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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) March 12, 1998
DATA I/O CORPORATION
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(Exact name of registrant as specified in its charter)
Washington 000-10394 95-4539347
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(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
10525 Willows Road N.E.
Redmond, Washington 98073-9746
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(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (425) 881-6444
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Item 5. OTHER EVENTS.
On March 12, 1998, Data I/O Corporation (the "Corporation") issued a
press release relating to the adoption by the Board of Directors (the
"Board") of a Shareholder Rights Plan which goes into effect on April 4,
1998, the expiration date of the Corporation's existing Shareholder Rights
Plan. The March 12, 1998 press release of the Corporation is attached hereto
as Exhibit 99.1. The Corporation's existing Shareholder Rights Plan, as
currently in effect, is attached hereto as Exhibit 4.2.
On March 12, 1998, the Board of Directors (the "Board") of Data I/O
Corporation (the "Corporation") declared a dividend distribution of one
preferred share purchase right (a "Right") for each outstanding share of
Common Stock (the "Common Stock") of the Corporation. The dividend is
payable to the shareholders of record on April 4, 1998 (the "Record Date")
and with respect to shares of Common Stock issued thereafter until the
Distribution Date (as defined below) and, in certain circumstances, with
respect to shares of Common Stock issued after the Distribution Date. Except
as set forth below, each Right, when it becomes exercisable, entitles the
registered holder to purchase from the Corporation one one-hundredth
(1/100th) of a share of Series A Junior Participating Preferred Stock of the
Corporation, having the relative rights, preferences and limitations set
forth in the Form of Certificate of Designation, Preferences and Rights of
Series A Junior Participating Preferred Stock (the "Preferred Stock") filed
as Exhibit A to Exhibit 1 to the Registration Statement on Form 8-A filed by
the Corporation with the Securities and Exchange Commission on April 5, 1988,
at a price of $30 per one one-hundredth (1/100th) of a share of Preferred
Stock (the "Purchase Price"), subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Corporation and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent (the "Rights Agent"), dated as of April 4, 1998. The
Preferred Stock was authorized in connection with the adoption of the
Corporation's existing Shareholder Rights Plan and no shares of the Preferred
Stock have been issued.
Initially, the Rights will be attached to certificates representing
shares of Common Stock then outstanding, and no separate certificates
representing the Rights ("Right Certificates") will be distributed. The
Rights will separate from the Common Stock upon the earlier to occur of (i) a
person or group of affiliated or associated persons having acquired, without
the prior approval of the Corporation's Board of Directors, beneficial
ownership of 15% or more of the outstanding shares of Common Stock or (ii) 10
days, or such later date as the Board may determine, following the
commencement of or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in a person or group of
affiliated or associated persons becoming an Acquiring Person (as hereinafter
defined) except pursuant to a Permitted Offer (as hereinafter defined) (the
"Distribution Date"). A person or group whose acquisitions of shares of
Common Stock cause a Distribution Date pursuant to
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clause (i) above is an "Acquiring Person," with certain exceptions as set
forth in the Rights Agreement. The date that a person or group is first
publicly announced to have become such by the Corporation or such Acquiring
Person is the "Shares Acquisition Date."
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the associated shares of Common
Stock. Until the Distribution Date (or earlier redemption or expiration of
the Rights), new Common Stock certificates issued after the Record Date upon
transfer or new issuance of shares of Common Stock will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for shares of Common Stock outstanding as of the
Record Date, even without attaching thereto such notation or a copy of the
Summary of Rights attached to the Rights Agreement as Exhibit B, will also
constitute the transfer of the Rights associated with the shares of Common
Stock represented by such certificate. As soon as practicable following the
Distribution Date Right Certificates will be mailed to the holders of record
of shares of the Common Stock as of the Close of Business (as defined in the
Rights Agreement) on the Distribution Date (and to each initial record holder
of certain shares of Common Stock issued after the Distribution Date), and
such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on April 4, 2008, unless earlier redeemed by
the Corporation as described below.
In the event that any person becomes an Acquiring Person (except
pursuant to a tender or exchange offer which is for all outstanding shares of
Common Stock at a price and on terms which a majority of certain members of
the Board determines to be adequate and in the best interests of the
Corporation, its shareholders and other relevant constituencies, other than
such Acquiring Person, its affiliates and associates (a "Permitted Offer")),
each holder of a Right will thereafter have the right (the "Flip-In Right")
to receive upon exercise the number of shares of Common Stock (or, in certain
circumstances, of one one-hundredths (1/100ths) of a share of Preferred Stock
or other securities of the Corporation) having a value (immediately prior to
such triggering event) equal to two times the then-applicable Purchase Price
of the Right. Notwithstanding the foregoing, following the occurrence of the
event described above, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring
Person or any affiliate or associate thereof will be null and void. The
Board has the option, at any time after any person becomes an Acquiring
Person, to exchange all or part of the then-exercisable Rights (excluding
those that have become void, as described in the immediately preceding
sentence) for shares of Common Stock, at an exchange ratio determined by
dividing the then-applicable Purchase Price by the
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then-current market price per share of Common Stock as determined in
accordance with the Rights Agreement. However, this option generally
terminates if any person becomes the beneficial owner of 50% or more of the
Common Stock.
In the event that, at any time following the Shares Acquisition Date,
(i) the Corporation is acquired in a merger or other business combination
transaction in which the holders of all of the outstanding shares of Common
Stock immediately prior to the consummation of the transaction are not the
holders of all of the surviving corporation's voting power, or (ii) more than
50% of the Corporation's assets or earning power is sold or transferred, in
either case with or to (x) an Acquiring Person or any affiliate or associate
thereof or (y) any other person in which such Acquiring Person, affiliate or
associate has an interest or any person acting on behalf of or in concert
with such Acquiring Person, affiliate or associate, or (z) if, in such
transaction, all holders of shares of Common Stock are not treated alike, any
other person, then each holder of a Right (except Rights which previously
have been voided as set forth above) shall thereafter have the right (the
"Flip-Over Right") to receive, upon exercise, common shares of the acquiring
company (or, in certain circumstances, its parent) having a value equal to
two times the exercise price of the Right. The holder of a Right will
continue to have the Flip-Over Right whether or not such holder exercises or
surrenders the Flip-In Right.
The Purchase Price payable, and the number of shares of Preferred Stock,
shares of Common Stock or other securities issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) upon the grant to holders of
shares of the Preferred Stock of certain rights or warrants to subscribe for
or purchase shares of Preferred Stock at a price, or securities convertible
into Preferred Stock with a conversion price, less than the then current
market price of the Preferred Stock or (iii) upon the distribution to holders
of shares of the Preferred Stock of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-hundredths
(1/100ths) of a share of Preferred Stock issuable upon exercise of each Right
are also subject to adjustment in the event of a stock split of the Common
Stock or a stock dividend on the Common Stock payable in Common Stock or
subdivisions, consolidations or combinations of the Common Stock occurring,
in any such case, prior to the Distribution Date.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price.
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At any time prior to the earlier to occur of (i) a person becoming an
Acquiring Person or (ii) the expiration of the Rights, and under certain
other circumstances, the Corporation may redeem the Rights in whole, but not
in part, at a price (payable in cash or, at the Corporation's election, in
Common Stock) of $.001 per Right (the "Redemption Price"), which redemption
shall be effective upon the action of the Board. Additionally, following the
Shares Acquisition Date, the Corporation may redeem the then outstanding
Rights in whole, but not in part, at the Redemption Price, provided that such
redemption is in connection with a merger or other business combination
transaction or series of transactions involving the Corporation in which all
holders of shares of Common Stock are treated alike but not involving an
Acquiring Person or its affiliates or associates.
Other than those provisions relating to the rights, duties and
obligations of the Rights Agent and certain principal economic terms of the
Rights, all of the provisions of the Rights Agreement may be amended by the
Board prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board of Directors
of the Corporation in order to cure any ambiguity, defect or inconsistency,
to make changes that do not adversely affect the interests of holders of
Rights (excluding the interests of any Acquiring Person), or, subject to
certain limitations, to shorten or lengthen any time period under the Rights
Agreement.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Corporation, including, without limitation,
the right to vote or to receive dividends. While the distribution of the
Rights will not be taxable to shareholders of the Corporation, shareholders
may, depending upon the circumstances, recognize taxable income should the
Rights become exercisable or upon the occurrence of certain events thereafter.
This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which
is hereby incorporated herein by reference.
As of March 12, 1998, there were 7,135,157 shares of Common Stock
outstanding. Each share of Common Stock outstanding on the Record Date will
receive one Right. As long as the Rights are attached to the shares of
Common Stock, the Corporation will issue one Right with each new share of
Common Stock so that all such shares will have attached rights.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the
Corporation without conditioning the offer on the Rights being redeemed or a
substantial number of Rights being acquired. However, the Rights should not
interfere with any tender offer or merger approved by the Corporation (other
than with an Acquiring Person) because the Rights do
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not become exercisable in the event of a Permitted Offer or other acquisition
exempted by the Board.
Attached hereto as Exhibit 4.1 and incorporated herein by reference are
copies of the Rights Agreement and the exhibits thereto, as follows: Exhibit
A -- Form of Right Certificate; and Exhibit B -- Summary of Rights to
Purchase Series A Junior Participating Preferred Stock. The foregoing
description of the Rights is qualified in its entirety by reference to the
Rights Agreement and such exhibits thereto.
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Item 7. EXHIBITS.
4.1 Rights Agreement, dated as of April 4, 1998, between Data I/O
Corporation and ChaseMellon Shareholder Services, L.L.C. as Rights
Agent, which includes: as Exhibit A thereto, the Form of Right
Certificate; and, as Exhibit B thereto, the Summary of Rights to
Purchase Series A Junior Participating Preferred Stock.
4.2 Rights Agreement, dated as of March 31, 1988, between Data I/O
Corporation and First Jersey National Bank, as Rights Agent, as
amended by Amendment No. 1 thereto, dated as of May 28, 1992 and
Amendment No. 2 thereto, dated as of July 16, 1997.
99.1 Press Release issued by the Corporation on March 12, 1998
[REST OF PAGE INTENTIONALLY LEFT BLANK]
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
DATA I/O CORPORATION
By: /s/ Joel S. Hatlen
------------------------------
Joel S. Hatlen
Vice President of Finance and
Chief Financial Officer
Date: March 13, 1998
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EXHIBIT INDEX
Exhibit Description
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4.1 Rights Agreement, dated as of April 4, 1998, between Data I/O
Corporation and ChaseMellon Shareholder Services, L.L.C. as Rights
Agent, which includes: as Exhibit A thereto, the Form of Right
Certificate; and, as Exhibit B thereto, the Summary of Rights to
Purchase Series A Junior Participating Preferred Stock.
4.2 Rights Agreement, dated as of March 31, 1988, between Data I/O
Corporation and First Jersey National Bank, as Rights Agent, as
amended by Amendment No. 1 thereto, dated as of May 28, 1992 and
Amendment No. 2 thereto, dated as of July 16, 1997.
99.1 Press Release issued by the Corporation on March 12, 1998
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EXHIBIT 4.1
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DATA I/O CORPORATION
and
CHASEMELLON SHAREHOLDER SERVICES L.L.C., AS RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF APRIL 4, 1998
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1. Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
2. Appointment Of Rights Agent. . . . . . . . . . . . . . . . . . . . . . . . . . .6
3. Issuance Of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . .7
4. Form Of Right Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
5. Countersignature And Registration. . . . . . . . . . . . . . . . . . . . . . . .9
6. Transfer, Split-Up, Combination And Exchange Of Right Certificates;
Mutilated, Destroyed, Lost Or Stolen Right Certificates . . . . . . . . . . . 10
7. Exercise Of Rights; Purchase Price; Expiration Date Of Rights. . . . . . . . . 11
8. Cancellation And Destruction Of Right Certificates . . . . . . . . . . . . . . 13
9. Reservation And Availability Of Preferred Stock. . . . . . . . . . . . . . . . 14
10. Preferred Stock Record Date . . . . . . . . . . . . . . . . . . . . . . . . . 15
11. Adjustment Of Purchase Price, Number And Kind Of Shares Or Number Of Rights. . 15
12. Certificate Of Adjusted Purchase Price Or Number Of Shares . . . . . . . . . . 22
13. Consolidation, Merger Or Sale Or Transfer Of Assets Or Earning Power . . . . . 23
14. Fractional Rights And Fractional Shares. . . . . . . . . . . . . . . . . . . . 25
15. Rights Of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
16. Agreement Of Right Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 27
17. Right Certificate Holder Not Deemed A Stockholder. . . . . . . . . . . . . . . 28
18. Concerning The Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . 28
19. Merger Or Consolidation Or Change Of Name Of Rights Agent. . . . . . . . . . . 29
20. Duties Of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
21. Change Of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
22. Issuance Of New Right Certificates . . . . . . . . . . . . . . . . . . . . . . 33
23. Redemption And Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 33
24. Notice Of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
25. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
26. Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Exhibit A - Form of Right Certificate. . . . . . . . . . . . . . . . . . . . . . .A-1
Exhibit B - Form of Summary of Rights. . . . . . . . . . . . . . . . . . . . . . .B-1
</TABLE>
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RIGHTS AGREEMENT
This RIGHTS AGREEMENT (this "AGREEMENT") is made as of this 4th day of
April, 1998 by and between Data I/O Corporation, a Washington corporation
(the "CORPORATION"), and ChaseMellon Shareholder Services, L.L.C., a New
Jersey limited liability company (the "RIGHTS AGENT"), with respect to the
following facts and circumstances.
A. The Board of Directors of the Corporation has authorized and
declared a dividend of one preferred share purchase right (a "RIGHT") for
each share of Common Stock (as hereinafter defined) of the Corporation
outstanding at the Close of Business (as hereinafter defined) on April 4,
1998 (the "RECORD DATE"), each Right representing the right to purchase one
one-hundredth (1/100th) of a share of Preferred Stock (as hereinafter
defined), upon the terms and subject to the conditions herein set forth.
B. The Board of Directors of the Corporation has further authorized
and directed the issuance of one Right with respect to each share of Common
Stock that shall become outstanding between the Record Date and the earliest
of the Distribution Date, the Redemption Date or the Final Expiration Date
(as such terms are hereinafter defined); PROVIDED, HOWEVER, that Rights may
be issued with respect to shares of Common Stock that shall become
outstanding after the Distribution Date and prior to the earlier of the
Redemption Date and the Final Expiration Date in accordance with the
provisions of Section 22 of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings
indicated:
1.1. "ACQUIRING PERSON" means any Person who or which, together
with all Affiliates and Associates of such Person, without the prior approval
of the Corporation's Board of Directors, shall be the Beneficial Owner of 15%
or more of the then outstanding shares of Common Stock (other than as a
result of a Permitted Offer) or was such a Beneficial Owner at any time after
the date hereof, whether or not such person continues to be the Beneficial
Owner of 15% or more of the then outstanding shares of Common Stock.
Notwithstanding the foregoing: (A) the term "Acquiring Person" shall not
include (i) the Corporation, (ii) any Subsidiary of the Corporation, (iii)
any employee benefit plan of the Corporation or of any Subsidiary of the
Corporation, (iv) any Person or entity organized, appointed or established by
the Corporation or any Subsidiary of the Corporation for or pursuant to the
terms of any such plan, or (v) any Person who or which, together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 15%
or more of the then outstanding shares of Common Stock
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as a result of the acquisition of shares of Common Stock directly from the
Corporation; and (B) no Person shall be deemed to be an "Acquiring Person"
either (i) as a result of the acquisition of Common Stock by the Corporation
which, by reducing the number of shares of Common Stock outstanding,
increases the proportional number of shares beneficially owned by such Person
together with all Affiliates and Associates of such Person; PROVIDED,
HOWEVER, that if (X) a Person would become an Acquiring Person (but for the
operation of this subclause (B)(i)) as a result of the acquisition of shares
of Common Stock by the Corporation, and (Y) after such share acquisition by
the Corporation, such Person, or an Affiliate or Associate of such Person,
becomes the Beneficial Owner of any additional shares of Common Stock, then
such Person shall be deemed an Acquiring Person, or (ii) if (X) within eight
(8) days after such Person would otherwise have become an Acquiring Person
(but for the operation of this subclause (B)(ii)), such Person notifies the
Board of Directors of the Corporation that such Person did so inadvertently
and (Y) within two (2) days after such notification, such Person is the
Beneficial Owner of less than 15% of the outstanding shares of Common Stock.
1.2. "ACT" means the Securities Act of 1933, as amended.
1.3. "ADJUSTED NUMBER OF SHARES" and "ADJUSTED PURCHASE PRICE"
have the respective meanings set forth in Section 11.1.3 hereof.
1.4. "ADJUSTMENT SHARES" has the meaning set forth in Section
11.1.2 hereof.
1.5. "AFFILIATE" and "ASSOCIATE" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act.
1.6. The term "CURRENT PER SHARE MARKET PRICE" shall have the
meaning set forth in Section 11.4.1 hereof when used with respect to a
"Security" (as defined in said Section 11.4.1) and shall have the meaning set
forth in Section 11.4.2 when used with respect to the Preferred Stock.
1.7. A Person is the "BENEFICIAL OWNER" of and "BENEFICIALLY OWNS"
any securities which:
1.7.1. such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
1.7.2. such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise of
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conversion rights, exchange rights, rights (other than the Rights), warrants
or options, or otherwise; PROVIDED, HOWEVER, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person or
any of such Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or (B) the right to vote pursuant to
any agreement, arrangement or understanding; PROVIDED, HOWEVER, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or understanding to vote such security
(1) arises solely from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations promulgated under the
Exchange Act and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
1.7.3. are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding relating to the acquisition, holding, voting
(except to the extent contemplated by the proviso to subclause (B) of Section
1.7.2), or disposing of any securities of the Corporation.
Notwithstanding anything in this Section 1.7 to the contrary,
the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Corporation, shall mean the number
of such securities then issued and outstanding together with the number of
such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
Notwithstanding anything in this Section 1.7 to the contrary,
no Person shall be deemed to beneficially own any securities solely by reason
of such Person being a party to a customary agreement pursuant to which such
Person acts or agrees to act as an underwriter with respect to a bona fide
public offering of securities.
