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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): August 5, 1996
TELXON CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-11402 74-1666060
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
3330 WEST MARKET STREET, AKRON, OHIO 44333
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: (330) 867-3700
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ITEM 5. OTHER EVENTS.
ON August 5, 1996, Telxon Corporation ("Telxon" or the "Company") and
KeyBank National Association, as Rights Agent, entered into Telxon's Amended
and Restated Rights Agreement (the "Rights Plan"), effective as of July 31,
1996, restating and amending the Company's Rights Plan originally adopted by
its Board of Directors (the "Directors") in 1987, at which time the Directors
declared a dividend of one Common Stock Purchase Right (a "Right") on each
outstanding share of Common Stock pursuant to the Rights Plan. The Rights Plan,
as amended, provides that each Right, when exercisable, entitles the registered
holder to purchase one share of Common Stock at a price of One Hundred Dollars
($100.00) per share (the "Purchase Price"), subject to adjustment. Unless they
become exercisable upon the occurrence of certain events as described below or
unless earlier redeemed by the Company, the Rights will expire on July 31,
2006.
If the Company is party to a merger or other business combination
transaction (not approved by the Directors) in which the Company is not the
surviving corporation, or where the Common Stock is changed or exchanged, or
50% or more of the Company's assets or earning power are sold, each holder of a
Right will have the right to receive shares of publicly traded common stock of
the acquiring company having a market value of two times the Purchase Price of
the Right or, in specified circumstances, cash in an amount determined under
the Rights Plan.
If the Company is the surviving corporation in a merger and the Common
Stock is not changed or exchanged, or if any acquiring person engages in
certain self-dealing transactions specified in the Rights Plan, or becomes the
beneficial owner of 15% or more of the outstanding Common Stock, each holder of
a Right (other than the acquiring person) will have the right to receive Common
Stock having a market value of two times the then current Purchase Price of the
Right.
The Rights Plan discourages hostile takeovers by effectively allowing
the Company's stockholders to purchase additional shares of Common Stock at a
discount following a hostile acquisition of a large block of the Company's
outstanding Common Stock and by increasing the value of consideration to be
received by stockholders in certain transactions following such an acquisition.
The Rights may be redeemed pursuant to the Rights Plan. The terms of the Rights
may be amended by the Directors without the consent of the holders of the
Rights.
The foregoing summary description of the Rights Plan and the Rights
thereunder (i) replaces and should be read in lieu of the discussion of the
Rights Plan contained (A) in Item 1 of the Form 8-A originally filed by the
Company on December 19, 1983, with respect to its Common Stock, par value $.01
per share ("Common Stock"), as amended by Amendment No. 1 thereto filed under
cover of a Form 8 dated May 1, 1992, and (B) on pages 37 and 38 of the
Prospectus, included as part of the Registration Statement on Form S-3 filed by
the Company with respect to its 5-3/4% Convertible Subordinated Notes due 2003,
which became effective February 23, 1996, and (ii) does not purport to be
complete and is qualified in its entirety by reference to the copy of the
Rights Plan filed as Exhibit 4 to this Current Report on Form 8-K.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
4. Rights Agreement dated as of August 25, 1987, Amended and
Restated as of July 31, 1996, including the Form of the Rights Certificate
attached as Exhibit A thereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TELXON CORPORATION
DATE: August 5, 1996 By: /s/ Glenn S. Hansen
-------------------
Glenn S. Hansen
Vice President, Legal Administration
and Corporate Counsel
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Exhibit 4
================================================================================
TELXON CORPORATION
and
KEYBANK NATIONAL ASSOCIATION
as
Rights Agent
-------------------------------
Rights Agreement
-------------------------------
Dated as of
August 25, 1987
Amended and Restated as of July 31, 1996
================================================================================
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RIGHTS AGREEMENT
----------------
This Agreement, dated as of August 25, 1987, as amended and
restated as of July 31, 1996, between Telxon Corporation, a Delaware corporation
(the "Company"), and KeyBank National Association, a national banking
association (the "Rights Agent").
W I T N E S S E T H:
--------------------
WHEREAS, on August 25, 1987, the Board of Directors of the
Company authorized and declared a dividend distribution of one Right (as defined
below) for each share of Common Stock (as defined below) outstanding on
September 15, 1987 (the "Record Date"), and contemplated the issuance of one
Right for each share of Common Stock issued between the Record Date and the
earlier of the Distribution Date and the Expiration Date (as such capitalized
terms are defined below) and certain shares of Common Stock issued after the
Distribution Date, each Right representing the right to purchase Common Stock
upon the terms and subject to the conditions set forth in this Agreement (the
"Rights"); and
WHEREAS, on July 17, 1996, the Board of Directors of the
Company deter- mined it advisable and in the best interests of the Company and
its stockholders to supplement and amend certain provisions of this Agreement
pursuant to Section 27 of this Agreement, including an amendment to extend the
Final Expiration Date (as defined below); and the Board of Directors of the
Company approved and adopted this amended and restated Rights Agree ment
implementing such supplements and amendments;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements set forth, the parties agree as follows:
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Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meaning indicated:
(a) "Act" means the Securities Act of 1933, as amended.
(b) "Acquiring Person" means any Person (as defined below) who or which
alone or, together with all Affiliates (as defined below) and Associates (as
defined below) of such Person, shall be the Beneficial Owner (as defined below)
of fifteen percent (15%) or more of the shares of Common Stock then outstanding
or who was such a Beneficial Owner at any time after the date of this Agreement,
whether or not such Person continues to be the Beneficial Owner of fifteen
percent (15%) or more of the shares of Common Stock outstanding from time to
time, but does not include an Exempt Person (as defined below).
(c) "Acquisition Date" means 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 (as defined
below)) by the Company or by an Acquiring Person that an Acquiring Person has
become such.
(d) "Affiliate" and "Associate" have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act, as in effect on the date of this Agreement.
(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 immedi ately or only after the passage of time) pursuant to
any agreement, arrangement or under-
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standing (whether or not in writing), or upon the exercise of any conversion,
exchange or purchase 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 or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for payment or exchange;
(B) securities issuable upon the exercise of Rights at any time prior to the
occurrence of a Triggering Event (as defined below); or (C) securities issuable
upon the exercise of Rights from and after the occurrence of a Triggering Event,
which Rights were acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date pursuant to Section 23 (the "Original
Rights") or pursuant to Section 11(i) in connection with any 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 or any successor rule thereto),
including pursuant to any agreement, arrangement or understanding (whether or
not in writing); provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any securities under this
Section 1(e)(ii) as a result of an agreement, arrangement or understanding to
vote such security which: (A) arises solely by reason of the grant of a
revocable proxy or consent to any Person who shall have obtained such proxy or
consent pursuant to and as a result of a public proxy or consent solicitation
subject to and conducted in accordance with the applicable provisions of the
Exchange Act and the applicable rules and regulations thereunder and (B) also is
not then
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reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are "beneficially owned," directly or indirectly,
by any other Person (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
clause (A) of subparagraph (ii) of this Section 1(e)) or disposing of any
securities of the Company; provided, however, that nothing in this Section 1(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 forty (40) days after the date of such
acquisition.
(f) "Board" means the Board of Directors of the Company.
(g) "Business Day" means any day other than a Saturday, Sunday or a day
on which banking institutions in the State of Ohio are authorized or obligated
by law or executive order to close.
(h) "Close of Business" on any given date means 5:00 P.M., Cleveland,
Ohio time, on such date; provided, however, that if such date is not a Business
Day it means 5:00 P.M., Cleveland, Ohio time, on the next succeeding Business
Day.
