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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
QUIDEL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-2573850
(State of incorporation or organization) (I.R.S. Employer
Identification No.)
10165 McKellar Court, San Diego, CA 92121
(Address of principal executive offices) (Zip Code)
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If this form relates to the registration of a class If this form relates to the registration of a class
of debt securities and is effective upon filing of debt securities and is to become effective
pursuant to General Instruction A(c)(1), please simultaneously with the effectiveness of a
check the following box. / / concurrent registration statement under the
Securities Act of 1933 pursuant to General
Instruction A(c)(2), please check the following
box. / /
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Securities to be registered pursuant to Section 12(b) of the Act:
None
(Title of Class)
Securities to be registered pursuant to Section 12(g) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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Preferred Stock Purchase Rights The Nasdaq National Market
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
On December 11, 1996 (the "RIGHTS DIVIDEND DECLARATION DATE"), the Board
of Directors of Quidel Corporation (the "COMPANY") declared a dividend of one
right (a "RIGHT") to purchase fractions of shares of its Series C Junior
Participating Preferred Stock, par value $.001 per share, having the rights,
preferences, privileges and restrictions described in Paragraph K below (the
"PREFERRED STOCK"), and, under certain circumstances, other securities, for each
outstanding share of the Company's common stock, par value $.001 per share (the
"COMMON STOCK"), to be distributed to stockholders of record at the close of
business on January 10, 1997 (the "RECORD DATE"). The description and terms of
the Rights are set forth in a Rights Agreement (the "RIGHTS AGREEMENT") dated as
of December 31, 1996 between the Company and American Stock Transfer & Trust
Company, as Rights Agent.
The following is a brief description of the Rights. It is intended to
provide a general description only and is qualified in its entirety by reference
to the Rights Agreement which is attached hereto as Exhibit 1.
A. ISSUANCE OF THE RIGHTS
Each share of Common Stock outstanding at the close of business on the
Record Date will receive one Right. In addition, prior to the earliest of the
Distribution Date, a Section 13 Event or the Expiration Date (as each is
hereinafter defined), one additional Right (as such number may be adjusted
pursuant to the provisions of the Rights Agreement) shall be issued with each
share of Common Stock issued after the Record Date. Following the Distribution
Date and prior to the expiration or redemption of the Rights, the Company will
issue one Right (as such number may be adjusted pursuant to the provisions of
the Rights Agreement) for each share of Common Stock issued pursuant to the
exercise of stock options or under employee plans or upon the exercise,
conversion or exchange of securities issued by the Company prior to the
Distribution Date. A "SECTION 13 EVENT" shall mean any event in which (i) the
Company merges or consolidates with another and the Company is not the surviving
corporation; (ii) the Company merges or consolidates with another, the Company
is the surviving corporation, and all or part of the Company's common stock is
exchanged for other securities, cash or property; or (iii) the Company sells or
transfers more than 50% of its assets or earning power. The "EXPIRATION DATE"
shall mean the earliest of (i) December 30, 2006; (ii) the date of redemption of
the Rights; (iii) the date the Board orders an exchange of Rights; or (iv) the
date of consummation of a tender offer approved as fair to and in the best
interests of the Company and its stockholders and adequately priced with each
stockholder receiving the same consideration per share in the same manner.
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B. COMMON STOCK CERTIFICATES REPRESENT THE RIGHTS PRIOR TO THE
DISTRIBUTION DATE
Prior to the Distribution Date (as hereinafter defined), no separate
Rights certificates will be issued. Instead, the Rights will be evidenced by the
certificates for the Common Stock to which they are attached and will be
transferred with and only with such Common Stock certificates. The surrender for
transfer of any certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate. New Common Stock certificates issued after the Record Date will
contain a legend incorporating the Rights Agreement by reference.
C. DISTRIBUTION DATE; ISSUANCE OF RIGHTS CERTIFICATES
The Rights will separate from the Common Stock and become exercisable and
a Distribution Date will occur (the "DISTRIBUTION DATE") upon the earlier of ten
days after (i) public announcement that a person or group of affiliated or
associated persons has acquired beneficial ownership of 15% or more of the
outstanding shares of Common Stock (an "ACQUIRING PERSON") or such earlier date
as a majority of the directors shall become aware of the existence of an
Acquiring Person (the "STOCK ACQUISITION DATE"), or (ii) the commencement of a
tender or exchange offer by any person or group, if upon consummation thereof,
such person or group of affiliated or associated persons would be the beneficial
owner of 15% or more of the shares of Common Stock then outstanding. As soon as
practicable after the Distribution Date, Rights certificates will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and, thereafter, the separate Rights certificates alone will
represent the Rights.
D. EXERCISE OF THE RIGHTS
1. RIGHTS INITIALLY NOT EXERCISABLE. Prior to the Distribution
Date, the Rights are not exercisable.
2. EXERCISE OF THE RIGHTS TO PURCHASE PREFERRED STOCK OF THE COMPANY.
At any time after the Distribution Date but prior to the earlier of the
expiration or redemption of the Rights, each Right may be exercised at the
stated purchase price of $24 (subject to adjustment, the "EXERCISE PRICE") for
one one-thousandth of a share of the Preferred Stock, provided, however, that
upon the occurrence of any of the events described below the Rights may no
longer be exercised for the Preferred Stock and may only be exercised for
certain other securities described below.
3. EXERCISE OF THE RIGHTS TO PURCHASE COMMON STOCK OF THE COMPANY. In
the event that at any time following the Rights Dividend Declaration Date, a
person, alone or with affiliates, becomes the beneficial owner of 15% or more of
the then outstanding shares of the Company's Common Stock (except pursuant to an
offer for all outstanding shares of Common Stock which is determined by both (i)
the Board of Directors acting by Special Vote, and (ii) a majority of the
Directors who are not associated with an Acquiring Person
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("CONTINUING DIRECTORS") and who are also not employees of the Company, to be
fair to and otherwise in the best interests of the Company and its stockholders
(a "PERMITTED OFFER")), then each holder of a Right will thereafter have the
right to exercise the Right for Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to two
times the Exercise Price of the Right. If the Company does not have sufficient
Common Shares available for all Rights to be exercised, the Company may
substitute for all or any portion of the Common Stock that would be issuable
upon exercise of the Rights, cash, assets, or other securities having the same
aggregate value as such Common Stock. The Rights are exercisable as described in
this paragraph only after the Company's right of redemption (as described below)
has expired. Notwithstanding any of the foregoing, following the occurrence of
the event set forth in this paragraph (a "SECTION 11(a)(ii) EVENT"), all Rights
that are, or under certain circumstances specified in the Rights Agreement were,
beneficially owned by an Acquiring Person will be null and void. A "SPECIAL
VOTE" of the Board of Directors is approval by both a majority of the Continuing
Directors and a majority of the entire Board, including the Continuing
Directors.
4. EXERCISE OF THE RIGHTS TO PURCHASE COMMON STOCK OF AN ACQUIRING
COMPANY. In the event that, at any time following the Stock Acquisition Date,
(i) the Company is merged or consolidated with another company in a business
combination transaction in which the Company is not the surviving corporation or
in which the Company is the surviving corporation and all or part of the Common
Stock of the Company is exchanged for stock of any other person, cash or any
other property (other than a merger which follows an offer described in the
preceding paragraph), or (ii) more than 50% of the assets or earning power of
the Company and its subsidiaries (taken as a whole) is sold or transferred, then
each holder of a Right (except Rights which previously have been voided as set
forth above) shall thereafter have the right to exercise the Right for common
stock of the acquiring company having a value equal to two times the Exercise
Price of the Right. (An event described in this paragraph is a "SECTION 13
EVENT.")
5. ADJUSTMENT OF NUMBER OF RIGHTS, PURCHASE PRICE AND NUMBER OF UNITS
OF PREFERRED STOCK. The Exercise Price payable and/or the number of shares of
Preferred Stock or other securities or property issuable upon exercise of the
Rights are subject to proportionate adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, combination
or reclassification of, the Preferred Stock, (ii) in the event holders of the
Preferred Stock are granted certain rights or warrants to subscribe for
Preferred Stock or convertible securities at less than the current market price
of the Preferred Stock, or (iii) upon the distribution to holders of the
Preferred Stock of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants (other than
those referred to above). If at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date the Company declares a stock dividend
on, subdivides or combines the outstanding shares of Common Stock, the number of
Rights associated with each share of Common Stock shall be proportionately
adjusted.
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E. FRACTIONAL RIGHTS AND FRACTIONAL SHARES
The Company is generally not required to issue fractional Rights,
fractions of shares of Preferred Stock (other than fractions which are integral
multiples of one one-thousandth of a share), or fractions of shares of Common
Stock and, in lieu thereof, an adjustment in cash will be made based on the
market price of the Rights, Preferred Stock, or Common Stock, respectively.
F. REDEMPTION OF THE RIGHTS
In general, the Company may redeem all (but not less than all) of the
Rights at a price of $0.005 per Right (subject to adjustment to reflect stock
splits, stock dividends, or similar transactions), at any time until the earlier
of the tenth day following the Stock Acquisition Date or December 30, 2006
(provided that any redemption after any person becomes an Acquiring Person may
be effected only by the Board of Directors acting by Special Vote). This
redemption period may be extended by the Board of Directors by amending the
Rights Agreement as described in Paragraph H below prior to the time when the
Rights become nonredeemable. The redemption price may be paid in cash, shares of
Common Stock, or any other consideration the Board of Directors deems
appropriate. Immediately upon the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and the only right of the
holders of Rights will be to receive the $0.005 redemption price.
G. EXCHANGE OF THE RIGHTS
At any time after a Section 11(a)(ii) Event or a Section 13 Event and
before any person or group acquires 50% or more of the outstanding Common Stock,
the Board of Directors of the Company, acting by Special Vote, may cause the
Company to exchange some or all of the outstanding and exercisable Rights for
Common Stock at a one-to-one exchange ratio (appropriately adjusted to reflect
stock splits, dividends or similar transactions). Rights may not be exercised
after the Board orders their exchange. If there is not sufficient authorized
unissued Common Stock to fund an exchange, the Board, acting by Special Vote,
may fund the exchange through other consideration, including issuance of debt
and/or equity. In addition, at any time before any person or group becomes in
Acquiring Person, the Board, acting by Special Vote, may exchange some or all of
the Rights for rights of substantially equivalent value.
H. AMENDMENTS
Other than those provisions relating to the redemption price or the final
expiration date of the Rights, any of the provisions of the Rights Agreement may
be supplemented or amended by the Board of Directors of the Company prior to the
Distribution Date, without approval of the Rights holders, whether or not a
supplement or amendment is adverse to the Rights holders. After the Distribution
Date, any provisions of the Rights Agreement (other than those provisions
relating to the redemption price or the final expiration date of the Rights) may
be amended by the Board of Directors acting by Special Vote in order to (i) cure
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any ambiguous, defective or inconsistent provision, (ii) shorten or lengthen any
time period hereunder, or (iii) otherwise change a provision which the Board of
Directors acting by Special Vote may deem necessary or desirable and which does
not materially and adversely affect the interests of holders of Rights (other
than any Acquiring Person); provided, the Rights Agreement may not be amended to
(A) make the Rights again redeemable after the Rights have ceased to be
redeemable, or (B) change any other time period unless such change is for the
purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to the holders of the Rights (other than any Acquiring Person).
