SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
QUALITY SYSTEMS, INC.
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(Exact Name of Registrant as Specified in Its Charter)
California 95-2888568
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(State of Incoropation or Organization) (I.R.S. Employer
Identificaton No.)
17822 East 17th Street, Tustin, 92780
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(Address of Principal Executive Offices) (Zip Code)
If this form relates to the If this form relates to
registration of a class of debt the registration of a
securities and is effective upon class of debt securities
filing pursuant to General and is to become effective
Intruction A(c)(1) please check simultaneously with the
the following box. effectiveness of a
concurrent registration
statement under the
Securities Act of 1933
pursuant to General
Instruction A(c)(2) please
check the following
box.
Securities to be registered pursuant to Section 12(b) 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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N/A N/A
Securities to be registered pursuant to Section 12(g) of the Act.
Common Stock Purchase Rights
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(Title of Class)
<PAGE>
Item 1. Description of Registrant's Securities to be Registered.
On November 22, 1996 (the "Rights Dividend Declaration
Date"), the Board of Directors of Quality Systems, Inc. (the
"Company") declared a dividend of one right (a "Right") to
purchase one share of the Company's common stock, par value $0.01
per share (the "Common Stock") and, under certain circumstances,
other securities, for each outstanding share of the Company's
common stock, to be distributed to stockholders of record at the
close of business on December 2, 1996 (the "Record Date"). The
description and terms of the Rights are set forth in a
Shareholder Rights Agreement (the "Rights Agreement") dated as of
November 25, 1996 between the Company and U.S. Stock Transfer
Corporation, 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 an Exhibit.
A. Issuance of the Rights
Each share of Common Stock outstanding at the close of
business on the Record Date (approximately 5,987,712 shares) 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.
The "Expiration Date" shall mean the earliest of (i) November 25,
2006; (ii) the date of redemption of the Rights; or (iii) the
date the Board orders an exchange of Rights.
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) the
first date of 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 date
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.
<PAGE>
D. Exercise of the Rights
Rights Initially Not Exercisable. Prior to the
Distribution Date, the Rights are not exercisable.
Exercise of the Rights to Purchase Common Stock of the
Company. At any time after the Distribution Date but prior to
the earlier of the expiration or redemption of the Rights or an
adjustment as described below, each Right may be exercised at the
stated purchase price of $40.00 (subject to adjustment, the
"Exercise Price") for one share of Common Stock.
Exercise of the Rights to Purchase Common Stock of the
Company at an Adjusted Purchase Price. In the event that any
person, alone or with affiliates, becomes the beneficial owner of
15% or more of the then outstanding shares of the Company's
Common Stock, then (subject to the grandfather provision
described in Paragraph J below) each holder of a Right will
thereafter have the right to exercise the Right for shares of
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.
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 (ii) the
Company is merged or consolidated with another company in a
business combination transaction 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, or (iii) 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 or survivor having a value equal to two
times the Exercise Price of the Right. (An event described in
this paragraph is a "Section 13 Event.")
Adjustment of Number of Rights, Purchase Price and
Number of Units of Common Stock. The Exercise Price payable
and/or the number of shares of Common 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 Common Stock, (ii) in the
event all holders of the Common Stock are granted certain rights
or warrants to subscribe for Common Stock or convertible
securities at less than the current market price of the Common
Stock, or (iii) upon the distribution to holders of the Common
Stock of evidences of indebtedness or assets (excluding 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.
<PAGE>
E. Fractional Rights and Fractional Shares
The Company is generally not required to issue
fractional Rights or fractional shares of Common Stock and, in
lieu thereof, an adjustment in cash will be made based on the
market price of the Rights 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 $0.001 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 the time following
the Stock Acquisition Date that a majority of the directors of
the Company are persons who were not directors immediately prior
to the Stock Acquisition Date. 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 $0.001
redemption price.
G. Exchange of the Rights
At any time after the Stock Acquisition Date and before
(i) any person or group acquires 50% or more of the outstanding
Common Stock or (ii) the time following the Stock Acquisition
Date that a majority of the directors of the Company are persons
who were not directors immediately prior to the Stock Acquisition
Date, the Company may by majority vote of the Board of Directors
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 by majority
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 an Acquiring Person, the Board by
majority vote, may exchange some or all of the Rights for rights
of substantially equivalent value.