(i) "Common Stock" means the common stock, presently having a par value
of $.01 per share, of the Company or any other shares of capital stock of the
Company into which such stock shall be reclassified or changed; provided,
however, that (i) "Common
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Stock," when used with reference to any Person other than the Company organized
in corporate form, means the capital stock or other equity security with the
greatest voting power, or the equity securities or other equity interest having
power to control or direct the management, of such Person or, if such Person is
a subsidiary of another Person, the Person which ultimately controls such
first-mentioned Person and which has issued any such outstand ing capital stock,
equity securities or equity interests and (ii) "Common Stock," when used with
reference to any Person which shall not be organized in corporate form, means
units of beneficial interest which (A) shall represent the right to participate
generally in the profits and losses of such Person (including, without
limitation, any flow-through tax benefits resulting from an ownership interest
in such Person) and (B) shall be entitled to exercise the greatest voting power
of such Person or, in the case of a limited partnership, shall have the power to
remove the general partner or partners.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(k) "Exempt Person" means: (i) the Company; (ii) any subsidiary of the
Company; (iii) any employee benefit plan of the Company or of any subsidiary of
the Company; (iv) any Person or entity organized, appointed or established by
the Company for or pursuant to the terms of any such plan; (v) any Person who
obtains the approval of the Board and is deemed by the Board not to be an
Acquiring Person prior to such Person otherwise becoming an Acquiring Person;
(vi) any Person who, together with its Affiliates and Associ- ates, becomes the
Beneficial Owner of fifteen percent (15%) or more of the shares of Common Stock
of the Company then outstanding solely as a result of a reduction in the number
of
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shares of Common Stock of the Company outstanding due to the repurchase of
shares of Common Stock of the Company by the Company, unless and until such time
as such Person shall purchase or otherwise become (as a result of actions taken
by such Person or its Affiliates or Associates) the Beneficial Owner of
additional shares of Common Stock of the Company constituting one percent (1%)
or more of the then outstanding shares of Common Stock of the Company; or (vii)
any Person whom the Board determines became an Acquiring Person solely as a
result of inadvertence, provided, however, that such Person divests as promptly
as practicable a sufficient number of shares of Common Stock so that such
Person, together with all Affiliates and Associates of such Person, would no
longer be the Beneficial Owner of fifteen percent (15%) or more of the shares of
Common Stock outstanding.
(l) "Expiration Date" shall have the meaning set forth in Section 7(a)
of this Agreement.
(m) "Final Expiration Date" shall have the meaning set forth in Section
7(a) of this Agreement.
(n) "Person" means any individual, firm, corporation, partnership,
trust, limited liability company or other entity and shall include any successor
(by merger or otherwise) of such entity.
(o) "Section 11(a)(ii) Event" shall have the meaning set forth in
Section 11(a)(ii) of this Agreement.
(p) "Section 13 Event" shall have the meaning set forth in Section
13(a) of this Agreement.
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(q) A "subsidiary" of any Person means any corporation or other entity
of which a majority of the voting power of the voting equity securities or
voting interests is owned, directly or indirectly, by such Person, or which is
otherwise controlled by such Person.
(r) "Tender Date" means the date (after the date of this Agreement and
prior to the issuance of the Rights Certificates) on which a tender offer or
exchange offer by any Person (other than the Company, any subsidiary of the
Company or any employee benefit plan sponsored or maintained by the Company or
any of its subsidiaries) is first published or sent or given within the meaning
of Rule 14d-2 of the General Rules and Regulations under the Exchange Act (or
any successor rule thereto), which shall not have been approved prior thereto by
the Board and which would, if successful, result in such Person becoming an
Acquiring Person.
(s) "Triggering Event" means any Section 11(a)(ii) Event or any Section
13 Event.
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 of this Agreement, shall, prior to the Distribution
Date (or later in certain circum stances), also be the holders of the Common
Stock) in accordance with the terms and condi tions of this Agreement, 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. In the
event the Company appoints one or more Co-Rights Agents, the respective duties
of such Co-Rights Agents shall be as the Company determines.
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Section 3. ISSUANCE OF RIGHTS CERTIFICATES.
(a) At all times prior to the earlier of (i) the tenth (10th) Business
Day after the Acquisition Date (or such specified or unspecified later date as
may be determined by the Board prior to such tenth (10th) Business Day) and (ii)
the tenth (10th) Business Day after the Tender Date (or such specified or
unspecified later date as may be determined by the Board prior to such tenth
(10th) Business Day) (the earlier of such dates being referred to in this
Agreement as the "Distribution Date"), (x) the Rights will be evidenced (subject
to the provisions of paragraph (b) of this Section 3) by the certificates for
Common Stock registered in the names of the holders of the Common Stock (which
certificates for Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates and (y) the Rights (and the right to
receive certificates therefor) will be transferable only in connection with the
transfer of the underlying shares of Common Stock. As soon as practicable after
the Distribu tion 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, a certificate for Rights, 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 in this
Agreement. As of and after the Distribution Date, the Rights will be evidenced
solely by such Rights Certificates.
In certain circumstances provided in Section 23 of this Agreement,
Rights will be issued in respect of shares of Common Stock which are issued
(whether originally issued or delivered from the Company's treasury) after the
Distribution Date, and as soon as practicable
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after the issuance thereof, the Rights Agent will so send Rights Certificates to
the record holders of such shares.
(b) The Company sent a copy of a Summary of Rights to Purchase Common
Stock, in substantially the form attached as EXHIBIT B to this Agreement, as
originally in effect (the "Summary of Rights"), 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, at all times from and after the Record Date until the Distribution
Date (or earlier redemption, expiration or termination of the Rights), the
Rights are evidenced by such certificates for Common Stock, with or without a
copy of the Summary of Rights attached thereto, and the registered holders of
the Common Stock also are the registered holders of the associated Rights. Until
the Distribution Date (or earlier redemption, expiration or termination of the
Rights), the surrender for transfer of any of the certificates for Common Stock
outstanding on the Record Date, with or without a copy of the Summary of Rights
attached thereto, also constitutes the transfer of the Rights associated with
the Common Stock represented by such certificate.
(c) Certificates for Common Stock issued (whether originally issued or
delivered from the Company's treasury) after the Record Date, but prior to the
earlier of the Distribution Date and the Expiration Date (as defined below),
shall also be deemed to be certificates for Rights and shall have impressed,
printed, stamped, written or otherwise affixed onto them either of the following
legends:
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"This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights Agreement between
Telxon Corporation and AmeriTrust Company National Association (the
"Rights Agent") dated as of August 25, 1987 (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 Telxon
Corporation. Under certain circumstances, as set forth in the Rights
Agreement, such Rights may be redeemed, may expire, or may be evidenced
by separate certificates and will no longer be evidenced by this
certificate. Telxon Corporation will mail to the holder of this
certificate a copy of the Rights Agreement without charge within five
(5) days after receipt of a written request therefor. Under certain
circumstances, Rights issued to Acquiring Persons (as defined in the
Rights Agreement) or certain related persons and any subsequent holder
of such Rights may become null and void with respect to certain rights
set forth in Section 11(a)(ii) of the Rights Agreement."
"This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in the Rights Agreement between
Telxon Corporation and the Rights Agent, as the same may be amended,
restated, renewed or extended from time to time (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
Telxon Corporation. Under certain circumstances, as set forth in the
Rights Agreement, such Rights may be redeemed, may expire, or may be
evidenced by separate certificates and will no longer be evidenced by
this certificate. Telxon Corporation will mail to the holder of this
certificate a copy of the Rights Agreement without charge within five
(5) business days after receipt of a written request therefor. Under
certain circumstances, Rights beneficially owned (as such term is
defined in the Rights Agreement) by an Acquiring Person (as such term
is defined in the Rights Agreement) or certain related persons and any
subsequent holder of such Rights, may become null and void. The Rights
shall not be exercisable, and shall be void so long as held, by a
holder in any jurisdiction where the requisite qualification to the
issuance to such holder, or the exercise by such holder, of the Rights
in such jurisdiction shall not have been obtained or be obtainable."
With respect to such certificates containing either of the foregoing legends,
until the Distribution Date (or earlier redemption, expiration or termination
of the Rights), the Rights associated
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with the Common Stock represented by such certificates are evidenced by such
certificates alone, and the surrender for 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 CERTIFICATE.