I. EXPIRATION
The Rights will expire upon the earliest to occur of the close of business
on December 30, 2006, the exchange or redemption of the Rights by the Company,
or the consummation of a Permitted Offer transaction followed by a merger or
consolidation of the Company with another company in which all stockholders of
the Company receive the same consideration and terms as in the Permitted Offer.
J. NO STOCKHOLDER RIGHTS PRIOR TO EXERCISE
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
K. TERMS OF THE PREFERRED STOCK
The Company has initially reserved 50,000 shares of Preferred Stock for
issuance upon exercise of the Rights, such number to be subject to adjustment
from time to time in accordance with the Rights Agreement. The Preferred Stock
will be nonredeemable. The dividend, liquidation and voting rights, and the
rights upon consolidation or merger of the Preferred Stock are designed so that
the value of the one one-thousandth interest in a share of Preferred Stock
purchasable with each Right will approximate the value of one share of Common
Stock. Each whole share of Preferred Stock will be entitled to receive a
quarterly preferential dividend of 1,000 times the dividend declared on the
Common Stock. In the event of liquidation, the holders of the Preferred Stock
will be entitled to receive a preferential liquidation payment of $1,000 per
share plus the amount of accrued unpaid dividends thereon, the holders of the
Common Stock will then be entitled to receive a liquidation payment equal to
$1.00 per share (subject to proportionate adjustment to reflect stock splits,
dividends or combinations), and the holders of the Preferred Stock and Common
Stock will then share ratably in all assets remaining available for distribution
to stockholders. Each share of Preferred Stock will have 1,000 votes (subject to
proportionate adjustment to reflect stock splits, dividends and combinations),
and will generally vote together with the Common Stock. Finally, in the event of
any merger, consolidation or other transaction in which shares of Common Stock
are exchanged for or changed into other stock or securities, cash and/or other
property, each share of Preferred Stock will be entitled to receive 1,000 times
the amount
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received per share of Common Stock (subject to proportionate adjustment to
reflect stock splits, dividends and combinations).
L. ANTI-TAKEOVER EFFECTS
The Rights are designed to protect and maximize the value of stockholders'
interests in the Company in the event of an unsolicited takeover attempt in a
manner or on terms not approved by the Board of Directors. Takeover attempts
frequently include coercive tactics to deprive the Board of Directors and
stockholders of any real opportunity to determine the destiny of the Company.
The Rights have been declared by the Board in order to deter such tactics,
including a gradual accumulation in the open market of a 15% or greater
position, followed by a merger or a partial or two-tier tender offer that does
not treat all stockholders equally. These tactics can unfairly pressure
stockholders, squeeze them out of their investment without giving them any real
choice and deprive them of the full value of their shares.
The Rights are not intended to prevent a takeover of the Company and will
not do so. The rights may be redeemed by the Company as described in Paragraph
F, and accordingly, the Rights should not interfere with any merger or business
combination approved by the Board of Directors.
Issuance of the Rights does not weaken the Company or interfere with its
business plans. The issuance of the Rights themselves has no dilutive effect,
will not affect reported earnings per share, should not be taxable to the
Company or to its stockholders, and will not change the way in which the
Company's shares are presently traded. The Company's Board of Directors believes
that the Rights represent a sound and reasonable means of addressing the complex
issues of corporate policy created by the current takeover environment.
However, the Rights may have the effect of rendering more difficult or
discouraging an acquisition of the Company deemed undesirable by the Board of
Directors. The Rights may cause substantial dilution to a person or group that
attempts to acquire the Company on terms or in a manner not approved by the
Company's Board of Directors, except pursuant to an offer conditioned upon the
negation, purchase or redemption of the Rights.
ITEM 2. EXHIBITS.
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1 Rights Agreement dated as of December 31, 1996 between
Quidel Corporation and American Stock Transfer & Trust
Company, as Rights Agent, which includes as Exhibit B
thereto the Form of Rights Certificate to be distributed to
holders of Rights after the Distribution Date (as that term
is defined in the Rights Agreement).
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereto duly authorized.
Date: January 8, 1997 QUIDEL CORPORATION
By: /s/ STEVEN C. BURKE
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Steven C. Burke
Vice President-Finance and
Administration
and Chief Financial Officer
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EXHIBIT 1
QUIDEL CORPORATION
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
AS RIGHTS AGENT
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RIGHTS AGREEMENT
DATED AS OF DECEMBER 31, 1996
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TABLE OF CONTENTS
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1. Certain Definitions.................................................... 4
2. Appointment of Rights Agent............................................ 8
3. Issue of Rights Certificates........................................... 8
4. Form of Rights Certificates........................................... 10
5. Countersignature and Registration..................................... 11
6. Transfer, Split-Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates.............. 11
7. Exercise of Rights; Purchase Price; Expiration Date of Rights......... 12
8. Cancellation and Destruction of Rights Certificates................... 14
9. Reservation and Availability of Capital Stock......................... 14
10. Preferred Stock Record Date.......................................... 15
11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights............................................................... 16
12. Certificate of Adjusted Purchase Price or Number of Shares........... 23
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. 23
14. Fractional Rights and Fractional Shares.............................. 26
15. Rights of Action..................................................... 28
16. Agreement of Rights Holders.......................................... 28
17. Rights Certificate Holder Not Deemed a Shareholder................... 29
18. Concerning the Rights Agent.......................................... 29
19. Merger or Consolidation or Change of Name of Rights Agent............ 29
20. Duties of Rights Agent............................................... 30
21. Change of Rights Agent............................................... 32
22. Issuance of New Rights Certificates.................................. 32
23. Redemption and Termination........................................... 33
24. Exchange............................................................. 34
25. Notice of Certain Events............................................. 35
26. Notices.............................................................. 36
27. Supplements and Amendments........................................... 37
28. Successors........................................................... 37
29. Determination and Actions by the Board of Directors, etc............. 37
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30. Benefits of this Agreement........................................... 38
31. Severability......................................................... 38
32. Governing Law........................................................ 38
33. Counterparts......................................................... 39
34. Descriptive Headings; References..................................... 39
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RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT (this "AGREEMENT"), dated as of December 31, 1996,
is entered into by and between Quidel Corporation, a Delaware corporation (the
"COMPANY"), and American Stock Transfer & Trust Company, a New York corporation
(the "RIGHTS AGENT"), with reference to the following facts:
WHEREAS, on December 11, 1996 (the "RIGHTS DIVIDEND DECLARATION DATE"),
the Board of Directors of the Company authorized and declared a dividend
distribution of one Right for each share of Common Stock (as hereinafter
defined) of the Company outstanding at the close of business on January 10, 1997
(the "RECORD DATE"), and has authorized the issuance of one Right (as such
number may hereinafter be adjusted pursuant to the provisions of Section 11(p))
for each share of Common Stock of the Company issued from the Record Date
(whether originally issued or delivered from the Company's treasury) until the
earliest of the Distribution Date or a Section 13 Event or the Expiration Date
(each as hereinafter defined), each Right initially representing the right to
purchase one one-thousandth of a share of Series C Junior Participating
Preferred Stock of the Company having the rights, preferences, privileges and
restrictions set forth in the form of Certificate of Designation of Rights,
Preferences, Privileges and Restrictions attached hereto as Exhibit A, upon the
terms and subject to the conditions hereinafter set forth (the "RIGHTS");
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "ACQUIRING PERSON" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, without the prior approval of the
Board of Directors of the Company, shall become, after the date hereof, the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding,
but shall not include an Exempt Person or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan, or a Person who or which, together with its Affiliates and Associates,
shall become the Beneficial Owner of 15% or more of the shares of Common Stock
then outstanding solely as a result of a reduction in the number of shares of
Common Stock outstanding due to a repurchase of Common Stock by the Company,
unless such Person shall thereafter purchase or otherwise become the Beneficial
Owner of additional shares of Common Stock representing 1% of the shares of
Common Stock then outstanding. Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that a Person who would
otherwise be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of shares of Common Stock
so that such Person would no longer be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph (a), then such Person
shall not be deemed to be an "Acquiring Person" for any purposes of this
Agreement.
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(b) "ACT" shall mean the Securities Act of 1933, as amended.
(c) "AFFILIATE" and "ASSOCIATE" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended and in effect on the date of
this Agreement (the "EXCHANGE ACT").
(d) A Person shall be deemed the "BENEFICIAL OWNER" of, and shall be
deemed to "BENEFICIALLY OWN," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," (A) securities tendered pursuant to a
tender or exchange offer made by such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for purchase or
exchange, or (B) securities issuable upon exercise of Rights at any time prior
to the occurrence of a Triggering Event, or (C) securities issuable upon
exercise of Rights from and after the occurrence of a Triggering Event which
Rights were acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(a) or Section
22 (the "ORIGINAL RIGHTS") or pursuant to Section 11(i) in connection with an
adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act), including pursuant to any
agreement, arrangement or understanding, whether or not in writing; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding to vote such security if such agreement
arrangement or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person (or
any of such Person's Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in the
proviso to subparagraph (ii) of this paragraph (d)) or disposing of any voting
securities of the Company; provided, however, that nothing in this paragraph (d)
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 40 days after the date of such acquisition.
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(e) "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the State of California are authorized or
obligated by law or executive order to close.
(f) "CLOSE OF BUSINESS" on any given date shall mean 5:00 P.M., California
time on such date; provided, however, that if such date is not a Business Day it
shall mean 5:00 P.M., California time on the next succeeding Business Day.
(g) "COMMON STOCK" shall mean the common stock, par value $.001 per share,
of the Company, except that "Common Stock" when used with reference to any
Person other than the Company shall mean the capital stock (or units of
beneficial interest which represent the right to participate in profits, losses,
deductions and credits) of such Person with the greatest voting power, or the
equity securities or other equity interest having power to control or direct the
management, of such Person.
(h) "COMMON STOCK EQUIVALENTS" shall have the meaning set forth in Section
11(a)(iii).
(i) "CONTINUING DIRECTOR" shall mean (i) any member of the Board of
Directors of the Company, while a member of the Board, who is not an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, or a representative
of an Acquiring Person or of any such Affiliate or Associate, and who was a
member of the Board prior to the date of this Agreement, or (ii) any Person who
subsequently becomes a member of the Board, while a member of the Board, who is
not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or
a representative of an Acquiring Person or of any such Affiliate or Associate,
if such Person's nomination for election or election to the Board is recommended
or approved by a majority of the Continuing Directors.
(j) "CURRENT MARKET PRICE" shall have the meaning set forth in Section
11(d)(i).
(k) "CURRENT VALUE" shall have the meaning set forth in Section
11(a)(iii).
(l) "DISTRIBUTION DATE" shall have the meaning set forth in Section 3(a).
(m) "EQUIVALENT PREFERRED STOCK" shall have the meaning set forth in
Section 11(b).
(n) "EXCHANGE ACT" shall have the meaning set forth in Section 1(c).