No decision reached, or action taken, by the Board of
Directors of the Corporation or any committee thereof shall cause any Person
(or any Affiliate or Associate of such Person) who is a member of the Board
of Directors of the Corporation or such committee to be deemed, for the
purposes of this Agreement, to be a Beneficial Owner of any securities
beneficially owned by any other Person (or any Affiliate or Associate of such
Person) who is a member of the Board of Directors of the Corporation or any
committee thereof solely by reason of such membership of the Board of
Directors or any committee thereof or participation in the decisions or
actions thereof on the part of either or both of such Persons.
1.8. "BUSINESS DAY" means any day other than a Saturday, a Sunday,
a day on which banking institutions in the State of New York are obligated by
law or executive order to close, or a United States federal holiday.
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1.9. "CAPITAL STOCK EQUIVALENTS" has the meaning set forth in
Section 11.1.3 hereof.
1.10. "CLOSE OF BUSINESS" on any given date means 5:00 P.M.,
California time, on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day it means 5:00 P.M., California time, on the next succeeding
Business Day.
1.11. "COMMON STOCK" when used with reference to the Corporation
means the Common Stock of the Corporation or, in the event of a subdivision,
combination or consolidation with respect to such shares of Common Stock, the
shares of Common Stock resulting from such subdivision, combination or
consolidation. "Common Stock" when used with reference to any Person other
than the Corporation means the capital stock (or equity interest) with the
greatest voting power of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which ultimately control
such first-mentioned Person.
1.12. "CORPORATION" means Data I/O Corporation, a Washington
corporation, and also means a Principal Party to the extent provided in
Section 13.1 hereof.
1.13. "DISTRIBUTION DATE" has the meaning set forth in Section 3.1
hereof.
1.14. "EQUIVALENT PREFERRED STOCK" has the meaning set forth in
Section 11.2 hereof.
1.15. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
1.16. "EXCHANGE RATIO" has the meaning set forth in Section 26.1
hereof.
1.17. "FINAL EXPIRATION DATE" has the meaning set forth in Section
7.1 hereof.
1.18. "INTERESTED STOCKHOLDER" means any Acquiring Person or any
Affiliate or Associate of an Acquiring Person or any other Person in which
any such Acquiring Person, Affiliate or Associate has an interest, or any
other Person acting directly or indirectly on behalf of or in concert with
any such Acquiring Person, Affiliate or Associate.
1.19. "NASDAQ" has the meaning set forth in Section 11.4.1 hereof.
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1.20. "PERMITTED OFFER" means a tender or exchange offer which is
for all outstanding shares of Common Stock of the Corporation at a price and
on terms determined, prior to the purchase of shares under such tender or
exchange offer, by at least a majority of the members of the Board of
Directors who are not officers of the Corporation and who are not Acquiring
Persons or Affiliates, Associates, nominees or representatives of an
Acquiring Person, to be adequate (taking into account all factors that such
directors deem pertinent including, without limitation, prices that could
reasonably be achieved if the Corporation or its assets were sold on an
orderly basis designed to realize maximum value) and otherwise in the best
interests of the Corporation, its stockholders (other than the Person or any
Affiliate or Associate thereof on whose basis the offer is being made) and
other relevant constituencies, taking into account all factors that such
directors may deem pertinent.
1.21. "PERSON" means any individual, firm, partnership,
corporation, limited liability company, limited liability partnership, trust,
association, joint venture or other entity, and includes any successor (by
merger or otherwise) of such entity.
1.22. "PREFERRED STOCK" means shares of the Corporation's Series A
Junior Participating Preferred Stock.
1.23. "PRINCIPAL PARTY" has the meaning set forth in Section 13.2
hereof.
1.24. "PRORATION FACTOR" has the meaning set forth in Section
11.1.3 hereof.
1.25. "PURCHASE PRICE" has the meaning set forth in Section 4.1
hereof.
1.26. "RECORD DATE" has the meaning set forth in Recital A hereof.
1.27. "REDEMPTION DATE" has the meaning set forth in Section 7.1
hereof.
1.28. "REDEMPTION PRICE" has the meaning set forth in Section
23.1.1 hereof.
1.29. "RIGHT CERTIFICATE" has the meaning set forth in Section 3.1
hereof.
1.30. "RIGHTS" has the meaning set forth in Recital A hereof.
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1.31. "RIGHTS AGENT" means ChaseMellon Shareholder Services,
L.L.C., a New Jersey limited liability company, as Rights Agent hereunder,
and, from the time of its succession, any successor Rights Agent under
Section 19 or Section 21 hereof.
1.32. "SECTION 11.1.2 EVENT" has the meaning set forth in Section
11.1.2 hereof.
1.33. "SECTION 13 EVENT" means any event described in clause (x),
(y) or (z) of Section 13.1 hereof.
1.34. "SHARES ACQUISITION DATE" means the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to the Exchange Act) by the Corporation
or an Acquiring Person that an Acquiring Person has become such or that facts
exist as a result of which there exists an Acquiring Person; PROVIDED, that,
if such Person is determined by the Board of Directors of the Corporation not
to have become an Acquiring Person pursuant to subclause (B)(ii) of Section
1.1 hereof, then no Shares Acquisition Date shall be deemed to have occurred.
1.35. "SUBSIDIARY" of any Person means any corporation or other
Person of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such
Person.
1.36. "SUMMARY OF RIGHTS" has the meaning set forth in Section 3.2
hereof.
1.37. "TRADING DAY" has the meaning set forth in Section 11.4.1
hereof.
1.38. "TRIGGERING EVENT" means any Section 11.1.2 Event or any
Section 13 Event.
1.39. The term "VOTING SECURITIES" has the meaning set forth in
Section 13.1 hereof.
2. APPOINTMENT OF RIGHTS AGENT.
2.1. The Corporation hereby appoints the Rights Agent to act as
agent for the Corporation in accordance with the terms and conditions hereof,
and the Rights Agent hereby accepts such appointment. The Corporation may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable.
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3. ISSUANCE OF RIGHT CERTIFICATES.
3.1. Until the earlier of (i) the Shares Acquisition Date or (ii)
the Close of Business on the tenth (10th) day (or such later date as may be
determined by action of the Corporation's Board of Directors) after the date
of the commencement by any Person (other than the Corporation, any Subsidiary
of the Corporation, any employee benefit plan of the Corporation or of any
Subsidiary of the Corporation or any Person or entity organized, appointed or
established by the Corporation or any Subsidiary of the Corporation for or
pursuant to the terms of any such plan) of, or after the date of the first
public announcement of the intention of any Person (other than the
Corporation, any Subsidiary of the Corporation, any employee benefit plan of
the Corporation or of any Subsidiary of the Corporation or any Person or
entity organized, appointed or established by the Corporation or any
Subsidiary of the Corporation for or pursuant to the terms of any such plan)
to commence (which intention to commence remains in effect for five (5)
Business Days after such announcement), a tender or exchange offer the
consummation of which would result in any Person becoming an Acquiring Person
(including, in the case of both (i) and (ii), any such date which is after
the date of this Agreement and prior to the issuance of the Rights) (the
"DISTRIBUTION DATE"), (x) the Rights will be evidenced (subject to the
provisions of Section 3.2 hereof) by the certificates for shares of Common
Stock registered in the names of the holders thereof (which certificates
shall also be deemed to be Right Certificates) and not by separate Right
Certificates, and (y) the right to receive Right Certificates will be
transferable only in connection with the transfer of the underlying shares of
Common Stock (including a transfer to the Corporation); PROVIDED, HOWEVER,
that if a tender or exchange offer is terminated prior to the occurrence of a
Distribution Date, then no Distribution Date shall occur as a result of such
tender or exchange offer. As soon as practicable after the Distribution
Date, the Corporation will prepare and execute, the Rights Agent will
countersign, and the Corporation will send or cause to be sent by
first-class, postage-prepaid mail, to each record holder of shares of Common
Stock as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Corporation, a Right Certificate,
substantially in the form of Exhibit A hereto (a "RIGHT CERTIFICATE"),
evidencing one Right for each share of Common Stock so held. As of and after
the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
3.2. As promptly as practicable following the Record Date, the
Corporation will send a copy of a Summary of Rights to Purchase Preferred
Stock, in substantially the form of Exhibit B hereto (the "SUMMARY OF
RIGHTS"), by first-class, postage-prepaid mail, to each record holder of
shares of Common Stock as of the Close of Business on the Record Date, at the
address of such holder shown on the records of the Corporation. With respect
to certificates for shares of Common Stock outstanding as of the Record Date,
until the Distribution Date the Rights will be evidenced by such certificates
registered in the names of the holders thereof together with a copy of the
Summary of Rights attached thereto. Until the Distribution Date (or the
earlier of the Redemption Date or the Final Expiration Date), the surrender
for transfer of any certificate for shares of Common Stock outstanding on the
Record Date, with or without a copy
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of the Summary of Rights attached thereto, shall also constitute the transfer
of the Rights associated with such shares of Common Stock.
3.3. Certificates for shares of Common Stock that become
outstanding (including, without limitation, reacquired shares of Common Stock
referred to in the last sentence of this Section 3.3) after the Record Date
but prior to the earliest of the Distribution Date, the Redemption Date or
the Final Expiration Date, shall be deemed also to be certificates for
Rights, and shall bear the following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Rights Agreement
between Data I/O Corporation and ChaseMellon Shareholder
Services, L.L.C., a New Jersey limited liability company, as
Rights Agent, dated as of April 4, 1998 (the "Rights
Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the
principal executive offices of Data I/O 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. Data I/O
Corporation will mail to the holder of this certificate a
copy of the Rights Agreement without charge after receipt of
a written request therefor. Under certain circumstances set
forth in the Rights Agreement, Rights issued to, or held by,
any Person who is, was or becomes an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights
Agreement) and certain related persons, whether currently
held by or on behalf of such Person or by any subsequent
holder, may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date the Rights associated with the shares of Common Stock
represented by such certificates shall be evidenced by such certificates
alone, and the surrender for transfer of any such certificate shall also
constitute the transfer of the Rights associated with the shares of Common
Stock represented thereby. In the event that the Corporation purchases or
acquires any shares of Common Stock after the Record Date but prior to the
Distribution Date (or the earlier of the Redemption Date or the Final
Expiration Date), any Rights associated with such shares of Common Stock
shall be deemed cancelled and retired so that the Corporation shall not be
entitled to exercise any Rights associated with the Common Stock that are no
longer outstanding.
4. FORM OF RIGHT CERTIFICATE.
4.1. The Right Certificates (and the forms of election to purchase
and of assignment to be printed on the reverse thereof) shall be
substantially in the form set forth in Exhibit A hereto and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Corporation may deem appropriate (which
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may not affect the duties and responsibilities of the Rights Agent) and as
are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any stock exchange on
which the Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Section 11 and Section 22 hereof, the Right
Certificates shall entitle the holders thereof to purchase such number of one
one-hundredths (1/100ths) of a share of Preferred Stock as shall be set forth
therein at the price per one one-hundredth (1/100th) of a share of Preferred
Stock set forth therein (the "PURCHASE PRICE"), but the amount and type of
securities purchasable upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment as provided herein.
4.2. Any Right Certificate issued pursuant to Section 3.1 or
Section 22 hereof that represents Rights that are null and void pursuant to
Section 7.6 of this Agreement and any Right Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this sentence, shall
contain (to the extent feasible and upon notice by the Corporation to the
Rights Agent that this Section 4.2 has become applicable) the following
legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Right Certificate and the
Rights represented hereby are null and void.
The provisions of Section 7.6 of this Agreement shall be operative whether or
not the foregoing legend is contained on any such Right Certificate.
5. COUNTERSIGNATURE AND REGISTRATION.
5.1. The Right Certificates shall be executed on behalf of the
Corporation by its President or any Vice President and the Secretary or an
Assistant Secretary, either manually or by facsimile signature, shall have
affixed thereto the Corporation's seal or a facsimile thereof, and shall be
attested by the Secretary or an Assistant Secretary of the Corporation,
either manually or by facsimile signature. The Right Certificates shall be
countersigned by the Rights Agent and shall not be valid for any purpose
unless so countersigned. In case any officer of the Corporation who shall
have signed any of the Right Certificates shall cease to be such officer of
the Corporation before countersignature by the Rights Agent and issuance and
delivery by the Corporation, such Right Certificates may nevertheless be
countersigned by the Rights Agent and issued and delivered by the Corporation
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Corporation; and any
Right Certificate may be signed on behalf of the Corporation by any Person
who, at the actual date of the execution of such Right Certificate, shall be
a proper officer of the Corporation to
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sign such Right Certificate, although at the date of the execution of this
Rights Agreement any such Person was not such an officer.
5.2. Following the Distribution Date, and receipt by the Rights
Agent of a list of record holders of Rights, the Rights Agent will keep or
cause to be kept, at its office designated pursuant to Section 25 hereof as
the appropriate place for surrender or transfer of the Right Certificates,
books for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights evidenced on the face
of each of the Right Certificates and the certificate number and the date of
each of the Right Certificates.
6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
6.1. Subject to the provisions of Section 4.2, Section 7.6 and
Section 14 hereof, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on the earlier of
the Redemption Date or the Final Expiration Date, any Right Certificate or
Right Certificates may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates, entitling the registered
holder to purchase a like number of one one-hundredths (1/100ths) of a share
of Preferred Stock (or, following a Triggering Event, other securities, as
the case may be) as the Right Certificate or Right Certificates surrendered
then entitled such holder (or former holder in the case of a transfer) to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall make such request
in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent designated for such purpose.
Neither the Rights Agent nor the Corporation shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Right
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Corporation or the Rights Agent shall reasonably
request. Thereupon the Rights Agent shall, subject to Section 4.2, Section
7.6 and Section 14 hereof, countersign and deliver to the Person entitled
thereto a Right Certificate or Right Certificates, as the case may be, as so
requested. The Corporation may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates. The
Rights Agent may in its sole discretion require the Corporation or the Person
entitled to such Right Certificate to provide evidence that such payment has
been made prior to countersigning and delivering any Right Certificate
pursuant to this Section 6.1.
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6.2. Upon receipt by the Corporation and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and,
at the Corporation's request, reimbursement to the Corporation and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender to
the Rights Agent and cancellation of the Right Certificate if mutilated, the
Corporation will make and deliver a new Right Certificate of like tenor to
the Rights Agent for countersignature and delivery to the registered holder
in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
7.1. Subject to Section 7.6 hereof, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent designated
for such purpose, together with payment of the aggregate Purchase Price for
the total number of one one-hundredths (1/100ths) of a share of Preferred
Stock (or other securities, as the case may be) as to which such surrendered
Rights are exercised, at or prior to the earlier of (i) the Close of Business
on April 4, 2008 (the "FINAL EXPIRATION DATE"), or (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof (the "REDEMPTION DATE").
7.2. The Purchase Price for each one one-hundredth (1/100th) of a
share of Preferred Stock pursuant to the exercise of a Right shall initially
be $30, shall be subject to adjustment from time to time as provided in the
next sentence and in Sections 11 and 13.1 hereof and shall be payable in
accordance with paragraph 7.3 below. Anything in this Agreement to the
contrary notwithstanding, in the event that at any time after the date of
this Agreement and prior to the Distribution Date, the Corporation shall (i)
declare or pay any dividend on the Common Stock payable in Common Stock or
(ii) effect a subdivision, combination or consolidation of the Common Stock
(by reclassification or otherwise than by payment of dividends in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then, in any such case, each share of Common Stock outstanding following such
subdivision, combination or consolidation shall continue to have a Right
associated therewith and the Purchase Price following any such event shall be
proportionately adjusted to equal the result obtained by multiplying the
Purchase Price immediately prior to such event by a fraction the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event. The adjustment provided for in the
preceding sentence shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
effected.
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7.3. Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and the certificate on the
reverse side thereof duly executed, accompanied by payment of the Purchase
Price for the Preferred Stock (or other securities, as the case may be) to be
purchased and an amount equal to any applicable tax or governmental charge
required to be paid by the holder of such Right Certificate in accordance
with Section 6 hereof by certified check, cashier's check or money order
payable to the order of the Corporation, the Rights Agent shall thereupon
promptly (i) (A) requisition from any transfer agent of the Preferred Stock
certificates for the number of shares of Preferred Stock to be purchased, and
the Corporation hereby irrevocably authorizes its transfer agent to comply
with all such requests, or (B) if the Corporation, in its sole discretion,
shall have elected to deposit the Preferred Stock issuable upon exercise of
the Rights hereunder into a depositary, requisition from the depositary agent
depositary receipts representing such number of one one-hundredths (1/100ths)
of a share of Preferred Stock as are to be purchased (in which case
certificates for the Preferred Stock represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the
Corporation will direct the depositary agent to comply with such requests,
(ii) when appropriate, requisition from the Corporation the amount of cash to
be paid in lieu of issuance of fractional shares in accordance with Section
14 hereof, (iii) after receipt of such certificates or depositary receipts,
cause the same to be delivered to or upon the order of the registered holder
of such Right Certificate, registered in such name or names as may be
designated by such holder, and (iv) when appropriate, after receipt thereof,
deliver such cash to or upon the order of the registered holder of such Right
Certificate. In the event that the Corporation is obligated to issue other
securities (including shares of Common Stock) of the Corporation pursuant to
Section 11.1 hereof, the Corporation will make all arrangements necessary so
that such other securities are available for distribution by the Rights
Agent, if and when necessary to comply with this Agreement.
7.4. In addition, in the case of an exercise of the Rights by a
holder pursuant to Section 11.1.2, the Rights Agent shall return such Right
Certificate to the registered holder thereof after imprinting, stamping or
otherwise indicating thereon that the Rights represented by such Right
Certificate no longer include the rights provided by Section 11.1.2 of the
Rights Agreement and if less than all the Rights represented by such Right
Certificate were so exercised, the Rights Agent shall indicate on the Right
Certificate the number of Rights represented thereby that continue to include
the rights provided by Section 11.1.2.
7.5. In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such Right Certificate
or to his duly authorized assigns, subject to the provisions of Section 6 and
Section 14 hereof, or the Rights Agent shall place an appropriate notation on
the Right Certificate with respect to those Rights exercised.