(a) The Rights Certificates (and the forms of election to purchase
shares and of assignment to be printed on the reverse thereof) shall each be
substantially in the form set forth in EXHIBIT A hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this 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 or over-the-counter market reporting
system on which the Rights may from time to time be listed or included, or to
conform to common usage in the financial community. Subject to the provisions of
Section 11 and Section 23 of this Agreement, 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 shares of Common Stock as
shall be set forth therein at the price per share set forth therein (the
"Purchase Price"), but the number of such shares and the Purchase Price shall at
all times after the distribution thereof be subject to adjustment as provided in
this Agreement.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 23 of this Agreement that represents Rights beneficially owned by an
Acquiring Person or an Associate or Affiliate thereof, any Rights Certificate
issued at any time upon the transfer of any Rights to such an Acquiring Person
or any Associate or Affiliate thereof or to any
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nominee of such Acquiring Person, Associate or Affiliate, and any Rights
Certificate issued pursuant to Section 6 or Section 11 upon transfer, exchange,
replacement or adjustment of any other Rights Certificate referred to in this
sentence, shall contain the following legend:
The Rights represented by this Rights Certificate were issued
to a Person who was an Acquiring Person or an Affiliate or an Associate
of an Acquiring Person. This Rights Certificate and the Rights
represented hereby may become void to the extent provided by, and under
certain circumstances as specified in, Section 7(e) of the Rights
Agreement.
The provisions of Section 7(e) of this Rights Agreement shall be operative
whether or not the foregoing legend is contained on any such Rights Certificate.
Section 5. COUNTERSIGNATURE AND REGISTRATION. The Rights
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, any Vice Chairman of the Board, its President or any Vice President and
by its Treasurer, its Secretary or any Assistant Secretary, either manually or
by facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof. 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 execution of such Rights
Certificates, shall
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be a proper officer of the Company to sign such Rights Certificates, although at
the date of execution of this Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep, or cause to
be kept, at its offices in Cleveland, Ohio, books for registration and transfer
of the Rights Certificates issued under this Agreement. Such books shall show
the names and addresses of the respective holders of the Rights Certificates,
the number of Rights evidenced on its face by each of the Rights Certificates
and the 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. Subject
to the provisions of Section 4(b), Section 7(e) and Section 15 of this
Agreement, at any time after the Close of Business on the Distribution Date, and
on or prior to the Close of Business on the Expiration Date, any Rights
Certificate or Rights Certificates may be transferred, split up, combined or
exchanged for another Rights Certificate or Rights Certificates, entitling the
registered holder to purchase a like number of shares of Common Stock (or, after
a Triggering Event, other securities, cash or other assets, as the case may be)
as the Rights Certificate or Rights Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Rights Certificates must make such
request in writing delivered to the Rights Agent and must surrender the Rights
Certificate or Rights Certificates to be transferred, split up, combined or
exchanged at the principal office of the Rights Agent. Thereupon, the Rights
Agent shall 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
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charge that may be imposed in connection with any transfer, split up,
combination or exchange of Rights Certificates.
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a valid
Rights Certificate and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and upon 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.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) The registered holder of any Rights Certificate may exercise
the Rights evidenced thereby (except as otherwise provided in this Agreement,
including, without limitation the restrictions on exercisability set forth in
Section 7(e), Section 11(a)(ii) and Section 24(a)) in whole or in part at any
time after the Distribution Date upon presentation of the Rights Certificate,
with the appropriate form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the Rights Agent,
together with payment of the Purchase Price for each share of Common Stock (or,
following a Triggering Event, other securities, cash or other assets, as the
case may be) as to which such Rights are exercisable, at or prior to the earlier
of (i) the later of (A) July 31, 2006 and (B) the date two (2) years after any
Distribution Date occurring prior to July 31, 2006 (the later of such dates
described in clauses (i)(A) and (i)(B) above in this Section 7(a) being referred
to in
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this Agreement as the "Final Expiration Date") and (ii) the date on which the
Rights are redeemed as provided in Section 24 hereof (the earlier of such dates
described in clauses (i) and (ii) above in this Section 7(a) being referred to
in this Agreement as the "Expiration Date"). Notwithstanding any other provision
of this Agreement, any Person who prior to the Distribution Date becomes a
record holder of shares of Common Stock may exercise all of the rights of a
registered holder of a Rights Certificate with respect to the Rights associated
with such shares of Common Stock in accordance with and subject to the
provisions of this Agreement, including the provisions of Section 7(e) hereof,
as of the date such Person becomes a record holder of shares of Common Stock,
regardless of whether the legends provided for in Section 3(c) of this Agreement
are reflected on the certificate evidencing such Common Stock.
(b) The Purchase Price for each share of Common Stock pursuant
to the exercise of a Right shall initially be One Hundred Dollars ($100.00),
shall be subject to adjustment from time to time as provided in Sections 11 and
13 of this Agreement and shall be payable in lawful money of the United States
of America in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights with the appropriate form of election to purchase duly
executed, accompanied by payment of the Purchase Price for the shares to be
purchased and an amount equal to any applicable transfer tax (as determined by
the Rights Agent) in cash, or by certified check or bank draft payable to the
order of the Company, the Rights Agent shall, subject to Section 7(f) and
Section 21(k), thereupon (i) promptly requisition from any transfer agent of the
shares of Common Stock (or
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make available, if the Rights Agent is the transfer agent) certificates for the
number of shares of Common Stock to be purchased, and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests, (ii)
when appropriate, requisition from the Company the amount of cash, if any, to be
paid in lieu of issuance of fractional shares in accordance with Section 15,
(iii) promptly after receipt of such certificates, 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) when appropriate, after receipt, promptly deliver such cash to
or upon the order of the registered holder of such Rights Certificate. In
addition, in the case of an exercise of the rights of a holder pursuant to
Section 11(a)(ii), the Rights Agent shall return such Rights Certificate to the
registered holder thereof after imprinting, stamping or otherwise indicating
thereon that the Rights represented by such Rights Certificate no longer include
the rights provided by Section 11(a)(ii) of the Rights Agreement, and if less
than all the Rights represented by such Rights Certificate were so exercised,
the Rights Agent shall indicate that rights under Section 11(a)(ii) continue to
the extent the Rights were not previously exercised pursuant thereto.
(d) In case the registered holder of any Rights Certificate shall
exercise (except pursuant to Section 11(a)(ii)) 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 the registered holder of such Rights Certificate or to his duly authorized
assigns, subject to the provisions of Section 15 of this Agreement.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an
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Acquiring Person or an Associate or Affiliate of an Acquiring Person, (ii) a
transferee of such Acquiring Person (or of any such Associate or Affiliate) who
becomes such a transferee after such Acquiring Person becomes such or (iii) a
transferee of such Acquiring Person (or of any such Associate or Affiliate) who
becomes such a transferee prior to or concurrently with such Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from such Acquiring Person (or any such
Associate or Affiliate) to holders of equity interests in such Acquiring Person
(or such Associate or Affiliate) or to any Person with whom such Acquiring
Person (or any such Associate or Affiliate) has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board determines 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 ensure 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 any other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees under this Agreement.
(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 the certificate contained in the
appropriate form of election to purchase set forth on the
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reverse side of the Rights Certificate surrendered for such exercise shall have
been completed and signed by the registered holder thereof and the Company shall
have been provided with such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
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, 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 Rights 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 COMMON STOCK. The Company
covenants and agrees that it will cause to be reserved and kept available out of
its authorized and unissued shares of Common Stock, or any authorized and issued
shares of Common Stock held in its treasury, the number of shares of Common
Stock that will be sufficient to permit the exercise in full of all outstanding
Rights; provided, however, that the Company need not so reserve and keep
available shares of Common Stock which may be required to be issued upon
exercise of the Rights in accordance with Section 11(a)(ii) until the occurrence
of a
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Section 11(a)(ii) Event; and provided, further, that if pursuant to Section
11(a)(iii), the Company makes provision to substitute alternative consideration
for some or all of the shares of Common Stock which may be required to be issued
upon exercise of the Rights, the Company shall be required to reserve and keep
available only the number of shares of Common Stock, if any, that may then be
required to be issued upon exercise of the Rights.