(o) "EXEMPT PERSON" shall mean the Company, any Subsidiary of the Company,
any employee benefit plan or employee stock plan of the Company or any
Subsidiary of the Company, or any person or entity organized, appointed, or
established by the Company or any Subsidiary of the Company, for or pursuant to
the terms of any such plan.
(p) "EXPIRATION DATE" shall mean the earliest of (i) the Final Expiration
Date, (ii) the time at which the Rights are redeemed as provided in Section 23,
(iii) the time at which the Board of Directors orders the exchange of Rights as
provided in Section 24, or (iv) the consummation of a transaction contemplated
by Section 13(d).
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(q) "FINAL EXPIRATION DATE" shall mean the close of business on December
30, 2006.
(r) "PERSON" shall mean any individual, firm, corporation, partnership or
other entity.
(s) "PREFERRED STOCK" shall mean shares of Series C Junior Participating
Preferred Stock, par value $.001 per share, of the Company and, to the extent
that there is not a sufficient number of shares of Series C Junior Participating
Preferred Stock authorized to permit the full exercise of the Rights, any other
series of Preferred Stock, par value $.001 per share, of the Company designated
for such purpose containing terms substantially similar to the terms of the
Series C Junior Participating Preferred Stock.
(t) "PRINCIPAL PARTY" shall have the meaning set forth in Section 13(b).
(u) "PURCHASE PRICE" shall have the meaning set forth in Section 4(a).
(v) "RECORD DATE" shall have the meaning set forth in the WHEREAS clause
at the beginning of this Agreement.
(w) "REDEMPTION PRICE" shall have the meaning set forth in Section 23(a).
(x) "RIGHTS" shall have the meaning set forth in the WHEREAS clause at the
beginning of this Agreement.
(y) "RIGHTS CERTIFICATES" shall have the meaning set forth in Section
3(a).
(z) "RIGHTS DIVIDEND DECLARATION DATE" shall have the meaning set forth in
the WHEREAS clause at the beginning of this Agreement.
(aa) "SECTION 11(a)(ii) EVENT" shall mean any event described in Section
11(a)(ii).
(bb) "SECTION 11(a)(ii) TRIGGER DATE" shall have the meaning set forth in
Section 11(a)(iii).
(cc) "SECTION 13 EVENT" shall mean any event described in clause (x), (y)
or (z) of Section 13(a).
(dd) "SPECIAL VOTE" shall mean an action of the Company's Board of
Directors that is taken (and can only be taken) at a time when there are two or
more Continuing Directors, and that is approved by both (i) a majority of the
Continuing Directors, and (ii) a majority of the entire Board of Directors,
including the Continuing Directors.
(ee) "SPREAD" shall have the meaning set forth in Section 11(a)(iii).
(ff) "STOCK ACQUISITION DATE" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such or
such earlier date as a majority of the directors shall become aware of
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<PAGE> 8
the existence of an Acquiring Person; provided, however, that if such Person is
thereafter determined not to have become an Acquiring Person within the meaning
of Section 1(a), then no Stock Acquisition Date shall be deemed to have
occurred.
(gg) "SUBSIDIARY" shall mean, with reference to any Person, any
corporation or other entity of which securities or other ownership interests
having ordinary voting power sufficient to elect at least a majority of the
directors of such corporation (or other persons performing similar functions) is
beneficially owned, directly or indirectly, by such Person, or otherwise
controlled by such Person.
(hh) "SUBSTITUTION PERIOD" shall have the meaning set forth in Section
11(a)(iii).
(ii) "TRADING DAY" shall have the meaning set forth in Section 11(d)(i).
(jj) "TRIGGERING EVENT" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
Any determination required by the definitions contained in this Section 1
shall be made by the Board of Directors of the Company in its good faith
judgment, which determination shall be binding on the Rights Agent and the
holders of the Rights.
2. APPOINTMENT OF RIGHTS AGENT.
The Company hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who, in accordance with Section 3, shall
prior to the Distribution Date also be the holders of the Common Stock) in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable.
3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the earlier of (i) the close of business on the tenth day after
the Stock Acquisition Date (or, if the tenth day after the Stock Acquisition
Date occurs before the Record Date, the close of business on the Record Date),
or (ii) the close of business on the tenth day after the date that a tender or
exchange offer by any Person (other than an Exempt Person) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if, upon consummation thereof, such Person
together with its Affiliates and Associates, would be the Beneficial Owner of
15% or more of the shares of Common Stock then outstanding (irrespective of
whether any shares are actually purchased pursuant to any such offer) (each of
the time periods in (i) and (ii) being subject to extension as provided in
Section 27 and the earliest of (i) and (ii) being herein referred to as the
"DISTRIBUTION Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for the
Common Stock registered in the names of the holders of the Common stock (which
certificates for Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (y) each Right will be
transferable only in connection with the transfer of the underlying share of
Common Stock (including a transfer to the Company). As soon as practicable after
the Distribution Date, the Rights Agent will send to each record
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<PAGE> 9
holder of the Common Stock as of the close of business on the Distribution Date,
at the address of such holder shown on the records of the Company, one or more
rights certificates, in substantially the form of Exhibit B hereto (the "RIGHTS
CERTIFICATES"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in the
number of Rights per share of Common Stock has been made pursuant to Section
11(p), at the time of distribution of the Rights Certificates, the Company shall
make the necessary and appropriate rounding adjustments (in accordance with
Section 14(a)) so that Rights Certificates representing only whole numbers of
Rights are distributed and cash is paid in lieu of any fractional Rights. As of
and after the Distribution Date, the Rights will be evidenced solely by such
Rights Certificates.
(b) As promptly as practicable following the Record Date, the Company will
send a copy of a Summary of Rights to purchase Preferred Stock, containing
substantially the information set forth in the form attached hereto as Exhibit
C, to each record holder of the Common Stock as of the close of business on the
Record Date, at the address of such holder shown on the records of the Company.
With respect to certificates for the Common Stock outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced by such
certificates for the Common Stock and the registered holders of the Common Stock
shall also be the registered holders of the associated Rights. Until the earlier
of the Distribution Date or the Expiration Date, the transfer of any
certificates representing shares of Common Stock in respect of which Rights have
been issued shall also constitute the transfer of the Rights associated with
such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of Common Stock which
are issued after the Record Date but prior to the earliest of the Stock
Acquisition Date or a Section 13 Event or the Expiration Date. Certificates
representing such shares of Common Stock (including, without limitation,
certificates issued upon transfer or exchange of Common Stock) shall also be
deemed to be certificates for Rights, and shall bear the following legend:
"This certificate also represents Rights that entitle the holder hereof to
certain rights as set forth in a Rights Agreement between the Corporation
and American Stock Transfer & Trust Company, as Rights Agent, dated as of
December 31, 1996 (the "RIGHTS AGREEMENT"), the terms, conditions and
limitations of which are hereby incorporated herein by reference and a
copy of which is on file at the principal offices of the Corporation.
Under certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer be
evidenced by this certificate. The Corporation will mail to the holder of
this certificate a copy of the Rights Agreement, as in effect on the date
of mailing, without charge promptly after receipt of a written request
therefor. Under certain circumstances set forth in the Rights Agreement,
Rights issued to, or beneficially owned by, any Person who is, was or
becomes an Acquiring Person or any Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement), whether currently held by or
on behalf of such Person or by any subsequent holder, may become null and
void."
With respect to such certificates containing the foregoing legend, the
Rights associated with the Common Stock represented by such certificates shall,
until the Distribution Date, be
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<PAGE> 10
evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer
of any of such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of an election to purchase and
of assignment and of certificates to be printed on the reverse thereof) when, as
and if issued, shall each be substantially in the form set forth in Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 11 and Section 22, the Rights
Certificates, whenever distributed, shall be dated as of the Record Date and on
their face shall entitle the holders thereof to purchase such number of one
one-thousandths of a share of Preferred Stock as shall be set forth therein at
the price set forth therein (such exercise price per one one-thousandth of a
share, the "PURCHASE PRICE"), but the amount and type of securities purchasable
upon the exercise of each Right and the Purchase Price thereof shall be subject
to adjustment as provided herein.
(b) Notwithstanding any other provision of this Agreement, any Rights
Certificate issued pursuant to Section 3(a) or Section 22 that represents Rights
beneficially owned by any Person known to be (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom such Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect avoidance
of Section 7(e), and any Rights Certificate issued pursuant to Section 6 or
Section 11 upon transfer, exchange, replacement or adjustment of any other
Rights Certificate referred to in this sentence, shall contain (to the extent
feasible) the following legend, modified as applicable to apply to such Person:
"The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined
in the Rights Agreement). Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void in the circumstances
specified in Section 7(e) of such Agreement."
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<PAGE> 11
5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its President or any other officer of the Company
designated by the Chairman or President, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature. The Rights Certificates
shall be manually countersigned by the Rights Agent and shall not be valid for
any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Rights Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company with
the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights
Certificates may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its office or offices designated as the appropriate place for
surrender of Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the certificate number and the date of each of the Rights
Certificates.
6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS
CERTIFICATES.
(a) Subject to the provisions of Section 4(b), Section 7(e) and Section
14, at any time after the close of business on the Distribution Date, and at or
prior to the close of business on the Expiration Date, any Rights Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the registered holder to purchase
a like number of one-thousandths of a share of Preferred Stock (or, following a
Triggering Event, Common Stock, other securities, cash or other assets, as the
case may be) as the Rights Certificate or Certificates surrendered then entitled
such holder (or former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the office or offices of the
Rights Agent designated for such purpose. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered holder
shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e) and Section 14, countersign and deliver to the Person
entitled thereto a Rights
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<PAGE> 12
Certificate or Rights Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Rights Certificate.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Subject to Section 7(e), Section 23(b) and Section 24(b), the
registered holder of any Rights Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein including, without limitation, the
restrictions on exercisability set forth in Section 9(c), Section 11(a)(iii) and
Section 23(a)), in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly executed, to the Rights Agent
at the office or offices of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price with respect to the total
number of one one-thousandths of a share of Preferred Stock (or other
securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable, at or prior to the Expiration Date.