<PAGE>
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, without approval of the
Rights holders, prior to the earlier of (i) the Distribution Date
or (ii) the time following the Stock Acquisition Date that a
majority of the directors of the Company are persons who were not
directors immediately prior to the Stock Acquisition Date,
whether or not the supplement or amendment is adverse to the
Rights holders. After the earlier of the dates described above,
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 in order to (i) cure any ambiguous, defective or
inconsistent provision, (ii) shorten or lengthen any time period,
or (iii) otherwise change a provision which the Board of
Directors may deem necessary or desirable and which does not
materially and adversely affect the interests of holders of
Rights (other than any Acquiring Person or such Person's
affiliates); 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
(i) the close of business on November 25, 2006 or (ii) the
exchange or redemption of the Rights by the Company.
J. Shareholders With Pre-Existing Holdings Equaling or Exceeding 15%
Any shareholder who already owned 15% or more of the
Company's outstanding stock on the Rights Dividend Declaration
Date (an "Original 15% Shareholder") is "grandfathered" under the
terms of the Rights Agreement and will not trigger the plan,
unless such Original 15% Shareholder subsequently acquires any
shares without the board's prior approval, and after such
acquistion would, together with affiliates and associates, own
15% or more of the Company's outstanding stock.
K. No Shareholder Rights Prior to Exercise
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.
<PAGE>
L. Anti-Takeover Effects
The Rights are designed to protect and maximize the
value of shareholders' 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
shareholders 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
shareholders equally. These tactics can unfairly pressure
shareholders, cash 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 shareholders, 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.
<PAGE>
Item 2. Exhibit.
The Shareholder Rights Agreement, dated as of November
25, 1996 between Quality Systems, Inc. and U.S. Stock Transfer
Corporation, as Rights Agent, which includes as Exhibit A 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).
<PAGE>
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: December 4, 1996 QUALITY SYSTEMS, INC.
By: /s/ Robert G. McGraw
Name: Robert G. McGraw
Its: Chief Financial Officer
EXHIBIT
Shareholder Rights Agreement.
QUALITY SYSTEMS, INC.
and
U.S. STOCK TRANSFER CORP.
as Rights Agent
_______________
SHAREHOLDER RIGHTS AGREEMENT
Dated as of November 25, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. Certain Definitions...........................................1
2. Appointment of Rights Agent...................................4
3. Issue of Rights Certificates..................................4
4. Form of Rights Certificates...................................6
5. Countersignature and Registration.............................6
6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates.......................................7
7. Exercise of Rights; Purchase Price; Expiration Date
of Rights....................................................7
8. Cancellation and Destruction of Rights Certificates...........9
9. Reservation and Availability of Capital Stock.................9
10. Record Date..................................................10
11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights...............................11
12. Certificate of Adjusted Purchase Price or Number of
Shares...................................................16
13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power.........................................16
14. Fractional Rights and Fractional Shares......................19
15. Rights of Actions............................................19
16. Agreement of Rights Holders..................................20
17. Rights Certificate Holder Not Deemed a Shareholder...........20
18. Concerning the Rights Agent..................................20
19. Merger or Consolidation or Change of Name of Rights
Agent....................................................21
20. Duties of Rights Agent.......................................21
21. Change of Rights Agents......................................23
22. Issuance of New Rights Certificates..........................23
23. Redemption and Termination...................................24
24. Exchange.....................................................26
25. Notice of Certain Events.....................................26
26. Notices......................................................27
27. Supplements and Amendments...................................27
28. Successors...................................................28
29. Determination and Actions by the Board of Directors, etc.....28
30. Benefits of this Agreement...................................28
31. Severability.................................................28
32. Governing Law................................................28
33. Counterparts.................................................29
34. Descriptive Headings; References.............................29
</TABLE>
<PAGE>
SHAREHOLDER RIGHTS AGREEMENT
This Shareholder Rights Agreement (this "Agreement") is
made as of November 25, 1996 between Quality Systems, Inc., a
California corporation (the "Company") and U.S. Stock Transfer
Corp., a California corporation (the "Rights Agent").