So long as the shares of Common Stock issuable upon the exercise of the
Rights may be listed on any national securities exchange or included on any
over-the-counter market reporting system, 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 or included on such
reporting system upon official notice of issuance upon such exercise.
The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all shares of Common Stock (and, following the
occurrence of a Triggering Event, any other equity securities) delivered upon
the exercise of Rights shall, at the time of delivery of the certificates for
such shares (or such other equity securities), subject to payment of the
Purchase Price, be duly and validly authorized, issued and fully paid and
nonassessable.
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 or of
any certificates for shares of Common Stock (or other securities, as the case
may be) upon the exercise of Rights. The Company shall not, however, be required
to pay any transfer tax which may be payable in respect of any transfer or
delivery of Rights Certificates to a person other than, or in respect of the
issuance
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<PAGE> 21
or delivery of the shares of Common Stock (or other securities, as the case may
be) in a name other than that of, the registered holder of the Rights
Certificates evidencing Rights surren dered for exercise or to issue or deliver
any certificates for shares of Common Stock (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.
The Company shall use its best efforts to (i) file, as soon as
practicable following the Distribution Date, a registration statement on an
appropriate form under the Act with respect to any securities purchasable upon
exercise of the Rights, (ii) cause such registration statement to become
effective as soon as practicable after such filing and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities and (B) the
Expiration Date. The Company shall also use its best efforts to qualify or
register the securities purchasable upon exercise of the Rights as may be
necessary or appropriate under the blue sky laws of the various states. The
Company may temporarily suspend, for a period of time not to exceed ninety (90)
days after the filing of a registration statement pursuant to clause (i) of the
first sentence of this paragraph, the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become effective.
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 and shall issue a public announcement at such time as the suspension
is no longer in effect. In addition,
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<PAGE> 22
if the Company shall determine that a registration statement is required in
other circumstances or for additional or different securities following the
Distribution Date, the Company may similarly temporarily suspend the
exercisability of the Rights until such time as that registration statement has
been declared effective. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been obtained, the
exercise thereof shall not otherwise be permitted under applicable law or a
registration statement shall not have been declared effective.
Section 10. COMMON STOCK RECORD DATE. Each Person in whose name any
certificate for shares of Common Stock (or other securities, as the case may
be) is issued upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of the shares of Common Stock (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 presented and payment of the Purchase Price (and any applicable
transfer taxes) was made; provided, however, that if the date of such
presentation and payment is a date upon which the transfer books for the Common
Stock (or other securities, as the case may be) of the Company are closed, such
Person shall be deemed to have become the record holder of such shares (or
other securities, as the case may be) on, and such certificate shall be dated,
the next succeeding Business Day on which such transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the holder of
a Rights Certificate shall not be entitled to any rights of a stockholder of
the Company with respect to the shares (or other securities, as the case may
be) for which the Rights shall be exercisable, including
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<PAGE> 23
without limitation, where applicable, 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 in this Agreement.
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 Common Stock payable in
shares of Common Stock, (B) subdivide or split the outstanding Common Stock, (C)
combine or consolidate its outstanding Common Stock into a smaller number of
shares or (D) issue any shares of its capital stock in a reclassification of all
of the Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a) and in Section
7(e), the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, split, combination,
consolidation or reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive, upon
the payment of the Purchase Price then in effect, the aggregate number and kind
of shares of capital stock which, if such Right had been exercised immediately
prior to such date and at a time when the Common Stock transfer books of the
Company were open, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend,
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<PAGE> 24
subdivision, split, combination, consolidation or reclassification, provided,
however, that if the record date for any such dividend, subdivision, combination
or reclassification shall occur prior to the Distribution Date, the Company
shall make an appropriate adjustment only to the Purchase Price (taking into
account any additional Rights which may be issued as a result of such dividend,
subdivision, combination or reclassification), in lieu of also adjusting (as
described above) the number of Common Shares (or other capital shares, as the
case may be) issuable upon exercise of the Rights. If an event occurs which
would require an adjustment under both Section 11(a)(i) and Section 11(a)(ii),
the adjustment provided for in this Section 11(a)(i) shall be in addition to,
and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii).
(ii) In the event (a "Section 11(a)(ii) Event") that, at any time
after the date of this Agreement, any Person, alone or together with all
Affiliates and Associates of such Person, shall become the Beneficial Owner of
fifteen percent (15%) or more of the shares of Common Stock then outstanding,
then, promptly following the occurrence of such Section 11(a)(ii) Event, proper
provision shall be made so that each holder of a Right, except as provided below
and in Section 7(e) of this Agreement, shall thereafter have the right to
receive, upon exercise thereof at the then current Purchase Price in accordance
with the terms of this Agreement, such number of shares of Common Stock of the
Company as shall equal the result obtained by dividing (x) the product obtained
by multiplying (1) the then current Purchase Price by (2) the number of shares
of Common Stock for which a Right is then exercisable by (y) fifty percent (50%)
of the current market price (as defined below) per share
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<PAGE> 25
of the Common Stock (determined pursuant to Section 11(d)) on the date of the
occurrence of such 11(a)(ii) Event (such number of shares being referred to as
the "Adjustment Shares").
(iii) In lieu of issuing shares of Common Stock in accordance with
Section 11(a)(ii), the Company, acting by resolution of the Board, may, and in
the event that the number of shares of Common Stock which are authorized by the
Company's Restated Certificate of Incorporation but not outstanding or reserved
for issuance for purposes other than upon exercise of the Rights is not
sufficient to permit the exercise in full of the Rights in accordance with
Section 11(a)(ii), the Company, acting by resolution of the Board, 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
attributable to each Right (such excess being referred to as the "Spread") and
(B) with respect to all or a portion of each Right (subject to Section 7(e)
hereof), 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) equity securities of the Company other than Common Stock
(including, without limitation, shares, or units of shares, of preferred stock
which the Board has determined to have the same value as shares of Common Stock
(such securities being referred to as "Common Stock Equivalents")), (4) debt
securities of the Company, (5) other assets or (6) any combination of the
foregoing which, when added to any shares of Common Stock issued upon such
exercise, has an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board based upon the advice of a
nationally recognized investment banking firm selected by the Board which has
theretofore performed no services for the Company or any of its subsidiaries in
the immediately preceding five (5) years; provided,
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<PAGE> 26
however, if the Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) Business Days following the
later of (x) the occurrence of a Section 11(a)(ii) Event and (y) the date on
which the Company's right of redemption pursuant to Section 24(a) expires (the
later of (x) and (y) being referred to herein as the "Section 11(a)(ii) Trigger
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
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 period of thirty (30) Business Days set forth above may be
extended (such period, as it may be extended, the "Substitution Period") to the
extent necessary, but not more than ninety (90) Business Days after the Section
11(a)(ii) Trigger Date, in order that the Company may seek stockholder approval
for the authorization of such additional shares. 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 and a public
announcement at such time as the suspension is no longer in effect. For purposes
of
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this Section 11(a)(iii), the value of the Common Stock shall be the current
market price per share of the Common Stock on the Section 11(a)(ii) Trigger Date
and the value of any "Common Stock Equivalent" shall be deemed to have the same
value as the Common Stock of the Company on such date.