(b) The Purchase Price for each one one-thousandth of a share of Preferred
Stock pursuant to the exercise of a Right shall initially be $24, and shall be
subject to adjustment from time to time as provided in Section 11 and Section
13(a) and shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable Rights,
with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price per one one-thousandth of a share of Preferred Stock (or other shares,
securities, cash or other assets, as the case may be) to be purchased as set
forth below and an amount equal to any applicable transfer tax, the Rights Agent
shall, subject to Section 20(k), thereupon promptly (i) (A) requisition from any
transfer agent of the shares of Preferred Stock (or make available, if the
Rights Agent is the transfer agent for such shares) certificates for the total
number of one one-thousandths of a share of Preferred Stock to be purchased and
the Company hereby authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the total number
of shares of Preferred Stock issuable upon exercise of the Rights hereunder with
a depository agent, requisition from the depository agent depository receipts
representing such number of one one-thousandths of a share of Preferred Stock as
are to be purchased (in which case certificates for the shares of Preferred
Stock represented by such receipts shall be deposited by the transfer agent with
the depository agent) and the Company will direct the depository agent to comply
with such request,
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<PAGE> 13
(ii) requisition from the Company an amount of cash, if any, to be paid in lieu
of fractional shares in accordance with Section 14, (iii) after receipt of such
certificates or depository receipts, cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate, registered in
such name or names as may be designated by such holder, and (iv) after receipt
thereof, deliver such cash, if any, to or upon the order of the registered
holder of such Rights Certificate. The payment of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii)) may be made by bank draft,
certified bank check or money order payable to the order of the Company. In the
event that the Company is obligated to issue other securities (including Common
Stock) of the Company, pay cash and/or distribute other property pursuant to
Section 11(a), the Company will make all arrangements necessary so that such
other securities, cash and/or other property are available for distribution by
the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall exercise
less than all the Rights evidenced thereby, a new Rights Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to, or upon the order of, the registered holder of
such Rights Certificate, registered in such name or names as may be designated
by such holder, subject to the provisions of Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the occurrence of a Section 11(a)(ii) Event, any Rights beneficially owned
by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate of Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) by or for the Acquiring Person to holders of equity interests
in such Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall become null
and void without any further action and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall use all reasonable efforts to
insure that the provisions of this Section 7(e) and Section 4(b) are complied
with, but shall have no liability to any holder of Rights Certificates or other
Person as a result of its failure to make any determinations with respect to an
Acquiring Person or any of their respective Affiliates, Associates or
transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
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<PAGE> 14
8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES.
All Rights Certificates surrendered for the purpose of exercises,
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
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The 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 canceled Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued shares of Preferred Stock
(and, following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities or out of its authorized
and issued shares held in its treasury), the number of shares of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock and, or other
securities) that, as provided in this Agreement including Section 11(a)(iii),
will be sufficient to permit the exercise in full of all outstanding Rights;
provided, however, that the Company shall not be required to reserve and keep
available shares of Preferred Stock, Common Stock or other securities sufficient
to permit the exercise in full of all outstanding Rights pursuant to the
adjustments set forth in Section 11(a)(ii), Section 11(a)(iii) or Section 13
unless, and only to the extent that, the Rights become exercisable pursuant to
such adjustments.
(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) issuable
and deliverable upon the exercise of Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.
(c) If necessary to permit the offer and issuance of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or
other securities) issuable and deliverable upon the exercise of Rights, the
Company shall use its best efforts to (i) file, as soon as practicable
following the earliest date after the occurrence of a Section 11(a)(ii) Event
on which the consideration to be delivered by the Company upon exercise of
the Rights has been determined in accordance with Section 11(a)(iii), or as
soon as is required by law following the Distribution Date, as the case may
be, a registration statement under the Act, with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause
such registration statement to become effective as soon as practicable after
such filing, and (iii) cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Act) until
the earlier of (A) the date as of which the Rights are no longer exercisable
for such securities, and (B) the date of the expiration of the Rights. The
Company
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<PAGE> 15
will also take such action as may be appropriate under, or to ensure compliance
with, the securities or "blue sky" laws of the various states in connection with
the exercisability of the Rights. The Company may temporarily suspend, for a
period of time not to exceed ninety (90) days after the date set forth in clause
(i) of the first sentence of this Section 9(c), the exercisability of the Rights
in order to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction, unless the
requisite qualification in such jurisdiction shall have been obtained and until
a registration statement (if required) has been declared effective.
(d) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all one one-thousandths of a share of Preferred
Stock (and, following the occurrence of a Triggering Event, Common Stock and/or
other securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable.
(e) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Rights Certificates and of
any certificates for a number of one one-thousandths of a share of Preferred
Stock (or Common Stock and/or other securities, as the case may be) upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or the issuance or delivery of a
number of one one-thousandths of a share of Preferred Stock (or Common Stock
and/or other securities, as the case may be) in respect of a name other than
that of, the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for a number of
one one-thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until such tax shall have been paid (any
such tax being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
10. PREFERRED STOCK RECORD DATE.
Each person in whose name any certificate for a number of one
one-thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of such fractional
shares of Preferred Stock (or Common Stock and/or other securities, as the case
may be) represented thereby and such certificate shall be dated as of the date
upon which the Rights Certificate evidencing such Rights was duly surrendered
and payment of the Purchase Price (and all applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Stock (or Common Stock and/or other securities, as the case
may be) transfer books of the Company are closed, such Person shall be
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<PAGE> 16
deemed to have become the record holder of such shares (fractional or otherwise)
on, and such certificate shall be dated, the next succeeding Business Day on
which the Preferred Stock (or Common Stock and/or other securities, as the case
may be) transfer books of the Company are open. Prior to the exercise of the
Rights evidenced thereby, the holder of a Rights Certificate, as such, shall not
be entitled to any rights of a stockholder of the Company with respect to shares
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS.
The Purchase Price, the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Preferred Stock payable in shares of
Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the
outstanding Preferred Stock into a smaller number of shares, or (D) issue any
shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) and Section 7(e), the Purchase Price
in effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the number and
kind of shares of Preferred Stock or capital stock, as the case may be, issuable
on such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares of
Preferred Stock or capital stock, as the case may be, which, if such Right had
been exercised immediately prior to such date and at a time when the Preferred
Stock transfer books of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii), the
adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 23(a) and Section 24, in the event any
Person (other than an Exempt Person), alone or together with its Affiliates and
Associates, shall, at any time after the Rights Dividend Declaration Date,
become the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding, unless the event causing the 15% threshold to be crossed is a
transaction set forth in Section 13(a), or is an acquisition of shares of Common
Stock pursuant to a tender offer or an exchange offer for all outstanding shares
of Common Stock at a price and on terms determined by at least a majority of the
members of the Board of Directors who are not officers of the Company and who
are not representatives, nominees, Affiliates or Associates of an Acquiring
Person/the Board of Directors of the Company acting by Special Vote and by at
least a majority of the Continuing Directors who are not officers of the
Company, after receiving advice from one or more investment banking firms, to be
(a) at a price which is fair to stockholders of the Company (taking into account
all factors which such members of the Board
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<PAGE> 17
deem relevant including, without limitation, prices which could reasonably be
achieved if the Company or its assets were sold on an orderly basis designed to
realize maximum value) and (b) otherwise in the best interests of the Company
and its stockholders, then, proper provision shall be made so that each holder
of a Right (except as provided below and in Section 7(e)) shall thereafter have
the right to receive, upon exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, in lieu of a number of one
one-thousandths of a share of Preferred Stock, such number of shares of Common
Stock of the Company as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the then number of one one-thousandths of a share
of Preferred Stock for which a Right was exercisable immediately prior to the
occurrence of a Section 11(a)(ii) Event, and (y) dividing that product (which,
following such occurrence, shall thereafter be referred to as the "PURCHASE
PRICE" for each Right and for all purposes of this Agreement) by 50% of the
Current Market Price (determined pursuant to Section 11(d)) per share of Common
Stock on the date of such occurrence (such number of shares is herein called the
"ADJUSTMENT SHARES"); provided that the Purchase Price and the number of
Adjustment Shares shall be further adjusted as provided in this Agreement to
reflect any events occurring after the date of such occurrence; and provided,
further, that if the transaction that would otherwise give rise to the foregoing
adjustment is also subject to the provisions of Section 13, then only the
provisions of Section 13 shall apply and no adjustment shall be made pursuant to
this Section 11(a)(ii).
(iii) In the event that the number of shares of Common Stock which
are authorized by the Company's Certificate of Incorporation but not outstanding
or reserved for issuance for purposes other than upon exercise of the Rights is
not sufficient to permit the exercise in full of the Rights in accordance with
the foregoing subparagraph (ii) of this Section 11(a) and the Rights shall
become so exercisable, to the extent permitted by applicable law and any
agreements in effect on the date hereof to which the Company is a party, the
Company shall (A) determine the excess of (1) the value of the Adjustment Shares
issuable upon the exercise of a Right (the "CURRENT VALUE") over (2) the
Purchase Price (such excess, the "SPREAD"), and (B) with respect to each Right,
make adequate provision to substitute for the Adjustment Shares, upon payment of
the applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price,
(3) Common Stock or other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock which the Board of
Directors of the Company has deemed to have the same value as shares of Common
Stock (such shares of preferred stock, "COMMON STOCK EQUIVALENTS")), (4) debt
securities of the Company, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors of the Company
based upon the advice of a nationally recognized investment banking firm
selected by the Board of Directors of the Company; provided, however, if the
Company shall not have made adequate provision to deliver value pursuant to
clause (B) above within thirty (30) days following the later of (x) the
occurrence of a Section 11(a)(ii) Event and (y) the date on which the Company's
right of redemption pursuant to Section 23(a) expires (the later of (x) and (y)
being referred to herein as the "SECTION 11(A)(ii) 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 of
Directors
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<PAGE> 18
of the Company shall determine in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance upon exercise
in full of the Rights, the thirty (30) day period set forth above may be
extended to the extent necessary, but not more than ninety (90) days after the
Section 11(a)(ii) Trigger Date, in order that the Company may seek stockholder
approval for the authorization of such additional shares (such period, as it may
be extended, the "SUBSTITUTION PERIOD"). To the extent that the 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), that such action shall apply uniformly to all outstanding Rights,
and (y) may suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution to be made pursuant to
such first sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of the Common Stock shall be the Current
Market Price (as determined pursuant to Section 11(d)) per share of the Common
Stock on the Section 11(a)(ii) Trigger Date and the value of any "COMMON STOCK
EQUIVALENT" shall be deemed to have the same value as the Common Stock on such
date. The Board of Directors may, but shall not be required to, establish
procedures to allocate the right to receive Common Stock upon the exercise of
Rights pursuant to this Section 11(a)(iii).