WHEREAS, on November 22, 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 December 2, 1996
(the "Record Date"), and has authorized the issuance of one Right
(as such number may hereinafter be adjusted pursuant to the
provisions of Section 11(p) hereof) for each share of Common
Stock of the Company issued 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 share of Common
Stock of the Company 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 (set forth in a resolution of the Board), shall
become, after the Rights Dividend Declaration Date, the
Beneficial Owner of 15% or more of the shares of Common Stock
then outstanding, but shall not include an Exempt Person.
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 provisions of this paragraph (a), then such Person shall not
be deemed to be an "Acquiring Person" for any purposes of this
Agreement. Furthermore, notwithstanding the foregoing, no
shareholder of the Company beneficially owning as of the Rights
Dividend Declaration Date (together with such shareholder's
Affiliates and Associates) 15% or more of the shares of Common
Stock outstanding as of the date of this Agreement (an "Original
15% Shareholder") shall be an Acquiring Person unless and until
such Original 15% Shareholder or any of such shareholder's
Associates or Affiliates shall, after the Rights Dividend
Declaration Date, acquire any additional shares of Common Stock
without the prior approval of the Board of Directors of the
Company (set forth in a resolution of the Board), at which point
such shareholder shall be an Acquiring Person if, immediately
following and giving effect to such acquisition, such Original
15% Shareholder, together with all such shareholder's Affiliates
and Associates, shall be the Beneficial Owner of 15% or more of
the shares of Common Stock then outstanding. Notwithstanding the
foregoing, however, a Person who or which, together with such
Person's 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 shall not be an Acquiring Person, unless
such Person shall thereafter purchase or otherwise become the
Beneficial Owner of additional shares of Common Stock.
<PAGE>
(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 (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 as in effect on the date of
this Agreement), 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 forty days after the date of such acquisition.
(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.
(g) "Common Stock" shall mean the Common Stock, $0.01
par value, 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.
<PAGE>
(h) "Common Stock Equivalents" shall have the meaning
set forth in Section 11(a)(iii).
(i) "Current Market Price" shall have the meaning set
forth in Section 11(d).
(j) "Current Value" shall have the meaning set forth
in Section 11(a)(iii).
(k) "Distribution Date" shall have the meaning set
forth in Section 3(a).
(l) "Equivalent Common Stock" shall have the meaning
set forth in Section 11(b).
(m) "Exchange Act" shall have the meaning set forth in
Section 1(c).
(n) "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.
(o) "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, or (iii) the time at
which the Board of Directors orders the exchange of Rights as
provided in Section 24.
(p) "Final Expiration Date" shall mean November 25,
2006.
(q) "Person" shall mean any individual, firm,
corporation, partnership or other entity.
(r) "Principal Party" shall have the meaning set forth
in Section 13(b).
(s) "Purchase Price" shall have the meaning set forth
in Section 4(a).
(t) "Record Date" shall have the meaning set forth in
the WHEREAS clause at the beginning of this Agreement.
(u) "Redemption Price" shall have the meaning set
forth in Section 23(a).
(v) "Rights" shall have the meaning set forth in the
WHEREAS clause at the beginning of this Agreement.
(w) "Rights Certificates" shall have the meaning set
forth in Section 3(a).
(x) "Rights Dividend Declaration Date" shall have the
meaning set forth in the WHEREAS clause at the beginning of this
Agreement.
(y) "Section 11(a)(ii) Event" shall mean any event
described in Section 11(a)(ii).
<PAGE>
(z) "Section 11(a)(ii) Trigger Date" shall have the
meaning set forth in Section 11(a)(iii).
(aa) "Section 13 Event" shall mean any event described
in clause (x), (y) or (z) of Section 13(a).
(bb) "Spread" shall have the meaning set forth in
Section 11(a)(iii).
