (1/1000th) of a share of
Preferred Stock (the "Purchase Price"), subject to adjustment.
The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Corporation and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the
"Rights Agent"), dated as of September 5, 2000.
Initially, the Rights will be attached to all
certificates representing shares of Common Stock then
outstanding, and no separate certificates representing the Rights
("Right Certificates") will be distributed. The Rights will
separate from the Common Stock upon the earliest to occur of (i)
a person or group of affiliated or associated persons having
acquired, without the prior approval of the Corporation's Board
of Directors, beneficial ownership of 15% or more of the
outstanding shares of Common Stock (except pursuant to a
Permitted Offer, as hereinafter defined) or (ii) 10 days (or such
later date as the Board may determine) following the commencement
of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in a person
or group of affiliated or associated persons becoming an
Acquiring Person (as hereinafter defined) (the "Distribution
Date"). A person or group whose acquisitions of shares of Common
Stock cause a Distribution Date pursuant to clause (i) above is
an "Acquiring Person," with certain exceptions as set forth in
the Rights Agreement. The date that a person or group is first
publicly announced to have become such by the Corporation or such
Acquiring Person is the "Shares Acquisition Date."
The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and only
with the associated shares of Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the
Rights), new Common Stock certificates issued after the Record
Date upon transfer or new issuance of shares of Common Stock will
contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any
certificates for shares of Common Stock outstanding as of the
Record Date, even without such notation or a copy of this Summary
of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the shares of Common Stock
represented by such certificate. As soon as practicable
following the Distribution Date, Right Certificates will be
mailed to the holders of record of the shares of Common Stock as
of the Close of Business (as defined in the Rights Agreement) on
the Distribution Date (and to each initial record holder of
certain shares of Common Stock issued after the Distribution
Date), and such separate Right Certificates alone will evidence
the Rights.
The Rights are not exercisable until the Distribution
Date and will expire at the close of business on September 5,
2010, unless earlier redeemed by the Corporation as described
below.
In the event that any person becomes an Acquiring
Person (except pursuant to a tender or exchange offer which is
for all outstanding shares of Common Stock at a price and on
terms which a majority of certain members of the Board determines
to be adequate and in the best interests of the Corporation, its
stockholders and other relevant constituencies, other than such
Acquiring Person, its affiliates and associates (a "Permitted
Offer")), each holder of a Right will thereafter have the right
(the "Flip-In Right") to receive, upon exercise, the number of
shares of Common Stock (or, in certain circumstances, of one one-
thousandths (1/1000ths) of a share of Preferred Stock or other
securities of the Corporation) having a value (immediately prior
to such triggering event) equal to two times the exercise price
of the Right. Notwithstanding the foregoing, following the
occurrence of the event described above, all Rights that are, or
(under certain circumstances specified in the Rights Agreement)
were, beneficially owned by any Acquiring Person or any affiliate
or associate thereof will be null and void. The Board has the
option, at any time after any person becomes an Acquiring Person,
to exchange all or part of the then-exercisable Rights (excluding
those that have become void, as described in the immediately
preceding sentence) for shares of Common Stock, at an exchange
ratio determined by dividing the then-applicable Purchase Price
by the then-current market price per share of Common Stock as
determined in accordance with the Rights Agreement. However,
this option generally terminates if any person becomes the
beneficial owner of 50% or more of the Common Stock.
In the event that, at any time following the Shares
Acquisition Date, (i) the Corporation is acquired in a merger or
other business combination transaction in which the holders of
all of the outstanding shares of Common Stock immediately prior
to the consummation of the transaction are not the holders of all
of the surviving corporation's voting power, or (ii) more than
50% of the Corporation's assets or earning power is sold or
transferred, in either case with or to (x) an Acquiring Person or
any affiliate or associate thereof or (y) any other person in
which such Acquiring Person, affiliate or associate has an
interest or any person acting on behalf of or in concert with
such Acquiring Person, affiliate or associate, or (z) if, in such
transaction, all holders of shares of Common Stock are not
treated alike, any other person, then each holder of a Right
(except Rights which previously have been voided as set forth
above) shall thereafter have the right (the "Flip-Over Right") to
receive, upon exercise, common shares of the acquiring company
(or, in certain circumstances, its parent), having a value equal
to two times the exercise price of the Right. The holder of a
Right will continue to have the Flip-Over Right whether or not
such holder exercises or surrenders the Flip-In Right.
The Purchase Price payable, and the number of shares of
Preferred Stock, shares of Common Stock or other securities
issuable, upon exercise of the Rights are subject to adjustment
from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification
of, the Preferred Stock, (ii) upon the grant to holders of shares
of the Preferred Stock of certain rights or warrants to subscribe
for or purchase Preferred Stock at a price, or securities
convertible into Preferred Stock with a conversion price, less
than the then current market price of the Preferred Stock or
(iii) upon the distribution to holders of shares of the Preferred
Stock of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants
(other than those referred to above).