(b) If the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Common Stock entitling them (for a
period expiring within forty-five (45) calendar days after such record date) to
subscribe for or purchase shares of Common Stock or Common Stock Equivalent,
securities convertible into shares of Common Stock or a Common Stock Equivalent,
at a price per share of Common Stock or such Common Stock Equivalent (or having
a conversion price per share, if a security is convertible into shares of Common
Stock or such Common Stock Equivalent) that is less than the current market
price per share of Common Stock or such Common Stock Equivalent 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
date by a fraction, the numerator of which shall be (i) the number of shares of
Common Stock outstanding on such record date plus (ii) the number of additional
shares of Common Stock or such Common Stock Equivalent which the aggregate
offering price of the total number of shares of Common Stock to be offered (or
the average initial conversion price of the convertible securities to be
offered) would purchase at such current market price, and the denominator of
which shall be (i) the number of shares of Common Stock outstanding on such
record date plus (ii) the number of additional shares of Common Stock or such
Common Stock Equivalent to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible). 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 by the Board reasonably and with good faith to the holders of Rights,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent and conclusive for all purposes.
Shares of Common Stock owned by or held for the account of the Company shall not
be deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed and, in the
event that such rights or warrants are not so issued, the Purchase Price shall
be readjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) If the Company shall fix a record date for the making of a
distribution to all holders of Common Stock (including any such distribution
made in connection with a merger in which the Company is the continuing or
surviving corporation) of evidence of indebtedness, cash (other than a regular,
periodic cash dividend at a rate not in excess of one hundred twenty-five
percent (125%) of the rate of the last regular, periodic cash dividend
theretofore paid), assets (other than a dividend payable in Common Stock, but
including any dividend payable in stock other than Common Stock) or subscription
rights or warrants (excluding those referred to in Section 11(b)), the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market price) per share of
Common Stock on such record date, less the fair market value (as determined by
the Board reasonably and with good faith to the holders of Rights, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent
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<PAGE> 29
and conclusive for all purposes) of the portion of the cash, assets or evidences
of indebtedness so to be distributed or of such subscription rights or warrants
distributable in respect of one (1) share of Common Stock, and the denominator
of which shall be the current market price per share of Common Stock. Such
adjustments shall be made successively whenever such a record date is fixed and,
in the event that such distribution is not so made, the Purchase Price shall be
adjusted to be the Purchase Price which would be in effect if such record date
had not been fixed.
(d) Except as otherwise expressly provided in this Agreement, the
"current market price" per share of Common Stock on any date for the purpose of
any computation under this Agreement 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 defined below) immediately prior to
such date; provided, however, that in the event that current market price per
share of Common Stock is determined during the period following the announcement
by the issuer of such Common Stock of (i) a dividend or distribution on such
Common Stock payable in shares of such Common Stock or securities convertible
into shares of such Common Stock other than the Rights or (ii) any subdivision,
split, combination, consolidation or reclassification of such Common Stock, 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,
split, combination, consolidation or reclassification, then, and in each such
case, the "current market price" shall be equitably adjusted to take into
account ex-dividend trading or the effects of such subdivision, split,
combination, consolidation or reclassification, as the case may be. The closing
price for each day shall be the last sale price,
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regular way, or in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the shares
of such 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 such Common Stock are listed or admitted to trading or,
if the shares of such Common Stock are not listed or admitted to trading on any
national securities exchange, the closing sale price or 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 any market or quotation system of The
Nasdaq Stock Market ("Nasdaq") or such other reporting system then in use, or,
if on any such date the shares of such Common Stock are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in such Common Stock selected by the
Board. If on any such date no market maker is making a market in such Common
Stock, the fair value of such shares on such date as determined by the Board
reasonably and with good faith to the holders of Rights shall be used and shall
be binding on the Rights Agent. The term "Trading Day" shall mean a day on which
the principal national securities exchange or over-the-counter market reporting
system on which the shares of such Common Stock are listed or admitted to
trading or included is open for or reports the transaction of business or, if
the shares of such Common Stock are not listed or admitted to trading on any
national securities exchange or included on any over-the-counter market
reporting system, a Business Day. If such Common Stock is not
29
<PAGE> 31
publicly held or not so listed or traded, "current market price" per share shall
mean the fair value per share determined by the Board reasonably and with good
faith to the holders of Rights, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent.
(e) Anything in this Agreement to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest ten-thousandth (1/10,000th)
of a share of Common 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 and (ii) the Expiration Date.
(f) If, as a result of any provision of Section 11(a) or Section
13(a), the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares of Common Stock contained in Sections
11(a), (b), (c), (e), (g), (h), (i), (j), (k), (l) and (m), inclusive, and the
provisions of Sections 7, 9, 10, 13
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and 15 of this Agreement with respect to the Common Stock shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjust ment or adjustments made to the Purchase Price under this Agreement shall
evidence the right to purchase, at the Purchase Price as theretofore adjusted,
the number of shares of Common Stock purchasable from time to time under this
Agreement upon exercise of the Rights, all subject to further adjustment as
provided in this Agreement.
(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 Section 11(b) and Section 11(c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
shares of Common Stock (calculated to the nearest ten-thousandth (1/10,000th))
obtained by (i) multiplying (x) the number of shares of Common Stock covered by
a Right immediately prior to such adjustment of the Purchase Price 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 making any
adjustment in the number of shares of Common Stock purchasable upon the exercise
of a Right. Each of the Rights outstanding after any such adjustment in the
number of Rights shall be exercisable for the number of shares of Common Stock
for which a Right was exercisable immediately prior to
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such adjustment. Each Right held of record prior to any such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest
ten-thousandth (1/10,000th)) obtained by dividing the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price by the Purchase Price
in effect immediately after such 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. Such record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if Rights
Certificates have been issued, such record date shall be at least ten (10)
Business Days later than the date of the public announcement. If Rights
Certificates have theretofore 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 the holders of record of Rights
Certificates on such record date, Rights Certificates evidencing, subject to
Section 15 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 such 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 in this Agreement (and may bear,
at the option of the Company, the Purchase Price as theretofore adjusted) and
shall be registered in the names of
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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 shares of Common Stock issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may continue
to express the Purchase Price per share and the number of shares which were
expressed in the initial Rights Certificates issued under this Agreement.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the shares of
Common 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 nonassessable
shares of Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment of 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 issuing to the holder of any Right exercised after such record date
the shares of Common Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the shares of Common Stock
and other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
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(m) Anything to the contrary in this Section 11 notwithstanding,
the Company by action of the Board 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 Board shall determine to be advisable
in order that any (i) consolidation or subdivision of the Common Stock, (ii)
issuance wholly for cash of any shares of Common Stock at less than the current
market price, (iii) issuance wholly for cash of shares of Common Stock or
securities which by their terms are convertible into or exchangeable for shares
of Common Stock, (iv) stock dividends or (v) issuance of rights, options or
warrants referred to above in this Section 11, hereafter made by the Company to
holders of its Common Stock shall not be taxable to such stockholders.