(cc) "Stock Acquisition Date" shall mean the first date
of public announcement (which, for purposes of this definition,
shall include, without limitation, a report filed pursuant to
Section 13(d) under the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such or such
earlier date as a majority of the Company's directors shall
become aware of the existence of an Acquiring Person; provided
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.
(dd) "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.
(ee) "Substitution Period" shall have the meaning set
forth in Section 11(a)(iii).
(ff) "Trading Day" shall have the meaning set forth in
Section 11(d)(i).
(gg) "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
commenced within the meaning of Rule 14d-2(a) of the General
Rules and Regulations under the Exchange Act as in effect on the
date of this Agreement, if upon consummation thereof, such
Person, together with such Person's 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 Common Stock (including a transfer to
the Company), and until the earlier of the Distribution Date or
the Expiration Date, the transfer of any certificates
representing Common Stock in respect of which Rights have been
issued shall also constitute the transfer of the Rights
associated with such Common Stock. As soon as practicable after
the Distribution Date, the Rights Agent will send to the record
holder of each Common Stock as of the close of business on the
Distribution Date, at the address of such holder shown on the
records of the Company, one or more rights certificates, in
substantially the form of Exhibit A hereto (the "Rights
Certificates"), evidencing one Right for each 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.
<PAGE>
(b) As promptly as practicable following the Record
Date, the Company will send a copy of a Summary of Rights to
purchase Common Stock, containing substantially the information
set forth in the form attached hereto as Exhibit B, to each
record holder of Common Stock as 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 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 common Stock in respect
of which Rights have been issued shall also constitute the
transfer of the Rights associates with the such 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 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 Shareholder Rights Agreement between the Corporation and
U.S. Stock Transfer Corp., as Rights Agent, dated as of
November 25, 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 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 A hereto
and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company
may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange or quotation system 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 shares of Common Stock as shall be set forth therein at
the price set forth therein (such exercise price per 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 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."
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.
<PAGE>
(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 shares of Common 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 Certificate or Rights
Certificates, as the case may be, as so requested. The Company
may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights
Certificates.
(b) Upon receipt by the Company and the Rights Agent
of evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Rights Certificate, and, in case
of loss, theft or destruction, of indemnity or security
reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation
of the Rights Certificate if mutilated, the Company will execute
and deliver a new Rights Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered owner
in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date
of Rights.
(a) Subject to Sections 7(e), 23(b) and 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 shares of Common 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.
<PAGE>
(b) The Purchase Price for each share of Common Stock
pursuant to the exercise of a Right shall initially be $40.00,
and shall be subject to adjustment from time to time as provided
in Sections 11 and 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 share of
Common 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
Common Stock (or make available, if the Rights Agent is the
transfer agent for such shares) certificates for the total number
of shares of Common 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 Common Stock issuable upon exercise of the
Rights hereunder with a depository agent, requisition from the
depository agent depository receipts representing such number of
shares of Common Stock as are to be purchased (in which case
certificates for the shares of Common 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, (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.
<PAGE>
(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.
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 or treasury shares of Common Stock the number of shares
of Common Stock 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 Common Stock 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 Common Stock and/or other
securities issuable and deliverable upon the exercise of Rights
may be listed on any national securities exchange or quoted on
the Nasdaq National Market, 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 so
listed or quoted upon official notice of issuance upon such
exercise.
(c) If necessary to permit the offer and issuance of
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 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.
<PAGE>
(d) The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all shares of
Common Stock and/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 shares of 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 shares of 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 shares of 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. Record Date. Each person in whose name any
certificate for a number of shares of Common Stock and/or other
securities, as the case may be, is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder
of record of such 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
Common Stock and/or other securities, as the case may be, transfer
books of the Company are closed, such Person shall be deemed to
have become the record holder of such shares (fractional or
otherwise) on, and such certificate shall be dated, the next
succeeding Business Day on which the 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.
<PAGE>
11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights. The Purchase Price, the number and
kind of shares covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided
in this Section 11.
