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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A/A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
AMENDMENT NO. 2
KLA Instruments Corporation
(Exact name of registrant as specified in charter)
Delaware 04-2564110
(State of (IRS Employer
incorporation Identification No.)
or organization)
160 Rio Robles, San Jose, California 95134
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which each class is
to be so registered to be registered
None None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock Purchase Rights
(Title of Class)
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Items 1 and 2 are hereby amended and restated in their entirety as
follows:
Item 1. Description of Registrant's Securities to be Registered.
On March 15, 1989, the Board of Directors of KLA Instruments
Corporation (the "Company") announced that it declared a dividend distribution
of one Common Stock Purchase Right (individually, a "Right," and collectively,
the "Rights") for each outstanding share of Common Stock, par value $0.001 per
share ("Common Stock"), of the Company. The distribution was paid as of March
27, 1989, to stockholders of record on that date. Each Right entitled the
registered holder to purchase from the Company one share of Common Stock at a
price of $50.00 per share (as adjusted for subsequent stock splits) and to
certain rights that vest upon certain triggering events, including certain
acquisitions resulting in the acquiring person owning 20% or more (the
"Acquisition Threshold") of the outstanding Common Stock. On April 25, 1996, the
Board of Directors of the Company approved the amendment and restatement of the
Rights Agreement between the Company and The First National Bank of Boston, as
Rights Agent (the "Rights Agent"), (i) to provide, among other things, that the
Rights will entitle each registered holder to purchase one share of Common Stock
at a price of $160.00 per share (the "Purchase Price"), (ii) to reduce the
Acquisition Threshold from 20% to 15%, (iii) to extend the term from 1999 to
2006, (iv) to add an exchange provision and (v) to make certain other technical
changes. The description and terms of the Rights, as amended are set forth in
the Amended and Restated Rights Agreement dated as of April 25, 1996 (the
"Rights Agreement") between the Company and the Rights Agent.
Until the earlier to occur of (i) the 10th day after a public
announcement that a person or group of affiliated or associated persons
("Acquiring Person"), other than the Company, any subsidiary of the Company, any
employee benefit plan or employee stock plan of the Company or of any subsidiary
of the Company ("Exempt Person") or a person acting solely in his capacity as an
officer, director or employee of an Exempt Person, has acquired, or obtained the
right to acquire, beneficial ownership of 15% or more of the outstanding Common
Stock of the Company (other than solely as a result of a reduction in the number
of shares of Common Stock outstanding that is not followed by an additional
acquisition of Common Stock by such person) or such earlier date as a majority
of the Board of Directors shall become aware of such acquisition of the Common
Stock (the "Stock Acquisition Date") or (ii) the tenth business day (subject to
extension by the Board prior to the time a person becomes an Acquiring Person)
following the commencement of, or public announcement of an intention to
commence, a tender or exchange offer (other than a tender or exchange offer by
an Exempt Person), the consummation of which would result in the ownership of
15% or more of the outstanding Common Stock (the earlier of such dates being
called the "Distribution Date"), or until such earlier date as the Rights are
redeemed or expire, the Rights will be evidenced, with respect to any Common
Stock certificate outstanding as of March 27, 1989, by such Common Stock
certificate with a copy of a Summary of Rights attached thereto and will be
represented by and transferred with, and only with, the Common Stock. Until the
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Distribution Date (or earlier redemption or expiration of the Rights), new
certificates issued for Common Stock (including, without limitation,
certificates issued upon transfer or exchange of Common Stock) after March 27,
1989 will bear a legend incorporating the Rights Agreement by reference. Until
the Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any of the Company's Common Stock certificates, with
or without the aforesaid legend or a copy of a Summary of Rights attached
thereto, will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate. As soon as practicable following
the Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Company's Common Stock
as of the close of business on the Distribution Date, and such Right
Certificates alone will evidence the Rights from and after the Distribution
Date.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on April 24, 2006, unless earlier redeemed
by the Company as described below.
The Purchase Price payable and the number of shares of Common Stock or
other securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on or a subdivision, combination or reclassification of the Common
Stock, (ii) upon the grant to holders of the Common Stock of certain rights or
warrants to subscribe for Common Stock or convertible securities at less than
the current market price of the Common Stock or (iii) upon the distribution to
holders of the Common Stock of evidences of indebtedness, assets or subscription
rights or warrants other than those referred to above. In any such event, in
lieu of an adjustment in the number of shares of Common Stock issuable upon
exercise of a Right, the Company may elect to adjust the number of Rights.
In the event (i) any Person (other than an Exempt Person) becomes the
beneficial owner of 15% or more of the then outstanding shares of Common Stock,
(ii) any Acquiring Person or any of its Affiliates or Associates, directly or
indirectly, (1) merges into the Company or any of its subsidiaries or otherwise
combines with the Company or any of its subsidiaries in a transaction in which
the Company or such subsidiary is the continuing or surviving corporation of
such combination, the Common Stock of the Company remains outstanding and no
shares thereof are changed into or exchanged for stock or other securities of
any other person or of the Company or cash or any other property, (2) transfers,
in one or more transactions, any assets to the Company or any of its
subsidiaries in exchange for capital stock of the Company or any of its
subsidiaries or for securities exercisable for or convertible into such capital
stock or otherwise obtains from the Company or any of its subsidiaries, with or
without consideration, any such capital stock or securities exercisable for or
convertible into such capital stock (other than as part of a pro rata offer or
distribution to all holders of such stock), (3) sells, purchases, leases,
exchanges, mortgages, pledges, transfers or otherwise disposes of, to, from or
with the Company or any of its subsidiaries, assets on terms and conditions less
favorable
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to the Company or such subsidiary than the Company or such subsidiary would be
able to obtain in arm's-length negotiation with an unaffiliated third party, (4)
receives any compensation for services from the Company or any of its
subsidiaries other than compensation for employment as a regular or part-time
employee or fees for serving as a director at rates in accordance with the
Company's (or its subsidiary's) past practice, (5) receives the benefit (except
proportionately as a stockholder) of any loans, advances, guarantees, pledges or
other financial assistance or tax credit or advantage, or (6) engages in any
transaction with the Company or any of its subsidiaries involving the sale,
license, transfer or grant of any right in, or disclosure of, any patents,
copyrights, trade secrets, trademarks or know how (or any other intellectual or
industrial property rights recognized under the laws of any country) which the
Company or any of its subsidiaries owns or has the right to use on terms and
conditions not approved by the Board of Directors of the Company, or (iii) while
there is an Acquiring Person, there shall occur any reclassification of
securities (including any reverse stock split), any recapitalization of the
Company, any merger or consolidation of the Company with any of its subsidiaries
or any other transaction or transactions involving the Company or any of its
subsidiaries (whether or not involving the Acquiring Person) which has the
effect of increasing by more than 1% the proportionate share of the outstanding
shares of any class of equity securities of the Company or any of its
subsidiaries which is directly or indirectly owned or controlled by the
Acquiring Person (such transactions being collectively referred to herein as
"Section 11(a)(ii) Events"), then, and in each such case, each holder of record
of a Right, other than the Acquiring Person, will thereafter have the right to
receive, upon payment of the Purchase Price, that number of shares of Common
Stock having a market value at the time of the transaction equal to twice the
Purchase Price. To the extent that insufficient shares of Common Stock are
available for the exercise in full of the Rights, holders of Rights will receive
upon exercise shares of Common Stock to the extent available and then cash,
property or other securities of the Company, in proportions determined by the
Company, so that the aggregate value received is equal to twice the Purchase
Price. Rights are not exercisable following the occurrence of the events set
forth in this paragraph until the expiration of the period during which the
Rights may be redeemed as described below. The holder of any Rights that are or
were, at any time on or after the Distribution Date, beneficially owned by an
Acquiring Person that is or was involved in or that caused or facilitated,
directly or indirectly, the event or transaction or transactions described in
this paragraph shall not be entitled to the benefit of the adjustment described
in this paragraph.
Unless the Rights are earlier redeemed, in the event that, after the
Rights have become exercisable, the Company is acquired in a merger or other
business combination in which any shares of the Company's Common Stock are
changed into or exchanged for other securities or assets (other than a merger or
other business combination in which the voting power represented by the
Company's securities outstanding immediately prior thereto continues to
represent all of the voting power represented by the securities of the Company
thereafter and the holders of such securities have not changed as a result of
such transaction) or more than 50% of the
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assets or earning power of the Company and its subsidiaries (taken as a whole)
are sold or transferred in one or a series of related transactions (such
transactions being collectively referred to herein as "Section 13 Events"), the
Rights Agreement provides that proper provision shall be made so that each
holder of record of a Right will, from and after such date, have the right to
receive, upon payment of the Purchase Price, that number of shares of common
stock of the acquiring company having a market value at the time of such
transaction equal to two times the Purchase Price.
No fractional shares of Common Stock will be issued upon exercise of
the Rights, and, in lieu thereof, a payment in cash will be made to the holder
of such Rights equal to the same fraction of the current market value of a share
of Common Stock.
At any time until the time that any person becomes an Acquiring Person,
the Board of Directors may redeem the Rights in whole, but not in part, at a
price of $.01 per Right. Immediately upon the action of the Board authorizing
redemption of the Rights, the right to exercise the Rights will terminate, and
the only right of the holders of Rights will be to receive the Redemption Price
without any interest thereon.
At any time after the occurrence of a Section 11(a)(ii) Event, but
prior to (i) such time as any person (other than an Exempt Person) acquires
direct or indirect beneficial ownership of 50% or more of the Common Stock then
outstanding and (ii) any Section 13 Event, the Board of Directors of the Company
may exchange all or any portion of the outstanding Rights (other than Rights
held by any Acquiring Person) for shares of Common Stock at the rate of one
share of Common Stock per Right. Immediately upon the ordering of such exchange
and without any notice, the right to exercise such Rights shall terminate and
the only right thereafter of a holder of such Rights shall be to receive shares
of Common Stock pursuant to the exchange. In the event there are insufficient
shares of authorized Common Stock to permit any exchange of Rights, the Company
shall take all actions necessary to authorize additional shares.
Before the first occurrence of a Section 11(a)(ii) Event, the Company
may, except with respect to the redemption price, amend the Rights in any manner
(including an amendment that provides that the Rights shall become exercisable
for shares or fractions of shares of preferred stock of the Company that are
economically common stock equivalents). After any person becomes an Acquiring
Person, the Company may amend the Rights in any manner that does not adversely
affect the interests of holders of the Rights.
Until a Right is exercised, the holder, as such, will have no rights as
a stockholder of the Company, including, without limitation, the right to vote
or to receive dividends.
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The issuance of the Rights is not taxable to the Company or to
stockholders under currently existing federal income tax law. If the Rights
should become exercisable, stockholders, depending on then existing
circumstances, may recognize taxable income. The issuance of the Rights will not
affect the manner in which the Common Stock can be traded.
The Rights have certain anti-takeover effects. Under certain
circumstances the Rights could cause substantial dilution to a person or group
who attempts to acquire the Company on terms not approved by the Company's Board
of Directors. The Rights should not interfere with any merger or other business
combination approved by the Board.