(b) In case the Company shall fix a record date for the issuance of rights
(other than the Rights), options or warrants to all holders of Preferred Stock
entitling them to subscribe for or purchase (for a period expiring within
forty-five (45) calendar days after such record date) Preferred Stock (or shares
having the same rights, privileges and preferences as the shares of Preferred
Stock ("EQUIVALENT PREFERRED STOCK")) or securities convertible into Preferred
Stock or Equivalent Preferred Stock at a price per share of Preferred Stock or
per share of Equivalent Preferred Stock (or having a conversion price per share,
if a security convertible into Preferred Stock or Equivalent Preferred Stock)
less than the Current Market Price (as determined pursuant to Section 11(d)) per
share of Preferred Stock on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of shares of Preferred Stock outstanding on such
record date, plus the number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred Stock (and/or
Equivalent Preferred Stock so to be offered and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such Current Market Price, and the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or Equivalent Preferred Stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price may
be paid by delivery of consideration part or all of which may be in a form other
than cash, the value of such consideration shall be as determined in good faith
by the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. Shares of Preferred Stock owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any
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<PAGE> 19
such computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to all
holders of Preferred Stock (including any such distribution made in connection
with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Preferred Stock, but including any dividend
payable in stock other then Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b)), the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the Current Market Price (as determined pursuant to
Section 11(d)) per share of Preferred Stock on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the cash, assets or evidences of indebtedness so
to be distributed or of such subscription rights or warrants applicable to a
share of Preferred Stock and the denominator of which shall be such Current
Market Price (as determined pursuant to Section 11(d)) per share of Preferred
Stock. Such adjustments shall be made successively whenever such a record dated
is fixed, and in the event that such distribution is not so made, the Purchase
Price shall be adjusted to be the Purchase Price which would have been in effect
if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii), the Current Market Price (as
hereinafter defined) per share of Common Stock on any date shall be deemed to be
the average of the daily closing prices per share of such Common Stock for the
thirty (30) consecutive Trading Days (as hereinafter defined) immediately prior
to such date and for purposes of computations made pursuant to Section
11(a)(iii), the "CURRENT MARKET PRICE" per share of Common Stock on any date
shall be deemed to be the average of the daily closing prices per share of such
Common Stock for the then ten (10) consecutive Trading Days immediately
following such date; provided, however, that in the event that the Current
Market Price per share of the Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of (A) a dividend
or distribution on such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock (other than the Rights),
or (B) any subdivision, combination or reclassification of such Common Stock,
and prior to the expiration of the requisite thirty (30) Trading Day or ten (10)
Trading Day period, as set forth above, after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision, combination
or reclassification, then, and in each such case, the Current Market Price shall
be properly adjusted to take into account ex-dividend trading. The closing price
for each day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the National Market System of the National Market System of the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
or, if the shares of Common Stock are not listed or
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<PAGE> 20
admitted to trading on National Market System of NASDAQ, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use, or, if on any such date the shares of Common Stock are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Common Stock
selected by the Board of Directors of the Company. If on any such date no market
maker is making a market in the Common Stock, the fair value of such shares on
such date as determined in good faith by the Board of Directors of the Company
shall be used. The term "TRADING DAY" shall mean a day on which the principal
national securities exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if the shares of
Common Stock are not listed or admitted to trading on any national securities
exchange, a Business Day. If the Common Stock is not publicly held or not so
listed or traded, Current Market Price per share shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the Current
Market Price per share of Preferred Stock shall be determined in the same manner
as set forth above for the Common Stock in clause (i) of this Section 11(d)
(other than the last sentence thereof). If the Current Market Price per share of
Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner described
in clause (i) of this Section 11(d), the Current Market Price per share of
Preferred Stock shall be conclusively deemed to be an amount equal to 1,000 (as
such number may be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock occurring after
the date of this Agreement) multiplied by the Current Market Price per share of
the Common Stock. If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, Current Market Price per share of the
Preferred Stock shall mean the fair value per share as determined in good faith
by the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all
purposes. For all purposes of this Agreement, the Current Market Price of one
one-thousandth of a share of Preferred Stock shall be equal to the Current
Market Price of one share of Preferred Stock divided by 1,000.
(e) Anything herein to the contrary notwithstanding, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a share of Common Stock
or other share or one-millionth of a share of Preferred Stock, as the case may
be. Notwithstanding the first sentence of this Section 11(e), an adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which mandates such adjustments, or
(ii) the Expiration Date.
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<PAGE> 21
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii) or
Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Section 11, and the
provisions of Section 7, Section 9, Section 10, Section 13, and Section 14 with
respect to the Preferred Stock shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the 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 one
one-thousandths of a share of Preferred Stock (calculated to the nearest one
ten-thousandths) obtained by (i) multiplying (x) the number of one
one-thousandths of a share covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in the
number of one one-thousandths of a share of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of one one-thousandths of a
share of Preferred Stock for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest
one-ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Rights Certificates have been issued, shall be at least ten (10) days
later than the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in substitution
and replacement for the Rights Certificates held by such holders prior to the
date of adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates so to be distributed shall
be issued executed and countersigned in the manner
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provided for herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of one one-thousandths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one one-thousandths of a
share and the number of one one-thousandths of a share which were expressed in
the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause adjustment reducing the
Purchase Price below the then stated value, if any, of the number of one
one-thousandths of a share of Preferred Stock issuable upon exercise of the
Rights, the 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 such number of one one-thousandths of a share
of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record date the number
of one one-thousandths of a share of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one one-thousandths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares (fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of any shares
of Preferred Stock at less than the Current Market Price, (iii) issuance wholly
for cash of shares of Preferred Stock or securities which by their terms are
convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Preferred Stock
shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time after
the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)),
(ii) merge with or into any other Person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(o)), or (iii) sell or transfer
(or permit any Subsidiary to sell or transfer), in one transaction, or a series
of related transactions, assets or earning power aggregating more than 50% of
the assets or earning
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<PAGE> 23
power of the Company and its Subsidiaries (taken as a whole) to any other Person
or Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o)), if (x) at the time of
or immediately after such consolidation, merger, sale or transfer there are any
rights, warrants or other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger, sale or transfer, the stockholders
of the Person who constitutes, or would constitute, the Principal Party (as
hereinafter defined) for purposes of Section 13(a) shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates.
(o) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Section 23, Section 24 or Section 27, take (or
permit any Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the numerator which
shall be the total number of shares of Common Stock outstanding immediately
prior to the occurrence of the event and the denominator of which shall be the
total number of shares of Common Stock outstanding immediately following the
occurrence of such event.
12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 and Section 13,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate, and (c) mail a
brief summary thereof to each holder of a Rights Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 25. Notwithstanding the foregoing
sentence, the failure of the Company to give such notice shall not affect the
validity of or the force or effect of or the requirement for such adjustment.
The Rights Agent shall be fully protected in relying on any such certificate and
on any adjustment therein contained. Any adjustment to be made pursuant to
Section 11 and Section 13 shall be effective as of the date of the event giving
rise to such adjustment.
13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
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(a) In the event that, following the Stock Acquisition Date, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o)), and the Company shall not be the continuing or
surviving corporation of such consolidation or merger, (y) any Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o)) shall consolidate with, or merge with or into, the Company, and the
Company shall be the continuing or surviving corporation of such consolidation
or merger, and, in connection with such consolidation or merger, all or part of
the outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other Person or cash or any other property, or
(z) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one transaction or a series
of related transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any Person or Persons (other than the Company or any Subsidiary of the
Company in one or more transactions each of which complies with Section 11(o)),
then, and in each such case, proper provisions shall be made so that (i) each
holder of a Right, except as provided in Section 7(e), shall thereafter have the
right to receive, upon the exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, such number of validly
authorized and issued, fully paid, non-assessable and freely tradable shares of
Common Stock of the Principal Party (as such term is hereinafter defined), not
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by (1) multiplying the then
current Purchase Price by the number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to the
occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such Section 11(a)(ii) Event, and (2) dividing that product
(which, following the first occurrence of a Section 13 Event, shall be referred
to as the "PURCHASE PRICE" for each Right and for all purposes of this
Agreement) by 50% of the Current Market Price (determined pursuant to Section
11(d)(i)) per share of the Common Stock of such Principal Party on the date of
consummation of such Section 13 Event (or the fair market value on such date of
other securities or property of the Principal Party, as provided for herein);
provided, however, that the Purchase Price and the number of shares of Common
Stock of such Principal Party issuable upon exercise of each Right shall be
further adjusted as provided in this Agreement to reflect any events occurring
after the date of the first occurrence of a Section 13 event; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such Section 13 Event, all the obligations and duties of the 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 shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of Common Stock thereafter deliverable upon the exercise of the Rights;
provided, however, that upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all assets, recapitalization,
reclassification of shares, reorganization or other extraordinary transaction in
respect of such Principal Party, each holder of a Right shall thereupon be
entitled to receive, upon exercise of a Right and payment of the Purchase Price,
such cash, shares, rights, warrants and other property
24
<PAGE> 25
which such holder would have been entitled to receive had he, at the time of
such transaction, owned the shares of Common Stock of the Principal Party
purchasable upon the exercise of a Right, and such Principal Party shall take
such steps (including, but not limited to, reservation of shares of stock) as
may be necessary to permit the subsequent exercise of the Rights in accordance
with the terms hereof for such cash, shares, rights, warrants and other
property; and (v) the provisions of Section 11(a)(ii) shall be of no effect
following the first occurrence of any Section 13 Event.
(b) "PRINCIPAL PARTY" shall mean:
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), (A) the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted in
such merger or consolidation, or, if there is more than one such issuer, the
issuer whose issued and outstanding Common Stock has the greatest aggregate
market value or (B) if no securities are so issued, (x) the Person that is the
other party to such merger or consolidation and survives said merger or
consolidation, or, if there is more than one such Person, the Person whose
issued and outstanding Common Stock has the greatest aggregate market value or
(y) if the Person that is the other party to the merger or consolidation does
not survive the merger or consolidation, the Person that does survive the merger
or consolidation (including the Company if it survives); and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of such Persons as is
the issuer of Common Stock having the greatest market value of shares
outstanding;
provided, however, that in any such case, (l) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the Common Stock of which is
and has been so registered, "PRINCIPAL PARTY" shall refer to such other Person;
and (2) if such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such persons is the
issuer of the issued and outstanding Common Stock having the greatest aggregate
market value.
(c) The Company shall not consummate any such consolidation, merger, sale
or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer mentioned in paragraph (a) of this
Section 13, the Principal Party will:
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(i) prepare and file a registration statement under the Act, with
respect to the Rights and the securities purchasable upon exercise of the Rights
on an appropriate form, and will use its best efforts to cause such registration
statement to (A) become effective as soon as practicable after such filing and
(B) remain effective (with a prospectus at all times meeting the requirements of
the Act) until the Expiration Date and similarly comply with applicable state
securities laws;
(ii) will deliver to holders of the Rights historical financial
statements of the Principal Party and each of its Affiliates which comply in all
respects with the requirements for registration on Form 10 (or any successor
form) under the Exchange Act;
(iii) use its best efforts, if the Common Stock of the Principal
Party shall become listed on a national securities exchange, to list (or
continue the listing of) the Rights and the securities purchasable upon exercise
of the Rights on such securities exchange and, if the Common Stock of the
Principal Party shall not be listed on a national securities exchange, to cause
the Rights and the securities purchasable upon exercise of the Rights to be
reported by NASDAQ or such other system then in use; and
(iv) obtain waivers of any rights of first refusal or preemptive
rights in respect of the shares of Common Stock of the Principal Party subject
to purchase upon exercise of outstanding Rights.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or transfers. In the event that a Section 13
Event shall occur at any time after the occurrence of a Section 11(a)(ii) Event,
the Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the contrary, Section 13
shall not be applicable to a transaction described in subparagraphs (x) and (y)
of Section 13(a) if (i) such transaction is consummated with a Person or Persons
who acquired shares of Common Stock pursuant to a tender offer or exchange offer
for all outstanding shares of Common Stock which complies with the provisions of
Section 11(a)(ii) hereof (or a wholly owned Subsidiary of any such Person or
Persons), (ii) the price per share of Common Stock offered in such transaction
is not less than the price per share of Common Stock paid to all holders of
shares of Common Stock whose shares were purchased pursuant to such tender offer
or exchange offer, and (iii) the form of consideration being offered to the
remaining holders of shares of Common Stock pursuant to such transaction is the
same as the form of consideration paid pursuant to such tender offer or exchange
offer. Upon consummation of any such transaction contemplated by this Section
13(d), all Rights hereunder shall expire.