(n) The exercise of Rights under Section 11(a) (ii) shall only
result in the loss of rights under Section 11(a) (ii) to the extent so exercised
and shall not otherwise affect the rights represented by the Rights under this
Rights Agreement, including the rights under Section 13.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Sections 11 and 13 of this
Agreement, 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 Common Stock a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Rights Certificate in accordance with Section 26 of
this Agreement. Notwithstanding the foregoing sentence, the failure of the
Company to prepare such certificate or statement or make such filings or
mailings shall not affect the validity of, or the force or
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effect of, the requirement for such adjustment. The Rights Agent shall 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 (a "Section 13 Event") that, following the
Acquisition Date, directly or indirectly, (x) the Company shall consolidate or
otherwise combine with, or merge with and into, any other Person (other than a
subsidiary of the Company in one or more transactions each of which complies
with Section 14(c)), and the Company shall not be the continuing or surviving
corporation of such consolidation, combination or merger, (y) any Person shall
consolidate or otherwise combine with the Company, or merge with and into the
Company and the Company shall be the continuing or surviving corporation of such
consolidation, combination or merger and, in connection with such consolidation,
combination or merger, all or part of the 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, mortgage or otherwise
transfer (or one or more of its subsidiaries shall sell, mortgage or otherwise
transfer), in one or more transactions, assets or earning power aggregating more
than fifty percent (50%) of the assets or earning power of the Company and its
subsidiaries (taken as a whole) to any other Person (other than to subsidiaries
of the Company in one or more transactions each of which complies with Section
14(c)), provided, however, that this clause (z) of Section 13(a) shall not apply
to the pro rata distribution by the Company of assets (including securities) of
the Company or any of its subsidiaries to all holders of the Company's Common
Stock; 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
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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, nonassessable and freely
tradable shares of Common Stock of the Principal Party (as defined below), not
subject to any liens, encumbrances, rights of call, rights of first refusal or
other adverse claims, as shall be equal to the result obtained by dividing (A)
the product obtained by multiplying (1) the then current Purchase Price by (2)
the number of shares of Common Stock for which a Right is then exercisable by
(B) fifty percent (50%) of the current market price per share of 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 shall apply to such Principal Party following the first
occurrence of a Section 13 Event; and (iv) such Principal Party shall take such
steps (including but not limited to the reservation of a sufficient number of
shares of its Common Stock in accordance with Section 9 of this Agreement) in
connection with such consummation as may be necessary to assure that the
provisions of this Agreement shall thereafter be applicable, as nearly as
reasonably may be, in relation to shares of its Common Stock thereafter
deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) In the case of any transaction described in clause (x)
or (y) of Section 13(a), the Person that is the issuer of any securities into
which shares of Common Stock of the Company are converted, changed or exchanged
in such merger, consolidation or
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combination or, if there is more than one issuer, the issuer of the Common Stock
having the greatest market value, or if no securities are so issued, the Person
that is the other party to the merger (and survives the merger), consolidation
or combination (or, if there is more than one such Person, the Person the Common
Stock of which has the greatest value), or if the other party to the merger does
not survive the merger, the Person that does survive the merger (including the
Company, if it survives); and
(ii) In the case of any transaction described in clause (z)
of Section 13(a), the Person that is the party receiving the greatest portion of
the assets or earning power transferred pursuant to such transaction or
transactions; or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power so
transferred or if the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such Persons is the issuer of
Common Stock having the greatest market value; provided, however, that in any
such case, (A) if the Common Stock of such Person is not at such time, or has
not been continuously over the preceding 12-month period, registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
subsidiary of another Person, "Principal Party" shall refer to such other
Person; (B) 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; and (C)
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 clauses (A) and (B) immediately above shall apply
to each of the chains of
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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.
(c) The Company shall not consummate any such Section 13 Event
unless prior thereto the Company and each Principal Party and each other Person
who may become a Principal Party as a result of such Section 13 Event shall have
executed and delivered to the Rights Agent a supplemental agreement confirming
that the terms set forth in paragraphs (a) and (b) of this Section 13 shall
promptly be performed in accordance with their terms and that such Section 13
Event shall not result in a default by the Principal Party under this Agreement
as the same shall have been assumed by the Principal Party pursuant to Section
13(a) and Section 13(b) and further providing that, as soon as practicable after
the date of such Section 13 Event, the Principal Party at its own expense will:
(i) Prepare and file a registration statement on an
appropriate form under the Act with respect to the Rights and the securities
purchasable upon exercise of the Rights and will use its best efforts to cause
such registration statement to become effective as soon as practicable after
such filing and to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date;
(ii) 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;
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(iii) Use its best efforts to list or obtain quotation of
(or continue the listing or quotation of) the Rights and the securities
purchasable upon exercise of the Rights on a national securities exchange or
automated quotation service;
(iv) Deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply in
all material respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act; and
(v) Use its best efforts to obtain waivers of any rights of
first refusal or preemptive rights in respect of the shares of Common Stock or
other securities of the Principal Party subject to purchase upon exercise of
outstanding Rights.
(d) In the event that, following the Acquisition Date, directly or
indirectly, any of the transactions described in Section 13(a) shall be
consummated and, as a result of application of the rules set forth in Section
13(b), "Principal Party" shall mean a Person the Common Stock of which (i) is
not at such time, or has not been continuously over the preceding 12-month
period, registered under Section 12 of the Exchange Act or (ii) is not listed on
a national securities exchange or regularly quoted in the over-the-counter
market by one or more members of a national or affiliated securities
association, each holder of a Right shall have the right to receive, upon the
exercise thereof at the then current Purchase Price in accordance with the terms
of this Agreement, cash in an amount equal to the result obtained by multiplying
(A) the product obtained by multiplying (1) the then current Purchase Price by
(2) the number of shares of Common Stock for which a Right is then exercisable
by (B) two (2). In such event, clauses (ii) and (iii) of Section 13(a) shall
continue to apply.
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(e) The provisions of this Section 13 shall similarly apply to
successive mergers, consolidations, combinations, sales or other transfers. The
rights of a holder of a Right under this Section 13 shall be in addition to the
rights of such holder to exercise such Right pursuant to, and the adjustments
required by, Section 11(a)(ii) and shall survive any exercise thereof under
Section 11(a)(ii).
Section 14. ADDITIONAL COVENANTS.
(a) Notwithstanding any other provision of this Agreement, except
as permitted by Section 11(a)(iii), no adjustment to the Purchase Price, the
number and kind of shares (or fractions of a share) for which a Right is
exercisable or the number of Rights outstanding or any similar adjustment shall
be made or be effective if such adjustment would have the effect of reducing or
limiting the benefits the holders of the Rights would have had absent such
adjustment, including, without limitation, the benefits under Section 11(a) (ii)
and Section 13.
(b) The Company covenants and agrees that it shall not at any time
after the Distribution Date, (i) consolidate or combine with any other Person
(other than a subsidiary of the Company in a transaction which complies with
Section 14(c)), (ii) merge with or into any other Person (other than a
subsidiary of the Company in a transaction which complies with Section 14(c)) or
(iii) sell or otherwise transfer, in one or more transactions, assets or earning
power aggregating more than fifty percent (50%) of the assets or earning power
of the Company and its subsidiaries taken as a whole to any other Person (other
than the Company and/or any of its subsidiaries in one or more transactions each
of which complies with Section 14(c)), if (x) at the time of or after such
consolidation, combination, merger, sale or other
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transfer, there are any provisions effecting the Company's Restated Certificate
of Incorporation or Amended and Restated By-Laws or any rights, warrants or
other instruments outstanding or any other action has been taken which would
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights or (y) prior to, simultaneously with or immediately after such
consolidation, combination, merger, sale or transfer, the stockholders of the
Person who constitutes, or would constitute, the "Principal Party" for purposes
of Section 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates. The Company shall
not consummate any such consolidation, merger, sale or other transfer unless
prior thereto the Company and such other Person shall have executed and
delivered to the Rights Agent a supplemental agreement evidencing compliance
with this Section 14(b).
(c) The Company covenants and agrees that, after the Distribution
Date, it will not, except as otherwise provided herein, take, or permit any of
its subsidiaries to take, any action, if at the time such action is taken it is
reasonably foreseeable that such action will diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
Section 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Rights Certificates which evidence fractional Rights. If the
Company determines that fractional Rights will not be issued, then, 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 the purposes of this Section 15(a), the current
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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 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 closing sale price or 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 any market or quotation system of Nasdaq or such other reporting
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. 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 by the Board
reasonably and with good faith to the holders of Rights shall be used and shall
be binding on the Rights Agent.
(b) The Company shall not be required to issue fractions of shares
of Common Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock. If the Company determines that
fractional shares of
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Common Stock will not be issued, then, in lieu of such fractional shares of
Common Stock, the Company shall pay to the registered holders of Rights
Certificates at the time such Rights are exercised as provided in this Agreement
an amount in cash equal to the same fraction of the current market price of a
share of Common Stock. For purposes of this Section 15(b), the current market
price of a share of Common Stock shall be the closing price of a share of Common
Stock for the Trading Day immediately prior to the date of such exercise.
(c) By the acceptance of a Right, each holder of a Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right.
Section 16. RIGHTS OF ACTION. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock). 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, such holder's right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged and agreed 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 under this Agreement and injunctive relief
against actual or threatened violations of the obligations under this Agreement
of any Person subject to this
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Agreement. Holders of Rights shall be entitled to recover the reasonable costs
and expenses, including attorneys' fees, incurred by them in any action to
enforce the provisions of this Agreement.