7.6. Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Section 11.1.2 Event, any Rights
beneficially owned by (i) an Acquiring
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Person or an Affiliate or Associate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or of any Affiliate or Associate thereof) who becomes
a transferee after the Acquiring Person becomes such, or (iii) a transferee
of an Acquiring Person (or of any Affiliate or Associate thereof) who becomes
a transferee prior to or concurrently with the Acquiring Person becoming such
and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person (or from any Affiliate or
Associate thereof) to holders of equity interests in such Acquiring Person or
to any Person with whom the Acquiring Person has a continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a
transfer that the Board of Directors of the Corporation has determined is
part of a plan, arrangement or understanding that has as a primary purpose or
effect the avoidance of this Section 7.6, shall become null and void without
any further action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Corporation shall notify the Rights Agent when
this Section 7.6 applies and shall use all reasonable efforts to insure that
the provisions of this Section 7.6 and Section 4.2 hereof are complied with,
but neither the Corporation nor the Rights Agent shall have any liability to
any holder of Right Certificates or other Person as a result of the
Corporation's failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder.
7.7. Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Corporation shall be obligated to undertake
any action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) properly completed and signed the certificate contained
in the form of election to purchase set forth on the reverse side of the
Right Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Corporation or
the Rights Agent shall reasonably request.
8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.
8.1. All Right Certificates surrendered for the purpose of
exercise, transfer, split up, combination or exchange shall, if surrendered
to the Corporation or to any of its agents, be delivered to the Rights Agent
for cancellation or in cancelled form, or, if surrendered to the Rights
Agent, shall be cancelled by it, and no Right Certificates shall be issued in
lieu thereof except as expressly permitted by the provisions of this Rights
Agreement. The Corporation shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any other Right Certificate purchased or acquired by the Corporation
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Corporation, or shall, at the written
request of the Corporation, destroy such cancelled Right Certificates, and in
such case shall deliver a certificate of destruction thereof to the
Corporation.
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9. RESERVATION AND AVAILABILITY OF PREFERRED STOCK.
9.1. The Corporation covenants and agrees that, at all times prior
to the occurrence of a Section 11.1.2 Event, it will cause to be reserved and
kept available out of its authorized and unissued Preferred Stock, or any
authorized and issued Preferred Stock held in its treasury, the number of
shares of Preferred Stock that will be sufficient to permit the exercise in
full of all outstanding Rights and, after the occurrence of a Section 11.1.2
Event, shall, to the extent reasonably practicable, so reserve and keep
available a sufficient number of shares of Common Stock (and/or other
securities) that may be required to permit the exercise in full of the Rights
pursuant to this Agreement.
9.2. So long as the shares of Preferred Stock (and, after the
occurrence of a Section 11.1.2 Event, shares of Common Stock or any other
securities) issuable upon the exercise of the Rights may be listed on any
stock exchange, the Corporation shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares or other
securities reserved for such issuance to be listed on such exchange upon
official notice of issuance upon such exercise.
9.3. The Corporation covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
(or shares of Common Stock and/or other securities, as the case may be)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares or other securities (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
non-assessable shares or securities.
9.4. The Corporation covenants and agrees that it will pay when
due and payable any and all taxes and governmental charges that may be
payable in respect of the issuance or delivery of the Right Certificates or
of any shares of Preferred Stock (or shares of Common Stock and/or other
securities, as the case may be) upon the exercise of Rights. The Corporation
shall not, however, be required to pay any tax or governmental charge that
may be payable in respect of any transfer or delivery of Right Certificates
to a person other than, or the issuance or delivery of certificates or
depositary receipts for the shares of Preferred Stock (or shares of Common
Stock and/or other securities, as the case may be) in a name other than that
of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise, or to issue or to deliver any certificates or
depositary receipts for shares of Preferred Stock (or shares of Common Stock
and/or other securities, as the case may be) upon the exercise of any Rights,
until any such tax or governmental charge shall have been paid (any such tax
or governmental charge being payable by the holder of such Right Certificate
at the time of surrender) or until it has been established to the
Corporation's reasonable satisfaction that no such tax or governmental charge
is due.
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9.5. The Corporation shall use its best efforts to (i) file, as
soon as practicable following the Shares Acquisition Date, a registration
statement under the Act, with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act and the rules and
regulations thereunder) until the date of the expiration of the period for
exercise of the Rights provided by Section 11.1.2. The Corporation will also
take such action as may be appropriate under the blue sky laws of the various
states.
10. PREFERRED STOCK RECORD DATE.
10.1. Each Person in whose name any certificate for shares of
Preferred Stock (or shares of Common Stock and/or other securities, as the
case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the shares of Preferred Stock
(or shares of Common Stock and/or other securities, as the case may be)
represented thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable taxes and governmental
charges) was made; PROVIDED, HOWEVER, that, if the date of such surrender and
payment is a date upon which the shares of Preferred Stock (or shares of
Common Stock and/or other securities, as the case may be) transfer books of
the Corporation are closed, such person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the
next succeeding Business Day on which the shares of Preferred Stock (or
shares of Common Stock and/or other securities, as the case may be) transfer
books of the Corporation are open.
11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR NUMBER OF
RIGHTS.
The Purchase Price, the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to
time as provided in this Section 11.
11.1. ADJUSTMENT EVENTS.
11.1.1. In the event the Corporation shall at any time
after the date of this Agreement (A) declare a dividend on the Preferred
Stock payable in Preferred Stock, (B) subdivide the outstanding Preferred
Stock, (C) combine the outstanding Preferred Stock into a smaller number of
Preferred Stock or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification
in connection with a consolidation or merger in which the Corporation is the
continuing or surviving corporation), except as otherwise provided in this
Section 11.1 and Section 7.6 hereof, the Purchase Price in effect at the time
of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall be
entitled
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to receive the aggregate number and kind of shares of capital stock that, if
such Right had been exercised immediately prior to such date and at a time
when the Preferred Stock transfer books of the Corporation were open, such
holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification;
PROVIDED, HOWEVER, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value, if any, of
the shares of capital stock of the Corporation issuable upon exercise of one
Right. If an event occurs that would require an adjustment under both
Section 11.1.1 and Section 11.1.2, the adjustment provided for in this
Section 11.1.1 shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11.1.2.
11.1.2. In the event (a "SECTION 11.1.2 EVENT") that any
Person, alone or together with its Affiliates and Associates, shall become an
Acquiring Person, then proper provision shall be made so that each holder of
a Right (except as provided below and in Section 7.6 hereof) shall, for a
period of sixty (60) days (or such longer period as the Corporation's Board
of Directors may determine at any time prior to or during such period of
sixty (60) days) after the later of the occurrence of any such event or the
effective date of an appropriate registration statement under the Act
pursuant to Section 9.5 hereof, have a right to receive, upon exercise
thereof at a price equal to the then current Purchase Price, in accordance
with the terms of this Agreement, such number of shares of Common Stock (or,
in the discretion of the Corporation's Board of Directors, one one-hundredths
(1/100ths) of a share of Preferred Stock) as shall equal the result obtained
by (x) multiplying the then current Purchase Price by the then number of one
one-hundredth (1/100th) of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section 11.1.2
Event, and (y) dividing that product by 50% of the then current per share
market price of the Common Stock (determined pursuant to Section 11.4 hereof)
on the date of such first occurrence (such number of shares being referred to
as the "ADJUSTMENT SHARES"); PROVIDED, HOWEVER, that if the transaction that
would otherwise give rise to the foregoing adjustment is also subject to the
provisions of Section 13 hereof, then only the provisions of Section 13
hereof shall apply and no adjustment shall be made pursuant to this Section
11.1.2.
11.1.3. In the event that there shall not be sufficient
treasury or authorized but unissued (and unreserved) Common Stock to permit
the exercise in full of the Rights in accordance with Section 11.1.2 and the
Rights become so exercisable (and the Board of Directors of the Corporation
has not determined to make the Rights exercisable solely into fractions of a
share of Preferred Stock), notwithstanding any other provision of this
Agreement, to the extent necessary and permitted by applicable law, each
Right shall thereafter represent the right to receive, upon exercise thereof
at the then current Purchase Price in accordance with the terms of this
Agreement, (x) a number of (or fractions of) shares of Common Stock (up to
the maximum number of shares of Common Stock that may permissibly be issued)
and (y) one one-hundredth (1/100th) of a share of Preferred Stock or a number
of, or fractions of, other equity securities of the Corporation (or, in the
discretion of the Board of Directors of the Corporation, debt) that the Board
of Directors of the Corporation has determined to have the same aggregate
current market value (determined pursuant to Section 11.1.1 and Section
11.1.2 hereof, to the extent applicable)
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as one share of Common Stock (such number of, or fractions of, shares of
Preferred Stock, debt or other equity securities or debt of the Corporation
being referred to as a "CAPITAL STOCK EQUIVALENT"), equal in the aggregate to
the number of Adjustment Shares; PROVIDED, HOWEVER, if sufficient shares of
Common Stock and/or Capital Stock Equivalents are unavailable, then the
Corporation shall, to the extent permitted by applicable law, take all such
action as may be necessary to authorize additional shares of Common Stock or
Capital Stock Equivalents for issuance upon exercise of the Rights, including
the calling of a meeting of stockholders; and PROVIDED, FURTHER, that if the
Corporation is unable to cause sufficient shares of Common Stock and/or
Capital Stock Equivalents to be available for issuance upon exercise in full
of the Rights, then each Right shall thereafter represent the right to
receive the Adjusted Number of Shares upon exercise at the Adjusted Purchase
Price (as such terms are hereinafter defined). As used herein, the term
"ADJUSTED NUMBER OF SHARES" shall be equal to that number of (or fractions
of) shares of Common Stock (and/or Capital Stock Equivalents) equal to the
product of (x) the number of Adjustment Shares and (y) a fraction, the
numerator of which is the number of shares of Common Stock (and/or Capital
Stock Equivalents) available for issuance upon exercise of the Rights and the
denominator of which is the aggregate number of Adjustment Shares otherwise
issuable upon exercise in full of all Rights (assuming there were a
sufficient number of shares of Common Stock available) (such fraction being
referred to as the "PRORATION FACTOR"). The "ADJUSTED PURCHASE PRICE" shall
mean the product of the Purchase Price and the Proration Factor. The Board
of Directors of the Corporation may, but shall not be required to, establish
procedures to allocate the right to receive shares of Common Stock and
Capital Stock Equivalents upon exercise of the Rights among holders of Rights.
11.2. In case the Corporation shall fix a record date for the
issuance of rights (other than the Rights), options or warrants to all
holders of Preferred Stock entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase shares of
Preferred Stock (or shares having the same rights, privileges and preferences
as the Preferred Stock ("EQUIVALENT PREFERRED STOCK")) or securities
convertible into Preferred Stock or Equivalent Preferred Stock at a price per
share of Preferred Stock or Equivalent Preferred Stock (or having a
conversion price per share, if a security convertible into shares of
Preferred Stock or Equivalent Preferred Stock) less than the then current per
share market price of the Preferred Stock (as determined pursuant to Section
11.4 hereof) on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of shares of Preferred Stock outstanding on such
record date plus the number of shares of Preferred Stock that the aggregate
offering price of the total number of shares of Preferred Stock and/or
Equivalent Preferred Stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would
purchase at such current per share market price, and the denominator of which
shall be the number of shares of Preferred Stock outstanding on such record
date plus the number of additional shares of Preferred Stock and/or
Equivalent Preferred Stock to be offered for subscription or purchase (or
into which the convertible securities so to be offered are initially
convertible); PROVIDED, HOWEVER, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value,
if any, of the shares of capital stock of the Corporation issuable upon
exercise of one Right. In case
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such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be
determined in good faith by the Board of Directors of the Corporation, whose
determination shall be described in a statement filed with the Rights Agent
and shall be binding on the Rights Agent and the holders of the Rights.
Preferred Stock owned by or held for the account of the Corporation shall not
be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed;
and in the event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price that would then be
in effect if such record date had not been fixed.
11.3. In case the Corporation shall fix a record date for the
making of a distribution to all holders of the Preferred Stock (including any
such distribution made in connection with a consolidation or merger in which
the Corporation is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11.2 hereof), the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the then current per share market price (as
determined pursuant to Section 11.4 hereof) of the Preferred Stock on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Corporation, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights) of the portion of the assets or
evidences of indebtedness so to be distributed or of such subscription rights
or warrants applicable to one share of Preferred Stock, and the denominator
of which shall be such current per share market price of the Preferred Stock;
PROVIDED, HOWEVER, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value, if any, of
the shares of capital stock of the Corporation to be issued upon exercise of
one Right. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution is not so made,
the Purchase Price shall again be adjusted to be the Purchase Price that
would then be in effect if such record date had not been fixed.
11.4. COMPUTATION OF "CURRENT PER SHARE MARKET PRICE."
11.4.1. For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the
purpose of this Section 11.4.1) on any date shall be deemed to be the average
of the daily closing prices per share of such Security for the thirty (30)
consecutive Trading Days immediately prior to and not including such date;
PROVIDED, HOWEVER, that in the event that the current per share market price
of the Security is determined during a period following the announcement by
the issuer of such Security of (A) a dividend or distribution on such
Security payable in shares of such Security or securities convertible into
such shares, or (B) any subdivision, combination or reclassification of such
Security and prior to the expiration of thirty (30) Trading Days after the
ex-dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification,
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then, and in each such case, the current per share market price shall be
appropriately adjusted to reflect the current market price per share
equivalent of such Security. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Security is not listed or admitted to trading on
the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or admitted to trading
on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such other
system then in use, or, if on any such date the Security is not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Security
selected by the Board of Directors of the Corporation. If on any such date
no such market maker is making a market in the Security, the fair value of
the Security on such date as determined in good faith by the Board of
Directors of the Corporation shall be used. The term "TRADING DAY" shall
mean a day on which the principal national securities exchange on which the
Security is listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day.
11.4.2. For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Stock shall be determined
in accordance with the method set forth in Section 11.4.1. If the shares of
Preferred Stock are not publicly traded, the "current per share market price"
of the Preferred Stock shall be conclusively deemed to be the current per
share market price of the Common Stock as determined pursuant to Section
11.4.1 (appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof), multiplied by 100. If
neither the Common Stock nor the Preferred Stock are publicly held or so
listed or traded, "current per share market price" shall mean, with respect
to the Preferred Stock, the fair value per share as determined in good faith
by the Board of Directors of the Corporation, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on
the Rights Agent and the holders of the Rights.
11.5. Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in the Purchase Price;
PROVIDED, HOWEVER, that any adjustments that by reason of this Section 11.5
are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 11 shall
be made to the nearest cent or to the nearest one one-hundredth (1/100th) of
a share of Preferred Stock or of any other share or security as the case may
be. Notwithstanding the first sentence of this Section 11.5, any adjustment
required by this Section 11 shall be made no later than the earlier of (i)
three (3) years from the date of the transaction that mandates such
adjustment or (ii) the Final Expiration Date.
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11.6. If as a result of an adjustment made pursuant to Section
11.1.2 or Section 13.1 hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the
Corporation other than Preferred Stock, thereafter the number of other shares
so receivable upon exercise of any Right shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the Preferred Stock contained in Section 11.1
through 11.3, inclusive, and the provisions of Sections 7, 9, 10, 13 and 14
with respect to the Preferred Stock shall apply on like terms to any such
other shares.
11.7. All Rights originally issued by the Corporation subsequent
to any adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of one
one-hundredths (1/100ths) of a share of Preferred Stock purchasable from time
to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
11.8. The Corporation may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in lieu of
any adjustment in the number of one one-hundredths (1/100ths) of a share of
Preferred Stock purchasable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be
exercisable for the number of one one-hundredths (1/100ths) of a share of
Preferred Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number
of Rights shall become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Corporation shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made, and shall deliver a copy of such public
announcement to the Rights Agent. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least ten (10) days later than the
date of the public announcement. If Right Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section 11.8,
the Corporation shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14 hereof, the additional Rights
to which such holders shall be entitled as a result of such adjustment, or,
at the option of the Corporation, shall cause to be distributed to such
holders of record in substitution and replacement for the Right Certificates
held by such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Corporation, new Right Certificates evidencing
all the Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein and shall be registered in
the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
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11.9. Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredths (1/100ths) of a share of Preferred
Stock issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the Purchase Price
and the number of one one-hundredths (1/100ths) of a share of Preferred Stock
that were expressed in the initial Right Certificates issued hereunder.
11.10. Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the number
of one one-hundredths (1/100ths) of a share of Preferred Stock, share of
Common Stock or other securities issuable upon exercise of the Rights, the
Corporation shall take any corporate action that may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue such number of fully paid and non-assessable one one-hundredths
(1/100ths) of a share of Preferred Stock, share of Common Stock or other
securities at such adjusted Purchase Price.
11.11. In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Corporation may elect to defer until the occurrence of
such event the issuance to the holder of any Right exercised after such
record date of the Preferred Stock, shares of Common Stock or other
securities of the Corporation, if any, issuable upon such exercise over and
above the Preferred Stock, shares of Common Stock or other securities of the
Corporation, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; PROVIDED, HOWEVER, that the
Corporation shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares
upon the occurrence of the event requiring such adjustment and shall deliver
to the Rights Agent a notice describing the terms of such due bill or other
appropriate instrument.
11.12. Anything in this Section 11 to the contrary
notwithstanding, the Corporation shall be entitled to make such reductions in
the Purchase Price, in addition to those adjustments expressly required by
this Section 11, as and to the extent that the Corporation in its sole
discretion shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Stock, (ii) issuance wholly for
cash of Preferred Stock at less than the current market price, (iii) issuance
wholly for cash of Preferred Stock or securities that by their terms are
convertible into or exchangeable for Preferred Stock, (iv) stock dividends or
(v) issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Corporation to holders of its Preferred Stock shall not
be taxable to such holders.
11.13. The Corporation covenants and agrees that it shall not, at
any time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Corporation in a transaction that does not
violate Section 11.14 hereof), (ii) merge with or into any other Person
(other than a Subsidiary of the Corporation in a transaction that does not
violate Section 11.14 hereof), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more than
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50% of the assets or earning power of the Corporation and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the Corporation
and/or any of its Subsidiaries in one or more transactions each of which does
not violate Section 11.14 hereof), if (x) at the time of or immediately after
such consolidation, merger, sale or transfer, there are any charter or bylaw
provisions or any rights, warrants or other instruments or securities
outstanding or agreements in effect or other actions taken that would
materially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately
after such consolidation, merger, sale or transfer, the stockholders of the
Person who constitutes, or would constitute, the "Principal Party" for
purposes of Section 13.1 hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates. The
Corporation shall not consummate any such consolidation, merger, sale or
transfer unless prior thereto the Corporation and such other Person shall
have executed and delivered to the Rights Agent a supplemental agreement
evidencing compliance with this Section 11.13.