(a) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the
Common Stock payable in shares of Common Stock, (B) subdivide the
outstanding Common Stock, (C) combine the outstanding Common
Stock into a smaller number of shares, or (D) issue any shares of
its capital stock in a reclassification of the Common Stock
(including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this
Section 11(a) and Section 7(e), the Purchase Price in effect at
the time of the record date for such dividend or of the date of
this Agreement of such subdivision, combination or
reclassification, and the number and kind of shares of Common
Stock or capital stock, as the case may be, issuable on such
date, shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive,
upon payment of the Purchase Price then in effect, the aggregate
number and kind of shares of Common Stock or capital stock, as
the case may be, which, if such Right had been exercised
immediately prior to such date and at a time when the Common
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 becomes an Acquiring Person, 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 one share of Common 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 shares of Common Stock for which a Right was
exercisable immediately prior to the occurrence of a
Section 11(a)(ii) Event, and (y) dividing that product 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.
(iii) In the event that the number of shares of
Common Stock which are authorized by the Company's Articles 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 if
available which the Board of Directors of the Company has deemed
to have the same value as shares of Common 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 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 shareholder
approval for the authorization of such additional shares (such
period, as it may be extended, the "Substitution Period"). To
the extent that the Company determines that some action need be
taken pursuant to the first and/or second sentences of this
Section 11(a)(iii), the Company (x) shall provide, subject to
Section 7(e), 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).
<PAGE>
(b) In case the Company shall fix a record date for
the issuance of rights (other than the Rights), options or
warrants to all holders of Common Stock entitling them to
subscribe for or purchase (for a period expiring within forty-
five (45) calendar days after such record date) Common Stock (or
shares having the same rights, privileges and preferences as the
shares of Common Stock ("Equivalent Common Stock")) or securities
convertible into Common Stock or Equivalent Common Stock at a
price per share of Common Stock or per share of Equivalent Common
Stock (or having a conversion price per share, if a security
convertible into Common Stock or Equivalent Common Stock) less
than the Current Market Price (as determined pursuant to
Section 11(d)) per share of Common Stock on such record date, the
Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Common Stock
outstanding on such record date, plus the number of shares of
Common Stock which the aggregate offering price of the total
number of shares of Common Stock (and/or Equivalent Common Stock
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 Common Stock outstanding on such record
date, plus the number of additional shares of Common Stock and/or
Equivalent Common Stock to be offered for subscription or
purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription
price may be paid by delivery of consideration part or all of
which may be in a form other than cash, the value of such
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 Common Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that such
rights or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend
out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Common Stock, but including any
dividend payable in stock other then Common Stock) or
subscription rights or warrants (excluding those referred to in
Section 11(b)), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a fraction,
the numerator of which shall be the Current Market Price (as
determined pursuant to Section 11(d)) per share of Common Stock
on such record date, less the fair market value (as determined in
good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights
or warrants applicable to a share of Common Stock and the
denominator of which shall be such Current Market Price (as
determined pursuant to Section 11(d)) per share of Common 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) For the purpose of any computation hereunder,
other than 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 thirty (30) consecutive
Trading Days (as such term is 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 the principal
national securities exchange or the Nasdaq National Market 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 or the
Nasdaq National Market the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System 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 or the Nasdaq National Market on
which the shares of Common Stock are listed or admitted to
trading is open for the transaction of business or, if the shares
of Common Stock are not listed or admitted to trading on any
national securities exchange, a Business Day. If the Common
Stock is not publicly held or not so listed or traded, "Current
Market Price" per share shall mean the fair value per share as
determined in good faith by the board of Directors of the
Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all
purposes.
(e) Anything herein to the contrary notwithstanding,
no adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one
percent (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 tenth of a share of Common Stock or other share.
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.
(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 Common Stock, thereafter the number
of such other shares so receivable upon exercise of any Right and
the Purchase Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock
contained in Section 11, and the provisions of Sections 7, 9, 10,
13 and 14 hereof with respect to the Common Stock shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase
Price, the number of shares of Common Stock purchasable from time
to time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of
the Purchase Price as a result of the calculations made in
Sections 11(b) and (c), each Right outstanding immediately prior
to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of
shares of Common Stock (calculated to the nearest one tenth)
obtained by (i) multiplying (x) the number of shares covered by a
Right immediately prior to this adjustment, by (y) the Purchase
Price in effect immediately prior to such adjustment of the
Purchase Price, and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the
Purchase Price.
<PAGE>
(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 shares of Common Stock
purchasable upon the exercise of a Right. Each of the Rights
outstanding after the adjustment in the number of Rights shall be
exercisable for the number of shares of Common Stock for which a
Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the
nearest one-tenth) 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 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 share of Common Stock issuable
upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the
Purchase Price per share and the number of shares which were
expressed in the initial Rights Certificates issued 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 shares of Common Stock issuable
upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid
and nonassessable such number of shares of Common Stock at such
adjusted Purchase Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of
a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuance to the
holder of any Right exercised after such record date the number
of shares of Common Stock and other capital stock or securities
of the Company, if any, issuable upon such exercise over and
above the number of shares of Common Stock and other capital
stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to
such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares
(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 Common Stock,
(ii) issuance wholly for cash of any shares of Common Stock at
less than the Current Market Price, (iii) issuance wholly for
cash of shares of Common Stock or securities which by their terms
are convertible into or exchangeable for shares of Common Stock,
(iv) stock dividends or (v) issuance of rights, options or
warrants referred to in this Section 11, hereafter made by the
Company to holders of its Common Stock shall not be taxable to
such stockholders.
(n) The Company covenants and agrees that it shall
not, at any time after the Distribution Date, (i) consolidate
with any other Person (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 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 shareholders of the Person who constitutes, or would
constitute, the "Principal Party" 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.
<PAGE>
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section
23, 24 or 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 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 Sections 11 and 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.
(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 number of shares of Common 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 by 50% of the Current Market Price
(determined pursuant to Section 11(d)) 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 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 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.
<PAGE>
(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:
(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 quoted on the Nasdaq National Market 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).
<PAGE>
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, 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 New York Stock Exchange or, if the
Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights
are listed or admitted to trading, or if the Rights are not
listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, 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 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 share of Common Stock. For purposes of this
Section 14(b), the Current Market Value of one share of Common
Stock shall be the closing price of a share of Common Stock (as
determined pursuant to Section 11(d)(ii)) for the Trading Day
immediately prior to the date of such exercise.
(c) 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.
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.
<PAGE>
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 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 shares of Common Stock or any other securities of the
Company which may at any time be issuable on the exercise of the
Rights represented thereby, nor shall anything contained herein or
in any Rights Certificate be construed to confer upon the holder of
any Rights Certificate, as such, any of the rights of a shareholder
of the Company or any right to vote for the election of directors
or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 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.
<PAGE>
(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 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.
<PAGE>
(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.
(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 to be issued pursuant to this
Agreement or any Rights Certificates or as to whether any shares
of Common Stock will, when so issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed
to accept instructions 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 shareholder, director,
officer or employee of the Rights Agent may buy, sell or deal in
any of the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company
or otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(i) The Rights Agent may execute and exercise any of
the rights or powers hereby vested in it or 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.
<PAGE>
(k) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the
certificate attached to the form of assignment or form of
election to purchase as the case may be, has either not been
completed or indicates an affirmative response to clause 1 and/or
2 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise or transfer without first
consulting with the Company.
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 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, 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) 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 date of this Agreement of any such appointment, the Company
shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Stock, and mail a
notice thereof in writing to the registered holders of the 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 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.
<PAGE>
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 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 day following
the Record Date), subject to extension as provided in Section 27
or (ii) the time following the Stock Acquisition Date that a
majority of the directors of the Company are persons who were not
directors immediately prior to the Stock Acquisition Date, redeem
all but not less than all the then outstanding Rights at a
redemption price of $0.001 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption
Price"). 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), of the Common Stock at the time of
redemption) or any other form of consideration deemed appropriate
by the Company's 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 Company's Board of
Directors in its sole discretion may establish.
(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
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 Stock
Acquisition Date and prior to the time that a majority of the
directors of the Company are persons who were not directors
immediately prior to that Stock Acquisition Date, the Board of
Directors of the Company 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.