14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights, except
prior to the Distribution date as provided in Section 11(p), or to distribute
Rights Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Rights Certificates
with regard to which such fractional Rights would otherwise be issuable,
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an amount in cash equal to the same fraction of the Current Market Value of a
whole Right. For purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price of the Rights for any day shall be the
last sale price, regular way, or, in case no such sale 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 National Market System of
NASDAQ or, if the Rights are not listed or admitted to trading on the National
Market System of NASDAQ, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading, or if
the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no such
market maker is making a market in the Rights the fair value of the Rights on
such date as determined in good faith by the Board of Directors of the Company
shall be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-thousandth of a share of Preferred Stock,
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the Current Market Value of one one-thousandth of a share of
Preferred Stock. For purposes of this Section 14(b), the Current Market Value of
one one-thousandth of a share of Preferred Stock shall be one one-thousandth of
the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii)) for the Trading Day immediately prior to the date of such
exercise.
(c) Following the occurrence of a Triggering Event, the Company shall not
be required to issue fractions of shares of Common Stock upon exercise of the
Rights or to distribute certificates which evidence fractional shares of Common
Stock. In lieu of fractional shares of Common Stock, the Company may pay to the
registered holders of Rights Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the Current
Market Value of one (1) share of Common Stock. For purposes of this Section
14(c), the Current Market Value of one share of Common Stock shall be the
closing price of one share of Common Stock (as determined pursuant to Section
11(d)(i)) for the Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Rights expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
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15. RIGHTS OF ACTION.
All rights of action in respect of this Agreement, other than rights of
action vested in the Rights Agent pursuant to Section 18, are vested in the
respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock); and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
of the Common Stock), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
16. AGREEMENT OF RIGHTS HOLDERS.
Every holder of a Right by accepting the same consents and agrees with the
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 office or
offices of the Rights Agent designated for such purposes, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f), the 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 Agents) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to the last sentence of Section 7(e),
shall be required to be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must
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use its best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.
No holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purposes the holder of the number of one
one-thousandths of a share of Preferred Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a 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), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Rights Certificate shall
have been exercised in accordance with the provisions hereof.
18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder as set forth in a separately executed
written fee agreement. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or expense, incurred
without gross negligence or willful misconduct on the part of the Rights Agent,
for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
its administration of this Agreement in reliance upon any Rights Certificate or
certificate for Common Stock or for other securities of the 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.
19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided, however, that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have
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been countersigned but not delivered, any such successor Rights Agent may adopt
the countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
20. DUTIES OF RIGHTS AGENT.
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Rights Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of Current Market Price) be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by the
Chairman of the Board, 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 hereunder only for its own gross
negligence or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
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(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any adjustment required under the provisions of
Section 11 or Section 13 or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after receipt of the certificate described in Section 12
setting forth any such adjustment); nor shall it by any act hereunder be deemed
to make any representation or warranty as to the authorization or reservation of
any shares of Common Stock or Preferred Stock to be issued pursuant to this
Agreement or any Rights Certificates or as to whether any shares of Common Stock
or Preferred Stock will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board or the President of the Company or any other officer of
the Company designated to the Rights Agent in writing by the Chairman of the
Board or President of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct or any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct; provided, however, reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agents to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
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(k) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Company.
21. CHANGE OF RIGHTS AGENT.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty (30) days' notice in
writing mailed to the Company, and to each transfer agent of the Common Stock
and Preferred Stock by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent (with or without cause) upon thirty (30) days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Stock and Preferred Stock,
by registered or certified mail, and to the holders of the Rights Certificates
by first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of thirty (30) days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by the Company),
then the incumbent Rights Agent or any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be a corporation organized and doing business
under the laws of the United States or of any other state of the United States
in good standing, which is authorized under such laws to exercise corporate
trust or stock transfer powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus deemed by the Company's Board of
Directors to be reasonable under the circumstances. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the Preferred Stock, and mail a
notice thereof in writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agents as
the case may be.
22. ISSUANCE OF NEW RIGHTS CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase
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Price and the number or kind or class of shares or other securities or property
purchasable under the Rights Certificates made in accordance with the provisions
of this Agreement. In addition, in connection with the issuance or sale of
shares of Common Stock following the Distribution Date and prior to the
redemption or expiration of the Rights, the Company (a) shall, with respect to
shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereinafter issued by the Company, and (b)
may, in any other case, if deemed necessary or appropriate by the Board of
Directors of the Company, issue Rights Certificates representing the appropriate
number of Rights in connection with such issuance or sale; provided, however,
that (i) no such Rights Certificate shall be issued 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.
23. REDEMPTION AND TERMINATION.
(a) The Board of Directors of the Company may, at its option, at any time
prior to the earlier of (i) the close of business on the tenth (10th) day
following the Stock Acquisition Date (or, if the Stock Acquisition Date shall
have occurred prior to the Record Date, the close of business on the tenth
(10th) day following the Record Date), subject to extension as provided in
Section 27 or (ii) the close of business on the Final Expiration Date, redeem
all but not less than all the then outstanding Rights at a redemption price of
$0.005 per Right, as such amount may be appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "REDEMPTION
PRICE"). Notwithstanding anything contained in this Agreement to the contrary,
the Rights shall not be exercisable after the occurrence of an event described
in Section 11(a)(ii) until such time as the Company's right of redemption
hereunder has expired. The Company may, at its option, pay the Redemption Price
in cash, shares of Common Stock (based on the Current Market Price, as defined
in Section 11(d)(i), of the Common Stock at the time of redemption) or any other
form of consideration deemed appropriate by the Board of Directors. Such
redemption of the Rights by the Company may be made effective at such time, on
such basis and with such conditions as the Board of Directors in its sole
discretion may establish; provided, however, that any redemption of Rights
occurring as of or after the time a Person becomes an Acquiring Person may be
effected, and the method of payment of the redemption price and conditions to
redemption may be determined, only by the Company's Board of Directors acting by
Special Vote.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights, and without any further action and
without any notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price for each Right so held, without any interest thereon. Promptly after the
action of the Board of Directors ordering the redemption of the Rights, the
Company shall give notice of such redemption to the Rights Agent and the holders
of the then outstanding Rights by mailing such notice to all such holders at
each holder's last address as it appears upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the Transfer
Agent for the Common Stock. Any notice which is mailed in the manner herein
provided
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shall be deemed given, whether or not the holder receives the notice. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made. The failure to give notice required by this
Section 23(b) or any defect therein shall not affect the legality or validity of
the action taken by the Company.
24. EXCHANGE.
(a) Subject to applicable laws, rules and regulations, and subject to
subsection (c) below, at any time after the occurrence of a Triggering Event,
the Board of Directors of the Company, acting by Special Vote, may cause the
Company to exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the provisions
of Section 7(e)) for Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "RATIO OF Exchange"). Notwithstanding
the foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than an Exempt Person), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors ordering the
exchange of any Rights pursuant to subsection (a) of this Section 24 and without
any further action and without any notice, the right to exercise such Rights
shall terminate and the only right thereafter of a holder of such Rights shall
be to receive that number of shares of Common Stock equal to the number of such
Rights held by such holder multiplied by the Ratio of Exchange. The Company
shall give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company shall mail a notice of any such exchange to all of
the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights that will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(e)) held by each
holder of Rights.
(c) In the event that there shall not be sufficient Common Stock
authorized but unissued to permit any exchange of Rights as contemplated in
accordance with Section 24(a), the Company shall either take such action as may
be necessary to authorize additional shares of Common Stock for issuance upon
exchange of the Rights or alternatively, at the option of the Board of Directors
acting by Special Vote, with respect to each Right (i) pay cash in an amount
equal to the Current Value (as hereinafter defined), in lieu of issuing Common
Stock in exchange therefor, or (ii) issue debt or equity securities or a
combination thereof, having a value equal to the Current Value, in lieu of
issuing Common Stock in exchange for each such Right, where the value of such
securities shall be determined by a nationally recognized investment banking
firm selected by the Board of Directors acting by Special Vote, or (iii) deliver
any combination of cash, property, Common Stock and/or other securities having a
value equal to the Current Value in
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exchange for each Right. For purposes of this Section 24(c) only, the "CURRENT
VALUE" shall mean the product of the current per share market price of Common
Stock (determined pursuant to Section 11(d) on the date of the occurrence of the
event described above in subparagraph (a)) multiplied by the number of shares of
Common Stock for which the Right otherwise would be exchangeable if there were
sufficient shares available. To the extent that the Company determines that some
action need be taken pursuant to clauses (i), (ii), or (iii) of this Section
24(c), the Board of Directors acting by Special Vote may temporarily suspend the
exercisability of the Rights for a period of up to sixty (60) days following the
date on which the event described in Section 24(a) shall have occurred, in order
to seek any authorization of additional Common Stock and/or to determine the
appropriate form of distribution to be made pursuant to the above provision and
to determine the value thereof. In the event of any such suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended.
(d) The Company shall not be required to issue fractions of Common Stock
or to distribute certificates that evidence fractional Common Stock. In lieu of
such fractional Common Stock, there shall be paid to the registered holders of
the Rights Certificates with regard to which such fractional Common Stock would
otherwise be issuable, an amount in cash equal to the same fraction of the
current per share market value of a whole Common Stock (as determined pursuant
to the second sentence of Section 11(d)).
(e) The Company may, at the option of the Board of Directors acting by
Special Vote, at any time before any Person has become an Acquiring Person,
exchange all or part of the then outstanding Rights for rights of substantially
equivalent value, as determined reasonably and with good faith by the Board of
Directors acting by Special Vote, based upon the advice of one or more
nationally recognized investment banking firms.
(f) Immediately upon the action of the Board of Directors acting by
Special Vote ordering the exchange of any Rights pursuant to subsection (e) of
this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of rights in exchange
therefore as has been determined by the Board of Directors in accordance with
subsection (e) above. The Company shall give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Company shall mail a notice of any
such exchange to all of the holders of such Rights at their last addresses as
they appear upon the registry books of the transfer agent for the Common Stock
of the 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 exchange will state the method by which the exchange of the Rights will be
effected.
25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any time after the Distribution
Date, (i) to pay any dividend payable in stock of any class to the holders of
Preferred Stock or to make any other distribution to the holders of Preferred
Stock (other than a regular quarterly cash dividend out of earnings or retained
earnings of the Company), or (ii) to offer to the holders of Preferred Stock
rights or warrants to subscribe for or to purchase any additional shares of
Preferred Stock
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<PAGE> 36
or shares of stock of any class or any other securities, rights or options, or
(iii) to effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Preferred Stock), or (iv) to effect any consolidation or merger into or with any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o)), or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any sale or other transfer), in
one transaction or a series of related transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section
11(o)), or (v) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of a
Rights Certificate, to the extent feasible and in accordance with Section 26, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the date
on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Preferred Stock, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least ten (10) days prior to the
record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least ten
(10) days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Preferred Stock whichever
shall be the earlier. The failure to give notice required by this Section 25 or
any defect therein shall not affect the legality or validity of the action taken
by the Company or the vote upon any such action.