11.14. The Corporation covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or Section
25.2 hereof, take (or permit any Subsidiary to take) any action the purpose
of which is to, or if at the time such action is taken it is reasonably
foreseeable that the effect of such action is to, materially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights.
11.15. The exercise of Rights under Section 11.1.2 shall only
result in the loss of rights under Section 11.1.2 to the extent so exercised
and shall not otherwise affect the rights represented by the Rights under
this Agreement, including the rights represented by Section 13.
12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
12.1. Whenever an adjustment is made as provided in Section 11 or
Section 13 hereof, the Corporation shall promptly (a) prepare a certificate
setting forth such adjustment and a brief, reasonably detailed statement of
the facts, computations and methodology accounting for such adjustment, (b)
file with the Rights Agent and with each transfer agent for the Common Stock
and the Preferred Stock a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate in accordance with
Section 25.1 hereof. The Rights Agent shall be fully protected in relying on
any such certificate and on any adjustment therein contained and shall have
no duty with respect to, and shall not be deemed to have knowledge of, such
adjustment unless and until it shall have received such certificate.
13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER.
13.1. In the event that, on or following the Shares Acquisition
Date, directly or indirectly, (x) the Corporation shall consolidate with, or
merge with and into, any Interested Stockholder or, if in such merger or
consolidation all holders of shares of Common Stock are not
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treated alike, any other Person, (y) the Corporation shall consolidate with,
or merge with, any Interested Stockholder or, if in such merger or
consolidation all holders of shares of Common Stock are not treated alike,
any other Person, and the Corporation shall be the continuing or surviving
corporation of such consolidation or merger (other than, in a case of any
transaction described in (x) or (y), a merger or consolation that would
result in all of the securities generally entitled to vote in the election of
directors of the Corporation ("voting securities") outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into securities of the surviving entity) all of the voting
securities of the Corporation or such voting surviving entity outstanding
immediately after such merger or consolidation and the holders of such
securities not having changed as a result of such merger or consolidation),
or (z) the Corporation shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one transaction or a
series of related transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Corporation and its Subsidiaries
(taken as a whole) to any Interested Stockholder or Stockholders or, if in
such transaction all holders of Common Stock are not treated alike, any other
Person (other than the Corporation or any Subsidiary of the Corporation in
one or more transactions each of which does not violate Section 11.14
hereof), then, and in each such case (except as provided in Section 13.4
hereof), proper provision shall be made so that (i) each holder of a Right,
except as provided in Section 7.6 hereof, shall thereafter have the right to
receive, upon the exercise thereof at a price equal to the then current
Purchase Price, in accordance with the terms of this Agreement and in lieu of
Preferred Stock, such number of freely tradeable shares of Common Stock of
the Principal Party, not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall equal the result obtained by (A)
multiplying the then current Purchase Price by the number of one
one-hundredths (1/100ths) of a share of Preferred Stock for which a Right is
then exercisable (without taking into account any adjustment previously made
pursuant to Section 11.1.2) and dividing that product by (B) 50% of the then
current per share market price of the Common Stock of such Principal Party
(determined pursuant to Section 11.4 hereof) on the date of consummation of
such Section 13 Event; (ii) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such Section 13 Event, all the
obligations and duties of the Corporation pursuant to this Agreement; (iii)
the term "Corporation" shall thereafter be deemed to refer to such Principal
Party, it being specifically intended that the provisions of Section 11
hereof shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; and (iv) such Principal Party shall take
such steps (including, but not limited to, the reservation of a sufficient
number of its shares of Common Stock) in connection with the consummation of
any such transaction as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in relation
to the shares of Common Stock thereafter deliverable upon the exercise of the
Rights.
13.2. "PRINCIPAL PARTY" shall mean:
13.2.1. in the case of any transaction described in clause
(x) or (y) of the first sentence of Section 13.1, the Person that is the
issuer of any securities into which shares of Common Stock of the Corporation
are converted in such merger or consolidation, and if no
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securities are so issued, the Person that is the other party to such merger
or consolidation (including, if applicable, the Corporation if it is the
surviving corporation); and
13.2.2. in the case of any transaction described in clause
(z) of the first sentence of Section 13.1, the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions;
PROVIDED, HOWEVER, that in any of the foregoing cases, (1) if the Common
Stock of such Person is not at such time and has not been continuously over
the preceding twelve (12) month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of another
Person the shares of Common Stock of which are and have been so registered,
"Principal Party" shall refer to such other Person; (2) in case such Person
is a Subsidiary, directly or indirectly, of more than one Person, the shares
of Common Stock of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of
the Common Stock having the greatest aggregate market value; and (3) in case
such Person is owned, directly or indirectly, by a joint venture formed by
two or more Persons that are not owned, directly or indirectly, by the same
Person, the rules set forth in (1) and (2) above shall apply to each of the
chains of ownership having an interest in such joint venture as if such party
were a "Subsidiary" of both or all of such joint venturers and the Principal
Parties in each such chain shall bear the obligations set forth in this
Section 13 in the same ratio as their direct or indirect interests in such
Person bear to the total of such interests.
13.3. The Corporation shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of its authorized shares of Common Stock that have not been issued or
reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Corporation and
such Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in Sections 13.1 and
13.2 and further providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer mentioned in Section 13.1, the
Principal Party at its own expense shall:
13.3.1. prepare and file a registration statement under the
Act with respect to the Rights and the securities purchasable upon exercise
of the Rights on an appropriate form, and will use its best efforts to cause
such registration statement to (A) become effective as soon as practicable
after such filing and (B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Final Expiration Date;
13.3.2. use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the Rights under the
blue sky laws of such jurisdictions as may be necessary or appropriate; and
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13.3.3. deliver to holders of the Rights historical
financial statements for the Principal Party that comply in all respects with
the requirements for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. The rights
under this Section 13 shall be in addition to the rights to exercise Rights
and adjustments under Section 11.1.2 and shall survive any exercise thereof.
13.4. Notwithstanding anything in this Agreement to the contrary,
the foregoing provisions of this Section 13 shall not be applicable to a
transaction described in clauses (x) and (y) of Section 13.1 if: (i) such
transaction is consummated with a Person or Persons who acquired shares of
Common Stock pursuant to a Permitted Offer (or a wholly owned Subsidiary of
any such Person or Persons); (ii) the price per share of Common Stock offered
in such transaction is not less than the price per share of Common Stock paid
to all holders of shares of Common Stock whose shares were purchased pursuant
to such Permitted Offer; and (iii) the form of consideration offered in such
transaction is the same as the form of consideration paid pursuant to such
Permitted Offer. Upon consummation of any such transaction contemplated by
this Section 13.4, all Rights hereunder shall expire.
14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
14.1. The Corporation shall not be required to issue fractions of
Rights or to distribute Right Certificates that evidence fractional Rights.
In lieu of such fractional Rights, there shall be paid to the registered
holders of the Right Certificates with regard to which such fractional Rights
would otherwise be issuable an amount in cash equal to the same fraction of
the current market value of a whole Right. For the purposes of this Section
14.1, the current market value of a whole Right shall be the closing price of
the Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for
any day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by NASDAQ or such other system
then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
a professional market maker making a market in the Rights selected by the
Board of Directors of the Corporation. If on any such date no such market
maker is making a market in the Rights, the fair value of the Rights on such
date as determined in good faith by the Board of Directors of the Corporation
shall be used.
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14.2. The Corporation shall not be required to issue fractions of
shares of Preferred Stock (other than fractions that are one one-hundredth
(1/100th) or integral multiples of one one-hundredth (1/100th) of a share of
Preferred Stock) upon exercise of the Rights or to distribute certificates
that evidence fractional shares of Preferred Stock (other than fractions that
are one one-hundredth (1/100th) or integral multiples of one one-hundredth
(1/100th) of a share of Preferred Stock). Fractions of shares of Preferred
Stock in integral multiples of one one-hundredth (1/100th) of a share of
Preferred Stock may, at the election of the Corporation, be evidenced by
depositary receipts, pursuant to an appropriate agreement between the
Corporation and a depositary selected by it; PROVIDED that such agreement
shall provide that the holders of such depositary receipts shall have the
rights, privileges and preferences to which they are entitled as beneficial
owners of the Preferred Stock represented by such depositary receipts. In
lieu of fractional shares of Preferred Stock that are not one one-hundredth
(1/100th) or integral multiples of one one-hundredth (1/100th) of a share of
Preferred Stock, the Corporation shall pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of one
share of Preferred Stock. For the purposes of this Section 14.2, the current
market value of a share of Preferred Stock shall be the closing price of a
share of Preferred Stock (as determined pursuant to Section 11.4.2 hereof)
for the Trading Day immediately prior to the date of such exercise.
14.3. Following the occurrence of one of the transactions or
events specified in Section 11 giving rise to the right to receive shares of
Common Stock, Capital Stock Equivalents (other than Preferred Stock) or other
securities upon the exercise of a Right, the Corporation shall not be
required to issue fractions of shares or units of such shares of Common
Stock, Capital Stock Equivalents or other securities upon exercise of the
Rights or to distribute certificates that evidence fractions of such shares
of Common Stock, Capital Stock Equivalents or other securities. In lieu of
fractional shares or units of such shares of Common Stock, Capital Stock
Equivalents or other securities, the Corporation may pay to the registered
holders of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of a share or unit of such shares of Common Stock, Capital Stock
Equivalents or other securities. For purposes of this Section 14.3, the
current market value shall be determined in the manner set forth in Section
11.4 hereof for the Trading Day immediately prior to the date of such
exercise and, if such Capital Stock Equivalent is not traded, each such
Capital Stock Equivalent shall have the value of one one-hundredth (1/100th)
of a share of Preferred Stock.
14.4. The holder of a Right by the acceptance of the Right
expressly waives such holder's right to receive any fractional Rights or any
fractional share upon exercise of a Right (except as provided above). The
Rights Agent shall not be deemed to have knowledge of, and shall have no duty
in respect of, the issuance of fractional Rights or fractional shares unless
and until it shall have received instructions from the Corporation concerning
the issuance of such fractional Rights or fractional shares.
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15. RIGHTS OF ACTION.
15.1. All rights of action in respect of this Agreement, excepting
the rights of action given to the Rights Agent under Section 18 hereof, are
vested in the respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of shares of the
Common Stock); and any registered holder of any Right Certificate (or, prior
to the Distribution Date, of shares of the Common Stock), without the consent
of the Rights Agent or of the holder of any other Right Certificate (or,
prior to the Distribution Date, of shares of the Common Stock), may, in such
registered holder's own behalf and for such registered holder's own benefit,
enforce, and may institute and maintain any suit, action or proceeding
against the Corporation to enforce, or otherwise act in respect of, such
registered holder's right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations
of any Person subject to, this Agreement. Nothing in this Section 15 is
intended to modify or limit the authority of the Board of Directors under
Section 25.3.
16. AGREEMENT OF RIGHT HOLDERS.
Every holder of a Right, by accepting the same, consents and agrees with
the Corporation and the Rights Agent and with every other holder of a Right
that:
16.1. prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the associated shares of
Common Stock;
16.2. after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate form
fully executed;
16.3. subject to Section 6 and Section 7.7 hereof, the Corporation
and the Rights Agent may deem and treat the Person in whose name the Right
Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on
the Right Certificate or the associated Common Stock certificate made by
anyone other than the Corporation or the Rights Agent) for all purposes
whatsoever, and neither the Corporation nor the Rights Agent, subject to the
last sentence of Section 7.6 hereof, shall be required to be affected by any
notice to the contrary; and
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16.4. notwithstanding anything in this Agreement to the contrary,
neither the Corporation nor the Rights Agent shall have any liability to any
holder of a Right or a beneficial interest in a Right or other Person as a
result of its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or other
order, decree, judgment or ruling (whether interlocutory or final) issued by
a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation;
PROVIDED, HOWEVER, that the Corporation must use its best efforts to have any
such order, decree, judgment or ruling lifted or otherwise overturned as soon
as practicable.
17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDEr.
No holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of shares of the
Preferred Stock or any other securities of the Corporation that may at any
time be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be construed to confer
upon the holder of any Right Certificate, as such, any of the rights of a
stockholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 24 hereof), or to receive dividends or other
distributions or to exercise any preemptive or subscription rights, or
otherwise, until the Right or Rights evidenced by such Right Certificate
shall have been exercised in accordance with the provisions hereof.
18. CONCERNING THE RIGHTS AGENT.
18.1. The Corporation agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the administration, preparation,
delivery, amendment and execution of this Agreement and the exercise and
performance of its duties hereunder. The Corporation also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, damage, judgment, fine, penalty, claim, demand, settlement, cost
or expense incurred without gross negligence, bad faith or willful misconduct
on the part of the Rights Agent, for any action taken, suffered or omitted by
the Rights Agent in connection with the acceptance and administration of this
Agreement, including without limitation the costs and expenses of defending
against any claim of liability in the premises. The indemnity provided for
herein shall survive the expiration of the Rights and the termination of this
Agreement.
18.2. The Rights Agent shall be authorized and protected and shall
incur no liability for, or in respect of, any action taken, suffered or
omitted by it in connection with the acceptance and administration of this
Agreement in reliance upon any Right Certificate or
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certificate for shares of Common Stock or for other securities of the
Corporation, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the
proper Person or Persons. The Rights Agent shall not be deemed to have
knowledge of, and shall have no duty in respect of, any fact contained in
such Right Certificate or certificate for shares of Common Stock or for other
securities of the Corporation, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document unless and until it shall
have received the same.
18.3. Anything in this Agreement to the contrary notwithstanding,
in no event shall the Rights Agent be liable for special, indirect,
incidental or consequential loss or damage of any kind whatsoever (including
but not limited to lost profits), even if the Rights Agent has been advised
of the likelihood of such loss or damage and regardless of the form of the
action.
19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
19.1. Any Person into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
Person resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any Person succeeding to
the stock transfer or all or substantially all of the shareholder services
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, PROVIDED that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof.
19.2. In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
20. DUTIES OF RIGHTS AGENT.
20.1. The Rights Agent undertakes those duties and obligations,
and only the duties and obligations, expressly imposed by this Agreement (and
no implied duties or obligations) upon the following terms and conditions, by
all of which the Corporation and the holders of Right Certificates, by their
acceptance thereof, shall be bound.
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20.2. The Rights Agent may consult with legal counsel (who may be
legal counsel for the Corporation), and the advice or opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent,
and the Rights Agent shall incur no liability for or in respect of any action
taken, suffered or omitted by it in good faith and in accordance with such
advice or opinion.
20.3. Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact
or matter (including, without limitation, the identity of an Acquiring Person
and the determination of the current market price of any security) be proved
or established by the Corporation prior to taking, suffering or omitting any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman of
the Board, the Chief Executive Officer, the President, any Vice President,
the Treasurer or the Secretary of the Corporation and delivered to the Rights
Agent; and such certificate shall be full authorization and protection to the
Rights Agent and the Rights Agent shall incur no liability for or in respect
of any action taken, suffered or omitted in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
20.4. The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
20.5. The Rights Agent shall not be liable for, or by reason of,
any of the statements of fact or recitals contained in this Agreement or in
the Right Certificates (except its countersignature on such Right
Certificates) or be required to verify the same, but all such statements and
recitals are and shall be deemed to have been made by the Corporation only.
20.6. The Rights Agent shall not be under any liability or
responsibility in respect of the validity of this Agreement or the execution
and delivery hereof (except the due execution hereof by the Rights Agent) or
in respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Corporation of any covenant or condition contained in this Agreement or in
any Rights Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming null and void
pursuant to Section 7.6 hereof) or any adjustment required under the
provisions of Section 11, Section 13 or Section 26 hereof or responsible for
the manner, method or amount of any such adjustment or the ascertaining of
the existence of facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after
receipt of the certificate described in Section 12 hereof); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Preferred Stock or shares of
Common Stock to be issued pursuant to this Agreement or any Right Certificate
or as to whether any Preferred Stock or shares of Common Stock will, when
issued, be validly authorized and issued, fully paid and non-assessable.
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20.7. The Corporation agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
20.8. The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Treasurer or the Secretary of the Corporation, and to
apply to such officers for advice or instructions in connection with its
duties, and such instructions shall be full authorization and protection of
the Rights Agent and the Rights Agent shall incur no liability for or in
respect of any action taken, suffered or omitted by it in good faith or lack
of action in accordance with instructions of any such officer or for any
delay in acting while waiting for those instructions. The Rights Agent shall
incur no liability for or in respect of its reliance upon the most recent
instructions received by any such officer. Any application by the Rights
Agent for written instructions from the Corporation may, at the option of the
Rights Agent, set forth in writing any action proposed to be taken or omitted
by the Rights Agent under this Agreement and the date on or after which such
action shall be taken or suffered such omission shall be effective. The
Rights Agent shall not be liable for any action taken or suffered by, or
omission of, the Rights Agent in accordance with a proposal included in any
such application on or after the date specified in such application (which
date shall not be less than five (5) Business Days after the date any officer
of the Corporation actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission),
the Rights Agent shall have received written instruction in response to such
application specifying the action to be taken, suffered or omitted.
20.9. The Rights Agent and any stockholder, affiliate, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Corporation or become pecuniarily
interested in any transaction in which the Corporation may be interested, or
contract with or lend money to the Corporation or otherwise act as fully and
freely as though it were not Rights Agent under this Agreement. Nothing
herein shall preclude the Rights Agent from acting in any other capacity for
the Corporation or for any other Person or legal entity.
20.10. The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, negligence or misconduct of
any such attorneys or agents or for any loss to the Corporation or any other
Person resulting from any such act, default, negligence or misconduct, absent
gross negligence, bad faith or willful misconduct in the selection and
continued employment thereof.
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20.11. No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights if it believes that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
20.12. If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase, as the case may be, has
not been completed, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting with
the Corporation.
21. CHANGE OF RIGHTS AGENT.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty (30) days' notice
in writing mailed to the Corporation and to each transfer agent of the Common
Stock or Preferred Stock by registered or certified mail, and to the holders
of the Right Certificates by first-class mail. The Corporation may remove
the Rights Agent or any successor Rights Agent upon sixty (60) days' notice
in writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Stock or Preferred Stock by
registered or certified mail, and to holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Corporation shall appoint a
successor to the Rights Agent. If the Corporation shall fail to make such
appointment within a period of sixty (60) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of
a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Corporation), then the registered holder of
any Right Certificate may apply to any court of competent jurisdiction for
the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Corporation or by such a court, shall be a Person organized
and doing business under the laws of the United States or of any of the
States of New York, New Jersey or California (or of any other state of the
United States so long as such Person is authorized to do business in any of
the States of New York, New Jersey or California), in good standing, having
an office in any of such States, which is subject to supervision or
examination by federal or state authority and which (or the parent
corporation of which) has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights Agent
without further act or deed; but the predecessor Rights Agent shall deliver
and transfer to the successor Rights Agent any property at the time held by
it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of a predecessor Rights
Agent and deliver such Right Certificates so countersigned; and in
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case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Right Certificates shall
have the full force provided in the Right Certificates and in this Agreement.
Not later than the effective date of any such appointment, the Corporation
shall file notice thereof in writing with the predecessor Rights Agent and
each transfer agent of the Common Stock or Preferred Stock, and mail a notice
thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation
or removal of the Rights Agent or the appointment of the successor Rights
Agent, as the case may be.
22. ISSUANCE OF NEW RIGHT CERTIFICATES.
22.1. Notwithstanding any of the provisions of this Agreement or
of the Rights to the contrary, the Corporation may, at its option, issue new
Right Certificates evidencing Rights in such form as may be approved by its
Board of Directors to reflect any adjustment or change in the Purchase Price
and the number or kind or class of shares or other securities or property
purchasable under the Right Certificates made in accordance with the
provisions of this Agreement.
22.2. In connection with the issuance or sale of Common Stock
following the Distribution Date and prior to the earlier of the Redemption
Date and the Final Expiration Date, the Corporation (a) shall with respect to
shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities, notes or debentures issued by the
Corporation, and (b) may in any other case, if deemed necessary or
appropriate by the Board of Directors of the Corporation, issue Right
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; PROVIDED, HOWEVER, that (i) the Corporation shall not
be obligated to issue any such Right Certificates if, and to the extent that,
the Corporation shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Corporation or
the Person to whom such Right Certificate would be issued, and (ii) no Right
Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
23. REDEMPTION AND TERMINATION.
23.1. REDEMPTION
23.1.1. The Board of Directors of the Corporation may, at
its option, redeem all but not less than all of the then outstanding Rights
at a redemption price of $.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or
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similar transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the "REDEMPTION PRICE"), at any time prior
to the earlier of the occurrence of a Section 11.1.2 Event or the Final
Expiration Date. The Corporation may, at its option, pay the Redemption
Price either in shares of Common Stock (based on the current per share market
price of the Common Stock at the time of redemption) or cash; PROVIDED that
if the Corporation elects to pay the Redemption Price in shares of Common
Stock, the Corporation shall not be required to issue any fractional shares
of Common Stock and the number of shares of Common Stock issuable to each
holder of Rights shall be rounded down to the next whole share.
23.1.2. In addition, the Board of Directors of the
Corporation may, at its option, at any time following the occurrence of a
Section 11.1.2 Event and the expiration of any period during which the holder
of Rights may exercise the Rights under Section 11.1.2 but prior to any
Section 13 Event redeem all but not less than all of the then outstanding
Rights at the Redemption Price (x) in connection with any merger,
consolidation or sale or other transfer (in one transaction or in a series of
related transactions) of assets or earning power aggregating 50% or more of
the earning power of the Corporation and its Subsidiaries (taken as a whole)
in which all holders of shares of Common Stock are treated alike and not
involving (other than as a holder of shares of Common Stock being treated
like all other such holders) an Interested Stockholder or (y) (i) if and for
so long as the Acquiring Person is not thereafter the Beneficial Owner of 15%
or more of the Common Stock, and (ii) at the time of redemption no other
Persons are Acquiring Persons.
23.2. In the case of a redemption permitted under Section 23.1.1,
immediately upon the date for redemption set forth in (or determined in the
manner specified in) a resolution of the Board of Directors of the
Corporation ordering the redemption of the Rights, and without any further
action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price for each Right so held. In the case of a
redemption permitted only under Section 23.1.2, the right to exercise the
Rights will terminate and represent only the right to receive the Redemption
Price upon the later of ten (10) Business Days following the giving of such
notice or the expiration of any period during which the Rights may be
exercised under Section 11.1.2. The Corporation shall promptly give public
notice of any such redemption; PROVIDED, HOWEVER, that the failure to give,
or any defect in, any such notice shall not affect the validity of such
redemption. Within ten (10) days after such date for redemption set forth in
a resolution of the Board of Directors of the Corporation ordering the
redemption of the Rights, the Corporation shall mail a notice of redemption
to the Rights Agent and all the holders of the then outstanding Rights at (in
the case of notice to holders) their addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Stock. Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made. Neither
the Corporation nor any of its Affiliates or Associates may redeem, acquire
or purchase for value any Rights at
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any time in any manner other than as specifically set forth in this Section
23 and other than in connection with the purchase of shares of Common Stock
prior to the Distribution Date.
23.3. The Corporation may, at its option, discharge all of its
obligations with respect to the Rights by (i) issuing a press release
announcing the manner of redemption of the Rights in accordance with this
Agreement and (ii) mailing payment of the Redemption Price to the registered
holders of the Rights at their addresses as they appear on the registry books
of the Rights Agent or, prior to the Distribution Date, on the registry books
of the Transfer Agent of the Common Stock, and upon such action, all
outstanding Rights and Right Certificates shall be null and void without any
further action by the Corporation.
24. NOTICE OF CERTAIN EVENTS.
24.1. In case the Corporation shall propose (i) to pay any
dividend payable in stock of any class to the holders of its Preferred Stock
or to make any other distribution to the holders of its Preferred Stock
(other than a regular quarterly cash dividend), (ii) to offer to the holders
of its Preferred Stock rights or warrants to subscribe for or to purchase any
additional Preferred Stock or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassification of its
Preferred Stock (other than a reclassification involving only the subdivision
of outstanding Preferred Stock), (iv) to effect any consolidation or merger
into or with any other Person (other than a Subsidiary of the Corporation in
a transaction which does not violate Section 11.14 hereof), or to effect any
sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer) in one or more transactions, of 50% or
more of the assets or earning power of the Corporation and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the Corporation
and/or any of its Subsidiaries in one or more transactions each of which does
not violate Section 11.14 hereof), or (v) to effect the liquidation,
dissolution or winding up of the Corporation, then, in each such case, the
Corporation shall give the Rights Agent and to each holder of a Right
Certificate, in accordance with Section 25 hereof, a notice of such proposed
action which shall specify the record date for the purposes of such stock
dividend or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is to take place and the date of participation
therein by the holders of the Preferred Stock, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least twenty (20) days prior to the record date
for determining holders of the Preferred Stock for purposes of such action,
and in the case of any such other action, at least twenty (20) days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of the Preferred Stock, whichever shall be the earlier.
24.2. In case of a Section 11.1.2 Event, then (i) the Corporation
shall as soon as practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 25.1.3 hereof, a notice of the
occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11.1.2 hereof,
and
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(ii) all references in the preceding Section 24.1 to Preferred Stock
shall be deemed thereafter to refer also to shares of Common Stock and/or, if
appropriate, other securities of the Corporation.
25. MISCELLANEOUS.
25.1. NOTICES.
25.1.1. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Corporation shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Rights Agent) as follows:
Data I/O Corporation
10525 Willows Road N.E.
Redmond, Washington 98052
Attention: Corporate Secretary
25.1.2. Subject to the provisions of Section 21 hereof, any
notice or demand authorized by this Agreement to be given or made by the
Corporation or by the holder of any Right Certificate to or on the Rights
Agent shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with
the Corporation) as follows:
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Ridgefield Park, New Jersey 07660-2108
Attention: General Counsel
25.1.3. Notices or demands authorized by this Agreement to
be given or made by the Corporation or the Rights Agent to the holder of any
Right Certificate or, if prior to the Distribution Date, to the holder of
certificates representing shares of Common Stock shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed to such
holder at the address of such holder as shown on the registry books of the
Corporation.
25.2. SUPPLEMENTS AND AMENDMENTS. The Corporation may from time
to time supplement or amend any provision of this Agreement without the
approval of any holders of Rights in order to cure any ambiguity, to correct
or supplement any provision herein, or to make any other provision with
respect to the Rights which the Corporation may deem necessary or desirable,
any such supplement or amendment to be evidenced by a writing signed by the
Corporation and the Rights Agent; PROVIDED, HOWEVER, that from and after any
Shares
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Acquisition Date this Agreement shall not be amended in any manner which will
adversely affect the interests of the holders of Rights. Upon the delivery
of a certificate from an appropriate officer of the Corporation which states
that the proposed supplement or amendment is in compliance with the terms of
this Section 25.2, and, if requested by the Rights Agent, an opinion of
counsel, the Rights Agent shall execute such supplement or amendment,
PROVIDED that such supplement or amendment does not adversely affect the
rights or obligations of the Rights Agent under Section 18 or Section 20 of
this Agreement. Prior to the Distribution Date, the interests of the holders
of Rights shall be deemed coincident with the interests of the holders of
shares of Common Stock. This Agreement shall not be amended, without the
prior written consent of the Rights Agent, in any manner that changes or
increases the duties or obligations of the Rights Agent.
25.3. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
The Board of Directors of the Corporation shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board, or the Corporation, or as may be necessary
or advisable in the administration of this Agreement, including without
limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including, without limitation, a
determination to redeem or not redeem the Rights or to amend the Agreement
and whether any proposed amendment adversely affects the interests of the
holders of Right Certificates). For all purposes of this Agreement, any
calculation of the number of shares of Common Stock or other securities
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding shares of Common Stock or any other
securities of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act as in effect on the date of this
Agreement. All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions
with respect to the foregoing) which are done or made by the Board in good
faith, shall (x) be final, conclusive and binding on the Corporation, the
Rights Agent, the holders of the Right Certificates and all other Persons,
and (y) not subject the Board to any liability to the holders of the Right
Certificates. The Rights Agent shall be fully protected and shall incur no
liability for or in respect of its reliance on the good faith of the
Corporation's Board of Directors with respect to actions done or made in
connection with such calculation. Nothing in Section 15 hereof is intended
to modify or limit this Section 25.3.
25.4. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Corporation or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
25.5. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person or corporation other than the Corporation,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the shares of Common Stock) any legal or
equitable right, remedy or claim under this Agreement. This
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Agreement shall be for the sole and exclusive benefit of the Corporation, the
Rights Agent and the registered holders of the Right Certificates (and, prior
to the Distribution Date, the shares of Common Stock).
25.6. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
25.7. GOVERNING LAW. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Washington and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts
to be made and performed entirely within such State; except that all
provisions regarding the rights, duties and obligations of the Rights Agent
shall be governed and construed in accordance with the laws of the State of
New York applicable to contracts made and to be performed entirely within
such State.
25.8. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
25.9. DESCRIPTIVE HEADINGS. Descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
26. EXCHANGE.
26.1. Notwithstanding any other provision hereof, the Board of
Directors of the Corporation may, at its option, at any time after any Person
becomes an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become null and
void pursuant to the provisions of Section 7.6 hereof) for shares of Common
Stock of the Corporation at an exchange ratio determined by dividing the
then-applicable exercise price of the Rights determined under Section 7.2 by
the "current per share market price" as defined in Section 11.4.1 (such
exchange ratio being hereinafter referred to as the "EXCHANGE RATIO").
Notwithstanding the foregoing, the Corporation's Board of Directors shall not
be empowered to effect such exchange at any time after any Person (other than
the Corporation, any Subsidiary of the Corporation, any employee benefit plan
of the Corporation or any such Subsidiary, or any Person organized, appointed
or established by the Corporation for or pursuant to the terms of any such
plan or any trustee, administrator or
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<PAGE>
fiduciary of such a plan), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the Common Stock
then outstanding.
26.2. Immediately upon the action of the Board of Directors of the
Corporation ordering the exchange of any Rights pursuant to Section 26.1 and
without any further action and without any notice, the right to exercise such
rights shall terminate and the only right thereafter of the holder of such
Rights (other than a holder of Rights that have become null and void pursuant
to the provisions of Section 7.6 hereof) shall be to receive that number of
shares of Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Corporation shall promptly give public
notice, and shall promptly give notice to the Rights Agent, of any such
exchange; PROVIDED, HOWEVER, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Corporation
promptly shall mail a notice of any such exchange to all of the holders of
such Rights at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each
such notice of exchange shall state the method by which the exchange of the
Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7.6) held by
each holder of Rights.
26.3. In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit
any exchange of Rights as contemplated in accordance with this Section 26,
the Corporation shall take all such action as may be necessary to authorize
additional shares of Common Stock or Preferred Stock for issuance upon
exchange of the Rights.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the date and year first above written.
DATA I/O CORPORATION
Attest:
By: /s/ James J. David By: /s/ Joel S. Hatlen
-------------------------------- -------------------------------
James J. David Joel S. Hatlen
President Vice President of Finance and
Chief Financial Officer
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By: /s/ Dianna Rausch
--------------------------------
Dianna Rausch
Vice President
<PAGE>
EXHIBIT A
Form of Right Certificate
Certificate No. A- _____ Rights
NOT EXERCISABLE AFTER APRIL 4, 2008 OR EARLIER IF REDEEMED
BY THE CORPORATION. THE RIGHTS ARE SUBJECT TO REDEMPTION AT
$.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT.
Right Certificate
DATA I/O CORPORATION
This certifies that __________, or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the
owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of April 4, 1998 (the "Rights Agreement"), between Data
I/O Corporation, a Washington corporation (the "Corporation"), and
ChaseMellon Shareholder Services, L.L.C., a New Jersey limited liability
company, (the "Rights Agent") to purchase from the Corporation at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M., Washington time, on April 4, 2008, unless the Rights
evidenced hereby shall have been previously redeemed by the Corporation, at
the principal office or offices of the Rights Agent designated for such
purpose, or at the office of its successor as Rights Agent, one one-hundredth
(1/100th) of a fully paid non-assessable share of Series A Junior
Participating Preferred Stock (the "Preferred Stock") of the Corporation, at
a purchase price of $30 per one one-hundredth (1/100th) of a share of
Preferred Stock (the "Purchase Price"), upon presentation and surrender of
this Right Certificate with the Form of Election to Purchase duly executed.
The number of Rights evidenced by this Right Certificate (and the number of
one one-hundredths (1/100ths) of a share of Preferred Stock that may be
purchased upon exercise hereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of _______________, based
on the Preferred Stock as constituted at such date.
Upon the occurrence of a Section 11.1.2 Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Right Certificate
are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any Affiliate or Associate thereof) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person
(or of an Affiliate or Associate thereof) who becomes a transferee prior to
or concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration)
from the Acquiring Person (or from any Affiliate or Associate thereof) to
holders of equity interests in such Acquiring Person or to any Person with
whom the Acquiring Person has a continuing agreement, arrangement
<PAGE>
or understanding regarding the transferred Rights or (B) a transfer that the
Board of Directors of the Corporation has determined is part of a plan,
arrangement or understanding that has as a primary purpose or effect the
avoidance of Section 7.6 of the Rights Agreement, shall become null and void
without any further action and no holder hereof shall have any rights
whatsoever with respect to such Rights, whether under any provision of the
Rights Agreement or otherwise.
As provided in the Rights Agreement, the Purchase Price and the number
of one one-hundredths (1/100ths) of a share of Preferred Stock or other
securities that may be purchased upon the exercise of the Rights evidenced by
this Right Certificate are subject to modification and adjustment upon the
happening of certain events, including Triggering Events (as such term is
defined in the Rights Agreement).
This Right Certificate is subject to all of the terms, covenants and
restrictions of the Rights Agreement, which terms, covenants and restrictions
are hereby incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Corporation and the holders of the Right
Certificates, which limitations of rights include the temporary suspension of
the exercisability of such Rights under the specific circumstances set forth
in the Rights Agreement. Copies of the Rights Agreement are on file at the
principal executive offices of the Corporation and the office of the Rights
Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
shares of Preferred Stock or other securities as the Rights evidenced by the
Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part,
the holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Corporation at a redemption price
of $.001 per Right (subject to adjustment as provided in the Rights
Agreement) payable in cash.
No fractional shares of Preferred Stock will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions that are one
one-hundredth (1/100th) or integral multiples of one one-hundredth (1/100th)
of a share of Preferred Stock, which may, at the election of the Corporation,
be evidenced by depository receipts), but in lieu thereof a cash payment will
be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of the Preferred
Stock or of any other securities of the Corporation that may at any time be
issuable on the exercise hereof, nor shall anything
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contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a shareholder of the Corporation
or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in the Rights Agreement),
or to receive dividends or other distributions or to exercise any preemptive
or subscription rights, or otherwise, until the Right or Rights evidenced by
this Right Certificate shall have been exercised as provided in the Rights
Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Corporation and its corporate seal. Dated as of __________, _____.
[SEAL]
ATTEST: DATA I/O CORPORATION
By __________________________________ By __________________________________
Name ________________________________ Name ________________________________
Title _______________________________ Title _______________________________
Countersigned:
[ ]
By __________________________________
Name ________________________________
Title _______________________________
3
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ______________________________________________________
hereby sells, assigns and transfers unto _____________________________________
______________________________________________________________________________
(Please print name and address of transferee)
______________________________________________________________________________
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________
Attorney-in-Fact, to transfer the within Right Certificate on the books of
the within-named Corporation, with full power of substitution.
Dated:__________, _____ _______________________________________
Signature
Signature Guaranteed:
______________________________
Signatures must be guaranteed by an "Eligible Guarantor Institution" as
defined in Rule 17Ad-15 (or any successor rule or regulation) promulgated
pursuant to the Securities Exchange Act of 1934, as amended (this term means,
in general, banks, stock brokers, savings and loan associations, and credit
unions, in each case with membership in an approved signature guarantee
medallion program).
The undersigned hereby certifies that (1) the Rights evidenced by this
Right Certificate are not being sold, assigned or transferred by or on behalf
of a Person who is or was an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement), (2) this Right
Certificate is not being sold, assigned or transferred to or on behalf of any
such Acquiring Person, Affiliate or Associate, and (3) after due inquiry and
to the best knowledge of the undersigned, the undersigned did not acquire the
Rights evidenced by this Right Certificate from any Person who is or was an
Acquiring Person or an Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement).
_______________________________________
Signature
<PAGE>
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder
desires to exercise Rights represented by the Right
Certificate)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise ______________
Rights represented by this Right Certificate to purchase the shares of
Preferred Stock, shares of Common Stock or other securities issuable upon the
exercise of such Rights and requests that certificates for such shares of
Preferred Stock, shares of Common Stock or other securities be issued in the
name of:
Please insert social security number
or other identifying number __________________________________________________
______________________________________________________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
Please insert social security number
or other identifying number __________________________________________________
______________________________________________________________________________
(Please print name and address)
Dated: __________, _____
_______________________________________
Signature
Signature Guaranteed:
______________________________
Signatures must be guaranteed by an "Eligible Guarantor Institution" as
defined in Rule 17Ad-15 (or any successor rule or regulation) promulgated
pursuant to the Securities Exchange Act of 1934, as amended (this term means,
in general, banks, stock brokers, savings and loan associations, and credit
unions, in each case with membership in an approved signature guarantee
medallion program).
<PAGE>
Form of Reverse Side of Right Certificate -- continued
The undersigned hereby certifies that (1) the Rights evidenced by this
Right Certificate are not being exercised by or on behalf of a Person who is
or was an Acquiring Person or an Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement), (2) this Right Certificate is not
being sold, assigned or transferred by or on behalf of any such Acquiring
Person, Affiliate or Associate, and (3) after due inquiry and to the best
knowledge of the undersigned, the undersigned did not acquire the Rights
evidenced by this Right Certificate from any Person who is or was an
Acquiring Person or an Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement).
_______________________________________
Signature
Notice
The signature on the foregoing Forms of Assignment and Election and
certificates must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Corporation and the Rights Agent will deem the Beneficial
Owner of the Rights evidenced by this Right Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as such terms are defined in the
Right Agreement) and such Assignment or Election to Purchase will not be
honored.
<PAGE>
EXHIBIT B
DATA I/0 CORPORATION
10525 Willows Road N.E.
Redmond, Washington 98052
SUMMARY OF RIGHTS TO PURCHASE
SERIES A JUNIOR PARTICIPATING PREFERRED SHARES
On March 12, 1998, the Board of Directors (the "Board") of Data I/0
Corporation (the "Corporation") declared a dividend distribution of one
preferred share purchase right (a "Right") for each outstanding share of
Common Stock (the "Common Stock") of the Corporation. The dividend is
payable to the shareholders of record on April 4, 1998 (the "Record Date"),
and with respect to shares of Common Stock issued thereafter until the
Distribution Date (as defined below) and, in certain circumstances, with
respect to shares of Common Stock issued after the Distribution Date. Except
as set forth below, each Right, when it becomes exercisable, entitles the
registered holder to purchase from the Corporation one one-hundredth
(1/100th) of a share of Series A Junior Participating Preferred Stock/ (the
"Preferred Stock"), of the Corporation at a price of $30 per one
one-hundredth (1/100th) of a share of Preferred Stock (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement") between the Corporation and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the "Rights
Agent"), dated as of April 4, 1998.
Initially, the Rights will be attached to all certificates
representing shares of Common Stock then outstanding, and no separate
certificates representing the Rights ("Right Certificates") will be
distributed. The Rights will separate from the Common Stock upon the earliest
to occur of (i) a person or group of affiliated or associated persons having
acquired, without the prior approval of the Corporation's Board of Directors,
beneficial ownership of 15% or more of the outstanding shares of Common Stock
(except pursuant to a Permitted Offer, as hereinafter defined) or (ii) 10
days (or such later date as the Board may determine) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in a person or group of
affiliated or associated persons becoming an Acquiring Person (as hereinafter
defined) (the "Distribution Date"). A person or group whose acquisitions of
shares of Common Stock cause a Distribution Date pursuant to clause (i) above
is an "Acquiring Person," with certain exceptions as set forth in the Rights
Agreement. The date that a person or group is first publicly announced to
have become such by the Corporation or such Acquiring Person is the "Shares
Acquisition Date."
The Rights Agreement provides that, until the Distribution Date,
the Rights will be transferred with and only with the associated shares of
Common Stock. Until the Distribution Date (or earlier redemption or
expiration of the Rights), new Common Stock certificates issued after the
Record Date upon transfer or new issuance of shares of Common Stock will
contain a notation incorporating the Rights Agreement by reference. Until
the Distribution Date (or earlier
<PAGE>
redemption or expiration of the Rights), the surrender for transfer of any
certificates for shares of Common Stock outstanding as of the Record Date,
even without such notation or a copy of this Summary of Rights being attached
thereto, will also constitute the transfer of the Rights associated with the
shares of Common Stock represented by such certificate. As soon as
practicable following the Distribution Date, Right Certificates will be
mailed to the holders of record of the shares of Common Stock as of the Close
of Business (as defined in the Rights Agreement) on the Distribution Date
(and to each initial record holder of certain shares of Common Stock issued
after the Distribution Date), and such separate Right Certificates alone will
evidence the Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on April 4, 2008, unless earlier redeemed by
the Corporation as described below.
In the event that any person becomes an Acquiring Person (except
pursuant to a tender or exchange offer which is for all outstanding shares of
Common Stock at a price and on terms which a majority of certain members of
the Board determines to be adequate and in the best interests of the
Corporation, its shareholders and other relevant constituencies, other than
such Acquiring Person, its affiliates and associates (a "Permitted Offer")),
each holder of a Right will thereafter have the right (the "Flip-In Right")
to receive, upon exercise, the number of shares of Common Stock (or, in
certain circumstances, of one one-hundredths (1/100ths) of a share of
Preferred Stock or other securities of the Corporation) having a value
(immediately prior to such triggering event) equal to two times the exercise
price of the Right. Notwithstanding the foregoing, following the occurrence
of the event described above, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by
any Acquiring Person or any affiliate or associate thereof will be null and
void. The Board has the option, at any time after any person becomes an
Acquiring Person, to exchange all or part of the then-exercisable Rights
(excluding those that have become void, as described in the immediately
preceding sentence) for shares of Common Stock, at an exchange ratio
determined by dividing the then-applicable Purchase Price by the then-current
market price per share of Common Stock as determined in accordance with the
Rights Agreement. However, this option generally terminates if any person
becomes the beneficial owner of 50% or more of the Common Stock.
In the event that, at any time following the Shares Acquisition
Date, (i) the Corporation is acquired in a merger or other business
combination transaction in which the holders of all of the outstanding shares
of Common Stock immediately prior to the consummation of the transaction are
not the holders of all of the surviving corporation's voting power, or (ii)
more than 50% of the Corporation's assets or earning power is sold or
transferred, in either case with or to (x) an Acquiring Person or any
affiliate or associate thereof or (y) any other person in which such
Acquiring Person, affiliate or associate has an interest or any person acting
on behalf of or in concert with such Acquiring Person, affiliate or
associate, or (z) if, in such transaction, all holders of shares of Common
Stock are not treated alike, any other person, then each holder of a Right
(except Rights which previously have been voided as set forth above) shall
thereafter have the right (the "Flip-Over Right") to receive, upon exercise,
common shares of the acquiring company (or, in certain circumstances, its
parent), having a value equal to two
2
<PAGE>
times the exercise price of the Right. The holder of a Right will continue
to have the Flip-Over Right whether or not such holder exercises or
surrenders the Flip-In Right.
The Purchase Price payable, and the number of shares of Preferred
Stock, shares of Common Stock or other securities issuable, upon exercise of
the Rights are subject to adjustment from time to time to prevent dilution
(i) in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) upon the grant to holders of
shares of the Preferred Stock of certain rights or warrants to subscribe for
or purchase Preferred Stock at a price, or securities convertible into
Preferred Stock with a conversion price, less than the then current market
price of the Preferred Stock or (iii) upon the distribution to holders of
shares of the Preferred Stock of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-hundredths (1/100ths) of a share of Preferred Stock issuable upon
exercise of each Right are also subject to adjustment in the event of a stock
split of the Common Stock or a stock dividend on the Common Stock payable in
Common Stock or subdivisions, consolidations or combinations of the Common
Stock occurring, in any such case, prior to the Distribution Date.
Preferred Stock purchasable upon exercise of the Rights will not be
redeemable. Each share of Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment of $1.00 per share but, if greater,
will be entitled to an aggregate dividend per share of 100 times the dividend
declared per share of Common Stock. In the event of liquidation, the holders
of shares of the Preferred Stock will be entitled to a minimum preferential
liquidation payment per share in an amount equal to $100 plus an amount equal
to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Series A Junior Participating
Liquidation Preference"); thereafter, and after the holders of shares of the
Common Stock receive a liquidation payment of an amount equal to the quotient
obtained by dividing the Series A Junior Participating Liquidation Preference
by 100 (subject to certain adjustments for stock splits, stock dividends and
recapitalizations with respect to the Common Stock), the holders of shares of
the Preferred Stock and the holders of the Common Stock will share the
remaining assets in the ratio of 100 to 1 (as adjusted) for each share of
Preferred Stock and Common Stock so held, respectively. Finally, in the
event of any merger, consolidation or other transaction in which shares of
Common Stock are exchanged, each share of Preferred Stock will be entitled to
receive 100 times the amount received per share of Common Stock. These
rights are protected by customary antidilution provisions. In the event that
the amount of accrued and unpaid dividends on the Preferred Stock is
equivalent to six full quarterly dividends or more, the holders of shares of
the Preferred Stock shall have the right, voting as a class, to elect two
directors in addition to the directors elected by the holders of shares of
the Common Stock until all cumulative dividends on the Preferred Stock have
been paid or set apart for payment through the last quarterly dividend
payment date. No fractional shares of Preferred Stock will be issued (other
than fractions which are one one-hundredth (1/100th) or integral multiples of
one one-hundredth (1/100th) of a share of Preferred Stock, which may, at the
election of the Corporation, be evidenced by depositary receipts) and in lieu
thereof, an adjustment in cash will be made
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<PAGE>
based on the market price of the Preferred Stock on the last trading day
prior to the date of exercise.
With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments require an adjustment of at least 1%
in such Purchase Price.
At any time prior to the earlier to occur of (i) a person becoming
an Acquiring Person or (ii) the expiration of the Rights, and under certain
other circumstances, the Corporation may redeem the Rights in whole, but not
in part, at a price (payable in cash or, at the Corporation's election, in
Common Stock) of $0.001 per Right (the "Redemption Price"), which redemption
shall be effective upon the action of the Board. Additionally, following the
Shares Acquisition Date, the Corporation may redeem the then outstanding
Rights in whole, but not in part, at the Redemption Price, provided that such
redemption is in connection with a merger or other business combination
transaction or series of transactions involving the Corporation in which all
holders of shares of Common Stock are treated alike but not involving an
Acquiring Person or its affiliates or associates.
Other than those provisions relating to the rights, duties and
obligations of the Rights Agent and certain principal economic terms of the
Rights, all of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Corporation prior to the Distribution Date. After
the Distribution Date, the provisions of the Rights Agreement may be amended
by the Board of Directors of the Corporation in order to cure any ambiguity,
defect or inconsistency, to make changes that do not adversely affect the
interests of holders of Rights (excluding the interests of any Acquiring
Person), or, subject to certain limitations, to shorten or lengthen any time
period under the Rights Agreement.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a shareholder of the Corporation, including, without limitation,
the right to vote or to receive dividends. While the distribution of the
Rights will not be taxable to shareholders of the Corporation, shareholders
may, depending upon the circumstances, recognize taxable income should the
Rights become exercisable or upon the occurrence of certain events thereafter.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form
8-A. A copy of the Rights Agreement is available free of charge from the
Corporation. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights
Agreement, which is hereby incorporated herein by reference.
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of March 31, 1988 (the "Agreement"), between
Data I/O Corporation, a Washington corporation (the "Company") , and The First
Jersey National Bank (the "Rights Agent"), as amended by Amendment No. 1
thereto, dated as of May 28, 1992 and Amendment No. 2 thereto dated as of
July 16, 1997.
On March 31, 1988 (the "Rights Dividend Declaration Date"), the Board of
Directors of the Company authorized and declared a dividend distribution of one
Right for each share of Common Stock (as hereinafter defined) of the Company
outstanding at the close of business on April 4, 1988 (the "Record Date"), and
has authorized the issuance of one Right (as such number may hereinafter be
adjusted pursuant to the provisions of Section 11(p) hereof) for each share of
Common Stock of the Company issued between the Record Date (whether originally
issued or delivered from the Company's treasury) and the Distribution Date (as
hereinafter defined) each Right initially representing the right to purchase one
one-hundredth of a share of Series A Junior Participating Preferred Stock of the
Company having the rights, powers and preferences set forth in the form of
Certificate of Designation, Preferences and Rights attached hereto as Exhibit A,
upon the terms and subject to the conditions hereinafter set forth (the
"Rights");
On May 28, 1992, the Company amended the Rights Agreement to appoint
Chemical Trust Company of California, as rights agent;
On January 20, 1995, the Company consented to the substitution as of
January 1, 1996 of Chemical Mellon Shareholder Services, L.L.C. for Chemical
Trust Company of California as rights agent; and
On May 31, 1996, Chemical Mellon Shareholder Services, L.L.C. changed its
name to ChaseMellon Shareholder Services, L.L.C.;
Therefore, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of
15% or more of the shares of Common Stock then outstanding, but shall not
include:
(i) the Company,
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(ii) any Subsidiary of the Company,
(iii) any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or
pursuant to the terms of any such plan,
(iv) any Person who becomes an Acquiring Person solely as a
result of a reduction in the number of shares of Common
Stock outstanding due to the repurchase of shares of
Common Stock by the Company, unless and until such Person
shall thereafter purchase or otherwise become the
Beneficial Owner of additional shares of Common Stock
constituting 1% or more of the shares of Common Stock
outstanding at the time that such Person becomes the
Beneficial Owner of 15% or more of the then outstanding
shares of Common Stock, or
(v) any Person described in Rule 13d-1(b)(1) under the
Exchange Act who is eligible to report beneficial
ownership of Common Stock on Schedule 13G, unless such
Person (1) becomes required to file a Statement on
Schedule 13D with respect to its Beneficial Ownership of
Common Stock or (2) acquires Beneficial Ownership
(whether or not required to be reported on Schedule 13D
or Schedule 13G) of 25% or more of the then outstanding
shares of Common Stock.
Notwithstanding the foregoing, Acquiring Person shall not include any Person
whose ownership of 15% or more of the shares of Common Stock then outstanding
results from any action, transaction or series of transactions approved in
advance by the Company's Board of Directors (provided that such Person shall
become an Acquiring Person if such Person shall thereafter purchase or otherwise
become the Beneficial Owner of additional shares of Common Stock constituting 1%
or more of the outstanding shares of Common Stock unless otherwise approved in
advance by the Board); PROVIDED however, (A) any transfer of shares by such
Person to a third party (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any trustee in respect thereof
acting in such capacity) who after such transfer owns 15% or more of the shares
then outstanding will cause the Rights to become exercisable at the time and in
the manner provided for herein and (B) any institution of a tender or exchange
offer by any holder of shares will trigger the exercisability of the Rights,
notwithstanding the above, "Act" shall mean the Securities Act of 1933.
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(b) "Act" shall mean the Securities Act of 1933.
(c) "Adjustment Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
(d) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended and in effect on the date of
this Agreement (the "Exchange Act").
(e) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to "beneficially own,"
(A) securities tendered pursuant to a tender or exchange offer made by such
Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, or (B) securities
issuable upon exercise of Rights at any time prior to the occurrence of an
Adjustment Event, or (C) securities issuable upon exercise of Rights from
and after the occurrence of an Adjustment Event which Rights were acquired
by such Person or any of such Person's Affiliates or Associates prior to
the Distribution Date or pursuant to Section 3(a) or Section 22 hereof (the
"Original Rights") or pursuant to Section 11(i) hereof in connection with
an adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or
has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act), including pursuant
to any agreement, arrangement or understanding, whether or not in writing:
provided, however, that a Person shall not be deemed the "Beneficial Owner"
of, or to "beneficially own," any security under this subparagraph (ii) as
a result of an agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding: (A) arises solely
from a revocable proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
provisions of the General Rules and Regulations
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under the Exchange Act, and (B) is not also then reportable by such Person
on Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or indirectly, by
Any other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing), for
the purpose of acquiring, holding, voting (except pursuant to a revocable
proxy as described in the proviso to subparagraph (ii) of this paragraph
(e)) or disposing of any voting securities of the Company; PROVIDED,
however, that nothing in this paragraph (e) shall cause a person engaged in
business as an underwriter of securities to be the "Beneficial Owner" of,
or to "beneficially own," any securities acquired through such person's
participation in good faith in a firm commitment underwriting until the
expiration of forth days after the date of such acquisition.
(f) "Business Day" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
(g) "Close of business" on any given date shall mean 5:00 p.m., New
York City time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 p.m., New York City time, on the next succeeding
Business Day.
(h) "Common Stock" shall mean the Common stock of the Company, except
that "Common Stock" when used with reference to any Person other than the
Company shall mean the capital stock of such Person with the greatest voting
power, or the equity securities or other equity interest having power to control
or direct the management, of such Person.
(i) "Common stock equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(j) "Current market price" shall have the meaning set forth in
Section 11(d)(i) hereof.
(k) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
(l) "Distribution Date" shall mean the earlier of (i) the Close of
Business on the tenth business day after the Stock Acquisition Date and (ii) the
Close of Business on the tenth business day (or such later date as the Board of
Directors shall determine) after the date that a tender or exchange offer by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or
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of any Subsidiary of the Company, or any Person or entity organized, appointed
or established by the Company for or pursuant to the terms of any such plan) is
first published or sent or given within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act, if upon consummation
thereof, such Person would be the Beneficial Owner of 15% or more of the shares
of Common Stock then outstanding.
(m) "Exchange Act" shall have the meaning set forth in Section l(d)
hereof.
(n) "Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(o) "Final Expiration Date" shall mean the close of business on April
4, 1998.
(p) "Offering Person" shall mean any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan of the Company or of
any Subsidiary of the Company, or any person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan) who
alone or together with its Affiliates and Associates, shall announce (within the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange
Act) a tender or exchange offer, if upon consummation thereof, such Person would
be the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding.
(q) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(r) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock of the Company and, to the extent that there is
not a sufficient number of shares of Series A Junior Participating Preferred
Stock authorized to permit the full exercise of the Rights, any other series of
Preferred Stock, no par value, of the Company designated for such purpose
containing terms substantially similar to the terms of the Series A Junior
Participating Preferred Stock.
(s) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(t) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
(u) "Record Date" shall have the meaning set forth in the
introductory clause at the beginning of this Agreement.
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(v) "Redemption price" shall have the meaning set forth injection
23(a) hereof.
(w) "Rights" shall have the meaning set forth in the introductory
clause at the beginning of this Agreement.
(x) "Rights Certificates" shall have the meaning set forth in Section
3(a) hereof.
(y) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii) (A), (B) or (C) hereof.
(z) "Section 11(a)(ii) Adjustment Date" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(aa) "Section 13 Event" shall mean any event described in clause (x),
(y) or (z) of Section 13(a) hereof.
(bb) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(cc) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such.
(dd) "Subsidiary" shall mean, with reference to any Person, any
corporation of which an amount of voting securities sufficient to elect at least
a majority of the directors of such corporation is beneficially owned, directly
or indirectly, by such Person, or otherwise controlled by such Person.
(ee) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
(ff) "Trading Day" shall have the meaning set forth in Section
11(d)(i) hereof.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution Date
also be the holders of the Common Stock) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
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Section 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the Distribution Date, (i) 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 (which
certificates for Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (ii) the Rights will be
transferable only in connection with the transfer of the underlying shares of
Common Stock (including a transfer to the Company). As soon as practicable
after the Distribution Date, the Rights Agent will send by first-class, insured,
postage prepaid mail, to each record holder of the Common Stock as of the close
of business on the Distribution Date, at the address of such holder shown on the
records of the Company, one or more rights certificates, in substantially the
form of Exhibit a hereto (the "Rights Certificates"), evidencing one Right for
each share of Common Stock so held, subject to adjustment as provided herein.
In the event that an adjustment. in the number of Rights per share of Common
Stock has been made pursuant to Section 11(p) hereof, at the time of
distribution of the Right Certificates, the Company shall make the necessary and
appropriate rounding adjustments (in accordance with Section 14(a) hereof) so
that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of and after
the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) As promptly as practicable following the Record Date, the Company
will send a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form attached hereto as Exhibit C, by first-class postage
prepaid mail, to each record holder of the Common Stock as of the close of
business on the Record Date, at the address of such holder shown on the records
of the Company. With respect to certificates for the Common Stock outstanding
as of the Record Date, until the Distribution Date, the Rights will be evidenced
by such certificates for the Common Stock and the registered holders of the
Common Stock shall also be the registered holders of the associated Rights.
Until the earlier of the Distribution Date or the Expiration Date, the transfer
of any certificates representing shares of Common Stock in respect of which
Rights have been issued shall also constitute the transfer of the Rights
associated with such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of Common Stock
which are issued after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date. Certificates representing such shares
of Common Stock shall also be deemed to be certificates for Rights, and shall
bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between Data I/O
Corporation, (the "Company") and The First Jersey National Bank (the
"Rights Agent") dated as of
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March 31, 1988, as amended, (the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy of which is on file
at the principal offices of the Rights Agent. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this certificate.
The Rights Agent will mail to the holder of this certificate a copy of the
Rights Agreement, as in effect .on the date of mailing, without charge
promptly after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or held
by, any Person who is, was or becomes an Acquiring Person, an Adverse
Person or any Affiliate or Associate thereof (as such terms are defined in
the .Rights Agreement), whether currently held by or on behalf of such
Person or by any subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the Associated Rights, and the transfer
of any of such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
Section 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the Form of Election To Purchase and
of Assignment to be printed on the reverse thereof) shall each be substantially
in the form set forth in Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Section 11
and Section 22 hereof, the Rights Certificates, whenever distributed, shall be
dated as of the Record Date and on their face shall entitle the holders thereof
to purchase such number of one one-hundredth of a share of Preferred Stock as
shall be set forth therein at the price set forth therein (such exercise price
per one one-hundredth of a share, the "Purchase Price"), but the amount and type
of securities purchasable upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificates issued pursuant to Section 3(a) or
Section 22 hereof that represent Rights beneficially owned by: (i) an Acquiring
Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person
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becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Persons with whom
such Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect avoidance of Section 7(e) hereof, and
any Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Rights Certificate
referred to in this sentence, shall contain (to the extent feasible) the
following legend:
The Rights represented by this Rights Certificates are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in the
Company's Rights Agreement, as amended). Accordingly, this Rights
Certificate and the Rights represented hereby may become null and void in
the circumstances specified in Section 7(e) of such Agreement.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chief Executive Officer, its President or any Vice President,
either manually or by facsimile signature, and shall 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 Rights Certificates shall be manually countersigned by the
Rights Agent and shall not be valid for any purpose unless so countersigned. In
case any officer of the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificates may be signed on behalf of the
Company by any person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names
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and addresses of the respective holders of the Rights Certificates, the number
of Rights evidenced on its face by each of the Rights Certificates and the
certificate number and the date of each of the Rights Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of Section 4(b), Section 7(e) and
Section 14 hereof, at any time after the close of business on the Distribution
Date, and at or prior to the close of business on the Expiration Date, any
Rights Certificate or Certificates may be transferred, split up, combined or
exchanged for another Rights Certificate or Certificates, entitling the
registered holder to purchase a like number of one one-hundredths of a share of
Preferred Stock or, following an Adjustment Event, Common Stock, other
securities, cash or other assets, as the case may be) as the Rights Certificate
or Certificates surrendered then entitled such holder (or former holder in the
case of a transfer) to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Rights Certificate or Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Certificates to be transferred, split up, combined or
exchanged at the principal office or offices of the Rights Agent designated for
such purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder shall have completed and signed
the certificate contained in the Form of Assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial owner (or former Beneficial Owner) or Affiliates or
Associates thereof or a bond as the Company or Rights Agent shall reasonably
request. Thereupon the Rights Agent shall, subject to Section 4(b), Section
7(e) and Section 14 hereof, countersign and deliver to the Person entitled
thereto a Rights Certificate or Rights 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 Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
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Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to Section 7(e) hereof, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section
23(a) hereof) in whole or in part at any time after the Distribution Date
upon surrender of the Rights Certificate, with the Form of Election To
Purchase and the certificate on the reverse side thereof duly executed, to
the Rights Agent at the principal office or offices of the Rights Agent
designated for such purpose, together with payment of the aggregate Purchase
Price with respect to the total number of one one-hundredths of a share of
Preferred Stock (or other securities, cash or other assets, as the case may
be) as to which such surrendered Rights are then exercisable, at or prior to
the earlier of (i) Final Expiration Date, or (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof (the earlier of (i) and
(ii) being herein referred to as the "Expiration Date").
(b) The Purchase Price for each one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be $35.00,
and shall be subject to adjustment from time to time as provided in Sections 11
and 13(a) hereof and shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the Form of Election To Purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price per one one-hundredth of a share of Preferred Stock (or other shares
securities, cash or other assets, as the case may be) to be purchased as set
forth below and an amount equal to any applicable transfer tax, the Rights Agent
shall,, subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition
from any transfer agent of the shares of Preferred Stock (or make available, if
the Rights Agent is the transfer agent for such shares) certificates for the
total number of one one-hundredths of a share of Preferred Stock to be purchased
and the Company hereby irrevocably authorizes its transfer agent to comply with
all such requests, or (B) if the Company shall have elected to deposit the total
number of shares of Preferred Stock issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one one-hundredths of a share of
Preferred Stock as are to be purchased (in which case certificates for the
shares of Preferred Stock represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company will direct the
depositary agent to comply with such request, (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, and (iv) after
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receipt thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. The payment of the Purchase Price
(as such amount may be reduced pursuant to Section 11(a)(iii) hereof) shall be
made in cash or by certified bank check or money order payable to the order of
the Company. In the event that the Company is obligated to issue other
securities (including Common Stock) of the Company, pay cash and/or distribute
other property pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities, cash and/or other property
are available for distribution to the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights of (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall become null
and void without any further action and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall use all reasonable efforts to
insure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Rights Certificates
or other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or any Affiliates, Associates or transferees
hereunder.
(f) Notwithstanding anything in this 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 Rights Certificate surrendered for
such exercise, and (ii) provided such additional evidence of
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the identity of the Beneficial owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents to be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Rights Certificates to the Company, or shall at the
written request of the Company, destroy such cancelled Rights Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the occurrence of an Adjustment Event, out of
its authorized and unissued shares of Common Stock and/or other securities or
out of its authorized and issued shares held in its treasury), the number of
shares of Preferred Stock (and, following the occurrence of an Adjustment Event,
Common Stock and/or other securities) that, as provided in this Agreement
including Section 11(a)(ii) hereof, will be sufficient to permit the exercise in
full of all outstanding Rights.
(b) If and so long as the shares of Preferred Stock (and, following
the occurrence of an Adjustment Event, Common Stock and/or other securities)
issuable and deliverable upon the exercise of the Rights are listed on any
national securities exchange, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all shares reserved
for such issuance to be listed on such exchange upon official notice of issuance
upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section 11(a)(iii)
hereof, a registration statement under the Act, with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until
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the earlier of (A) the date as of which the Rights are no longer exercisable for
such securities, and (B) the date of the expiration of the Rights. The Company
will also take such action as may be appropriate under, or to ensure compliance
with, the securities or "blue sky" laws of the various states in connection with
the exercisability of the Rights. The Company may temporarily suspend, for a
period of time not to exceed ninety (90) days after the date set forth in clause
(i) of the first sentence of this Section 9(c), the exercisability of the Rights
in order to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the 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 addition, if the Company shall determine that a
registration statement is required following the Distribution Date, the Company
may temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any Jurisdiction, unless the requisite qualification in such jurisdiction
shall have been obtained and until a registration statement has been declared
effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all one one-hundredths of a share of
Preferred Stock (and, following the occurrence of an Adjustment Event, Common
Stock and/or other securities) delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such shares (subject to payment of the
Purchase Price), be duly. and validly authorized and issued and fully paid and
non-assessable.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Rights Certificates
and of any certificates for a number of one one-hundredths of a share of
Preferred Stock (or Common Stock and/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
Rights Certificates to a Person other than, or the issuance or delivery of a
number of one one-hundredths of a share of Preferred Stock (or Common Stock
and/or other securities, as the case may be) in respect of a name other than
that of, the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for a number of
one one-thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until such tax shall have been paid (any
such tax being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
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Section 10. PREFERRED STOCK RECORD DATE. Each person in whose name any
certificate for a number of one one-hundredths of a share of Preferred Stock (or
Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such fractional shares of Preferred Stock (or Common Stock and/or
other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such shares (fractional or otherwise) on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Stock (or Common
Stock and/or other securities, as the case may be) transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the holder of
a Rights Certificate, as such, shall not be entitled to any rights of a
shareholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable in
shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock,
(C) combine the outstanding Preferred Stock into a smaller number of
shares, or (D) issue any shares of its capital stock in a reclassification
of the Preferred Stock (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section 11(a)
and Section 7(e) hereof, the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of
Preferred Stock or capital stock, as the case may be, issuable on such
date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares of
Preferred Stock or capital stock, as the case may be, which, if such Right
had been exercised immediately prior to such date and at a time when the
Preferred Stock transfer books of the Company were open, he would have
owned upon such exercise and been entitled to receive by
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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) hereof.
(ii) In the event:
(A) (1) any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, at any time after the date of this Agreement, directly or
indirectly, shall merge into the Company or otherwise combine with the
Company and the Company shall be the continuing or surviving corporation of
such merger or combination and the Common Stock of the Company shall remain
outstanding and unchanged, or (2) subject to the right of redemption
granted in Section 24 hereof, any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of
any Subsidiary of the Company, or any Person or entity organized, appointed
or established by the Company for or pursuant to the terms of any such
plan), alone or together with its Affiliates and Associates, shall, at any
time after the Rights Dividend Declaration Date, become an Acquiring
Person, other than pursuant to any transaction set forth in Section 13(a)
hereof, or pursuant to an offer for all outstanding shares of Common Stock
at a price and upon such terms and conditions as a majority of the Board of
Directors determines to be in the best interests of the Company and its
stockholders, other than such Acquiring Person, its Affiliates and its
Associates, or
(B) during such time as there is an Acquiring Person, there shall be
any reclassification of securities (including any reverse stock split), or
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, other than a
transaction or transactions to which the provisions of Section 13(a) apply
(whether or not with or into or otherwise involving an 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
securities of the Company or any of its Subsidiaries which is directly or
indirectly beneficially owned by any Acquiring Person or any Associate or
Affiliate of any Acquiring Person,
then, promptly following the occurrence of a Section 11(a)(ii) Event, the
Company and, to the extent necessary or appropriate, the Acquiring Person and
its Affiliates and Associates, shall make proper provision so that each holder
of a Right (except as provided below and in Section 7(e) hereof) shall
thereafter have the right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement,
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in lieu of a number of one one-hundredths of a share of Preferred Stock, such
number of shares of Common Stock of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then number
of one one-hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event, and (y) dividing that product (which, following such first occurrence,
shall thereafter be referred to as the "Purchase Price" for each Right and for
all purposes of this Agreement) by 50% of the current market price (determined
pursuant to Section 11(d) hereof) per share of Common Stock on the date of such
first occurrence (such number of shares, the "Adjustment Shares").
(iii) In the event that the number of shares of Common Stock which
are authorized by the Company's Restated Articles of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise
of the Rights are not sufficient to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii) of this Section
11(a), the Company shall: (A) determine the excess of (1) the value of the.
Adjustment Shares issuable upon the exercise of a Right (the "Current
Value") over (2) the Purchase Price (such excess, the "Spread"), and (B)
with respect to each Right, make adequate provision to substitute for the
Adjustment Shares, upon payment of the applicable Purchase Price, (1) cash,
(2) a reduction in the Purchase Price, (3) Common Stock or other equity
securities of the Company (including, without limitation, shares, or units
of shares, of preferred stock which the Board of Directors of the Company
has deemed to have the same value as shares of Common Stock (such shares of
preferred stock, "Common stock equivalents")), (4) debt securities of the
Company, (5) other assets or (6) any combination of the foregoing, having
an aggregate value equal to the Current Value, where such aggregate value
has been determined by the Board of Directors of the Company based upon the
advice of a nationally recognized investment banking firm selected by the
Board of Directors of the Company; provided, however, if the Company shall
not have made adequate provision to deliver value pursuant to clause (B)
above within thirty (30) days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the date on which the
Company's right of redemption pursuant to Section 23(a) expires (the later
of (x) and (y) being referred to herein as the "Section 11(a)(ii)
Adjustment Date"), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the
Purchase Price shares of Common Stock (to the extent available) and then,
if necessary, cash, which shares and/or cash have an aggregate value equal
to the Spread. If the Board of Directors of the 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,
the thirty (30) day period set forth above may be extended to the extent
necessary, but not more than ninety (90) days after the
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Section 11(a)(ii) Adjustment Date, in order that the Company may seek
shareholder approval for the authorization of such additional shares (such
period, as it may be extended, the "Substitution Period"). To the extent
that the Company determines that some action need be taken pursuant to the
first and/or second sentences of this Section 11(a)(iii), the Company (x)
shall provide, subject to Section 7(e) hereof, that such action shall apply
uniformly to all 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 such first sentence
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 (as determined pursuant to Section 11(d)
hereof) per share of the Common Stock on the Section 11(a)(ii) Adjustment
Date and the value of any "Common stock equivalent" shall be deemed to have
the same value as the Common Stock on such date.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within forty-five (45) calendar
days after such record date) Preferred Stock (or shares having the same rights,
privileges and preferences as the shares of Preferred' Stock ("equivalent
preferred stock")) or securities convertible into Preferred Stock or equivalent
preferred stock at a price per share of Preferred Stock or per share of
equivalent preferred stock (or having a conversion price per share, if a
security convertible into Preferred Stock or equivalent preferred stock) less
than the current market price (as determined pursuant to Section 11(d) hereof)
per share of Preferred Stock on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date, plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock and/or
equivalent preferred stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price,. and the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record. date, plus the number
of additional shares of Preferred Stock and/or equivalent preferred stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price
may be paid by delivery of consideration part or all of which may be in a form
other than cash, the value of such consideration shall be as determined. in good
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faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the
Rights Agent and the holders of the Rights. Shares of Preferred 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.
(c) In case the Company shall fix a record date for a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Preferred Stock, but including any dividend
payable in stock other than Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) 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 (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on such record date, less the
fair market value (as determined in good faith by the Board of Directors of the
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 Preferred Stock and the denominator of which shall be such current
market price (as determined pursuant to Section 11(d) hereof) per share of
Preferred Stock. Such adjustments shall be made successively whenever such a
record date is fixed, and in the event that such distribution is not so made,
the Purchase Price shall be adjusted to be the Purchase Price which would have
been in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) 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 such Common Stock for
the thirty (30) 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 Common Stock on any date shall be deemed to be the average of the
daily closing prices per share of such Common Stock for the ten (10)
consecutive Trading Days immediately following such date; provided,
however, that in the event that the current market price per share of the
Common Stock is determined during a period following the announcement by
the issuer of such Common Stock of (A) a dividend or distribution on such
Common
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Stock payable in shares of such Common Stock or securities convertible into
shares of such Common Stock (other than the Rights), or (B) any
subdivision, combination or reclassification of such Common Stock, and
prior to the expiration of the requisite thirty (30) Trading Day or ten
(10) Trading Day period, as set forth above, after the ex-dividend date for
such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the "Current
market price" shall be properly adjusted to take into account ex-dividend
trading. The closing price for each day shall be the last sale price,
regular way, 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 price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System ("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 or 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. 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.
(ii) For the purpose of any computation hereunder, the "Current market
price" per share of Preferred Stock shall be determined in the same manner
as set forth above for the Common Stock in clause (i) of this Section 11(d)
(other than the last sentence thereof). If the current market price per
share of Preferred Stock cannot be determined in the manner provided above
or if the Preferred Stock is not publicly held or listed or traded in a
manner described in clause (i) of this Section
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11(d), the "Current market price" per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 100 (as such number may be
appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring after the date
of this Agreement) multiplied by the current market price per share of the
Common Stock. If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, "Current market price" per share of
the Preferred Stock shall mean the fair value per share as determined in
good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes. For all purposes of this Agreement, the
"Current market price" of one one-hundredth of a share of Preferred Stock
shall be equal to the "Current market price" of one share of Preferred
Stock divided by 100.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest one-thousandth of a share of Common Stock
or other share or one-millionth of a share of Preferred Stock, as the case may
be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction 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
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of any Right and the Purchase Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Stock contained in
Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred
Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
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(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
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 one-hundredths of a
share of Preferred Stock (calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-hundredths of a share covered by a
Right immediately prior to this adjustment, by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price, and (ii) dividing
the product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any adjustment in
the number of one one-hundredths of a share of Preferred Stock, purchasable upon
the exercise of a Right. Each of the Rights outstanding after the adjustment in
the number of Rights shall be exercisable for the number of one one-hundredths
of a share of Preferred Stock for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such adjustment of
the number of Rights shall become that number of Rights (calculated to the
nearest one-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 Rights
Certificates have been issued, shall be at least ten (10) days later than the
date of the public announcement. If Rights Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders of
record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-hundredths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to
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express the Purchase Price per one one-hundredths of a share and the number of
one one-hundredths of a share which were expressed in the initial Rights
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then stated value, if any, of the number of one
one-hundredths of a share of Preferred Stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and non-assessable such number of one one-hundredths of a share
of Preferred Stock at such adjusted Purchase Price.
(1) 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 number of one one-hundredths of a share of Preferred Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise over and
above the number of one one-hundredths of a share of Preferred 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 (fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
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 Preferred Stock, (ii) issuance wholly for cash of any shares
of Preferred Stock at less than the current market price, (iii) issuance wholly
for cash of shares of Preferred Stock or securities which by their terms are
convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Preferred Stock
shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to
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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 (other than a Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger, sale or transfer there
are any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger, sale or
transfer, 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.
(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 otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date (i) declare a dividend on
the outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock. then outstanding, or
issued or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Section 11 and Section
13 hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent, and with each transfer
agent for the Preferred Stock and the Common Stock, a copy of such
certificate, and (c) mail a brief summary thereof to each holder of a Rights
Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in accordance with Section
25 hereof. The Rights Agent shall
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be fully protected in relying on any such certificate and on any adjustment
therein contained.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event that, following the Stock Acquisition Date, directly
or indirectly, (x) the Company shall consolidate with, or merge with and into,
any other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), and the Company shall not be the continuing
or surviving corporation of such consolidation or merger, (y) any Person (other
than Subsidiary of the Company in a transaction which complies with Section
11(o) hereof) shall consolidate with, or merge with or 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 cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one transaction or a
series of related transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Company and its Subsidiaries (taken as
a whole) to any Person or Persons (other than the Company or any Subsidiary of
the Company in one or more transactions each of which complies with Section
11(o) hereof), then, and in each such case, proper provision shall be made so
that: (i) each holder of a Right, except as provided in Section 7(e) hereof,
shall thereafter have the right to receive, upon the exercise thereof at the
then current Purchase Price in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid, non-assessable and freely
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 be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of one-hundredths of a
share of Preferred Stock for which a Right is exercisable immediately prior to
the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has
occurred prior to the first occurrence of a Section 13 Event, multiplying the
number of such one-hundredths of a share of Preferred Stock for which a Right
was exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event by the Purchase Price in effect immediately prior to such first
occurrence), and dividing that product (which, following the first occurrence of
a Section 13 Event, shall be referred to as the "Purchase Price" for each Right
and for all purposes of this Agreement) by (2) 50% of the current market price
(determined pursuant to Section 11(d)(i) hereof) per share of the Common Stock
of such Principal Party on the date of consummation of such Section 13 Event;
(ii) such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall thereafter be deemed
to refer to such Principal Party, it being specifically intended that the
provisions of Section 11 hereof
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shall apply to such Principal Party following the first occurrence of a Section
13 Event; (iv) such Principal Party shall take such steps (including, out 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; and (v) the provisions
of Section 11(a)(ii) hereof shall be of no effect following the first occurrence
of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) of (y) of
the first sentence of Section 13(a), the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted
in such merger or consolidation, and if no securities are so issued, the
Person that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions;
PROVIDED, however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect subsidiary of another person, the Common Stock of which is
and has been so registered, "Principal Party" shall refer to such other Person;
and (2) in case such Person is a subsidiary, directly or indirectly, of more
than one Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer mentioned in paragraph (a) of this
Section 13, the Principal Party will
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(i) prepare and file a registration statement under the Act, with
respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after
such filing and (S) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Expiration Date; and
(ii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply
in all respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13
Event shall occur at any time after the occurrence of a Section 11(a)(ii) Event,
the Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11(p) hereof, or to
distribute Rights Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price of the Rights for any day shall be
the last sale price, regular way, or, in case no such sale take place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading, or if the Rights
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter, market, as reported by NASDAQ or such
other system then in use or if . on any such date the Rights are not quoted by
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights selected
by the Board of Directors of the Company. If on any such date no such
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<PAGE>
market maker is making a market in the Rights the fair value of the Rights on
such date as determined in good faith by the Board of Directors of the Company
shall be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-hundredth of a share of Preferred Stock,
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one one-hundredths of a share of
Preferred Stock. For purposes of this Section 11(b), the current market value
of one one-hundredth of a share of Preferred Stock shall be one one-hundredth of
the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of
such exercise.
(c) Following the occurrence of an Adjustment Event, 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 of
Common Stock. In lieu of fractional shares of Common Stock, the Company may pay
to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one (1) share of Common Stock. For purposes of this
Section 14(c) the current market value of one share of Common Stock shall be the
closing price of one share of Common Stock (as determined pursuant to Section
11(d)(i) hereof for the Trading Day immediately prior to the date of such
exercise.
(d) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, other than rights of action vested in the Rights Agent pursuant to
section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such
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Rights Certificate and in this Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at
law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual
or threatened violations of the obligations hereunder of any Person subject
to this Agreement.
Section 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the, Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such purposes
duly endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(e) hereof, the Company and
the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the. associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be required to be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability. to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; PROVIDED, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
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Section 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of one
one-hundredths of a share of Preferred Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in Section 14 hereof), or to receive dividends or subscription rights,
or otherwise, until the Right or Rights evidenced by such Rights Certificate
shall have been exercised in accordance with the provisions hereof.
Section 17. 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
disbursements and other disbursements incurred in the administration and
execution of this 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 of expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or documents believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
Section 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
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stock transfer business of the Rights Agent or any successor Right Agent, shall
be the successor to the Rights Agent under this Agreement without the execution
or filing of any paper or any further act on the part of any of the parties
hereto; PROVIDED, however, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person or Adverse
Person and the determination of "Current market price") 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 Chief Executive Officer, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and such
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certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The rights Agent shall be liable hereunder only for its own gross
negligence, 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 Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of Section 11 or
Section 13 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
Rights Certificates after receipt of the certificate described in Section 12
hereof setting forth any such adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization of
reservation of any shares of Common Stock or Preferred Stock to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any shares
of Common Stock or Preferred Stock will, when so issued, be validly authorized
and issued, fully paid and non-assessable.
(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 Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chief Executive officer, the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such officer.
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(h) The Rights Agent and any shareholder, 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 Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or performs 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, however, reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the Form of
Assignment or Form of Election To Purchase, as the case may be, has either not
be 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.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon thirty (30) days, notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preferred Stock, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of thirty (30) days after giving
notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the
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holder of the Rights Certificate (who shall, with such notice, submit his Rights
Certificate for inspection by the Company), then any registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States or of any state
of the United States as long as such corporation is authorized to do business as
a banking institution in the State of New York, in good standing, and having a
principal office in the State of New York, which is authorized under such laws
to exercise corporate trust powers and is subject to supervision or examination
by federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $100,000,000 or (b) an
affiliate of 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 the
Preferred Stock, and mail a notice thereof in writing to the registered holders
of the Rights Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
Date and prior to the redemption or expiration of the Rights, the 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 Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
PROVIDED, however, that (i) no such Rights Certificate shall be issued it, and
to the extent that, the Company shall be advised by counsel that such issuance
would create a significantly risk of material adverse tax consequences to the
Company or the person to whom such Rights Certificate would be
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issued, and (ii) no such Rights Certificate shall be issued if, and to the
extent that, appropriate adjustment shall otherwise have been made in lieu of
the issuance thereof.
Section 23. REDEMPTION AND TERMINATION.
(a) The Board of Directors of the Company may, at any time prior to
the earlier of (i) the close of business on the twentieth day following the
Stock Acquisition Date or (ii) the Final Expiration Date, redeem all but not
less than all the then outstanding Rights at a redemption price of $.05 per
Right, as such amount may be appropriately adjusted to reflect any stock split,
reverse stock split, reclassification, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"); PROVIDED, however, that if, following
the occurrence of a Stock Acquisition Date and following the expiration of the
right of redemption hereunder but prior to any Adjustment Event, (i) a Person
who is an Acquiring Person shall have transferred or otherwise disposed of a
number of shares of Common Stock in one transaction or series of transactions,
not directly or indirectly involving the Company or any of its Subsidiaries,
which did not result in the occurrence of an Adjustment Event such that such
Person is thereafter a Beneficial Owner of 10% or less of the outstanding shares
of Common Stock, and (ii) there are no other Persons, immediately following the
occurrence of the event described in clause (i), who are Acquiring Persons, then
the right of redemption shall be reinstated and thereafter be subject to the
provisions of this Section 23. Notwithstanding anything contained in this
Agreement to the contrary, subject to Section 26 hereof, the Rights shall not be
exercisable after the first occurrence of a Section 11(a)(ii) Event until such
time as the Company's right of redemption hereunder has expired. The Company
may, at its option, pay the Redemption Price in cash, shares of Common Stock
(based on the "current market price," as defined in Section 11(d)(i) hereof, of
the Common Stock at the time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which shall have been
filed with the Rights Agent and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holder of Rights shall be to receive the Redemption Price for
each Right so held. Promptly after the action of the Board of Directors
ordering the redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights by
mailing such notice to all such holders at each holder's last address as it
appears upon the registry books of the 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.
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(c) The Company's Board of Directors may at any time after any
Person becomes an Acquiring Person, exchange all or part of the then outstanding
and exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11(a)(ii) hereof) 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 the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such subsidiary or any entity holding shares
of Common Stock for or pursuant to any such plan), 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.
(d) Immediately upon the action of the Company's Board of Directors
ordering the exchange of any Rights pursuant to paragraph (c) of this Section 23
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 shall mail promptly 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 7(e) hereof) held by each holder of Rights.
(e) 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 23, 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. In the event
the Company shall, after good faith effort, be unable to take all such action as
may be necessary to authorize such additional shares of Common Stock, the
Company shall substitute for each share of Common Stock that would otherwise be
issuable upon exchange of a Right, a number of shares of Preferred Stock or
fraction thereof such that the current per share market price of one share of
Preferred Stock multiplied by such number or fraction is equal to the current
per
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share market price of one share of Common Stock as of the date of issuance of
such share of Preferred Stock or fraction thereof.
(f) 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 (f), the current
market value of a whole share of Common Stock shall be the closing price of a
share of Common Stock (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 23.
Section 24. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular quarterly cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to holders of Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its Preferred
Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to effect any consolidation or
merger into or with any other Person other than a Subsidiary of the Company in a
transaction which complies with Section 11(b) hereof, or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one transaction or a series of related transactions, of
more than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other person or Persons (other than the Company and/or
any of its Subsidiaries in one or more transactions each of which complies with
Section 11(o) hereof), or (v) to effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company shall give to each
holder of a Rights Certificate, to the extent feasible and in accordance with
Section 25 hereof, a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend, distribution of rights or
warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of the shares of Preferred Stock,
if any such date is to be fixed, and such notice shall be so given in the case
of any action covered by clause (i) or (ii) above at least twenty (20) days
prior to the record date for determining holders of the shares of Preferred
Stock for purposes of such action, and in the case of any such other action, at
least twenty (20) days prior to the date of the taking
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of such proposed action of the date of participation therein by the holders of
the shares of Preferred Stock which ever shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii) hereof
shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of the Rights Certificate, to the
extent feasible and in accordance with Section 25 hereof a notice of the
occurrence of such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii) hereof, and (ii) all
references in the preceding paragraph to Preferred Stock shall be deemed
thereafter to refer to Common Stock and/or, if appropriate, other securities.
Section 25. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the 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:
Data I/O Corporation
10525 Willows Road N.E.
Redmond, Washington 98052
Attention: John J. Hagedorn
Subject to the provisions of Section 21, any notice of demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
50 California Street, 10th Floor
San Francisco, California 94111
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage pre-paid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 26. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date
and subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement without the approval of any holders of certificates
representing shares of Common Stock. From and after the Distribution Date and
subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs,
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supplement or amend this Agreement without the approval of any holders of Rights
Certificates in order (i) to cure any ambiguity, (ii) to correct to supplement
any provision contained herein which may be defective or inconsistent with any
other provisions herein, (iii) to shorten or lengthen any time period hereunder,
or (iv) to change or supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Rights Certificates (other than an Acquiring Person,
an Adverse Person or an Affiliate or Associate of any such Person); PROVIDED,
this Agreement may not be supplemented or amended to lengthen, pursuant to
clause (iii) of this sentence, (A) a time period relating to when the Rights may
be redeemed at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights.
Upon the delivery of a certificate from an appropriate officer of the Company
which states that the proposed supplement or amendment is in compliance with the
terms of this Section 26, the Rights Agent shall execute such supplement or
amendment. Notwithstanding anything containing in this Agreement to the
contrary, no supplement or amendment shall be made which changes the Redemption
Price, the Final Expiration Date, the Purchase Price or the number of one
one-hundredths of a share of Preferred Stock for which a Right is exercisable.
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.
Section 27. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act. The Board of Directors of the Company (or, as set forth
herein, certain specified members thereof) shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors of the Company or to the Company,
or as may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Agreement, and (ii) make all determinations deemed necessary
or advisable for the administration of this Agreement (including, but not
limited to, a determination to redeem or not redeem the Rights or to amend this
Agreement). All such actions, calculations, interpretations and determination
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board of Directors of the Company in
good faith, shall (x) be final, conclusive and
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<PAGE>
binding on the Company, the Rights Agent, the holders of the Rights and all
other parties, and (y) not subject the Board to any liability to the holders of
the Rights.
Section 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any person other than the Company, the Rights Agent and
the registered holders of the Rights Certificate (and, prior to the Distribution
Date, registered holders of the Common Stock) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company the Rights Agent and the registered holders
of the Rights Certificates (and, prior to the Distribution Date, registered
holders of the Common Stock).
Section 30. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
PROVIDED, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstate and shall not expire until the close of business on the
twentieth day following the date of such determination by the Board of Directors
of the Company.
Section 31. GOVERNING LAW. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Washington and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
Section 32. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 33. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
DATA I/O CORPORATION
--------------------------------------
Name: John Hagedorn
Title: Vice President, Chief
Financial Officer
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
---------------------------------------
Name:
Title:
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EXHIBIT 99.1
FOR MORE INFORMATION PLEASE CONTACT:
Joel Hatlen Margaret Liddiard
Vice President/CFO Corporate Communications Manager
Data I/O Corporation Data I/O Corporation
425/881-6444 425/867-6884
[email protected]
DATA I/O REPLACES EXPIRING SHAREHOLDER RIGHTS PLAN
REDMOND, WA --March 12, 1998. The Board of Directors of Data I/O Corporation
(Nasdaq: DAIO) has adopted a new Shareholder Rights Plan which will replace
its existing Shareholder Rights Plan when it expires on April 4, 1998. The
new plan will go into effect simultaneously with the expiration of the
existing plan. Like the existing plan, the new Rights Plan will assist Data
I/O's shareholders in realizing fair value and equal treatment in the event
of any attempted takeover of the Company and protect the Company and its
shareholders against coercive takeover tactics.
The Company noted that its new Shareholder Rights Plan reflects modern
developments in shareholder rights plans though remains similar to its prior
plan and to those adopted by many other companies and is not in response to
any known effort to acquire control of the Company.
Under the new Shareholder Rights Plan, a dividend of one Share Purchase Right
is being declared for each share of Common Stock outstanding at the close of
business on April 4, 1998. These new Rights will replace the currently
outstanding Rights upon their expiration. No separate certificates
evidencing the Rights will be issued unless and until they become exercisable.
more
<PAGE>
DATA I/O REPLACES EXPIRING SHAREHOLDER RIGHTS PLAN
PAGE 2
The new Rights generally will not be exercisable until a person or group
acquires 15% or more of the Common Stock of the Company. In that event, each
new Right will entitle the holder, other than the acquirer, to buy Common
Stock with a market value of twice the new Right's then current exercise price
(the intial exercise price is $30, subject to adjustment).
In addition, if the new Rights were triggered by such a non-approved
acquisition and the Company were thereafter to be acquired in a merger in
which all shareholders were not treated alike, shareholders with unexercised
Rights would be entitled to purchase common stock of the acquirer with a
value of twice the exercise price of the new Rights.
The Company's Board of Directors may redeem the new Rights for a nominal
amount at any time prior to an event that causes the Rights to become
exercisable. The new Rights will expire on April 4, 2008.
ABOUT DATA I/O
The market leader for more than 25 years, Data I/O Corporation is the world
leader in device programming and handling solutions, providing the most
comprehensive product offering from design through manufacturing of
programmable integrated circuits. It is the first and only device
programming systems supplier to receive ISO 9001 certification. The company,
which is publicly traded (NASDAQ: DAIO), is headquartered in Redmond, Wash.,
and has sales and service offices worldwide. The company's worldwide web
address is http://www.data-io.com.
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