<PAGE>
(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 and unreserved 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, 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 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 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, 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, based
upon the advice of one or more nationally recognized investment
banking firms.
<PAGE>
(f) Immediately upon the action of the Board of
Directors 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 Common Stock or to make any
other distribution to the holders of Common 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
Common Stock rights or warrants to subscribe for or to purchase
any additional shares of Common Stock or shares of stock of any
class or any other securities, rights or options, or (iii) to
effect any reclassification of its Common Stock (other than a
reclassification involving only the subdivision of outstanding
shares of Common 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 Common Stock, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least ten (10) days prior to the
record date for determining holders of the shares of Common 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 Common 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 Common Stock shall be
deemed thereafter to refer to Common Stock and/or, if
appropriate, other securities.
<PAGE>
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:
Quality Systems, Inc.
Centre Building, Suite 210
17822 East 17th Street
Tustin, California 92780
Attention: Chief Financial Officer
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:
U.S. Stock Transfer Corp.
1745 Gardena Avenue
Second Floor
Glendale, CA 92104
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 earlier of
(i) the Distribution Date or (ii) the time following the Stock
Acquisition Date that a majority of the directors of the Company
are persons who were not directors immediately prior to the Stock
Acquisition 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 earlier of the dates referred to in the preceding sentence, and
subject to the penultimate sentence of this Section 27, the Board
of Directors may, and the Rights Agent shall, if the Board of
Directors 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 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, this Agreement may not be
supplemented or amended after the earlier of the dates referred to
in the first sentence of this Section 27 to (A) make the Rights
again redeemable or exchangeable after the Rights have ceased to be
redeemable or exchangeable, 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 or the Final Expiration Date. 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.
<PAGE>
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. For all purposes of this Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular
time, including for purposes of determining the particular
percentage of such outstanding shares of Common Stock of which any
Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act as in effect on the date of this
Agreement. The Board of Directors of the Company 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, subject to the
restrictions set forth in Sections 23 and 27, respectively, 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
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 California and for all
purposes shall be governed by and construed in accordance with the
laws of such State applicable to contracts made and to be performed
entirely within such State.
<PAGE>
33. Counterparts. This Agreement may be executed in
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.
<PAGE>
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.
QUALITY SYSTEMS, INC.
By: ________________________
Sheldon Razin
President
U.S. STOCK TRANSFER CORP.
By: ___________________
Name: ___________________
Title: ___________________
<PAGE>
Exhibits
Exhibit A Form of Rights Certificate
Exhibit B Summary of Rights
<PAGE>
EXHIBIT A DRAFT
FORM OF
RIGHTS CERTIFICATE
Certificate No. R _______________ ________________ Rights
NOT EXERCISABLE AFTER NOVEMBER 25, 2006 OR EARLIER IF
REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION,
AT THE OPTION OF THE COMPANY, AT $0.001 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
QUALITY SYSTEMS, INC.
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
Shareholder Rights Agreement, dated as of November 25, 1996 (the
"Rights Agreement"), between Quality Systems, Inc., a California
corporation (the "Company"), and U.S. Stock Transfer
Corporation, a California corporation (the "Rights Agent"), to
purchase from the Company at any time prior to 5:00 P.M.
(California time) on November 25, 2006 at the office or offices
of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one share of common stock (the
"Common Stock") of the Company, at a purchase price of $40.00
per 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.
<PAGE>
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
_____________, based on the Common Stock as constituted at such
date.
Upon the occurrence of a Section 1l(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 of an
Acquiring 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 Common 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 $0.001 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.
<PAGE>
No fractional shares will be issued upon the exercise of
any Right or Rights evidenced hereby, 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 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 ____________________, _____
(Seal)
ATTEST: QUALITY SYSTEMS, INC.
By:_______________________________ By:________________________________
Name:_____________________________ Name:______________________________
Title:____________________________ Title:_____________________________
Countersigned:
U.S. STOCK TRANSFER CORPORATION, as Rights Agent
By:_____________________________
Name:___________________________
Title:__________________________
<PAGE>
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:
_________________________________
<PAGE>
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:
________________________
<PAGE>
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.