The number of outstanding Rights and the number of one
one-thousandths (1/1000ths) of a share of Preferred Stock
issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Stock or a
stock dividend on the Common Stock payable in Common Stock or
subdivisions, consolidations or combinations of the Common Stock
occurring, in any such case, prior to the Distribution Date.
Preferred Stock purchasable upon exercise of the Rights
will not be redeemable. Each share of Preferred Stock will be
entitled to a minimum preferential quarterly dividend payment of
$1.00 per share but, if greater, will be entitled to an aggregate
dividend per share of 1,000 times the dividend declared per share
of Common Stock. In the event of liquidation, the holders of
shares of the Preferred Stock will be entitled to a minimum
preferential liquidation payment per share in an amount equal to
the greater of $75.00 or 1,000 times the payment made per share
of Common Stock plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to
the date of such payment (the "Series RP Liquidation
Preference"); thereafter, and after the holders of shares of the
Common Stock receive a liquidation payment of an amount equal to
the quotient obtained by dividing the Series RP Liquidation
Preference by 1,000 (subject to certain adjustments for stock
splits, stock dividends and recapitalizations with respect to the
Common Stock), the holders of shares of the Preferred Stock and
the holders of the Common Stock will share the remaining assets
in the ratio of 1,000 to 1 (as adjusted) for each share of
Preferred Stock and Common Stock so held, respectively. Finally,
in the event of any merger, consolidation or other transaction in
which shares of Common Stock are exchanged, each share of
Preferred Stock will be entitled to receive 1,000 times the
amount received per share of Common Stock. These rights are
protected by customary antidilution provisions. In the event
that the amount of accrued and unpaid dividends on the Preferred
Stock is equivalent to six full quarterly dividends or more, the
holders of shares of the Preferred Stock shall have the right,
voting as a class, to elect two directors in addition to the
directors elected by the holders of shares of the Common Stock
until all cumulative dividends on the Preferred Stock have been
paid or set apart for payment through the last quarterly dividend
payment date. No fractional shares of Preferred Stock will be
issued (other than fractions which are one one-thousandth
(1/1000th) or integral multiples of one one-thousandth (1/1000th)
of a share of Preferred Stock, which may, at the election of the
Corporation, be evidenced by depositary receipts) and in lieu
thereof, an adjustment in cash will be made based on the market
price of the Preferred Stock on the last trading day prior to the
date of exercise.
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price.
At any time prior to the earlier to occur of (i) a
person becoming an Acquiring Person or (ii) the expiration of the
Rights, and under certain other circumstances, the Corporation
may redeem the Rights in whole, but not in part, at a price
(payable in cash or, at the Corporation's election, in Common
Stock) of $0.001 per Right (the "Redemption Price"), which
redemption shall be effective upon the action of the Board.
Additionally, following the Shares Acquisition Date, the
Corporation may redeem the then outstanding Rights in whole, but
not in part, at the Redemption Price, provided that such
redemption is in connection with a merger or other business
combination transaction or series of transactions involving the
Corporation in which all holders of shares of Common Stock are
treated alike but not involving an Acquiring Person or its
affiliates or associates.
Other than those provisions relating to the rights,
duties and obligations of the Rights Agent and certain principal
economic terms of the Rights, all of the provisions of the Rights
Agreement may be amended by the Board of Directors of the
Corporation prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be
amended by the Board of Directors of the Corporation in order to
cure any ambiguity, defect or inconsistency, to make changes that
do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person), or, subject to
certain limitations, to shorten or lengthen any time period under
the Rights Agreement.
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. While the distribution of the Rights will not be
taxable to stockholders of the Corporation, stockholders may,
depending upon the circumstances, recognize taxable income should
the Rights become exercisable or upon the occurrence of certain
events thereafter.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A. A 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 hereby incorporated herein by reference.
TABLE OF CONTENTS
1. Certain Definitions. 0
2. Appointment of Rights Agent. 0
3. Issuance of Right Certificates. 0
4. Form of Right Certificate. 0
5. Countersignature and Registration. 0
6. Transfer, Split-Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. 0
7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. 0
8. Cancellation and Destruction of Right Certificates. 0
9. Reservation and Availability of Preferred Stock. 0
10. Preferred Stock Record Date. 0
11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. 0
12. Certificate of Adjusted Purchase Price or Number of Shares. 0
13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. 0
14. Fractional Rights and Fractional Shares. 0
15. Rights of Action. 0
16. Agreement of Right Holders. 0
17. Right Certificate Holder Not Deemed a Stockholder. 0
18. Concerning the Rights Agent. 0
19. Merger or Consolidation or Change of Name of Rights Agent. 0
20. Duties of Rights Agent. 0
21. Change of Rights Agent. 0
22. Issuance of New Right Certificates. 0
23. Redemption and Termination. 0
24. Notice of Certain Events. 0
25. Miscellaneous. 0
26. Exchange. 0
Exhibit A - Form of Certificate of Designation, Preferences and
Rights of Series RP Preferred Stock A-1
Exhibit B - Form of Right Certificate B-1
Exhibit C - Form of Summary of Rights C-1