The foregoing description of the Rights is qualified in its entirety by
reference to the form of Rights Agreement (including as Exhibit A the form of
Right Certificate and as Exhibit B the Summary of Terms of Rights), which is
attached hereto as Exhibit 1.
Item 2. Exhibits.
1. Amended and Restated Rights Agreement dated as of April 25, 1996
between KLA Instruments Corporation and The First National Bank of Boston as
Rights Agent (including as Exhibit A the form of Right Certificate and as
Exhibit B the Summary of Terms of Rights).
2. Press Release, dated April 26, 1996.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
KLA INSTRUMENTS CORPORATION
By: Christopher Stoddart
-------------------------------
Christopher Stoddart, Treasurer
Dated: September 23, 1996
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EXHIBIT 1
KLA INSTRUMENTS CORPORATION
and
THE FIRST NATIONAL BANK OF BOSTON
Rights Agent
AMENDED AND RESTATED RIGHTS AGREEMENT
Dated as of April 25, 1996
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TABLE OF CONTENTS
Section Page
- ------- ----
1. Certain Definitions................................................. 2
2. Appointment of Rights Agent......................................... 6
3. Issuance of Right Certificates...................................... 6
4. Form of Right Certificates.......................................... 8
5. Countersignature and Registration................................... 9
6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates............. 9
7. Exercise of Rights; Purchase Price; Expiration Date of Rights....... 10
8. Cancellation and Destruction of Right Certificates.................. 11
9. Reservation and Availability of Shares of Common Stock.............. 12
10. Common Stock Record Date............................................ 14
11. Adjustments to Number and Kind of Shares, Number of Rights or
Purchase Price...................................................... 14
12. Certification of Adjustments........................................ 23
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power 23
14. Fractional Rights and Fractional Shares............................. 27
15. Rights of Action.................................................... 27
16. Agreement of Right Holders.......................................... 28
17. Right Certificate Holder Not Deemed a Stockholder................... 28
18. Concerning the Rights Agent......................................... 29
19. Merger or Consolidation or Change of Name of Rights Agent........... 29
20. Duties of Rights Agent.............................................. 30
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21. Change of Rights Agent.............................................. 32
22. Issuance of New Right Certificates.................................. 33
23. Redemption.......................................................... 33
24. Exchange of Rights for Common Stock................................. 34
25. Notice of Proposed Actions.......................................... 36
26. Notices............................................................. 37
27. Supplements and Amendments.......................................... 37
28. Successors.......................................................... 38
29. Benefits of this Rights Agreement................................... 38
30. Delaware Contract................................................... 38
31. Counterparts........................................................ 38
32. Descriptive Headings................................................ 38
33. Severability........................................................ 38
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RIGHTS AGREEMENT
THIS AMENDED AND RESTATED RIGHTS AGREEMENT ("Rights Agreement") is
entered into as of April 25, 1996 by and between KLA Instruments Corporation, a
Delaware corporation (the "Company"), and The First National Bank of Boston, a
national banking association (the "Rights Agent").
W I T N E S E T H:
WHEREAS, the Board of Directors of the Company on March 15, 1989 (i)
announced that it authorized the issuance and declared a dividend of one right
(a "Right") for each share of the common stock, par value $0.01 per share
("Common Stock"), of the Company outstanding as of the Close of Business on
March 27, 1989 (the "Record Date"), each Right representing the right to
purchase one share of Common Stock of the Company upon the terms and subject to
the conditions hereinafter set forth, and (ii) further authorized the issuance
of one Right with respect to each share of Common Stock of the Company that
shall become outstanding between March 27, 1989, and the Distribution Date (as
defined herein) pursuant to that certain Rights Agreement dated as of March 15,
1989 (the "Prior Agreement");
WHEREAS, pursuant to Section 9(a) of the Prior Agreement, as amended,
the Company has covenanted to reserve one share of its Common Stock for every
Right outstanding;
WHEREAS, the Board approved an amendment and restatement of the Prior
Agreement as of August 30, 1995, to remove the covenant in Section 9(a) of the
Prior Agreement to reserve Common Stock pursuant thereto prior to a Triggering
Event (as defined under the Prior Agreement, as amended);
WHEREAS, the Board has determined that it is in the best interests of
the Company and its stockholders to change certain triggering percentages
(including the percentage of beneficial ownership determining an Acquiring
Person) from 20% to 15%, to change the Purchase Price after consultation with
the Company's financial adviser, to extend the term of the Rights Plan from 1999
to 2006, to add an exchange provision, and to make certain additional technical
amendments to the Agreement; and
WHEREAS, the Company requested that the Prior Agreement, as amended, be
amended and restated as set forth herein and the Rights Agent is willing to
amend and restate the Prior Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the Prior Agreement is hereby amended and restated
to read in full as follows:
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1. Certain Definitions. For purposes of this Rights Agreement, the
following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, without the prior approval of the Board of Directors, shall be the
Beneficial Owner (as such term is hereinafter defined) of 15% or more of the
outstanding Common Stock; provided, however, that in no event shall a Person who
or which, together with all Affiliates and Associates of such Person, is the
Beneficial Owner of less than 15% of the Company's outstanding shares of Common
Stock, become an Acquiring Person solely as a result of a reduction of the
number of shares of outstanding Common Stock, including repurchases of
outstanding shares of Common Stock by the Company, which reduction increases the
percentage of outstanding shares of Common Stock beneficially owned by such
Person, provided, however, that if a Person shall become the Beneficial Owner of
15% or more of the Company's outstanding shares of Common Stock then outstanding
solely by reason of a reduction of the number of shares of outstanding Common
Stock, and shall thereafter become the Beneficial Owner of any additional shares
of Common Stock of the Company, then such Person shall be deemed to be an
"Acquiring Person" unless upon the consummation of the acquisition of such
additional shares of Common Stock such person does not own fifteen percent (15%)
or more of the shares of Common Stock then outstanding and provided, further,
that an Acquiring Person shall not include an Exempt Person (as such term is
hereinafter defined). Notwithstanding the foregoing, if the Board of Directors
of the Company determines in good faith that a Person who would otherwise be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
paragraph (a), has become such inadvertently (including, without limitation,
because (i) such Person was unaware that it beneficially owned a percentage of
Common Stock that would otherwise cause such Person to be an "Acquiring Person"
or (ii) such Person was aware of the extent of its Beneficial Ownership but had
no actual knowledge of the consequences of such Beneficial Ownership under this
Agreement) and without any intention of changing or influencing control of the
Company, and such Person divests as promptly as practicable a sufficient number
of shares of Common Stock so that such Person would no longer be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this paragraph (a),
then such Person shall not be deemed to be or to have become an "Acquiring
Person" for any purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended ("Exchange
Act"), as in effect on the date of this Agreement, as amended.
(c) A Person shall be deemed the "Beneficial Owner" of any
securities:
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(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, 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 (other than customary agreements
with and between underwriters and selling group members with respect to a bona
fide public offering of securities), whether or not in writing, 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 such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange; or (B) the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act, or any comparable or successor
rule), including pursuant to any agreement, arrangement or understanding
(whether or not in writing); provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own", any securities if
the agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the applicable
rules and regulations of the Exchange Act and (2) is not also then reportable by
such Person on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting (except as described in
clause (B) of subparagraph (ii) of this paragraph (d) or disposing of any
securities of the Company;
provided, however, that no Person who is an officer, director or employee of an
Exempt Person shall be deemed, solely by reason of such Person's status or
authority as such, to be the "Beneficial Owner" of, to have "Beneficial
Ownership" of or to "beneficially own" any securities that are "beneficially
owned" (as defined in this Section 1(c)), including, without limitation, in a
fiduciary capacity, by an Exempt Person or by any other such officer, director
or employee of an Exempt Person.
For all purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act as in effect on the date hereof.
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(d) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the Commonwealth of
Massachusetts are authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00
P.M., Boston time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Boston time, on the next succeeding
Business Day.
(f) "Common Stock" when used with reference to the Company
shall mean the common stock (presently $0.001 par value per share) of the
Company. "Common Stock" when used with reference to any Person other than the
Company which shall be organized in corporate form shall mean the capital stock
or other equity security with the greatest per share voting power of such Person
or, if such Person is a Subsidiary of or is controlled by another Person, the
Person which ultimately controls such first-mentioned Person. "Common Stock"
when used with reference to any Person other than the Company which shall not be
organized in corporate form shall mean units of beneficial interest which shall
represent the right to participate in profits, losses, deductions and credits of
such Person and which shall be entitled to exercise the greatest voting power
per unit of such Person.
(g) "Common Stock Equivalents" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(h) "Current Market Price" shall have the meaning set forth in
Section 11(d) hereof.
(i) "Current Value" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(j) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(k) "Equivalent Common Stock" shall have the meaning set forth
in Section 11(b) hereof.
(l) "Exchange Act" shall have the meaning set forth in Section
1(c) hereof.
(m) "Exempt Person" shall mean the Company or any Subsidiary
of the Company including, without limitation, in its fiduciary capacity, any
employee benefit plan or employee stock plan of the Company or of any Subsidiary
of the Company, or any Person, organized, appointed, established or holding
Common Stock for or pursuant to the terms of any such plan or funding other
employee benefits for employees of the Company or any subsidiary of the Company.
(n) "Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
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(o) "Final Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
(p) "NASDAQ" shall have the meaning set forth in Section 9(b)
hereof.
(q) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(r) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(s) "Purchase Price" shall have the meaning set forth in
Section 4(a) hereof.
(t) "Record Date" shall have the meaning set forth in the
first WHEREAS clause hereof.
(u) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(v) "Right Certificate" shall have the meaning set forth in
Section 3(a) hereof.
(w) "Section 11(a)(ii) Event" shall mean any event described
in Section 11(a)(ii) (A), (B) or (C) hereof.
(x) "Section 11(a)(ii) Trigger Date" shall have the meaning
set forth in Section 11(a)(iii) hereof.
(y) "Section 13 Event" shall mean any event described in
clause (x), (y) or (z) of Section 13(a) hereof.
(z) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(aa) "Stock Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such or such earlier date as a majority of the directors shall
become aware of the existence of an Acquiring Person.
(ab) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(ac) "Subsidiary" of a Person shall mean any corporation or
other entity of which securities or other ownership interests having ordinary
voting power sufficient to elect a majority of the board of directors or other
persons performing
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similar functions are beneficially owned, directly or indirectly, by such Person
and any corporation or other entity that is otherwise controlled by such Person.
(ad) "Summary of Rights" shall mean the Summary of Rights to
Purchase Common Stock attached as Exhibit B hereto.
(ae) "Trading Day" shall have the meaning set forth in Section
11(d) hereof.
(af) "Triggering Event" shall mean any event described in
Section 11(a)(ii)(A), (B), or (C) or Section 13 hereof.
(ag) "Voting Power" shall mean the voting power of all
securities of the Company then outstanding and generally entitled to vote for
the election of directors of the Company.
Any determination required by the definitions contained in this Section
1 shall be made by the Board of Directors of the Company in its good faith
judgment, which determination shall be binding on the Rights Agent and the
holders of the Rights.
2. Appointment of Rights Agent. The Company hereby appoints the Rights
Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. With
the consent of the Rights Agent, the Company may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable.