Section 17. AGREEMENT OF RIGHTS HOLDERS. By accepting a Right, each holder
of a Right 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 of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer;
(c) The Company and the Rights Agent may deem and treat the person
in whose name a 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 shall 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
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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.
Section 18. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No holder,
as such, of any Rights Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the shares of Common Stock or any
other securities of the Company which may at any time be issuable on the
exercise of the Right represented thereby, nor shall anything contained in this
Agreement or in any Rights Certificate be construed to confer upon the holder of
any Rights Certificate, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 25 of this Agreement), or
to receive dividends or subscription rights, or otherwise, until the Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions thereof.
Section 19. CONCERNING THE RIGHTS AGENT. The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it under this
Agreement 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 under this Agreement. The
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Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability or expense incurred without gross negligence, bad
faith or willful misconduct on the part of the Rights Agent and 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 arising therefrom, directly or indirectly.
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 document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged by the proper Person or Persons.
Section 20. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT. Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated or combined, or any corporation
resulting from any merger or consolidation or combination to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the shareholder services business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agree ment without the execution or filing of any paper or any further act on
the part of any of the parties to this Agreement, provided that such corporation
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 22 of this Agreement. In case at the time such successor
Rights Agent shall succeed to the agency created by this
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Agreement, any of the Rights Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature
of the predecessor Rights Agent and deliver such 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.
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 21. 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 selected by it
(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.
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(b) Whenever, in the performance of its duties under this
Agreement, the Rights Agent shall deem it necessary or desirable that any fact
or matter (including, without limitation, the identity of any Acquiring Person
and the determination of current market price) be proved or established by the
Company prior to taking or suffering any action under this Agreement, such fact
or matter (unless other evidence in respect thereof be specifically prescribed
in this Agreement) may be deemed to be conclusively proved and established by a
certificate signed by 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 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 under this Agreement 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 (except as to the fact that it has countersigned the Rights
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 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 of this
Agreement (except the due execution of this Agreement 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
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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 Sections 11 or 13 of this Agreement 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 actual notice of any such adjustment); nor shall it be responsible for any
determination by the Board of current market value of the Rights or Common Stock
pursuant to the provisions of Section 15 of this Agreement; nor shall it by any
act under this Agreement be deemed to make any representation or warranty as to
the authorization or reservation of any shares of Common Stock to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any shares
of Common Stock will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver, or cause to be performed, executed, acknowledged and delivered, all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions from the Chief Executive Officer, President, any Vice President,
the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary
of the Company (the "Authorized Officers") with respect to the performance of
its duties under this Agreement and to accept certificates delivered pursuant to
any provision of this Agreement from any of the Authorized Officers and is
authorized to apply to such officers for advice or instructions in connection
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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 the instructions of or
certificates delivered by any of the Authorized Officers.
(h) The Rights Agent, and any stockholder, director, officer or
employee of the Rights Agent, may buy, sell or deal in any of the Rights or
other securities of the Com pany or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
the Rights Agent under this Agreement. Nothing in this Agreement shall preclude
the Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty under this Agreement either
itself or by or through its attorneys or agents, and the Rights Agent shall not
be answerable or accountable for any act, omission, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company or to
the holders of the Rights resulting from any such act, omission, default,
neglect or misconduct, provided 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 under this Agreement or in the exercise of
its rights if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
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(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
Section 22. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock by registered or certified mail and to
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 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 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 holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then the 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 corporation organized and doing
business under the laws of the United States or of the State of Ohio or the
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State of New York (or of any other state of the United States so long as such
corporation is authorized to do business as a banking institution in the State
of Ohio or the State of New York) in good standing, having a principal office in
the State of Ohio or 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 banking authorities and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least Fifty
Million Dollars ($50,000,000). After appointment, the successor Rights Agent
shall, without further act or deed, be vested with the same powers, rights,
duties and responsibilities as if it had been originally named as Rights Agent,
and the predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it under this Agreement and shall
execute and deliver any further assurance, conveyance, act or deed necessary for
such purposes. Not later than the effective date of any such appointment, the
Company shall file a notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and mail a notice thereof in writing
to the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 22 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 23. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights Certificates to the contrary,
the Company may, at its option, issue new Rights Certificates evidencing Rights
in such form as may be approved by the Board to reflect any adjustment of or
change in the Purchase Price per share and the number or kind or class of shares
or other securities or property purchasable under the Rights
52
<PAGE> 54
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 stock appreciation rights
or under any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities heretofore or hereafter granted, issued or sold by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by
the Board, issue Rights Certificates representing the appropriate number of
Rights in connection with the issuance or sale of such shares of Common Stock;
provided, however, that (i) no such Rights Certificate shall be issued if, and
to the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued, and (ii)
no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 24. REDEMPTION AND TERMINATION.
(a) (i) The Board may, at its option, at any time prior to the
earlier of (x) the Close of Business on the tenth (10th) Business Day following
the Acquisition Date (or such specified or unspecified later date as may be
determined by the Board prior to the expiration of such ten (10) Business Day
period) and (y) the Final Expiration Date, redeem all, but not less than all, of
the then outstanding Rights at a redemption price of One One-Thousandth Dollar
($.001) per Right (payable in cash, shares of Common Stock (based on the current
market price of the Common Stock at the time of redemption) or any other form of
consideration
53
<PAGE> 55
deemed appropriate by the Board), as such amount may be appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date of this Agreement (such redemption price being hereinafter
referred to as the "Redemption Price"). Notwithstanding anything contained in
this Agreement to the contrary, the Rights shall not be exercisable after the
first occurrence of a Triggering Event until such time as the Company's right of
redemption hereunder has expired.
(b) Immediately upon the action of the Board 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
holders of Rights shall be to receive the Redemption Price for each Right so
held. Promptly after the action of the Board 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 Rights Agent or, prior to the Distribution Date, on the registry books of
the transfer agent for the Common Stock of the Company. 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.
Section 25. NOTICE OF CERTAIN EVENTS. In case the Company shall propose
(a) to pay any dividend payable in stock of any class to the holders of Common
Stock or to make any other distribution to the holders of Common Stock (other
than a regular periodic cash dividend at a rate not in excess of one hundred
twenty-five percent (125%) of the rate of the last regular
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<PAGE> 56
periodic cash dividend theretofore paid, or (b) to offer to the holders of
Common Stock rights or warrants to subscribe for or to purchase any additional
shares of Common Stock or shares of stock of any class or any other securities,
rights or options, or (c) to effect any reclassifica tion of its Common Stock
(other than a reclassification involving only the subdivision or split of the
outstanding shares of Common Stock), or (d) to effect any consolidation,
combination or merger with or into, or to effect any sale or other transfer (or
to permit one or more of its subsidiaries to effect any sale or other transfer),
in one or more transactions, of more than fifty percent (50%) of the assets or
earning power of the Company and its subsidiaries, taken as a whole, to any
other Person or (e) 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, in accordance with Section 26 of this Agreement, a notice of
such proposed action specifying the record date for the purposes of such stock
dividend or distribution of rights or warrants, or the date on which such
reclassification, consolidation, combination, merger, sale, transfer,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of Common Stock, if any such date is to be
fixed, and such notice shall be so given in the case of any action described in
clause (a) or (b) above in this Section 25 at least ten (10) Business Days prior
to the record date for determining the holders of Common Stock for purposes of
such action, and in the case of any other such action, at least ten (10) days
prior to the date of the taking of such proposed action or the date of
participation therein by the holders of Common Stock, whichever shall be
earlier. Failure to give any such required notice prior to the Distribution Date
shall not affect the validity of any such action.
55
<PAGE> 57
In the case that any Section 11(a)(ii) Event shall occur, then, in any
such case, the Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, in accordance with Section 26 of this Agreement,
a notice of the occurrence of such event specifying the event and the
consequences of the event to holders of Rights under Section 11(a)(ii) of this
Agreement.