(b) In case any of the events set forth in Section 11(a)(ii) shall occur,
then, in any such case, (i) the Company shall as soon as practicable thereafter
give to each holder of a Rights Certificate, to the extent feasible and in
accordance with Section 26, a notice of the occurrence of such event, which
shall specify the event and the consequences of the event to holders of Rights
under Section 11(a)(ii), and (ii) all references in the preceding paragraph to
Preferred Stock shall be deemed thereafter to refer to Common Stock and/or, if
appropriate, other securities.
26. NOTICES.
Notices or demands authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights Certificate to or on the 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:
Quidel Corporation
10165 McKellar Court
San Diego, California 92121
Attention: President
Subject to the provisions of Section 21, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
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<PAGE> 37
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10005
Attention: Isaac Kagan
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Transfer Agent.
27. SUPPLEMENTS AND AMENDMENTS.
Prior to the Distribution Date and subject to the penultimate sentence of
this Section 27, the Board of Directors of the Company may, in its sole and
absolute discretion and the Rights Agent shall, if the Board of Directors so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing shares of Common Stock,
whether or not such supplement or amendment is adverse to any holders of Rights.
From and after the Distribution Date, and subject to the penultimate sentence of
this Section 27, the Board of Directors acting by Special Vote may, and the
Rights Agent shall, if the Board of Directors acting by Special Vote so directs,
supplement or amend this Agreement without the approval of any holders of Rights
Certificates in order to (i) cure any ambiguity, (ii) correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions hereunder, (iii) shorten or lengthen any time period hereunder, or
(iv) otherwise change or supplement the provisions hereunder in any manner which
the Board of Directors acting by Special Vote may deem necessary or desirable
and which shall not materially and adversely affect the interests of the holders
of Rights Certificates (other than an Acquiring Person or an Affiliate or
Associate of any such Person); provided, however, this Agreement may not be
supplemented or amended after the Distribution Date to (A) make the Rights again
redeemable after the Rights have ceased to be redeemable, or (B) change any
other time period unless such change is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to the holders of Rights (other
than any Acquiring Person and its Associates or Affiliates). Upon the delivery
of a certificate from an appropriate officer of the Company which states that
the proposed supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price. Prior
to the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
28. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the benefit
of the Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
29. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
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<PAGE> 38
For all purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act. The Board of Directors of the Company
(acting by Special Vote where specifically provided for herein) shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board of Directors of the Company
or to the Company, or as may be necessary or advisable in the administration of
this Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Agreement, and (ii) make all determinations
deemed necessary or advisable for the administration of this Agreement
(including, but not limited to, a determination to redeem or not redeem the
Rights, or to amend this Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
of Directors of the Company in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other parties, and (y) not subject any member of the Board of Directors to any
liability to the holders of the Rights or to any other Person.
30. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, registered holders of the
Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, registered holders of the Common Stock).
31. SEVERABILITY.
If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company (acting
by Special Vote) determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose or effect of
this Agreement, the right of redemption set forth in Section 23, if lapsed,
shall be reinstated and shall not expire until the close of business on the
tenth Business Day following the date of such determination by the Board of
Directors of the Company.
32. GOVERNING LAW.
This Agreement, each Right and each Rights Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of Delaware
and for all purposes shall be
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<PAGE> 39
governed by and construed in accordance with the laws of such State applicable
to contracts made and to be performed entirely within such State.
33. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
34. DESCRIPTIVE HEADINGS; REFERENCES.
Descriptive headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof. References herein to Sections and
Exhibits shall, unless otherwise specified, be to the referenced section or
exhibit hereof or hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
The "Company":
QUIDEL CORPORATION
By: /s/ STEVEN T. FRANKEL
-----------------------------------
Steven T. Frankel
President and Chief Executive
Officer
The "Rights Agent":
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ HERBERT J. LEMMER
--------------------------------
Name: Herbert J. Lemmer
--------------------------------
Title: Vice President
--------------------------------
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<PAGE> 40
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATION OF
RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS
OF SERIES C JUNIOR PARTICIPATING PREFERRED STOCK
OF
QUIDEL CORPORATION
The undersigned, Steven T. Frankel, the President of Quidel Corporation, a
Delaware corporation (the "CORPORATION"), does hereby certify that pursuant to
the authority conferred upon the Board of Directors by the Certificate of
Incorporation of the Corporation, on December 11, 1996, the Board of Directors
adopted the following resolutions creating a series of 50,000 shares of
Preferred Stock designated as Series C Participating Preferred Stock:
"RESOLVED, that pursuant to Section 151(g) of the Delaware General
Corporation Law, the Board of Directors hereby acknowledges that none of
the shares of Series B Preferred Stock authorized pursuant to that certain
Certificate of Designations of the Series B Preferred Stock of Quidel
Corporation filed on January 4, 1995 with the Delaware Secretary of State
are outstanding.
"RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation by the Certificate of Incorporation, the
Board of Directors does hereby provide for the issue of a series of
Preferred Stock, par value $.001 per share, of the Corporation, to be
designated "Series C Junior Participating Preferred Stock" (the "SERIES C
PREFERRED STOCK"), initially consisting of 50,000 shares, and to the
extent that the rights, preferences, privileges and restrictions of the
Series C Preferred Stock are not stated and expressed in the Certificate
of Incorporation, does hereby fix and herein state and express such
rights, preferences, privileges and restrictions thereof as follows (all
terms used herein that are defined in the Certificate of Incorporation
shall be deemed to have the meanings provided therein):
1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "SERIES C JUNIOR PARTICIPATING PREFERRED STOCK" and the
number of shares constituting such series shall be 50,000. Such number of
shares may be increased or decreased by resolution of the Board of
Directors; provided, that no decrease shall reduce the number of shares of
Series C Junior Participating Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the
Corporation convertible into Series C Junior Participating Preferred
Stock.
2. Dividends and Distributions.
(a) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the
shares of Series C Preferred
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<PAGE> 41
Stock with respect to dividends, the holders of shares of Series C
Preferred Stock shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the 15th day of January, April,
July and October and in each year (each a "QUARTERLY DIVIDEND PAYMENT
DATE"), commencing on the first Quarterly Dividend Payment Date after the
first issuance of a share or fraction of a share of Series C Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to,
subject to the provision for adjustment hereinafter set forth, 1,000 times
the aggregate per share amount of all cash dividends, and 1,000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the common stock, par value
$.001 per share, of the Corporation (the "COMMON STOCK") since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series C Preferred Stock. In the event the
Corporation shall at any time after December 11, 1996 (the "RIGHTS
DECLARATION DATE") (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock or
(iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the amount to which holders of shares of
Series C Preferred Stock were entitled immediately prior to such event
under the preceding sentence shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the
Series C Preferred Stock as provided in paragraph (a) above concurrently
with any declaration of a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock).
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series C Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issue of such shares of Series C Preferred
Stock, unless the date of issue of such shares is prior to the record date
for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares,
or unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of shares of
Series C Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events
such dividends shall begin to accrue and be cumulative from such Quarterly
Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series C Preferred Stock in an
amount less than the total amount of such dividends at the time accrued
and payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares
of Series C Preferred Stock entitled to receive payment of a dividend or
distribution declared
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<PAGE> 42
thereon, which record date shall be no more than 30 days prior to the date
fixed for the payment thereof.
3. VOTING RIGHTS. The holders of shares of Series C Preferred
Stock shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set forth,
each share of Series C Preferred Stock shall entitle the holder thereof to
1,000 votes on all matters submitted to a vote of the shareholders of the
Corporation. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of
shares, then in each case the number of votes per share to which holders
of shares of Series C Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such
event.
(b) Except as otherwise provided herein or by law, the holders of
shares of Series C Preferred Stock and the holders of shares of Common
Stock shall vote together as one class on all matters submitted to a vote
of stockholders of the Corporation.
(c) Except as set forth herein, holders of Series C Preferred Stock
shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
4. CERTAIN RESTRICTIONS.
(a) The Corporation shall not declare any dividend on, make any
distribution on, or redeem or purchase or otherwise acquire for
consideration any shares of Common Stock after the first issuance of a
share or fraction of a share of Series C Participating Preferred Stock
unless concurrently therewith it shall declare a dividend on the Series C
Participating Preferred Stock as required by Section 2 hereof.
(b) Whenever quarterly dividends or other dividends or distributions
payable on the Series C Preferred Stock as provided in Section 2 have been
declared but not paid, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series
C Preferred Stock outstanding shall have been paid in full, the
Corporation shall not
(i) declare or pay dividends on, make any other distribution
on, or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series C Preferred Stock;
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<PAGE> 43
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series
C Preferred Stock, except dividends paid ratably on the Series C Preferred
Stock and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series
C Preferred Stock, provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such parity stock in exchange
for shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Series C
Preferred Stock;
(iv) purchase or otherwise acquire for consideration any
shares of Series C Preferred Stock, or any shares of stock ranking on a
parity with the Series C Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective Series
Cnd classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(c) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under paragraph
(a) of this Section 4, purchase or otherwise acquire such shares at such
time and in such manner.
5. REACQUIRED SHARES. Any shares of Series C Preferred Stock
purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized
but unissued shares of Preferred Stock and may be reissued as part of a
new series of Preferred Stock to be created by resolution or resolutions
of the Board of Directors, subject to the conditions and restrictions on
issuance set forth herein.
6. Liquidation, Dissolution or Winding Up.
(a) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the
holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series C Preferred Stock
unless, prior thereto, the holders of shares of Series C Preferred Stock
shall have received $1,000 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to
the date of such payment (the "SERIES C LIQUIDATION PREFERENCE").
Following the payment of the full amount of the Series C Liquidation
Preference, no additional distributions shall be made to the
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<PAGE> 44
holders of shares of Series C Preferred Stock unless, prior thereto, the
holders of shares of Common Stock shall have received an amount per share
(the "COMMON ADJUSTMENT") equal to the quotient obtained by dividing (i)
the Series C Liquidation Preference by (ii) 1,000 (as appropriately
adjusted as set forth in subparagraph (c) below to reflect such events as
stock splits, stock dividends and recapitalizations with respect to the
Common Stock) (such number in clause (ii), the "ADJUSTMENT NUMBER").
Following the payment of the full amount of the Series C Liquidation
Preference and the Common Adjustment in respect of all outstanding shares
of Series C Preferred Stock and Common Stock, respectively, holders of
Series C Preferred Stock and holders of shares of Common Stock shall
receive their ratable and proportionate share of remaining assets to be
distributed in the ratio of the Adjustment Number to one (1) with respect
to such Preferred Stock and Common Stock, on a per share basis,
respectively.
(b) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series C Liquidation Preference
and the liquidation preferences of all other series of Preferred Stock, if
any, which rank on a parity with the Series C Preferred Stock, then such
remaining assets shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquidation preferences.
In the event, however, that there are not sufficient assets available to
permit payment in full of the Common Adjustment, then such remaining
assets shall be distributed ratably to the holders of Common Stock.
(c) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the Adjustment Number in effect immediately
prior to such event shall be adjusted by multiplying such Adjustment
Number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case
the shares of Series C Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 1,000 times the aggregate
amount of stock, securities, cash and/or any other property (payable in
kind), as the case may be, into which or for which each share of Common
Stock is changed or exchanged. In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of
Series C Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
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<PAGE> 45
the number of shares of Common Stock that were outstanding immediately
prior to such event.
8. NO REDEMPTION. The shares of Series C Preferred Stock
shall not be redeemable.
9. RANKING. The Series C Preferred Stock shall rank junior to
all other series of the Corporation's preferred stock, if any, as to
the payment of dividends and the distribution of assets, unless the
terms of any such series shall provide otherwise.
10. AMENDMENT. The Certificate of Incorporation of the Corporation
shall not be further amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series C Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of a majority or more of the outstanding shares of Series C
Preferred Stock, voting separately as a class.
11. FRACTIONAL SHARES. Series C Preferred Stock may be issued in
fractions of a share, which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all
other rights of holders of Series C Preferred Stock.
RESOLVED FURTHER, that the President or any Vice President and the
Secretary or any Assistant Secretary of the Corporation be, and they
hereby are, authorized and directed to prepare and file a Certificate of
Designation of Rights, Preferences, Privileges and Restrictions in
accordance with the foregoing resolution and the provisions of Delaware
law and to take such actions as they may deem necessary or appropriate to
carry out the intent of the foregoing resolution."
IN WITNESS WHEREOF, this Certificate of Designations is executed on
January ___, 1997.
QUIDEL CORPORATION,
a Delaware corporation
By:_____________________________
Steven T. Frankel, President
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EXHIBIT B
FORM OF RIGHTS CERTIFICATE
CERTIFICATE NO. R______________ ________________RIGHTS
NOT EXERCISABLE AFTER DECEMBER 31, 2006 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$0.005 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE
OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
[THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e)
OF SUCH AGREEMENT.*]
RIGHTS CERTIFICATE
QUIDEL CORPORATION
This certifies that ___________________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of December 31, 1996 (the "RIGHTS
AGREEMENT"), between Quidel Corporation, a Delaware corporation (the "COMPANY"),
and American Stock Transfer & Trust Company, a New York corporation (the "RIGHTS
AGENT"), to purchase from the Company at any time prior to 5:00 P.M. (California
time) on December 30, 2006 at the office or offices of the Rights Agent
designated for such purpose, or its successors as Rights Agent, one
one-thousandth of a fully paid, non-assessable share of Series C Junior
Participating Preferred Stock (the "PREFERRED STOCK") of the Company, at a
purchase price of $24 per one one-thousandth of a share (the "PURCHASE PRICE"),
upon presentation and surrender of this Rights Certificate with the Form of
Election to Purchase and related Certificate duly executed. The Purchase Price
may be paid by bank draft, certified bank check or money order payable to the
order of the Company.
- ----------
* The portion of the legend in brackets shall be inserted only if applicable,
shall be modified to apply to an Acquiring Person, and shall replace the
preceding sentence.
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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 December 31, 1996, based on the Preferred Stock as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate an
Acquiring of Person (as such terms are defined in the Rights Agreement), (ii) a
transferee of an Acquiring Person, (or of any such Associate or Affiliate), or
(iii) under certain circumstances specified in the Rights Agreement, a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such, such Rights shall become null and void and no holder hereof shall have any
right with respect to such Rights from and after the occurrence of such Section
11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of shares of Preferred Stock or other securities which may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are subject
to modification and adjustment upon the happening of certain events, including
Triggering Events (as such term is defined in the Rights Agreement).
The Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the Rights,
limitations of Rights, and obligations, duties and immunities of the Rights
Agent, the Company and the holders of the Rights Certificates, which limitations
of Rights include the temporary suspension of the exercisability of such Rights
under the specific circumstances set forth in the Rights Agreement. Copies of
the Rights Agreement are on file at the office of the Rights Agent and are also
available upon written request to the Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate or Rights Certificates
of like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate amount of securities as the Rights evidenced by the Rights Certificate
or Rights Certificates surrendered shall have entitled such holder to purchase.
If this Rights Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be (i) redeemed by the Company at its option at a
redemption price of $0.005 per Right or (ii) exchanged by the Company in whole
or part for Common Shares, substantially equivalent rights, or other
consideration as determined by the Company.
No fractional shares of Preferred Stock will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth
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of a share of Preferred Stock, which may, at the election of the Company, be
evidenced by depository receipts), but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the 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 shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or, to
receive notice of meeting or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
The Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of _____________, 19___
The "Company":
(Seal) QUIDEL CORPORATION, a Delaware
corporation
By:_________________________________
Name:_______________________________
Title:______________________________
By:_________________________________
Name:_______________________________
Title:______________________________
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The "Rights Agent":
AMERICAN STOCK TRANSFER & TRUST COMPANY,
a New York corporation
By:________________________________
Name:______________________________
Title:_____________________________
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<PAGE> 50
[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED _____________________________________ hereby sells,
assigns and transfers unto_____________________________________________________
_____________________________________________________
_____________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ___________________________
______________________________________ Attorney, to transfer the within Rights
Certificate on the books of the within-named Company with full power of
substitution.
DATED: _____________________ ___________________________________
(Signature)
SIGNATURE GUARANTEED:
___________________________________
(Signature)
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<PAGE> 51
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) This Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Person (as such terms are defined pursuant to
the Rights Agreement);
(2) After due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of any such Person.
DATED: _____________________ ___________________________________
(Signature)
SIGNATURE GUARANTEED:
___________________________________
(Signature)
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<PAGE> 52
NOTICE
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
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<PAGE> 53
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate)
TO: QUIDEL CORPORATION
The undersigned hereby irrevocably elects to exercise_____________________
_______________________ Rights represented by this Rights Certificate to
purchase the number of one one-thousandths of a share of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other Person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
Name and Address: _______________________________________
_______________________________________
_______________________________________
Social Security or
Other Identifying Number: _______________________________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Name and Address: _______________________________________
Social Security or
Other Identifying Number: _______________________________________
DATED: _____________________ _______________________________________
(Signature)
SIGNATURE GUARANTEED:
_______________________________________
(Signature)
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<PAGE> 54
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) This Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Person (as such terms are defined pursuant to
the Rights Agreement);
(2) After due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of any such Person.
DATED: _____________________ _______________________________________
(Signature)
SIGNATURE GUARANTEED:
_______________________________________
(Signature)
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<PAGE> 55
NOTICE
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
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<PAGE> 56
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
OF
QUIDEL CORPORATION
On December 11, 1996 (the "RIGHTS DIVIDEND DECLARATION DATE") the Board of
Directors of Quidel Corporation (the "COMPANY") declared a dividend of one Right
(a "RIGHT") for each outstanding share of Company Common Stock to be distributed
to shareholders of record at the close of business on January 10, 1997. Each
Right entitles the registered holder to purchase from the Company one
one-thousandth of a share (a "UNIT") of Series C Junior Participating Preferred
Stock, par value $.001 per share (the "PREFERRED STOCK") at a "PURCHASE PRICE"
of $24, subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement (the "RIGHTS AGREEMENT") between the Company and
American Stock Transfer & Trust Company, as Rights Agent.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed.
Until the Distribution Date (as described below), (i) the Rights will be
evidenced by the Common Stock certificates and will be transferred with and only
with such Common Stock certificates, (ii) new Common Stock certificates issued
after January 10, 1997 will contain a notation incorporating the Rights
Agreement by reference and (iii) the surrender for transfer of any certificates
for Common Stock outstanding will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on December 30, 2006, unless earlier redeemed by the
Company as described below.
The Rights will separate from the Common Stock and a Distribution Date
will occur (the "DISTRIBUTION DATE") upon the earlier of 10 days (or such longer
time as may be determined by the Company's board, acting with the approval of a
majority of the Continuing Directors as defined below) following (i) a public
announcement (or determination by the Company's board) that a person or group of
affiliated or associated persons (an "ACQUIRING PERSON") has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding shares of Common Stock (the "STOCK ACQUISITION DATE"), or (ii) the
commencement of a tender offer or exchange offer that would result in a person
or group beneficially owning 15% or more of such outstanding shares of Common
Stock.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights.
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<PAGE> 57
In the event that on or at any time following the Rights Dividend
Declaration Date, a person becomes the beneficial owner of more than 15% of the
then outstanding shares of Common Stock (except pursuant to an offer for all
outstanding shares of Common Stock which the Continuing Directors determine to
be fair to and otherwise in the best interests of the Company and its
shareholders), then each holder of a Right will thereafter have the right to
receive, upon exercise, Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to two times
the Purchase Price of the Right. Rights are exercisable following the occurrence
of the foregoing only after such time as the Rights are no longer redeemable by
the Company, as set forth below. Notwithstanding any of the foregoing, following
the occurrence of the event set forth in this paragraph, all Rights that are, or
(under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person will be null and void.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation or in which the Company's
outstanding Common Stock is exchanged for cash, stock or other property (other
than a merger which follows an offer described in the second preceding
paragraph), or (ii) 50% or more of the Company's assets or earning power is sold
or transferred, each holder of a Right (except Rights which previously have been
voided as set forth above) shall thereafter have the right to receive, upon
exercise, common stock of the acquiring company having a value equal to two
times the Purchase Price of the Right.
The Purchase Price payable, and the number of Units of Preferred Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution, as set forth in the Rights
Agreement. With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Rights, fractions of shares of Preferred Stock (other than
fractions which are integral multiples of one one-thousandth of a share), or
fractional shares of Common Stock will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Rights,
Preferred Stock, or Common Stock, respectively, on the last trading date prior
to the date of exercise.
In general, the Company may redeem the Rights in whole, but not in part,
at a price of $0.005 per Right, at any time until ten days following the Stock
Acquisition Date (or such later date as may be determined by the Company's
board, acting with the approval of a majority of the Continuing Directors, as
defined below). Immediately upon the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and the only right of the
holders of Rights will be to receive the $0.005 redemption price.
The Company may exchange Common Stock or other substantially equivalent
rights or consideration for the Rights, in whole or part, from time to time as
determined by the Company's board, acting with the approval of a majority of the
Continuing Directors, as defined below.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
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Other than those provisions relating to the redemption price or the final
expiration date of the Rights, any of the provisions of the Rights Agreement may
be supplemented or amended by the Board of Directors prior to the Distribution
Date, without approval of the Rights holders, whether or not a supplement or
amendment is adverse to the Rights holders. After the Distribution Date, the
provisions of the Rights Agreement (other than the provisions relating to the
redemption price or the final expiration date of the Rights) may be amended by
the Board of Directors, with the approval of a majority of the Continuing
Directors in order to make changes which do not materially and adversely affect
the interests of holders of Rights (excluding the interests of any Acquiring
Person), provided, however, that the Rights Agreement may not be amended to (i)
make the Rights again redeemable after the Rights have ceased to be redeemable,
or (ii) change any other time period unless such change is for the benefit of
the holders (excluding any Acquiring Person).
"CONTINUING DIRECTOR" means a member of the Board of Directors of the
Company who is not an Acquiring Person or an affiliate or representative of an
Acquiring Person.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
January 8, 1997. A copy of the Rights Agreement is available free of charge from
the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is incorporated herein by reference.
58