3. Issuance of Right Certificates.
(a) Until the earlier of (i) the tenth day after the Stock
Acquisition Date or (ii) the tenth business day (or such later date as may be
determined by action of the Board of Directors prior to such time as any Person
becomes an Acquiring Person) after the date of the commencement by any Person
(other than an Exempt Person) of, or of the first public announcement of the
intent of any Person (other than an Exempt Person) to commence (which intention
to commence remains in effect for five business days after such announcement), a
tender or exchange offer upon the successful consummation of which such Person,
together with its Affiliates and Associates, would be the Beneficial Owner of
15% or more of the outstanding Common Stock (irrespective of whether any shares
are actually purchased pursuant to any such offer) (including any such date
which is after the date of this Rights Agreement and prior to the issuance of
the Rights; the earlier of such dates being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates for the Common Stock
registered in the names of the holders of the Common Stock and not by separate
Right Certificates, and (y) each Right will be transferable only in connection
with the transfer of a share (subject to adjustment as hereinafter provided) of
Common Stock. As soon as practicable after the Distribution Date, the Rights
Agent will mail, by first-class, postage prepaid mail, to each record holder of
the Common Stock as of the
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<PAGE> 10
Close of Business on the Distribution Date, as shown by the records of the
Company, at the address of such holder shown on such records, a Right
Certificate in substantially the form of Exhibit A hereto ("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.
(b) Rights shall be issued in respect of all shares of Common
Stock that are issued (either as an original issuance or from the Company's
treasury) after the Record Date prior to the earlier of the Distribution Date,
the Redemption Date or the Expiration Date. With respect to certificates
representing such shares of Common Stock, the Rights will be evidenced by such
certificates for Common Stock registered in the names of the holders thereof
together with the Summary of Rights. Until the Distribution Date (or, if
earlier, the Expiration Date or Final Expiration Date), the surrender for
transfer of any certificate for Common Stock, with or without a copy of the
Summary of Rights attached thereto, shall also constitute the surrender for
transfer of the Rights associated with the Common Stock represented thereby.
(c) Certificates issued for Common Stock (including, without
limitation, certificates issued upon transfer or exchange of Common Stock) prior
to the earlier of the Distribution Date, the Expiration Date or the Final
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in an Amended and Restated Rights Agreement
between KLA Instruments Corporation and The First National Bank of
Boston, as Rights Agent, dated as of April 25, 1996 (as amended from
time to time in accordance with its terms, the "Rights Agreement"), the
terms of which are incorporated herein by reference and a copy of which
is on file at the principal executive office of KLA Instruments
Corporation. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. KLA Instruments
Corporation will mail to the holder of this certificate a copy of the
Rights Agreement without charge after receipt by it of a written
request therefor. Under certain circumstances as provided in the Rights
Agreement, Rights issued to or beneficially owned by Acquiring Persons
or their Associates or Affiliates (as defined in the Rights Agreement)
or any subsequent holder of such Rights will be null and void and will
no longer be transferable.
With respect to such certificates containing the foregoing legend, the Rights
associated with the Common Stock represented by such certificates shall, until
the Distribution Date, be evidenced by such certificates alone, and registered
holders of Common Stock shall also be the registered holders of the associated
Rights, and the surrender for transfer of any such certificate shall also
constitute the surrender for transfer of the Rights associated with the Common
Stock represented thereby.
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<PAGE> 11
Notwithstanding this paragraph (c), the omission of a legend shall not
affect the enforceability of any part of this Agreement or the rights of any
holder of the Rights.
4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to
purchase shares and of assignment to be printed on the reverse thereof), when,
as and if issued, shall be substantially in the form set forth in Exhibit A
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Rights
Agreement, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Sections 11 and 22 hereof, the Right
Certificates evidencing the Rights issued on March 27, 1989, whenever issued,
shall be dated as of March 27, 1989 and the Right Certificates evidencing Rights
to holders of record of Common Stock issued after March 27, 1989 shall be dated
as of March 27, 1989 but also be dated to reflect the date of issuance of such
Right Certificate and on their face Right Certificates shall entitle the holders
thereof to purchase one share of Common Stock, or other securities or property
as provided herein, as the same may from time to time be adjusted as provided
herein, at the price of $160.00 set forth therein, as the same may from time to
time be adjusted as provided herein (the "Purchase Price").
(b) Notwithstanding any other provision of this Rights
Agreement, any Right Certificate that represents Rights that are or were at any
time on or after the earlier of the Stock Acquisition Date or the Distribution
Date beneficially owned by an Acquiring Person or any Affiliate or Associate
thereof (or any transferee of such Rights) shall have impressed on, printed on,
written on or otherwise affixed to it (if the Company or the Rights Agent has
knowledge that such Person is an Acquiring Person or an Associate or Affiliate
thereof or transferee of such Persons or a nominee of any of the foregoing) the
following legend:
The beneficial owner of the Rights represented by this Right
Certificate is an Acquiring Person or an Affiliate or Associate (as
defined in the Rights Agreement) of an Acquiring Person or a subsequent
holder of such Right Certificates beneficially owned by such Persons.
Accordingly, under certain circumstances as provided in the Rights
Agreement, this Right Certificate and the Rights represented hereby may
be limited as provided in Section 11(a)(ii) of the Rights Agreement.
The provisions of Section 11(a)(ii) and Section 24 of this Rights Agreement
shall be operative whether or not the foregoing legend is contained on any such
Right Certificates.
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<PAGE> 12
5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the
Company by its President or any Vice President, either manually or by facsimile
signature, and have affixed thereto the Company's seal or a facsimile thereof
which shall be attested by the Secretary or an Assistant Secretary of the
Company, either manually or by facsimile signature. The Right Certificates shall
be manually countersigned by the Rights Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Right Certificates, nevertheless, may be countersigned by the
Rights Agent, issued and delivered with the same force and effect as though the
person who signed such Right Certificates had not ceased to be such officer of
the Company; and any Right Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Right Certificate,
shall be a proper officer of the Company to sign such Right Certificate,
although at the date of the execution of this Rights Agreement any such person
was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at one of its offices designated for such purposes,
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 its face by each of the
Right Certificates, the date of each of the Right Certificates, and the
certificate numbers for each of the Right Certificates.
6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e),
11(a)(ii) and 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
Expiration Date or the Final Expiration Date, any Right Certificate or
Certificates (other than Right Certificates representing Rights that have become
void pursuant to Section 11(a)(ii) hereof or that have been exchanged pursuant
to Section 24 hereof) may be (i) transferred or (ii) split up, combined or
exchanged for another Right Certificate or Right Certificates, entitling the
registered holder to purchase a like number of shares of Common Stock as the
Right Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer any Right Certificate shall
surrender the Right Certificate at the office of the Rights Agent designated for
such purposes with the form of assignment on the reverse side thereof duly
endorsed (or enclose with such Right Certificate a written instrument of
transfer in form satisfactory to the Company and the Rights Agent), duly
executed by the registered holder thereof or his attorney duly authorized in
writing, and with such signature duly guaranteed. Any registered holder desiring
to split up, combine or exchange any Right Certificate shall make such request
in writing delivered to the Rights
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<PAGE> 13
Agent, and shall surrender the Right Certificate or Right Certificates to be
split up, combined or exchanged at the shareholder services office of the Rights
Agent. Thereupon the Rights Agent shall, subject to Sections 4(b), 7(e), 11 and
14 hereof, countersign (by manual signature) and deliver to the person entitled
thereto a Right Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Right Certificates.
(b) Subject to the provisions of Section 11(a)(ii) hereof,
upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, if requested by the Company,
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will execute and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Section 11(a)(ii) hereof, the Rights shall
become exercisable, and may be exercised to purchase Common Stock, except as
otherwise provided herein, in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed (with such
signature duly guaranteed), to the Rights Agent at the shareholder services
office of the Rights Agent in Boston, Massachusetts together with payment of the
Purchase Price with respect to each Right exercised, subject to adjustment as
hereinafter provided, at or prior to the Close of Business on the earlier of (i)
April 24, 2006 ("Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof, or (iii) the time at which all such
Rights are exchanged as provided in Section 24 hereof (the earliest of (i), (ii)
or (iii) being herein referred to as the "Expiration Date").
(b) The Purchase Price shall initially be $160.00 for each
share of Common Stock issued pursuant to the exercise of a Right. The Purchase
Price and the number of shares of Common Stock or other securities or
consideration to be acquired upon exercise of a Right shall be subject to
adjustment from time to time as provided in Sections 11 and 13 hereof. The
Purchase Price shall be payable in lawful money of the United States of America,
in accordance with Section 7(c) hereof.
(c) Except as provided in Section 11(a)(ii) hereof, upon
receipt of a Right Certificate with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price or so much thereof as is
necessary for the shares to be purchased and an amount equal to any applicable
transfer tax, by cash, certified check or official bank check payable to the
order of the Company or the Rights Agent, the Rights Agent shall thereupon
promptly (i) requisition from any transfer
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<PAGE> 14
agent of the Common Stock (or make available if the Rights Agent is the transfer
agent) certificates for the number of shares of Common Stock so elected to be
purchased and the Company will comply and hereby authorizes and directs such
transfer agent to comply with all such requests, (ii) requisition from the
Company the amount of cash to be paid in lieu of issuance of fractional shares
in accordance with Section 14(b) hereof, and (iii) promptly after receipt of
such Common Stock certificates 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, when appropriate, after
receipt promptly deliver such cash to or upon the order of the registered holder
of such Right Certificate; provided, however, that in the case of a purchase of
securities, other than Common Stock, pursuant to Section 13 hereof, the Rights
Agent shall promptly take the appropriate actions corresponding to the foregoing
clauses (i) through (iii). In the event that the Company is obligated to issue
other securities of the Company, pay cash and/or distribute other property, the
Company will make all arrangements necessary so that such other securities, cash
and/or other property are available for distribution by the Rights Agent, if and
when appropriate.
(d) Except as otherwise provided herein, 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 14 hereof.
(e) Notwithstanding anything in this Rights Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the form
of election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
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<PAGE> 15
9. Reservation and Availability of Shares of Common Stock.
(a) Prior to a Triggering Event the Company shall not be
required to cause to be reserved and kept available, (i) out of its authorized
and unissued shares of Common Stock or (ii) out of its shares of Common Stock
not reserved for another purpose held in its treasury, shares of Common Stock
that, as provided in this Rights Agreement, would permit the exercise of
outstanding Rights and this Rights Agreement shall not constitute a commitment
by the Company to issue any such shares; provided, however, that from and after
a Triggering Event the Company shall, to the extent required by Sections
11(a)(ii), 11(a)(iii) and 13, be required to reserve and keep available shares
of Common Stock or other securities, cash or property (or, in the case of
Section 13, the Principal Party shall be required to reserve and keep available
shares of Common Stock of the Principal Party) sufficient to permit the exercise
in full of all outstanding Rights pursuant to the adjustments provided for in
those sections. In the event that, prior to a Triggering Event, the number of
shares of Common Stock (a) authorized by the Company's certificate of
incorporation but not outstanding or reserved for issuance for purposes other
than upon exercise of the Rights or (b) held in the Company's treasury and not
received for another purpose is not sufficient to permit the exercise in full of
any Rights that become exercisable and are exercised, the Company shall issue
shares of Common Stock to the extent available for the exercise in full of any
Right or Rights so exercised and, to the extent shares of Common Stock are not
so available, then the Company shall be obligated to deliver, upon the surrender
for exercise of such Right or Rights, along with payment of the Purchase Price
for each such Right, shares of Common Stock (to the extent available) and then,
if necessary, (1) cash, (2) other equity securities of the Company (including,
without limitation, shares, or units of shares, of preferred stock), (3) debt
securities of the Company, (4) other assets, or (5) any combination of the
foregoing, having a value which, when added to the value of the shares of Common
Stock actually issued upon exercise of such Right or Rights, shall have an
aggregate value equal to the Current Market Price of the shares of Common Stock
otherwise issuable upon exercise of such Right or Rights, where the aggregate
value has been determined in good faith by the Board of Directors of the Company
based upon the advice of a nationally recognized independent investment banking
firm selected in good faith by the Board of Directors of the Company; provided,
however, that if the Board of Directors of the Company shall determine in good
faith that it is likely that sufficient additional shares of Common Stock could
be authorized for issuance upon exercise in full of the Rights prior to a
Triggering Event, then the Company may suspend the exercisability of the Rights
for such period, prior to a Triggering Event, as shall be necessary, but not for
more than 90 days after the Rights become exercisable, in order to seek
authorization of approval for the issuance of additional shares of Common Stock
and, in the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. In determining the availability of shares of Common Stock for
purposes of this subsection, the Board of Directors may, but shall not be
required to, establish procedures to allocate the
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<PAGE> 16
right to receive Common Stock upon exercise of the Rights among the holders
thereof on a basis other than priority according to time of exercise.
(b) The Company shall (i) use its best efforts to cause, from
and after such time as the Rights become exercisable, the Rights and all shares
of Common Stock (and other securities) issued or reserved for issuance upon
exercise thereof to be reported by the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or such other system then
in use, and if the Common Stock shall become listed on any national securities
exchange, to cause, from and after such time as the Rights become exercisable,
the Rights and all shares of Common Stock (and other securities) issued or
reserved for issuance upon exercise thereof to be listed on such exchange upon
official notice of issuance upon such exercise and (ii) if then necessary to
permit the offer and issuance of such shares of Common Stock (and other
securities), register and qualify such shares of Common Stock (and other
securities) under the Securities Act and any applicable state securities or
"blue sky" laws (to the extent exemptions therefrom are not available), cause
such registration statement and qualifications to become effective as soon as
possible after such filing and keep such registration and qualifications
effective until the earlier of the Expiration Date or the Final Expiration Date
of the Rights. The Company may temporarily suspend, for a period of time not to
exceed ninety (90) days, the exercisability of the Rights in order to prepare
and file a registration statement under the Securities Act and permit it to
become effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Rights Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction shall have been obtained and until
a registration statement under the Securities Act (if required) shall have been
declared effective.
(c) The Company covenants and agrees that it will take all
such action as may be necessary to insure that all shares of Common Stock (and
other securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares (subject to payment of the Purchase
Price in respect thereof), be duly and validly authorized and issued and fully
paid and nonassessable shares in accordance with applicable law.
(d) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Right
Certificates or of any shares of Common Stock (or other securities, as the case
may be) upon the exercise of Rights. The Company shall not, however, be required
to pay any transfer tax which may be payable in respect of any transfer or
delivery of Right Certificates to a Person other than, or the issuance or
delivery of certificates for Common Stock (or other securities, as the case may
be) upon exercise of Rights in a name other than that of, the registered holder
of the Right Certificate, and the Company shall not be required to issue or
deliver a Right Certificate or certificate for Common Stock (or other
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<PAGE> 17
securities, as the case may be) to a person other than such registered holder
until any such tax shall have been paid (any such tax being payable by the
holder of such Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
10. Common Stock Record Date. Each Person in whose name any certificate
for shares of Common Stock (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 Common Stock (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 transfer taxes) was made.
11. Adjustments to Number and Kind of Shares, Number of Rights or
Purchase Price. The number and kind of shares subject to purchase upon the
exercise of each Right, the number of Rights outstanding and the Purchase Price
are subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Rights Agreement (A) declare or pay any dividend on Common Stock
payable in shares of Common Stock, (B) subdivide or split the outstanding shares
of Common Stock into a greater number of shares, (C) combine or consolidate the
outstanding shares of Common Stock into a smaller number of shares or effect a
reverse split of the outstanding shares of Common Stock or (D) issue any shares
of its capital stock in a reclassification of the Common Stock (including any
such reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of Common
Stock or capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive, upon payment of the Purchase Price then in
effect, the aggregate number and kind of shares of Common Stock or capital
stock, as the case may be, which, if such Right had been exercised immediately
prior to such date, the holder thereof would have owned upon such exercise and
been entitled to receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 24, in the event
(A) any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after the date of this Rights
Agreement, directly or indirectly, (1) shall consolidate with or merge with and
into the Company or any of its Subsidiaries or otherwise combine with the
Company or any of its Subsidiaries
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<PAGE> 18
and the Company or such Subsidiary shall be the continuing or surviving
corporation of such consolidation, merger or combination and the Common Stock of
the Company shall remain outstanding and no shares thereof shall be changed into
or exchanged for stock or other securities of the Company or of any other Person
or cash or any other property, or (2) shall, in one or more transactions, other
than in connection with the exercise of a Right or Rights and other than in
connection with the exercise or conversion of securities exercisable for or
convertible into securities of the Company or of any Subsidiary of the Company,
transfer any assets or property to the Company or any of its Subsidiaries in
exchange (in whole or in part) for any shares of any class of capital stock of
the Company or any of its Subsidiaries or any securities exercisable for or
convertible into shares of any class of capital stock of the Company or any of
its Subsidiaries, or otherwise obtain from the Company or any of its
Subsidiaries, with or without consideration, any additional shares of any class
of capital stock of the Company or any of its Subsidiaries or any securities
exercisable for or convertible into shares of any class of capital stock of the
Company or any of its Subsidiaries (other than as part of a pro rata offer or
distribution by the Company or such Subsidiary to all holders of such shares),
or (3) shall sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise acquire (other than as a pro rata dividend) or dispose, to, from or
with, as the case may be, in one transaction or a series of transactions, the
Company or any of its Subsidiaries, assets (including securities) on terms and
conditions less favorable to the Company or such Subsidiary than the Company or
such Subsidiary would be able to obtain in arm's-length negotiation with an
unaffiliated third party, or (4) shall receive any compensation from the Company
or any of its Subsidiaries for services other than compensation for employment
as a regular or part-time employee, or fees for serving as a director, at rates
in accordance with the Company's (or its Subsidiary's) past practices, or (5)
shall receive the benefit, directly or indirectly (except proportionately as a
stockholder), of any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or tax advantage provided by the Company or any of
its Subsidiaries or (6) shall engage in any transaction with the Company (or any
of its Subsidiaries) involving the sale, license, transfer or grant of any right
in, or disclosure of, any patents, copyrights, trade secrets, trademarks or know
how (or any other intellectual or industrial property rights recognized under
any country's intellectual property laws) which the Company (including its
Subsidiaries) owns or has the right to use on terms and conditions not approved
by the Board; or
(B) any Person, alone or together with its
Affiliates and Associates, shall become an Acquiring Person; or
(C) during such time as there is an
Acquiring Person, there shall be any reclassification of securities (including
any reverse stock split), or any recapitalization of the Company, or any merger
or consolidation of the Company with any of its Subsidiaries or any other
transaction or series of transactions involving the Company or any of its
Subsidiaries (whether or not with or into or otherwise involving an Acquiring
Person or any Affiliate or Associate of such Acquiring Person) which has the
effect, directly or indirectly, of increasing by more than 1% the proportionate
share of the outstanding shares of any class of equity
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<PAGE> 19
securities of the Company or any of its Subsidiaries, or securities exercisable
for or convertible into equity securities of the Company or any of its
Subsidiaries, which is directly or indirectly beneficially owned by any
Acquiring Person or any Affiliate or Associate of any Acquiring Person,
then upon the first occurrence of such Section 11(a)(ii) Event (A) the Purchase
Price shall be adjusted to be the Purchase Price in effect immediately prior to
the Section 11(a)(ii) Event multiplied by the number of shares of Common Stock
for which a Right was exercisable immediately prior to such Section 11(a)(ii)
Event, whether or not such Right was then exercisable, and (B) each holder of a
Right, except as otherwise provided in this Section 11(a)(ii) and Section
11(a)(iii) hereof, shall thereafter have the right to receive, upon exercise
thereof at a price equal to the Purchase Price (as so adjusted), in accordance
with the terms of this Agreement, such number of shares of Common Stock as shall
equal the result obtained by dividing the Purchase Price (as so adjusted) by 50%
of the Current Market Price per share of the Common Stock (determined pursuant
to Section 11(c) hereof) on the date of such Section 11(a)(ii) Event; provided,
however, that the Purchase Price (as so adjusted) and the number of shares of
Common Stock so receivable upon the exercise of a Right shall, following the
Section 11(a)(ii) Event, be subject to further adjustment as appropriate in
accordance with this Section 11(a). Notwithstanding anything in this Agreement
to the contrary, however, from and after the Section 11(a)(ii) Event, any Rights
that are beneficially owned by (x) any Acquiring Person (or any Affiliate or
Associate of any Acquiring Person), (y) a transferee of any Acquiring Person (or
any such Affiliate or Associate) who becomes a transferee after the Section
11(a)(ii) Event or (z) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who became a transferee prior to or concurrently with
the Section 11(a)(ii) Event pursuant to either (I) a transfer from the Acquiring
Person to holders of its equity securities or to any Person with whom it has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (II) a transfer which the Board of Directors has determined is part of
a plan, arrangement or understanding which has the purpose or effect of avoiding
the provisions of this paragraph, and subsequent transferees of such Persons,
shall be void without any further action and any holder of such Rights shall
thereafter have no rights whatsoever with respect to such Rights under any
provision of this Agreement. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 11(a)(ii) are complied with, but
shall have no liability to any holder of Right Certificates or other Person as a
result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder. From and after
the Section 11(a)(ii) Event, no Right Certificate shall be issued pursuant to
Section 3 or Section 6 hereof that represents Rights that are or have become
void pursuant to the provisions of this paragraph, and any Right Certificate
delivered to the Rights Agent that represents Rights that are or have become
void pursuant to the provisions of this paragraph shall be canceled.
(iii) The Company may at its option substitute for a
share of Common Stock issuable upon the exercise of Rights in accordance with
the foregoing subparagraph (ii) such number or fractions of shares of preferred
stock having an
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<PAGE> 20
aggregate current market value equal to the Current Market Price of a share of
Common Stock. In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit the
exercise in full of the Rights in accordance with the foregoing subparagraph
(ii), the Board of Directors shall, to the extent permitted by applicable law
and any material agreements then in effect to which the Company is a party (A)
determine the excess (such excess, the "Spread") of (1) the value of the shares
of Common Stock issuable upon the exercise of a Right in accordance with the
foregoing subparagraph (ii) (the "Current Value") over (2) the Purchase Price
(as adjusted in accordance with the foregoing subparagraph (ii)), and (B) with
respect to each Right (other than Rights which have become void pursuant to the
foregoing subparagraph (ii)), make adequate provision to substitute for the
shares of Common Stock issuable in accordance with the foregoing paragraph (ii)
upon exercise of the Right and payment of the Purchase Price (as adjusted in
accordance therewith), (1) cash, (2) a reduction in such Purchase Price, (3)
shares of Preferred Stock or other equity securities of the Company (including,
without limitation, shares or fractions of shares of preferred stock which, by
virtue of having dividend, voting and liquidation rights substantially
comparable to those of the shares of Common Stock, are deemed in good faith by
the Board of Directors to have substantially the same value as the shares of
Common Stock (such shares of preferred stock and shares or fractions of shares
of preferred stock are hereinafter referred to as "Common Stock Equivalents"),
(4) debt securities of the Company, (5) other assets, or (6) any combination of
the foregoing, having a value which, when added to the value of the shares of
Common Stock actually issued upon exercise of such Right, shall have an
aggregate value equal to the Current Value (less the amount of any reduction in
such Purchase Price), where such aggregate value has been determined by the
Board of Directors upon the advice of a nationally recognized investment banking
firm selected in good faith by the Board of Directors; provided, however, that
if the Company shall not make adequate provision to deliver value pursuant to
clause (B) above within thirty (30) days following the Section 11(a)(ii) Event
(the "Section 11(a)(ii) Trigger Date"), then the Company shall be obligated to
deliver, to the extent permitted by applicable law and any material agreements
then in effect to which the Company is a party, upon the surrender for exercise
of a Right and without requiring payment of such Purchase Price, shares of
Common Stock (to the extent available), and then, if necessary, such number or
fractions of shares of preferred stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to the
Spread. If the Board of Directors of the Company shall determine in good faith
that it is likely that sufficient additional shares of Common Stock and/or
Common Stock Equivalents could be authorized for issuance upon exercise in full
of the Rights, the thirty (30) day period set forth above may be extended to the
extent necessary, but not more than ninety (90) days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek stockholder approval for the
authorization of such additional shares or Common Stock Equivalents (such thirty
(30) day period, as it may be extended, is herein called the "Substitution
Period"). To the extent that the Company determines that some action need be
taken pursuant to the second and/or third sentence of this Section 11(a)(iii),
the Company (x) shall provide, subject to the last three sentences of Section
11(a)(ii) hereof, that such action shall apply uniformly to all
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outstanding Rights, and (y) may suspend the exercisability of the Rights until
the expiration of the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of distribution to be
made pursuant to the first sentence of Section 11(a)(ii) and to determine the
value thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iii), the
value of the Common Stock shall be the Current Market Price per share of the
Common Stock on the Section 11(a)(ii) Trigger Date and the per share or per unit
value of any Common Stock Equivalent shall be deemed to equal the Current Market
Price per share of the Common Stock on such date. The Board of Directors may,
but shall not be required to, establish procedures to allocate the right to
receive Common Stock upon the exercise of the Rights among holders of Rights
pursuant to this Section 11(a)(iii)
(b) In case the Company shall fix a record date for the
issuance of rights (other than the Rights), options or warrants to all holders
of Common Stock entitling them to subscribe for or purchase (for a period
expiring within forty-five calendar days after such record date) Common Stock,
shares having the same rights, privileges and preferences as the Common Stock
("equivalent common stock") or securities convertible into Common Stock or
equivalent common stock at a price per share of Common Stock or equivalent
common stock (or having a conversion price per share, if a security convertible
into Common Stock or equivalent common stock) less than the Current Market Price
per share of Common Stock on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding on
such record date, plus the number of shares of Common Stock which the aggregate
offering price of the total number of shares of Common Stock and/or equivalent
common stock (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such Current Market Price, and
the denominator of which shall be the number of shares of Common Stock
outstanding on such record date, plus the number of additional shares of Common
Stock and/or equivalent common stock to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially
convertible). In case such subscription price may be paid by delivery of
consideration part or all of which may be in a form other than cash, the value
of such non-cash consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent. Shares of Common Stock owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made successively whenever
such a record date is fixed, and in the event that such rights or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
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<PAGE> 22
(c) In case the Company shall fix a record date for a
distribution to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash, assets (other than a
dividend payable in Common Stock, but including any dividend payable in stock
other than Common Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b) 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 Current Market Price per share of Common Stock on such record date,
less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to a share of Common Stock and the denominator of which shall be such
Current Market Price per share of Common Stock. Such adjustments shall be made
successively whenever such a record date is fixed, and in the event that such
distribution is not so made, the Purchase Price shall be adjusted to be the
Purchase Price which would have been in effect if such record date had not been
fixed.
(d) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "Current Market
Price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of the Common Stock for the thirty
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date, and for purpose of computations made pursuant to Section
11(a)(iii) hereof, the "Current Market Price" per share of the Common Stock on
any date shall be deemed to be the average of the daily closing prices per share
of the Common Stock for the ten consecutive Trading Days immediately following
such date; provided, however, that in the event that the Current Market Price
per share of the Common Stock is determined during a period following the
announcement by the issuer of the Common Stock of (i) any dividend or
distribution on the Common Stock (other than a regular quarterly cash dividend
and other than the Rights), (ii) any subdivision, combination or
reclassification of the Common Stock, and prior to the expiration of the
requisite thirty Trading Day or ten Trading Day period, as set forth above, the
ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification occurs, then, and in each such
case, the Current Market Price shall be properly adjusted to take into account
ex-dividend trading. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the shares of Common Stock are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, the last quoted sale price or,
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<PAGE> 23
if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use,
or, if on any such date the shares of Common Stock are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock selected by the
Board of Directors of the Company. If on any such date no market maker is making
a market in the Common Stock, the fair value of such shares on such date as
determined in good faith by the Board of Directors of the Company shall be used,
and shall be binding on the Rights Agent. The term "Trading Day" shall mean a
day on which the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or admitted to trading
on any national securities exchange, a Business Day. If the Common Stock is not
publicly held or not so listed or traded, "Current Market Price" per share shall
mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least one percent in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a share, as the case may
be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates such adjustment, or (ii)
the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than Common
Stock, thereafter the number of such other shares so receivable upon exercise of
any Right and the Purchase Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares of Common Stock contained in Section
11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m) hereof, and the provisions
of Sections 7, 9, 10, 13 and 14 hereof with respect to the Common Stock shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Common Stock
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the
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<PAGE> 24
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of shares of Common Stock
(calculated to the nearest ten-thousandth) obtained by (i) multiplying (x) the
number of shares covered by a Right immediately prior to this adjustment, by (y)
the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price, and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price or any adjustment to the number of shares of
Common Stock for which a Right may be exercised, to adjust the number of Rights,
in lieu of any adjustment in the number of shares of Common Stock purchasable
upon the exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the number of shares
of Common 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
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least ten 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(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of shares of Common Stock issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue to
express the Purchase Price per share and the number of shares which were
expressed in the initial Right Certificates issued hereunder.
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<PAGE> 25
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value of the shares of Common
Stock issuable upon exercise of the Rights, the Company shall take any corporate
action, including using its best efforts to obtain any required stockholder
approvals, which may, in the opinion of its counsel, be necessary in order that
the Company may validly and legally issue fully paid and nonassessable shares of
Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the shares of Common Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the shares of Common Stock
and other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares of Common Stock and other capital stock or securities upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment the Board of
Directors of the Company shall determine to be advisable in order that any (i)
consolidation or subdivision of the Common Stock, (ii) issuance for cash of any
shares of Common Stock at less than the current market price, (iii) issuance for
cash of shares of Common Stock or securities which by their terms are
convertible into or exchangeable for shares of Common Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Common Stock shall
not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person, (ii)
merge with or into any other Person, 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 Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons, if (x) at the time of or immediately after such
consolidation, merger or sale there are any charter or bylaw provisions or any
rights, warrants or other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the shareholders of the
Person who constitutes, or would constitute, the "Principal Party" for purposes
of Section 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates. The
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Company shall not consummate any such consolidation, merger or sale unless prior
thereto the Company and such other Person shall have executed and delivered to
the Rights Agent a supplemental agreement evidencing compliance with this
subsection.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or Section 26
hereof, take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action will diminish
substantially or eliminate the benefits intended to be afforded by the Rights.
12. Certification of Adjustments. Whenever an adjustment is made as
provided in Sections 11 and 13 hereof, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of the facts
giving rise to such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the Common Stock a copy of such certificate and (c) mail
a brief summary thereof to each holder of a Right Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 25 hereof. Notwithstanding the
foregoing sentence, the failure of the Company to give such notice shall not
affect the validity of or the force or effect of or the requirement for such
adjustment. The Rights Agent shall be fully protected in relying on any
certificate prepared by the Company pursuant to Sections 11 and 13 and on any
adjustment therein contained and shall not be deemed to have knowledge of any
such adjustment unless and until it shall have received such certificate. Any
adjustment to be made pursuant to Sections 11 and 13 of this Rights Agreement
shall be effective as of the date of the event giving rise to such adjustment.
13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power
(a) In the event that, following the first occurrence of a
Triggering Event, directly or indirectly, (x) the Company shall consolidate
with, or merge with and into, any other Person or Persons and the Company shall
not be the surviving or continuing corporation of such consolidation or merger,
or (y) any Person or Persons shall consolidate with, or merge with and into, the
Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other Person or of the
Company or cash or any other property (other than in the case of the
transactions described in subparagraphs (x) or (y), a merger or consolidation
which would result in all of the Voting Power represented by the securities of
the Company 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 Power represented by the securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation and the holders of such securities not having changed as a result
of such transactions), or (z) the Company or one or more of its Subsidiaries
shall sell, mortgage or otherwise transfer to any other Person or any Affiliate
or Associate of
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such Person, 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
Company and its Subsidiaries (taken as a whole), then, on the first occurrence
of any such event, (a "Section 13 Event"), proper provision shall be made so
that (i) each holder of a Right (other than Rights which have become void
pursuant to Section 11(a)(ii) hereof) shall thereafter have the right to
receive, upon the exercise thereof at the Purchase Price (as theretofore
adjusted in accordance with Section 11(a)(ii) hereof), in accordance with the
terms of this Agreement and in lieu of shares of preferred stock or Common Stock
of the Company, such number of validly authorized and issued, fully paid,
non-assessable and freely tradeable shares of Common Stock of the Principal
Party (as such term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall equal
the result obtained by dividing the Purchase Price (as theretofore adjusted in
accordance with Section 11(a)(ii) hereof) by 50% of the Current Market Price per
share of the Common Stock of such Principal Party (determined pursuant to
Section 11(d) hereof) on the date of consummation of such consolidation, merger,
sale or transfer; provided, however, that the Purchase Price (as theretofore
adjusted in accordance with Section 11(a)(ii) hereof) and the number of shares
of Common Stock of such Principal Party so receivable upon exercise of a Right
shall be subject to further adjustment as appropriate in accordance with Section
11(f) hereof to reflect any events occurring in respect of the Common Stock of
such Principal Party after the occurrence of such consolidation, merger, sale or
transfer; (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 Company pursuant to this Rights Agreement; (iii) the term "Company" for all
purposes of this Rights Agreement shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of Section
11 hereof shall only apply 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
shares of its Common Stock) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of Common Stock thereafter deliverable upon the exercise of the Rights;
provided, however, that, upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all assets, recapitalization,
reclassification of shares, reorganization or other extraordinary transaction in
respect of such Principal Party, each holder of a Right shall thereupon be
entitled to receive, upon exercise of a Right, such cash, shares, rights,
warrants and other property which such holder would have been entitled to
receive had he, at the time of such transaction, owned the shares of Common
Stock of the Principal Party purchasable upon the exercise of a Right, and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property.
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(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x)
or (y) of the first sentence of Section 13(a) hereof; (A) the Person
that is the issuer of the securities into which shares of Common Stock
of the Company are converted in such merger or consolidation, or, if
there is more than one such issuer, the issuer the Common Stock of
which has the greatest aggregate market value or (B) if no securities
are so issued, (x) the Person that is the other party to the merger or
consolidation and that survives said merger or consolidation, or, if
there is more than one such Person, the Person the Common Stock of
which has the greatest market value or (y) if the Person that is the
other party to the merger or consolidation does not survive the merger
or consolidation, the Person that does survive the merger or
consolidation (including the Company if it survives); and
(ii) in the case of any transaction described in (z)
of the first sentence in Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions, or, if each Person that is a party
to such transaction or transactions receives the same portion of the assets or
earning power so transferred or if the Person receiving the greatest portion of
the assets or earning power cannot be determined, whichever of such Persons as
is the issuer of Common Stock having the greatest aggregate market value of
shares outstanding, or if 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 clauses (1) and (2) above
shall apply to each of the owners having an interest in the joint venture as if
the Person owned by the joint venture was a Subsidiary of both or all of such
joint venturers, and the Principal Party in each such case shall bear the
obligations set forth in this Section 13 in the same ratio as its interest in
such Person bears to the total of such interests; provided, however, that in any
such case described in the foregoing (b)(i) or (b)(ii), if the Common Stock of
such Person is not at such time and has not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, and such Person
is a direct or indirect Subsidiary of another Person the Common Stock of which
is and has been so registered, the term "Principal Party" shall refer to such
other Person, or if such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Stocks of all of which are and have been so
registered, the term "Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Stock having the greatest market value of shares
outstanding.
(c) The Company shall not consummate any consolidation,
merger, sale or transfer referred to in Section 13(a) unless the Principal Party
shall have a sufficient number of authorized shares of its 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
Company and the Principal Party involved therein shall have executed and
delivered to the Rights Agent an agreement confirming that the requirements of
Sections 13(a) and (b) hereof
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<PAGE> 29
shall promptly be performed in accordance with their terms and that such
consolidation, merger, sale or transfer of assets shall not result in a default
by the Principal Party under this Rights Agreement as the same shall have been
assumed by the Principal Party pursuant to Sections 13(a) and (b) hereof and
further providing that, as soon as practicable after executing such agreement
pursuant to this Section 13, the Principal Party at its own expense shall:
(i) prepare and file a registration statement under
the Securities Act, if necessary, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its best
efforts to cause such registration statement to become effective as soon as
practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the date of expiration of the Rights,
and similarly comply with applicable state securities laws;
(ii) use its best efforts, if the Common Stock of the
Principal Party shall become listed on a national securities exchange, to list
(or continue the listing of) the Rights and the securities purchasable upon
exercise of the Rights on such securities exchange and, if the Common Stock of
the Principal Party shall not be listed on a national securities exchange, to
cause the Rights and the securities purchasable upon exercise of the Rights to
be reported by NASDAQ or such other system then in use;
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and
(iv) obtain waivers of any rights of first refusal or
preemptive rights in respect of the shares of Common Stock of the Principal
Party subject to purchase upon exercise of outstanding Rights.
In the event that any of the transactions described in Section 13(a)
hereof shall occur at any time after the occurrence of a transaction described
in Section 11(a)(ii) hereof, the Rights which have not theretofore been
exercised shall thereafter be exercisable in the manner described in Section
13(a). The provisions of this Section 13 shall similarly apply to all successive
Section 13 Events.
(d) Furthermore, in case the Principal Party which is to be a
party to a transaction referred to in this Section 13 has a provision in any of
its authorized securities or in its Certificate of Incorporation or By-laws or
other instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, shares of Common Stock of such Principal Party at less than the then Current
Market Price per share (determined pursuant to Section 11(d) hereof) or
securities exercisable for, or convertible into, Common Stock of such Principal
Party at less than such then current market price (other than to holders of
Rights pursuant to this Section 13) or
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(ii) providing for any special payment, tax or similar provisions in connection
with the issuance of the Common Stock of such Principal Party pursuant to the
provisions of Section 13; then, in such event, the Company hereby agrees with
each holder of Rights that it shall not consummate any such transaction unless
prior thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing that the
provision in question of such Principal Party shall have been canceled, waived
or amended, or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or as a consequence
of, the consummation of the proposed transaction.
14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the holders of record 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 then
current market value of a whole Right. For the purposes of this Section 14(a),
the then current market value of a Right shall be determined in the same manner
as the Current Market Price of a share of Common Stock shall be determined
pursuant to Section 11(d) hereof.
(b) The Company shall not be required to issue fractions of
shares of Common Stock upon exercise of the Rights or to distribute certificates
which evidence fractional shares. In lieu of issuing fractions of shares of
Common Stock, there shall be paid to the holders of record of Right Certificates
at the time such Right Certificates are exercised as herein provided an amount
in cash equal to the same fraction of the then current market value of a share
of Common Stock. For purposes of this Section 14(b), the then current market
value of a share of Common Stock shall be the Current Market Price thereof as
determined pursuant to Section 11(d) hereof.
(c) The holder of a Right by the acceptance of a Right
expressly waives his right to receive any fractional Right or any fractional
shares upon exercise of a Right.
15. Rights of Action. All rights of action in respect of this Rights
Agreement, other than any rights of action vested in the Rights Agent pursuant
to Sections 18 and 20 below, are vested in the respective holders of record of
the Right Certificates (and, prior to the Distribution Date, the holders of
record of the Common Stock); and any holder of record of any Right Certificate
(or, prior to the Distribution Date, of the Common Stock), without the consent
of the Rights Agent or of the holder of any other Right Certificate (or, prior
to the Distribution Date, of the Common Stock), may, in his own behalf and for
his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company or any other Person to enforce, or otherwise act
in respect of, his right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this Rights
Agreement. Without limiting the foregoing or any remedies
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available to the holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for any breach of
this Rights Agreement and, accordingly, that they 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 Rights
Agreement. Holders of Rights shall be entitled to recover the reasonable costs
and expenses, including attorneys' fees, incurred by them in any action to
enforce the provisions of this Rights Agreement.
16. Agreement of Right Holders. Every holder of a Right by accepting
the same consents and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will not be
evidenced by a Right Certificate and will be transferable only in connection
with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates will
be transferable only on the registry books of the Rights Agent if surrendered at
the shareholder services office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the
person in whose name 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 Company or the Rights Agent or the
transfer agent of the Common Stock) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the contrary;
and
(d) notwithstanding anything in this Rights Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Rights Agreement by reason of any preliminary
or permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
17. Right Certificate Holder Not Deemed a Stockholder. No holder of a
Right, as such, shall be entitled to vote, receive dividends in respect of or be
deemed for any purpose to be the holder of Common Stock or any other securities
of the Company which may at any time be issuable upon the exercise of the
Rights, 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
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<PAGE> 32
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders, or to receive dividends or subscription rights
in respect of any such stock or securities, 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.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this Rights
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability or expense incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent for anything done or omitted
to be done by the Rights Agent in connection with the acceptance and
administration of this Rights Agreement, including the cost and expenses of
defending against any claim of liability in the premises. The indemnity provided
herein shall survive the expiration of the Rights and the termination of this
Rights Agreement.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Rights Agreement in reliance upon any
Right Certificate, certificate for Common Stock or other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, guaranteed, verified or acknowledged, by the proper Person or
Persons.
19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Rights Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Rights Agreement, any of the
Right Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and in case at that
time any of the Right Certificates shall not have been countersigned, any
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<PAGE> 33
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver such Right Certificates so countersigned; and
in case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Rights Agreement.
20. Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Rights Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted to be taken by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this
Rights Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any Acquiring
Person) be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the President or any Vice President and
by the Treasurer or any Assistant Treasurer or the Secretary or any Assistant
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Rights Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Rights Agreement or
in the Right Certificates (except its countersignature thereof) or be required
to verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and delivery
hereof (except
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<PAGE> 34
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Rights Agreement or in any Right Certificate; nor
shall it be responsible for any adjustment required under the provisions of
Sections 11, 13, 23 or 24 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 a Certificate furnished
pursuant to Section 12 describing any such adjustment); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock to be issued pursuant
to this Rights Agreement or any Right Certificate or as to whether any shares of
Common Stock will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the President or any Vice President or the Secretary
or any Assistant Secretary or the Treasurer or any Assistant Treasurer of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions of any such
officer. Any application by the Rights Agent for written instructions from the
Company may, at the option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent under this Rights Agreement
and the date on and/or after which such action shall be taken or such omission
shall be effective. Subject to Section 20(c) hereof, the Rights Agent shall not
be liable for any action taken 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 Business
Days after the date any officer of the Company 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
instructions in response to such application specifying the action to be taken
or omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent
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<PAGE> 35
under this Rights Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
(j) No provision of this Rights Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of its rights if there shall be reasonable grounds for believing that repayment
of such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate contained in the form
of assignment or the form of election to purchase set forth on the reverse
thereof, as the case may be, has either not been completed or indicates an
affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not
take any further action with respect to such requested exercise of transfer
without first consulting with the Company.
21. Change of Rights Agent. The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Rights Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Stock by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent (with or without cause) upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Stock by registered or certified
mail, and to the holders of the Right Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent.
Notwithstanding the foregoing provisions of this Section 21, in no event shall
the resignation or removal of a Rights Agent be effective until a successor
Rights Agent shall have been appointed and have accepted such appointment. If
the Company shall fail to make such appointment within a period of 30 days after
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 Company), then the incumbent Rights Agent or the holder of
record of any Right Certificate may apply to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States or any State
thereof, in good standing, which is authorized under such laws to exercise
corporate trust or stock
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<PAGE> 36
transfer powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000 or (b) an Affiliate
controlled by a corporation described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common 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. Notwithstanding any of the
provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price per share and the number or kind or class of
shares of stock or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Rights Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the redemption or expiration of the
Rights, the Company (a) shall, with respect to shares of Common Stock so issued
or sold pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Right
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Right Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Right Certificate
would be issued, and (ii) no such Right Certificate shall be issued, if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
23. Redemption.
(a) The Board of Directors of the Company may, at its option,
at any time prior to the earlier of (x) the first occurrence of a Section
11(a)(ii) Event or (y) the Close of Business on the Final Expiration Date,
redeem all but not less than all the then outstanding Rights at a redemption
price of $0.01 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").
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<PAGE> 37
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights (or such later time as the
Board of Directors may establish for the effectiveness of redemption), 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, without any interest thereon. Within
10 days after the action of the Board of Directors ordering the redemption of
the Rights (or such later time as the Board of Directors may establish for the
effectiveness of redemption), the Company shall mail a notice of such redemption
to the Rights Agent and the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. The failure to give notice required by this Section 23(b) or any
defect therein shall not affect the legality or validity of the action taken by
the Company.
(c) In the case of a redemption permitted under Section 23(a),
the Company 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 and (ii) mailing payment of the Redemption Price to the registered
holders of the Rights at their last 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 Right Certificates shall be null and void without any further action
by the Company.
24. Exchange of Rights for Common Stock.
(a) The Board of Directors of the Company may, at its option,
at any time after the occurrence of a Section 11(a)(ii) Event, exchange all or
part of the then outstanding and exercisable Rights (which (i) shall not include
Rights that have become void pursuant to the provisions of Section 11(a)(ii) and
(ii) shall include, without limitation, any Rights issued after the Distribution
Date in accordance with Section 22) for shares of Common Stock at an exchange
ratio of one share of Common Stock per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other than an
Exempt Person), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of shares of Common Stock aggregating 50% or more
of the shares of Common Stock then outstanding. From and after the occurrence of
an event specified in Section 13(a) hereof, any Rights that theretofore have not
been exchanged pursuant to this Section 24(a) shall thereafter be exercisable
only in accordance with Section 13 and may not be exchanged pursuant to this
Section 24(a).
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(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to subsection (a) of
this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of shares of Common Stock
equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company 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 will
state the method by which the exchange of the shares of Common Stock for Rights
will be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become void pursuant to
the provisions of Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute, and, 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 24, the Company shall substitute to the extent of such
insufficiency, for each share of Common Stock that would otherwise be issuable
upon exchange of a Right, a number of shares of preferred stock or fractions
thereof having an aggregate current per share market price (determined pursuant
to Section 11(d) hereof) equal to the Current Market Price of one share of
Common Stock (determined pursuant to Section 11(d) hereof) as of the date of the
Section 11(a)(ii) Event.
(d) 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 24, the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock, the
Company shall pay to the registered holders of the Right Certificates with
regard to which such fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of a whole share of Common Stock. For the purposes of this paragraph (d),
the current market value of a whole share of Common Stock shall be the Current
Market Price of a share of Common Stock (as defined in Section 11(d) hereof for
the purposes of computations made other than pursuant to Section 11(a)(iii)) for
the Trading Day immediately prior to the date of exchange pursuant to this
Section 24.
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25. Notice of Proposed Actions.
(a) In case the Company, after the Distribution Date, shall
propose (i) to effect any of the transactions referred to in Section 11(a)(i) or
to pay any dividend to the holders of record of its Common Stock payable in
stock of any class or to make any other distribution to the holders of record of
its Common Stock (other than a regular periodic cash dividend), or (ii) to offer
to the holders of record of its Common Stock options, warrants, or other rights
to subscribe for or to purchase shares of Common Stock (including any security
convertible into or exchangeable for Common Stock) or shares of stock of any
class or any other securities, options, warrants, convertible or exchangeable
securities or other rights, or (iii) to effect any reclassification of its
Common Stock or any recapitalization or reorganization of the Company, or (iv)
to effect any consolidation or merger with or into, or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one or more transactions, of more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons, or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of record of a Right Certificate, in accordance with Section 25
hereof, notice of such proposed action, which shall specify the record date for
the purposes of such transaction referred to in Section 11(a)(i), or such
dividend or distribution, or the date on which such reclassification,
recapitalization, reorganization, consolidation, merger, sale or transfer of
assets, liquidation, dissolution, or winding up is to take place and the record
date for determining participation therein by the holders of record of Common
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 10 days prior to
the record date for determining holders of record of the Common Stock for
purposes of such action, and in the case of any such other action, at least 10
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of record of Common Stock, whichever shall
be the earlier. The failure to give notice required by this Section 24 or any
defect therein shall not affect the legality or validity of the action taken by
the Company or the vote upon any such action.
(b) In case any of the transactions referred to in Section
11(a)(ii) or Section 13 of this Rights Agreement are proposed, then, in any such
case, the Company shall give to each holder of Rights, in accordance with
Section 25 hereof, notice of the proposal of such transaction at least 10 days
prior to consummating such transaction, which notice shall specify the proposed
event and the consequences of the event to holders of Rights under Section
11(a)(ii) or Section 13 hereof, as the case may be, and, upon consummating such
transaction, shall similarly give notice thereof to each holder of Rights.
(c) The failure to give notice required by this Section 25 or
any defect therein shall not affect the legality or validity of the action taken
by the Company or the vote upon any such action.
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<PAGE> 40
26. Notices. Notices or demands authorized by this Rights Agreement to
be given or made by the Rights Agent or by the holder of record of any Right
Certificate or Right to or on behalf of the Company shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
KLA Instruments Corporation
160 Rio Robles
P.O. Box 49055
San Jose, California 95161-9055
Attention: Chief Financial Officer
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Rights Agreement to be given or made by the Company or by the holder of
record of any Right Certificate or Right to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
The First National Bank of Boston
P.O. Box l865
Boston, Massachusetts 02l05
Attention: Shareholder Services Division
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of record of any Right Certificate
or Right 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 it
appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer Agent.
27. Supplements and Amendments. Except as provided in the penultimate
sentence of this Section 27, for so long as the Rights are then redeemable, the
Company may in its sole and absolute discretion, and the Rights Agent shall if
the Company so directs, supplement or amend any provision of this Agreement in
any respect without the approval of any holders of the Rights. At any time when
the Rights are no longer redeemable, except as provided in the penultimate
sentence of this Section 27, the Company may, and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without the approval of
any holders of Rights Certificates in order to (i) cure any ambiguity, (ii)
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) shorten or lengthen any
time period hereunder, or (iv) change or supplement the provisions hereunder in
any manner which the Company may deem necessary or desirable; provided that no
such supplement or amendment shall adversely affect the interests of the holders
of Rights as such (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person), and no such amendment may cause the Rights again to
become redeemable or cause the Agreement again to become amendable other than in
accordance with this sentence.
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<PAGE> 41
Notwithstanding anything contained in this Rights Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price. Prior
to the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
28. Successors. All of the covenants and provisions of this Rights
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
29. Benefits of this Rights Agreement. Nothing in this Rights Agreement
shall be construed to give to any person or corporation other than the Company,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the Common Stock) any legal or equitable right,
remedy or claim under this Rights Agreement; but this Rights Agreement shall be
for the sole and exclusive benefit of the Company, the Rights Agent and the
holders of record of the Right Certificates (and, prior to the Distribution
Date, the Common Stock).
30. Delaware Contract. This Rights Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts to be made and
performed entirely within such state; provided, however, that the rights and
obligations of the Rights Agent shall be governed by the laws of the State of
California (or state of incorporation of any successor Rights Agent).
31. Counterparts. This Rights Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
32. Descriptive Headings. Descriptive headings of the several sections
of this Rights Agreement are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions hereof.
33. Severability. If any term, provision, covenant or restriction of
this Rights Agreement is held by a court of competent jurisdiction or other
authority to be invalid, illegal, or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Rights Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
38
<PAGE> 42
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, all as of the day and year first above written.
ATTEST: KLA INSTRUMENTS CORPORATION
By:________________________ By:________________________
Name: Name:
Title: Title:
ATTEST: THE FIRST NATIONAL BANK OF
BOSTON
By:________________________ By:________________________
Name: Name:
Title:_____________________ Title:_____________________
39
<PAGE> 43
EXHIBIT A
[Form of Right Certificate]
Certificate No. W- Rights
NOT EXERCISABLE AFTER APRIL , 2006 OR EARLIER IF REDEEMED OR EXCHANGED.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$0.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. IN THE
EVENT THAT THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE ISSUED TO A
PERSON WHO IS AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OR AN
ACQUIRING PERSON OR A TRANSFEREE OF THE RIGHTS PREVIOUSLY OWNED BY SUCH
PERSONS, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY SHALL
BE NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
RIGHT CERTIFICATE
KLA INSTRUMENTS CORPORATION
This certifies that , or registered assigns, is the registered owner of
the number of Rights set forth above, each of which entitles the owner thereof,
subject to the terms, provisions and conditions of the Amended and Restated
Rights Agreement dated as of April , 1996 ("Rights Agreement") between KLA
Instruments Corporation, a Delaware corporation ("Company"), and The First
National Bank of Boston, a national banking association ("Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M. (Boston time) on
April , 1996 at the office of the Rights Agent, of its successors as Rights
Agent, designated for such purposes, one fully paid and nonassessable share of
Common Stock, par value $0.001 per share ("Common Stock"), of the Company at a
purchase price of $ .00 as the same may from time to time be adjusted in
accordance with the Rights Agreement ("Purchase Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly
executed.
As provided in the Rights Agreement, the Purchase Price and the number
of shares of Common Sock which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and adjustment
upon the happening of certain events and, upon the happening of certain events,
securities other than shares of Common Stock, or other property, may be acquired
upon exercise of the Rights evidenced by this Right Certificate, as provided by
the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated
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<PAGE> 44
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 of the Rights Agent, the Company and
the holders of record of the Right Certificates. Copies of the Rights Agreement
are on file at the principal executive office of the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the shareholder services 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 of record to purchase a like
aggregate number of shares of Common Stock 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 Company at its option at a redemption
price of $0.01 per Right at any time prior to the earlier of (i) the date on
which a Person becomes an Acquiring Person (as such term is defined in the
Rights Agreement), or (ii) the Final Expiration Date.
No fractional shares of Common Stock shall be issued upon the exercise
of any Right or Rights evidenced hereby, and in lieu thereof, as provided in the
Rights Agreement, fractions of shares of Common Stock shall receive an amount in
cash equal to the same fraction of the then current market value of a share of
Common Stock.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of Common Stock or
of any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the stockholders at any
meeting thereof, or to give or withhold consent to any corporate action or to
receive notice of meetings or other actions affecting stockholders or to receive
dividends or 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.
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<PAGE> 45
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of , 19 .
ATTEST: KLA INSTRUMENTS CORPORATION
_____________________________ By:_________________________
Secretary Title:______________________
COUNTERSIGNED: THE FIRST NATIONAL BANK OF
BOSTON
By:__________________________ By:_________________________
Authorized Signature Name:
Title:______________________
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<PAGE> 46
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer any or all of the Rights
represented by this Right Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
________________________________________________________________________________
________________________________________________________________________________
(Name, address and social security or other
identifying number of transferee)
___________________________________ (_______________) of the Rights represented
by this Right Certificate, together with all right, title and interest in and to
said Rights, and hereby irrevocably constitutes and appoints
_________________________ attorney to transfer said Rights on the books of the
within-named Company with full power of substitution.
Dated:___________________, 19__. _________________________
(Signature)
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the rights evidenced by this Right Certificate [ ] are [ ] are not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person (as such capitalized terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] 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 of an
Acquiring Person or any transferee of such Persons.
Dated:__________________, 19_________________________________
(Signature)
Signature Guaranteed:
4
<PAGE> 47
Form of Reverse Side of Right Certificate
(continued)
NOTICE
The signatures to the foregoing Assignment and the foregoing
Certificate, if applicable, must correspond to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever, and must be guaranteed by a participant in a
Securities Transfer Association ("STA") recognized signature program.
In the event that the foregoing Certificate is not duly executed, with
signature guaranteed, the Company may deem the Rights represented by this Right
Certificate to be Beneficially Owned by an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such capitalized terms are defined in the
Rights Agreement), and not issue any Right Certificate or Right Certificates in
exchange for this Right Certificate.
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<PAGE> 48
Form of Reverse of Right Certificate
(continued)
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder
desires to exercise any or all of the Rights
represented by this Right Certificate)
To KLA Instruments Corporation:
The undersigned hereby irrevocably elects to exercise _______________
(__________) of the Rights represented by this Right Certificate to purchase the
shares of the Common Stock of the Company, or other securities or property
issuable upon the exercise of said number of Rights pursuant to the Rights
Agreement.
The undersigned hereby requests that a certificate for any such
securities and any such property be issued in the name of and delivered to:
________________________________________________________________________________
________________________________________________________________________________
(Name, address and social security or other
identifying number of issuee)
The undersigned hereby further requests that if said number of Rights
shall not be all the Rights represented by this Right Certificate, a new Right
Certificate for the remaining balance of such Rights be issued in the name of
and delivered to:
________________________________________________________________________________
________________________________________________________________________________
(Name, address and social security or other
identifying number of issuee)
Dated:__________________, 19_______________________________
(Signature)
Signature Guaranteed:
6
<PAGE> 49
Form of Reverse Side of Right Certificate
(continued)
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined pursuant to
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] 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 of an
Acquiring Person or any transferee of such Persons.
Dated:__________________, 19___________________________
(Signature)
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and the foregoing
Certificate, if applicable, must correspond to the name as written upon the face
of the this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever, and must be guaranteed by a member firm of
a registered national securities exchange, a member of the National Association
of Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
In the event that the foregoing Certificate is not executed, with
signature guaranteed, the Company may deem the Rights represented by this Right
Certificate to be Beneficially Owned by an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such capitalized terms are defined in the
Rights Agreement), and not issue any Right Certificate or Right Certificates in
exchange for this Right Certificate.
7
<PAGE> 50
EXHIBIT B
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED
TO, BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN
ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) OR AN ASSOCIATE OR
AFFILIATE (AS DEFINED IN THE RIGHTS AGREEMENT) THEREOF AND CERTAIN TRANSFEREES
THEREOF WILL BE NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
KLA INSTRUMENTS CORPORATION
SUMMARY OF TERMS OF
RIGHTS AGREEMENT
NATURE OF RIGHT: When exercisable, each Right (a "Right")
will initially entitle the holder to
purchase one share of Common Stock ("Common
Stock") of KLA Instruments Corporation (the
"Company").
MEANS OF DISTRIBUTION: The Rights will be distributed to holders of
the Company's outstanding Common Stock as a
dividend of one Right for each share of
Common Stock. The Rights will also be
attached to all future issuances of Common
Stock prior to the Distribution Date (as
defined below).
EXERCISABILITY: Rights become exercisable on the earlier of:
(i) the tenth day following the date of
public announcement by the Company or by any
person or group (an "Acquiring Person") that
such person or group has acquired beneficial
ownership of 15% or more of the Company's
outstanding Common Stock, or (ii) the tenth
business day (unless extended by the Board
prior to the time a person becomes an
Acquiring Person) following the
commencement, or announcement of an
intention to commence, by any person or
group of a tender or exchange offer which
would result in such person owning 15% or
more of the outstanding Common Stock of the
Company (the earlier of such dates is
referred to as the "Distribution Date").
Rights will trade separately from the Common
Stock once the Rights become exercisable.
EXERCISE PRICE: $160.00 per share, which is the amount that
in the judgment of the Board of Directors
represents the long-term value of the Common
Stock over the term of the Rights Agreement
(the "Exercise Price").
TERM: The Rights will expire upon the earlier of
(i) ten years after the date of issuance, or
April 24, 2006 or (ii) redemption or
exchange by the Company as described below.
REDEMPTION OF RIGHTS: Rights are redeemable at a price of $0.01
per Right, by the vote of the Company's
Board of Directors, at any time until the
occurrence of a Section 11(a)(ii) Event
(defined below).
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<PAGE> 51
RIGHTS IN EVENT OF In the event that an Acquiring Person
SELF-DEALING TRANSAC- engages in certain dealing transactions with
TION OR ACQUISITION OF the Company, or a Person becomes the
SUBSTANTIAL AMOUNT OF beneficial owner of 15% or more of the
COMMON STOCK: outstanding Common Stock ("Section 11(a)(ii)
Events"), a holder of a Right thereafter has
the right to purchase, upon payment of the
then current Exercise Price, such number of
shares of Common Stock having a market value
at the time of the transaction equal to the
Exercise Price divided by one-half the
Current Market Price (as defined in the
Rights Agreement) of the Common Stock.
Notwithstanding the foregoing, Rights held
by the Acquiring Person or any Associate or
Affiliate thereof or certain transferees
will be null and void and no longer be
transferable.
Self-dealing transactions are defined to
include a consolidation, merger or other
combination of an Acquiring Person with the
Company in which the Company is the
surviving corporation, the transfer of
assets to the Company in exchange for
securities of the Company, or otherwise
obtain securities of the Company (other than
in a pro rata distribution to all
stockholders), the sale, purchase, transfer,
distribution, lease, mortgage, pledge or
acquisition of assets by the Acquiring
Person to, from or with the Company on other
than an arm's length basis, compensation to
an Acquiring Person for services (other than
for employment as a regular or part-time
employee or director on a basis consistent
with the Company's past practice), a loan or
provision of other financial assistance
(except proportionately as a stockholder) to
an Acquiring Person or the licensing, sale
or other transfer of proprietary technology
or know-how from the Company to the
Acquiring Person on terms not approved by
the Board of Directors or a
reclassification, recapitalization or other
transaction with the effect of increasing by
more than 1% the Acquiring Person's
proportionate share of any class of
securities of the Company.
RIGHTS IN EVENT OF If, following the occurrence of a Section
BUSINESS COMBINATION: 11(a)(ii) Event, the Company is acquired by
any person in a merger or other business
combination transaction in which the Common
Stock is exchanged or converted or in which
the corporation is not the surviving
corporation, or 50% or more of its assets or
earnings power are sold to any person, each
holder of a Right (other than an Acquiring
Person, or Affiliates or Associates thereof)
shall thereafter have the right to purchase,
upon payment of the then current Exercise
Price, such number of shares of common stock
of the acquiring company having a current
market value equal to the Exercise Price
divided by one-half the Current Market Price
of such common stock.
EXCHANGE OPTION: In the event (i) any person or group becomes
an Acquiring Person or (ii) any of the types
of transactions, acquisitions or other
events described above as self- dealing
transactions occur, and prior to the
acquisition by such person or group of 50%
or more of the outstanding shares of Common
Stock, the Board may require all or any
portion of the outstanding Rights (other
than Rights owned by such Acquiring Person
which have become void) to be exchanged for
Common Stock on a pro rata basis, at
2
<PAGE> 52
an exchange ratio of one share of Common
Stock (or of a share of a class or series of
the Company's preferred stock having
equivalent rights, preferences and
privileges), per Right (subject to
adjustment).
FRACTIONAL SHARES: No fractional shares of Common Stock will be
issued upon exercise of the Rights and, in
lieu thereof, a payment in cash will be made
to the holder of such Rights equal to the
same fraction of the current market value of
a share of Common Stock.
ADJUSTMENT: The Exercise Price payable, and the number
of shares of Common Stock or other
securities or property issuable, upon
exercise of the Rights are subject to
adjustment from time to time to prevent
dilution (i) in the event of a stock
dividend on, or a subdivision, combination
or reclassification of the Common Stock,
(ii) upon the grant to holders of the Common
Stock of certain rights or warrants to
subscribe for Common Stock or convertible
securities at less than the current market
price of the Common Stock or (iii) upon the
distribution to holders of the Common Stock
of evidences of indebtedness or assets
(excluding dividends payable in Common
Stock) or of subscription rights or warrants
(other than those referred to above). The
number of Rights associated with each share
of Common Stock is also subject to
adjustment in the event of a stock split of
the Common Stock or 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.
RIGHTS AS STOCKHOLDER: The Rights themselves do not entitle the
holder thereof to any rights as a
stockholder, including, without limitation,
voting rights or to receive dividends.
AMENDMENT OF RIGHTS: Until the Rights become nonredeemable, the
Company may, except with respect to the
redemption price, amend the Agreement in any
manner. After the Rights become
nonredeemable, the Company may amend the
Agreement to cure any ambiguity, to correct
or supplement any provision which may be
defective or inconsistent with any other
provisions, to shorten or lengthen any time
period under the Rights Agreement, or to
change or supplement any provision in any
manner the Company may deem necessary or
desirable, provided that no such amendment
may adversely affect the interests of the
holders of the Rights (other than the
Acquiring Person or its Affiliates or
Associates) or cause the Rights to again be
redeemable or the Agreement to again be
freely amendable.
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 COMPANY, 160 RIO ROBLES,
SAN JOSE, CA 95161-9055, ATTENTION: SECRETARY. THIS SUMMARY DESCRIPTION OF THE
RIGHTS AGREEMENT DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE RIGHTS AGREEMENT, AS AMENDED FROM TIME TO TIME,
WHICH IS INCORPORATED IN THIS SUMMARY DESCRIPTION BY REFERENCE.
3
<PAGE> 1
EXHIBIT 2
[KLA LOGO] NEWS RELEASE
- -------------------------------------------------------------------------------
KLA INSTRUMENTS CORPORATION Contact: Robert J. Boehlke
Chief Financial Officer
160 Rio Robles
San Jose, CA 95134
(408) 468-6285
FOR IMMEDIATE RELEASE
KLA INSTRUMENTS CORPORATION
AMENDS SHAREHOLDER RIGHTS PLAN
San Jose, California, April 26, 1996 -- KLA Instruments Corporation
(NASDAQ: KLAC) announced today that its Board of Directors had approved
amendments to its Common Stock Purchase Rights Plan to better protect KLA
against certain coercive takeover tactics and inadequate offers. KLA's
Shareholder Rights Plan was amended to extend the term of the Plan to April 25,
2006, and to change the exercise price from $50.00 to $160.00. The amendments
also reduced the stock ownership level at which the rights become exercisable
and made certain other changes. The amendments are intended to bring the Rights
Plan more in line with the current provisions of shareholders rights plans of
many other public companies. The KLA Board believes that the extension of the
Plan, the reduction of the ownership percentage threshold and the increase of
the exercise price will help ensure that the plan remains effective in
preserving the Company's long-term value for its stockholders. The amendments
were not in response to any proposal to acquire KLA, and the KLA Board is not
aware of any such effort.
As amended, the Rights Plan provides that if any person or group
acquires 15% or more of KLA common stock, each right not owned by such person or
group will entitle its holder to purchase, at the right's then-current
exercise price, KLA common stock having a value of twice the right's exercise
price.
KLA Instruments is the world's leading manufacturer of yield monitoring
and process control systems for the semiconductor manufacturing industry. KLA
is a publicly held corporation, traded on the Nasdaq National Market under the
symbol "KLAC."
###