Section 26. NOTICES. Except as may be otherwise expressly required by this
Agreement, 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:
Telxon Corporation
3330 West Market Street
Akron, Ohio 44333
Attention: Treasurer
Subject to the provisions of Section 22 and except as may be otherwise expressly
required by this Agreement, notices or demands 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:
KeyBank National Association
P.O. Box 6477
Cleveland, Ohio 44101-44144
Attn: Shareholder Services
56
<PAGE> 58
Notices or demand authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate 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 Company.
Section 27. SUPPLEMENTS AND AMENDMENTS. The Company may from time to time
supplement or amend this Agreement without the approval of any holders of Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock) in order to cure any ambiguity, to correct or supplement any
provision contained in this Agreement which may be defective or inconsistent
with any other provisions in this Agreement, or to make any other provisions in
regard to matters or questions arising under this Agreement which the Company
may deem necessary or desirable and, as to any supplement or amendment made
after the Distribution Date, which shall not adversely affect the interests of
the holders of Rights Certificates; provided, however, that the Company shall
not amend or otherwise change the rights, duties and compensation of the Rights
Agent without its prior written consent.
Section 28. SUCCESSORS. All of 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 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 Certificates (and, prior to the Distribution
Date, the registered holders of the Common Stock) any legal or equitable right,
remedy or claim under this Agreement, but
57
<PAGE> 59
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, the 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 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 24 hereof shall be reinstated and shall
not expire until the Close of Business on the tenth (10th) Business Day
following the date of such determination by the Board.
Section 31. GOVERNING LAW. This Agreement, each Right and each Rights
Certifi cate issued under this Agreement shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts to be made and to be performed entirely within such State.
Section 32. COUNTERPARTS. This Agreement may be executed in any number of
counterparts; each of such counterparts shall for all purposes be deemed to be
an original; and all of such counterparts shall together constitute but one and
the same instrument.
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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 of this
Agreement.
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<PAGE> 61
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
Attest: TELXON CORPORATION
__________________________ By___________________________
Name:_____________________ Name:________________________
Title:____________________ Title:_______________________
Attest: KEYBANK NATIONAL ASSOCIATION
__________________________ By___________________________
Name:_____________________ Name:________________________
Title: ___________________ Title:_______________________
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<PAGE> 62
EXHIBIT A
[FORM OF RIGHTS CERTIFICATE]
Certificate No. R-_______ _______Common Stock Purchase Rights
NOT EXERCISABLE AFTER THE LATER OF JULY 31, 2006 AND THE
DATE TWO YEARS AFTER ANY DISTRIBUTION DATE OCCURRING PRIOR TO JULY 31,
2006, OR EARLIER IF NOTICE OF REDEMPTION IS GIVEN. THE COMMON STOCK
PURCHASE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. THE RIGHTS SHALL NOT BE EXERCISABLE, AND SHALL BE VOID SO
LONG AS HELD, BY A HOLDER IN ANY JURISDICTION WHERE THE REQUISITE
QUALIFICATION FOR THE ISSUANCE TO SUCH HOLDER, OR THE EXERCISE BY SUCH
HOLDER, OF THE RIGHTS IN SUCH JURISDICTION SHALL NOT HAVE BEEN OBTAINED
OR BE OBTAIN ABLE. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY
OWNED BY AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE AMENDED
AND RESTATED RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE WERE ISSUED TO A PERSON WHO WAS AN ACQUIRING PERSON OR AN
AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON. THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID TO THE
EXTENT PROVIDED BY, AND UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN,
SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
- --------
* The portion of the legend in brackets shall be inserted only if applicable.
<PAGE> 63
RIGHTS CERTIFICATE
------------------
TELXON CORPORATION
This certifies that ______________________________________, or
registered assigns, is the registered owner of the number of Common Stock
Purchase Rights (the "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 August 25, 1987, as amended and restated as of July 31,
1996, as amended, restated, renewed or extended from time to time thereafter
(the "Rights Agreement"), between Telxon Corporation, a Delaware corporation
(the "Company"), and KeyBank National Association (the "Rights Agent") to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M. (Cleveland, Ohio
time) on July 31, 2006 at the principal office of the Rights Agent in Cleveland,
Ohio, or its successors as Rights Agent, one fully paid, nonassessable share of
the Common Stock, par value $.01 per share, of the Company (the "Common Stock"),
at a purchase price of $100.00 per share (the "Purchase Price"), upon
presentation and surrender of this Rights Certificate with the appropriate Form
of Election to Purchase duly executed. The number of Rights evidenced by this
Rights Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per share set forth
above, are the number and Purchase Price as of July 31, 1996, based on the
Common Stock as constituted at such date. The Company reserves the right to
require prior to the occurrence of a Triggering Event (as such term is defined
in the Rights Agreement) that a number of Rights be exercised so that only whole
shares of Common Stock will be issued.
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<PAGE> 64
As provided in the Rights Agreement, the Purchase Price and
the number of shares of Common Stock which may be purchased upon the exercise of
the Rights evidenced by this Rights Certificate are subject to modification and
adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immuni ties hereunder
of the Rights Agent, the Company and the holders of the Rights Certificates.
Reference is also made to the Rights Agreement for definitions of capitalized
terms used but not defined herein. Copies of the Rights Agreement are on file at
the principal office of the Company and are also available upon written request
to the Company.
This Rights Certificate, either alone or together with other
Rights Certificates, upon surrender at the principal office of the Rights Agent
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Common Stock as the Rights evidenced by the Rights
Certificate or Rights Certificates surrendered shall have entitled such holder
to purchase. If this Rights Certificate shall be exercised (other than pursuant
to Section 11(a)(ii) of the Rights Agreement) in part, the holder shall be
entitled to receive upon surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised. If this Rights
Certificate shall be exercised in whole or in part pursuant to Section 11(a)(ii)
of the Rights Agreement, the holder shall be entitled to receive this Rights
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<PAGE> 65
Certificate duly marked to indicate that such exercise has occurred as set forth
in the Rights Agreement.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $.001 per Right.
The Company is not required to issue fractional shares of
Common Stock upon the exercise of any Right or Rights evidenced hereby, but in
lieu thereof a cash payment shall be made as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of shares of Common
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
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<PAGE> 66
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of ____________.
[Corporate Seal] TELXON CORPORATION
By__________________________
Name:_______________________
Title: _____________________
By__________________________
Name:_______________________
Title: _____________________
Countersigned:
KEYBANK NATIONAL ASSOCIATION
By:_________________________
Authorized Signature
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<PAGE> 67
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED __________________________________________________
does hereby sell, assign and transfer unto ___________________________________
- ------------------------------------------------------------------------------
(Please print name and address of transferee)
- ------------------------------------------------------------------------------
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ___________________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated:__________________, 19__
------------------------------------------
Signature
Signature Guaranteed:
<PAGE> 68
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) This Rights Certificate [ ] is [ ] is not being exercised, sold,
assigned or transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement); and
(2) After due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated:________________, 19__ ___________________________________________
Signature
NOTICE
------
The signature to the foregoing Assignment must correspond to the name
as written upon the face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE> 69
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires
to exercise the Rights represented
by the Rights Certificate.)
To TELXON CORPORATION
The undersigned hereby irrevocably elects to exercise___________ Rights
represented by this Rights Certificate to purchase the shares of Common Stock
issuable upon the exercise of the Rights and requests that certificates for such
shares be issued in the name of:
- ------------------------------------------------------------------------------
(Please print name and address)
- ------------------------------------------------------------------------------
Please insert Social Security
or tax identification number: _______________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
- ------------------------------------------------------------------------------
(Please print name and address)
- ------------------------------------------------------------------------------
Please insert Social Security
or tax identification number: _______________________________________________
Dated:_________________, 19__ __________________________________________
Signature
Signature Guaranteed:
