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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
Mylex Corporation
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 59-2291597
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(State of Incorporation or (I.R.S. Employer
Organization) Identification No.)
34551 Ardenwood Boulevard
Fremont, California 94555
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(Address of principal executive (Zip Code)
offices)
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
-------------------------- --------------------------------------
Common Stock Purchase Rights Nasdaq Stock Market's National Market
Securities to be registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
Page 1 of ___ Pages
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
RIGHTS AGREEMENT
On May 12, 1997, the Board of Directors of Mylex Corporation (the
"Company") authorized the distribution of one common stock purchase right (a
"Right") for each outstanding share of common stock, $0.01 par value per share,
of the Company ("Common Stock") to stockholders of record at the close of
business on May 23, 1997 (the "Record Date"). In addition, the Company has
authorized the issuance of one Right with respect to each share of Common Stock
that shall become outstanding between the Record Date and the earlier of the
Distribution Date or Expiration Date (as such terms are hereinafter defined) or
the date, if any, on which the Rights may be redeemed. Each Right, when
exercisable, entitles the registered holder to purchase from the Company a
quarter (1/4) share of Common Stock (or other shares, securities or property, as
the case may be, of equivalent value) at a price of $2.65 per share (the
"Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between the
Company and BankBoston, N.A., as Rights Agent.
Initially, the Rights will not be exercisable and will be attached to, and
evidenced only by, the Common Stock certificates representing the shares of
Common Stock then outstanding. The Rights will become exercisable, will
separate from the Common Stock, and will become transferrable apart from the
Common Stock on a date (the "Distribution Date") that is the earlier of the
close of business on the tenth business day following (i) a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") has acquired or obtained the right to acquire, in a transaction or
series of transactions not approved by the Board of Directors of the Company
(the "Board"), beneficial ownership of 20% or more of the outstanding shares of
Common Stock (the "Shares Acquisition Date") or (ii) the commencement of a
tender or exchange offer by any person (other than the Company or an employee
benefit plan of the Company or any of its subsidiaries) for 20% or more of the
outstanding shares of Common Stock.
Until the Distribution Date (or earlier redemption, exchange or expiration
of the Rights), the Rights will be transferred with and only with the Common
Stock certificates to which the Rights are attached. New Common Stock
certificates after the Record Date upon transfer or new issuance of Common Stock
will contain a notation incorporating the Rights Agreement by reference, and the
surrender for transfer of any certificates for Common Stock outstanding on or
after the Record Date, with or without such notation or a copy of this Summary
of Rights being attached thereto, will also constitute the transfer of the
Rights associated with the shares of Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights (the "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
evidence the Rights.
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In the event that at any time following the Distribution Date, (i) the
Company is the surviving corporation in a merger with an Acquiring Person and
the Company's Common Stock is not changed or exchanged, (ii) a person becomes
the beneficial owner of 20% or more of the then outstanding shares of Common
Stock (except pursuant to an offer for which all outstanding shares of Common
Stock which the Continuing Directors (as defined) determine to be fair to and
otherwise in the best interest of the Company and its stockholders), (iii) an
Acquiring Person engages in one or more "self dealing" transactions as set forth
in the Rights Agreement, or (iv) during such time as there is an Acquiring
Person, an event occurs which results in such Acquiring Person's ownership
interest being increased by more than 1% (e.g., a reverse stock split), each
holder of a Right will thereafter have the right to receive, upon exercise and
payment of the Purchase Price, Common Stock (or, in certain circumstances, cash,
property or other securities of the Company, subject to certain limitations)
having a value equal to two times the Purchase Price of the Right.
Notwithstanding the foregoing, all Rights that are, with certain exceptions
specified in the Rights Agreement, beneficially owned by an Acquiring Person (or
any of its affiliates or associates, as defined) will be null and void. The
Rights are, however, not exercisable following the occurrence of any of the
events set forth above until such time as the Rights are no longer redeemable by
the Company.
In the event that at any time following the Share Acquisition Date, (i) the
Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving Corporation, or (ii) 50 percent or more
of the Company's assets or earning power is sold or transferred, each holder of
a Right (except Rights which previously have been voided as set forth above)
shall thereafter have the right to receive, upon exercise thereof and payment of
the then current Purchase Price, Common Stock of the acquiring company having a
value equal to two times the Purchase Price of the Right.
The Purchase Price payable, and the number of shares of Common Stock (or
the number and kind of other securities or property, as the case may be)
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on or a
subdivision combination or reclassification of, the Common Stock, (ii) upon the
grant to owners of the Common Stock of certain rights or warrants to subscribe
for Common Stock or convertible securities at less than the current market price
of the Common Stock, or (iii) upon the distribution of 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)).
At any time after a person or group of affiliated or associated person
becomes an acquiring person, an until the beneficial ownership level of such
acquiring person, together with all affiliates and associates of such acquiring
person, reaches 50 percent, the Board of Directors may exchange the Rights
(other than the Rights held by the acquiring person, affiliates or associates of
the acquiring person and certain other persons whose Rights can be traced to an
acquiring person) in whole or in part, at an exchange ratio of a quarter (1/4)
share of the Common Stock per Right. The exchange must also be approved by a
majority of the Continuing Directors.
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At any time prior to the close of business on the tenth business day
following the Share Acquisition Date, the Company may redeem the Rights in whole
but not in part at a redemption price of $0.01 per Right. Under certain
circumstances, the redemption must also be approved by a majority of the
Continuing Directors. Immediately upon the action of the Board of Directors
electing to redeem the Rights, with, where required, the concurrence of the
Continuing Directors, the Rights will terminate and the only right of the
holders of Rights will be to receive the redemption price. With certain
exceptions, no adjustment in the Purchase Price will be required until
accumulative adjustments amount to at least one percent of the Purchase Price.
No fractional shares will be issued and in lieu thereof an adjustment in cash
will be made based on the market price of the Common Stock on the last trading
day prior to the date of exercise.
The term "Continuing Directors" means any member of the Board of Directors
of the Company who was a member of the Board prior to the date of the Rights
Agreement, and any person who is subsequently elected to the Board if such
person is recommended or approved by a majority of the Continuing Directors, but
shall not include an Acquiring Person or an affiliate or associate of an
Acquiring Person or any representative of the foregoing entities.
Until the Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
At any time prior to the Distribution Date, the Board of Directors may
amend any provision of the Rights Agreement in any manner, including to change
the Purchase Price, without the approval of the holders of the Common Stock.
Thereafter, subject to certain limitations, the Board of Directors (with the
concurrence of the Continuing Directors) may amend the Rights Agreement without
the approval of the holders of the Common Stock in order to cure any ambiguity,
to make changes which do not adversely affect the interest of holders of Rights
(excluding the interest of any acquiring person), or to shorten or lengthen any
time period under the Rights Agreement.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board of Directors. The Rights should not
interfere with any merger or other business combination approved by the Board of
Directors since the Board of Directors may, at its option, at any time prior to
the close of business on the tenth business day after the Shares Acquisition
Date, redeem all but not less than all of the then outstanding Rights at the
Redemption Price.
A copy of the Rights Agreement has been filed as an exhibit to this
Registration Statement. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to the Rights
Agreement, which is hereby incorporated herein by reference.
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ITEM 2. EXHIBITS.
Exhibit No. Description
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4.1 Rights Agreement dated as of May 23, 1997, between the
Registrant and BankBoston, N.A., which includes the
form of Rights Certificate (including the forms of
Assignment and Election to Exercise) as Exhibit A and
the Summary of Rights to Purchase Common Stock as
Exhibit B.
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.
MYLEX CORPORATION
Date: June 11, 1997 By:
_______________________________________
Al Montross
President and Chief Executive Officer
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EXHIBIT INDEX
Exhibit No. Description
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4.1 Rights Agreement dated as of May 23, 1997, between the
Registrant and BankBoston, N.A., which includes the
form of Rights Certificate (including the forms of
Assignment and Election to Exercise) as Exhibit A and
the Summary of Rights to Purchase Common Stock as
Exhibit B.
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EXHIBIT 4.1
RIGHTS AGREEMENT
DATED MAY 23, 1997
BETWEEN
MYLEX CORPORATION
AND
BANKBOSTON, N.A., RIGHTS AGENT
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TABLE OF CONTENTS
Page No.
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Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 5
Section 3. Issuance of Rights Certificates 5
Section 4. Form of Rights Certificates 7
Section 5. Countersignature and Registration 8
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates 8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights 9
Section 8. Cancellation and Destruction of Rights Certificates 11
Section 9. Reservation and Availability of Common Shares 11
Section 10. Common Shares Record Date 12
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights 13
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares 20
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power 21
Section 14. Fractional Rights and Fractional Shares 24
Section 15. Rights of Action 25
Section 16. Agreement of Rights Holders 25
Section 17. Rights Certificate Holder Not Deemed a Stockholder 26
Section 18. Concerning the Rights Agent 26
Section 19. Merger or Consolidation or Change of Name of Rights
Agent 26
Section 20. Duties of Rights Agent 27
Section 21. Change of Rights Agent 29
Section 22. Issuance of New Rights Certificates 30
Section 23. Redemption 30
Section 24. Exchange 31
Section 25. Notice of Certain Events 33
Section 26. Notices 34
Section 27. Supplements and Amendments 34
Section 28. Successors 35
Section 29. Determinations and Actions by the Board of Directors,
etc. 35
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Section 30. Benefits of this Agreement 36
Section 31. Severability 36
Section 32. Governing Law 36
Section 33. Counterparts 36
Section 34. Descriptive Headings 36
Exhibit A Form of Rights Certificate A-1
Exhibit B Summary of Rights to Purchase Common Stock B-1
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COMMON STOCK RIGHTS AGREEMENT
This COMMON STOCK RIGHTS AGREEMENT is dated as of May 23, 1997 between
Mylex Corporation, a Delaware corporation (the "Company"), and BankBoston, N.A.
(the "Rights Agent").
Subject to the execution of this Agreement (as hereinafter defined) and to
certain other conditions, on May 12, 1997 (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company (the "Board") authorized and
declared a dividend of one common stock purchase right (a "Right") for each
Common Share (as hereinafter defined) of the Company outstanding as of the Close
of Business (as hereinafter defined) on May 23, 1997 (the "Record Date"), and
further authorized and directed the issuance of one Right (as such number may be
adjusted pursuant to the provisions of this Agreement) with respect to each
Common Share that shall become outstanding between the Record Date and the
earlier of the Distribution Date or the Expiration Date (as such terms are
hereinafter defined), and in certain circumstances after the Distribution Date.
Each Right represents the right to purchase a quarter (1/4) share of Common
Stock (as such number may be adjusted pursuant to the provisions of this
Agreement), upon the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions.
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, shall be the Beneficial Owner of
20% or more of the Common Shares then outstanding. Notwithstanding the
foregoing, (x) the term Acquiring Person shall not include the Company, any
Subsidiary of the Company, any employee benefit plan maintained by the Company
or any of its Subsidiaries or any trustee or fiduciary with respect to such plan
acting in such capacity; and (y) no Person shall become an Acquiring Person as
the result of (A) the acquisition of Common Stock (or other securities
convertible into Common Stock or other rights with respect to Common Stock)
directly from the Company, or (B) an acquisition of Common Stock by the Company
which, by reducing the number of shares outstanding, proportionately increases
the percentage of shares beneficially owned by such Person (alone or together
with all of such Person's Affiliates and Associates) to 20% or more of the
shares of Common Stock then outstanding; provided, however, that if a Person
(together with such Person's Affiliates and Associates) becomes the Beneficial
Owner of 20% or more of the Common Stock then outstanding as a result of share
purchases by the Company, and such Person (or an Affiliate or Associate of such
Person) subsequently becomes the Beneficial Owner of any additional Common
Stock, such Person shall then be an Acquiring Person. Notwithstanding the
foregoing, if the Board of Directors of the Company determines in good
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faith that a Person who would otherwise be an Acquiring Person has become such
inadvertently, and such Person divests as promptly as practicable the sufficient
number of shares of Common Stock so that such Person is no longer an Acquiring
Person, then such Person shall not be deemed an Acquiring Person for purposes of
this Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(c) "Agreement" shall mean this Rights Agreement as originally executed or
as it may from time to time be supplemented or amended pursuant to the
applicable provisions herein.
(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 is considered to beneficially own, directly or indirectly, for
purposes of Section 13(d) of the Exchange Act and Rule 13d-3 of the Rules
and Regulations (or any comparable or successor law or regulation);
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to acquire (whether
such right is exercisable immediately or only after the passage of time or
upon the satisfaction of condition) pursuant to any agreement, arrangement
or understanding (whether or not in writing) (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities), or upon the exercise
of conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person shall
not be deemed pursuant to this Section 1(d)(ii)(A) the Beneficial Owner of,
or to beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any security under
this Section 1(d)(ii)(B) if the agreement, arrangement or understanding to
vote such security (1) arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable Rules and
Regulations and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person
or any of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) (other than
customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent contemplated by
the proviso
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to Section 1(d)(ii)(B)) or disposing of any securities of the Company;
provided, however, that in no case shall an officer or director of the
Company be deemed (x) the Beneficial Owner of any securities beneficially
owned by another officer or director of the Company solely by reason of
actions undertaken by such persons in their capacity as officers or
directors of the Company or (y) the Beneficial Owner of securities held of
record by the trustee of any employee benefit plan of the Company or any
Subsidiary of the Company for the benefit of any employee of the Company or
any Subsidiary of the Company, other than the officer or director, by
reason of any influence that such officer or director may have over the
voting of the securities held in the plan.
(d) "Business Day" shall mean any day other than a Saturday, a Sunday,
or a day on which banking institutions in San Francisco, California are
authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given day shall mean 2:00 p.m.,
California time, on such date; provided, however, that if such date is not a
Business Day, it shall mean 2:00 p.m., California time on the next succeeding
Business Day.
(f) "Common Shares," when used with reference to the Company, shall
mean the shares of Common Stock. "Common Shares," when used with reference to
any Person other than the Company, shall mean the capital stock (or equity
interest) with the greatest voting power of such other Person or, if such other
Person is a Subsidiary of another Person, the Person or Persons which ultimately
control such first-mentioned Person.
(g) "Common Stock" shall mean the common stock, $0.01 par value, of the
Company.
(h) "Continuing Director" shall mean any Person who is a member of the
Board of Directors who is not an Acquiring Person, or an Affiliate or Associate
of an Acquiring Person, or a nominee or representative of an Acquiring Person or
of an Acquiring Person's Affiliate or Associate, and who (i) was a member of the
Board prior to the date of this Agreement, or (ii) becomes a member of the Board
after the date of this Agreement if such Person's nomination for election to the
Board is recommended or approved by a majority of the Continuing Directors.
(i) "Distribution Date" shall mean the earlier of (i) the Close of
Business on the tenth day (or such later date as may be determined by action of
a majority of Continuing Directors then in office) after the Shares Acquisition
Date (or, if the tenth day after the Shares 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 (or such later date as may be determined by action of
a majority of Continuing Directors then in office) after the date that a tender
or exchange offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan) is first published or
sent or given within the meaning of Rule 14d-2(a) of the Rules and Regulations,
if, assuming the successful consummation thereof, such Person would be the
Beneficial Owner of 20% or more of the shares of Common Stock then outstanding.
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(j) "Equivalent Shares" shall mean Common Shares and any other class or
series of capital stock of the Company that is entitled to participate in
dividends and other distributions, including distributions upon the liquidation,
dissolution or winding up of the Company, on a proportional basis with the
Common Shares. In calculating the number of any class or series of Equivalent
Shares for purposes of Section 11 of this Rights Agreement, the number of
shares, or fractions of a share, of such class or series of capital stock that
is entitled to the same dividend or distribution as a whole Common Share shall
be deemed to be one share.
(k) "Expiration Date" shall mean the earlier of (i) the Close of
Business on the Final Expiration Date, (ii) the Redemption Date, (iii) the time
at which the Board of Directors orders the exchange of the Rights as provided in
Section 24 hereof or (iv) the consummation of a transaction contemplated by
Section 13(d) hereof.
(l) "Final Expiration Date" shall mean May 23, 2007.
(m) "Permitted Offer" shall mean a tender offer or exchange offer for
all outstanding Common Shares made in the manner prescribed by Section 14(d) of
the Exchange Act and the Rules and Regulations; provided, however, that such
tender offer occurs at a time when Continuing Directors are in office and a
majority of the Continuing Directors then in office has determined that the
offer is both adequate and otherwise in the best interests of the Company and
its stockholders (taking into account all factors that such Continuing Directors
deem relevant, including without limitation prices that could reasonably be
achieved if the Company or its assets were sold on an orderly basis designed to
realize maximum value).
(n) "Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity and shall
include any successor (by merger or otherwise) of such entity, as well as any
syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange
Act.
(o) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
(p) "Redemption Date" shall mean the time at which the Board of
Directors of the Company orders redemption of the Rights as provided in
Section 23 hereof.
(q) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(r) "Rights Certificate" shall have the meaning set forth in Section 3
hereof.
(s) "Rules and Regulations" shall mean the general rules and
regulations promulgated under the Exchange Act, as in effect on the date hereof.
(t) "Section 11(a)(ii) Event" shall mean any event described in clause
(A), (B) or (C) of Section 11(a)(ii) hereof.
(u) "Section 13 Event" shall mean any event described in clause (i),
(ii) or (iii) of Section 13(a) hereof.
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(v) "Shares Acquisition Date" shall mean the first date of public
announcement (which shall include a report filed pursuant to Section 13(d) of
the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person
has become such; provided that, if such Person is determined not to have become
an Acquiring Person pursuant to Section 1(a)(y) hereof, then no Shares
Acquisition Date shall be deemed to have occurred.
(w) "Subsidiary" means, as to any Person, any corporation of which an
amount of voting securities sufficient to elect at least a majority of the
directors of such corporation is beneficially owned, directly or indirectly, by
such Person, or otherwise controlled by such Person.
(x) "Total Purchase Price" shall have the meaning set forth in Section
4(a) hereof.
(y) "Trading Day" shall have the meaning set forth in section 11(d)
hereof.
(z) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
Section 2. Appointment of Rights Agent.
The Company hereby appoints the Rights Agent to act as agent for the
Company in accordance with the terms and conditions of this Agreement, and the
Rights Agent hereby accepts such appointment. The Company may from time to time
appoint co-Rights Agents as it may deem necessary or desirable and shall provide
the Rights Agent with 10 days' advance written notice of any such appointment.
The Rights Agent shall have no duty to supervise, and shall in no event be
liable for the acts or omissions of any such co-Rights Agent.
Section 3. Issuance of Rights Certificates.
(a) Until the Distribution Date, (i) the Rights will be evidenced
(subject to the provisions of Sections 3(b) and 3(c) hereof) by the certificates
for Common Shares registered in the names of the holders thereof (which
certificates shall also be deemed to be Rights Certificates whether or not such
certificates bear the legend set forth in this Section 3) and not by separate
Rights Certificates and (ii) the right to receive Rights Certificates will be
transferable only in connection with the transfer of Common Shares. Until the
earlier of the Distribution Date or the Expiration Date, the surrender for
transfer of such certificates for Common Shares shall also constitute the
surrender for transfer of the Rights associated with the Common Shares
represented thereby. As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will, at the request
and expense of the Company, send) by first-class, postage-prepaid mail, to each
record holder of Common Shares as of the close of business on the Distribution
Date, at the address of such holder shown on the records of the Company, a
Rights Certificate, in substantially the form of Exhibit A hereto (a "Rights
Certificate"), evidencing one Right for each Common Share so held, subject to
adjustment as provided herein. In the event that an adjustment in the number of
Rights per Common Share has been made pursuant to Section 11(a)(i) or
Section 11(i) hereof, then at the time of distribution of the Rights
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Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights. As of the Distribution Date, the
Rights will be evidenced solely by such Rights Certificates and may be
transferred by the transfer of the Rights Certificates as permitted hereby,
separately and apart from any transfer of one or more Common Shares, and the
holders of such Rights Certificates as listed in the records of the Company or
any transfer agent or registrar for the Rights shall be the record holders
thereof.
(b) On the Record Date or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights in substantially the form of
Exhibit B hereto (the "Summary Of Rights"), by first-class, postage-prepaid
mail, to each record holder of Common Shares as of the Close of Business on the
Record Date, at the address of such holder shown on the records of the Company.
(c) Unless the Board of Directors by resolution adopted at or before
the time of the issuance (including pursuant to the exercise of rights under the
Company's benefit plans) of any Common Shares specifies to the contrary, Rights
shall be issued in respect of all Common Shares that are issued after the Record
Date but prior to the earlier of the Distribution Date or the Expiration Date
or, in certain circumstances provided in Section 22 hereof, after the
Distribution Date. Certificates representing such Common Shares shall also be
deemed to be certificates for Rights, and shall bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between Mylex Corporation
and BankBoston, N.A. (the "Rights Agent") dated as of May 23, 1997, as it
may from time to time be amended (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a copy of which is on
file at the principal executive offices of Mylex 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. Mylex 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 after receipt of a written request therefor. Under
certain circumstances set forth in the Rights Agreement, Rights issued to,
or held by, any Person who is, was or becomes an Acquiring Person or 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. The Rights shall not be
exercisable by a holder in any jurisdiction where the requisite
qualification to the issuance to such holder of the Rights or the exercise
by such holder of the Rights in such jurisdiction, shall not have been
obtained or obtainable.
With respect to such certificates containing the foregoing legend, until
the earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for transfer of any such
certificate shall also constitute the transfer of the Rights associated with
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the Common Shares represented thereby. In the event that the Company purchases
or acquires any Common Shares after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Shares shall be deemed
canceled and retired so that the Company shall not be entitled to exercise any
Rights associated with the Common Shares which are no longer outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase
Common Shares and of assignment to be printed on the reverse thereof) shall be
substantially in the form of 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 on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Section 11
and Section 22 hereof, the Rights Certificates, whenever distributed, shall be
dated as of the Record Date (or in the case of Rights issued with respect to
Common Shares issued by the Company after the Record Date, as of the date of
issuance of such Common Shares), shall show the date of countersignature, 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 quarter (1/4) share of Common Stock being hereinafter
referred to as the "Purchase Price" and the aggregate exercise price of all
Common Shares (or, following a Triggering Event, other securities, cash or other
assets, as the case may be) for which such surrendered Right is then
exercisable, hereinafter referred to as the "Total Purchase Price"), but the
number and type of securities purchasable upon the exercise of each Right and
the Purchase Price shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section
22 hereof that represents Rights beneficially owned by: (i) an Acquiring Person
or any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person 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 that the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding that has as a primary
purpose or effect avoidance of Section 7(e) hereof, and any Rights Certificate
issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange,
replacement or adjustment of any other Rights Certificate referred to in this
sentence, shall contain (to the extent feasible) the following legend:
The Rights represented by this Rights 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
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Agreement). Accordingly, this Rights Certificate and the Rights
represented hereby may become null and void in the circumstances specified
in Section 7(e) of the Rights Agreement.
In the event that the Rights become exercisable, the Rights Agent and the
Company will agree upon a procedure for determining which Rights will be so
legended.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its Chief Executive Officer, its President or any
Vice President, either manually or by facsimile signature, and by the Secretary
of the Company, either manually or by facsimile signature, and shall have
affixed thereto the Company's seal (if any) or a facsimile thereof. The Rights
Certificates shall be manually countersigned by an authorized signatory of the
Rights Agent and shall not be valid for any purpose unless 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 Certificate may be signed on behalf of the
Company by any person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office designated for such purposes, 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 date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.
(a) Subject to the provisions of Sections 7(e), 14 and 24 hereof, at
any time after the Close of Business on the Distribution Date, and at or prior
to the Close of Business on the Expiration Date, any Rights Certificate or
Rights Certificates may be transferred, split up, combined or exchanged for
another Rights Certificate or Rights Certificates, entitling the registered
holder to purchase the number of shares of Common Stock (or, following a
Triggering Event, other securities, cash or other assets, as the case may be) as
the Rights Certificate or Rights Certificates surrendered entitle such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate or Rights Certificates shall make such request
in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Rights Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent designated for such purpose.
Neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such
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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 Sections 7(e), 14 and 24 hereof,
countersign and deliver to the person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and, at the Company's or the Rights
Agent's request, 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 make
and deliver a new Rights Certificate of like tenor to the Rights Agent for
delivery to the registered holder in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) 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
on the reverse side thereof duly executed, to the Rights Agent at the office of
the Rights Agent designated for such purpose, together with payment of the Total
Purchase Price, at or prior to the Expiration Date.
(b) The Purchase Price for each quarter (1/4) share of Common Stock
issuable pursuant to the exercise of a Right shall initially be $2.65 and shall
be subject to adjustment from time to time as provided in Sections 11 and 13
hereof and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Total Purchase Price (as such amount may be reduced pursuant to
Section 11(a)(iv)) (or other securities or property, as the case may be) and an
amount equal to any applicable transfer tax required to be paid by the holder of
such Rights Certificate in accordance with Section 9(d) hereof in cash, or by
certified check or cashier's check payable to the order of the Company, the
Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i)(A)
requisition from any transfer agent of the Common Shares (or make available, if
the Rights Agent is the transfer agent for the Common Shares) a certificate or
certificates for such number of Common Shares to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests or (B) if the Company shall have elected to deposit the total number of
Common Shares issuable upon exercise of the Rights hereunder with a depository
agent, requisition from the depository agent of depository receipts representing
such number of Common Shares as are to be purchased (in
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which case certificates for the Common Shares represented by such receipts shall
be deposited by the transfer agent with the depository agent) and the Company
hereby directs the depository agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates or 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) when appropriate, after receipt thereof, deliver such cash 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 (including to zero)
pursuant to Section 11(a)(iv) hereof) may be made in cash or by certified check
or cashier's check payable to the order of the Company. In the event that the
Company is obligated to issue other securities of the Company, pay cash and/or
distribute other property pursuant to Section 11(a) hereof, the Company will
make all arrangements necessary so that such other securities, cash and/or other
property are available for distribution 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 to the registered holder of such Rights Certificate or to
his or her duly authorized assigns, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event or Section 13 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 (a "Post Transferee"), (iii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee prior to
or concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights 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) (a "Prior Transferee") or (iv) any subsequent
transferee receiving transferred Rights from a Post Transferee or a Prior
Transferee, either directly or through one or more intermediate transferees,
shall become null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company shall use all
reasonable efforts to ensure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but shall have no liability to any holder
of Rights Certificates or to any other Person as a result of its failure to make
any determinations with respect to an Acquiring Person or any of such Acquiring
Person's Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered
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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.
Section 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or to any
of its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
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 and consistent with the internal policies of the
Rights Agent, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Common Shares.
(a) The Company (i) shall use its reasonable efforts to cause to be
reserved and kept available out of, and to the extent of, its authorized and
unissued shares of Common Stock not reserved for another purpose (and/or other
securities), or its authorized and issued shares of Common Stock held in its
treasury, the number of shares of Common Stock (and/or other securities) that
will be sufficient to permit the exercise in full of all outstanding Rights.
(b) The Company shall use its best efforts to (i) file, as soon as
practicable following the occurrence of a Section 11(a)(ii) Event in which the
consideration to be delivered by the Company upon exercise of the Rights has
been determined in accordance with Section 11(a)(iv) hereof, or as soon as is
required by law following the Distribution Date, as the case may be, a
registration statement under the Securities Act of 1933, as amended (the
"Securities 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 Securities Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities and
(B) the Expiration Date. The Company may temporarily suspend, for a period not
to exceed ninety (90) days after the date set forth in clause (i) of the first
sentence of this Section 9(b), 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,
and notify the Rights Agent, that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement and notification to the
Rights Agent at such time as the suspension is no longer in effect. The Company
will also take such action as may be appropriate under, or to ensure
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compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. 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, or an exemption therefrom shall be available, and until a
registration statement has been declared effective. The Company will notify the
Rights Agent in writing of the jurisdictions in which Rights shall not be
exercisable pursuant to the preceding sentence. So long as shares of Common
Stock (and/or other shares of capital stock or securities) issuable upon the
exercise of Rights is listed on any national securities exchange, the Company
shall use its best efforts to cause all shares or other securities reserved for
issuance upon exercise of Rights to be listed on such exchange upon official
notice of issuance upon such exercise.
(c) The Company shall take such action as may be necessary to ensure
that all Common Shares that may be delivered upon exercise of Rights shall, at
the time of delivery of the certificates for such Common Shares (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares.
(d) The Company shall pay when due and payable any and all Federal and
state transfer taxes and charges which may be payable in respect of the original
issuance or delivery of the Rights Certificates or of any Common Shares 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
certificates or depository receipts for the Common Shares in a name other than
that of, the registered holder of the Rights Certificate evidencing Rights
surrendered for exercise or to issue or to deliver any certificates or
depository receipts for Common Shares upon the exercise of any Rights until any
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.
Section 10. Common Shares Record Date.
Each person in whose name any certificate for shares of Common Stock
(and/or other securities) is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of Common Shares
represented thereby on, and such certificate shall be dated, the date upon which
the Rights Certificate evidencing such Rights was duly surrendered and payment
of the Total Purchase Price with respect to which the Rights have been exercised
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Common Shares
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares on, and such certificate shall be dated,
the next succeeding Business Day on which the Common Shares transfer books of
the Company are open. Prior to the exercise of the Rights evidenced thereby,
the holder of a Rights Certificate shall not be entitled to any rights of a
holder of Common 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.
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Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights.
The Purchase Price, the number and kind of shares or other property 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 Common
Shares, (B) subdivide the outstanding Common Stock, (C) combine the
outstanding Common Stock (by reverse stock split or otherwise) into a
smaller number of Common 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), then, in each such
event, except as otherwise provided in this Section 11(a) and Section 7(e)
hereof, the Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision, combination or
reclassification, and the number of shares of Common Stock (or the number
and kind of other securities, as the case may be), shall be proportionately
adjusted so that if a holder of Rights after such time were to exercise
that number of Rights (or fraction thereof) which would result in the
aggregate amount of the Purchase Price payable upon such exercise (at the
Purchase Price then in effect) being equal to the amount of the Purchase
Price that was payable prior to such time upon exercise of a Right, he
would be entitled to receive the aggregate number of shares of Common Stock
in an aggregate principal amount (or the number and kind of other
securities, as the case may be) which, if a Right had been exercised
immediately prior to such time and at a time when the Common Stock (or
other capital stock, as the case may be) 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) hereof, the adjustment provided for
in this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii) hereof
(ii) In the event
(A) at any time after the tenth Business Day after a Shares
Acquisition Date, directly or indirectly, any Person (other than a
wholly owned subsidiary of the Company) shall merge into the Company
or any of its subsidiaries or otherwise combine with the Company or
any of its subsidiaries and the Company or such subsidiary shall be
the continuing or surviving corporation of such merger or combination
or any Person shall sell or otherwise transfer, in one or more
transactions, assets to the Company or any of its subsidiaries in
exchange for 50% or more of the shares of any class of capital stock
of the Company or any of its subsidiaries, and Common Stock of the
Company shall remain outstanding and unchanged, or at any time after
the date of this Agreement, directly or indirectly, any Acquiring
Person shall (1) in one or more transactions, transfer any assets to
the Company or any of its subsidiaries in exchange (in whole or in
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part) for shares of any class of capital stock of the Company or any
of its subsidiaries or for securities exercisable for or convertible
into shares of any class of capital stock of the Company or any of its
subsidiaries or otherwise obtain from the Company or any of its
subsidiaries, with or without consideration, any additional shares of
any class of capital stock of the Company or any of its subsidiaries
or other securities exercisable for or convertible into shares of any
class of capital stock of the Company or any of its subsidiaries
(other than as part of a pro rata distribution to all holders of
Common Stock), (2) sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise dispose (in one or more transactions), to, from
or with, as the case may be, the Company or any of its subsidiaries,
assets on terms and conditions less favorable to the Company or such
subsidiary than the Company or such subsidiary would be able to obtain
in arm's-length negotiation with an unaffiliated third party, (3)
receive any compensation from the Company or any of its subsidiaries
other than compensation for full-time employment as a regular
employee, or fees for serving as director, as rates in accordance with
the Company's (or its subsidiaries') past practices, or (4) receive
the benefit, directly or indirectly (except proportionately as a
stockholder), of any loans, advances, guarantees, pledges or other
financial assistance provided by the Company or any of its
subsidiaries or
(B) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any reverse
stock split), or recapitalization of the Company, or any merger, share
exchange or consolidation of the Company with any of its subsidiaries
or any other similar transaction or series of transactions involving
the Company or any of its subsidiaries (whether or not with or into or
otherwise involving an Acquiring Person) which has the effect,
directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity
securities or of securities exercisable for or convertible into equity
securities of the Company or any of its subsidiaries which is directly
or indirectly owned by any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, or
(C) any Person (other than the Company, any subsidiary of the
Company, any employee benefit plan of the Company or of any subsidiary
of the Company or any person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such
plan), either alone or together with its Affiliates and Associates,
becomes, at any time after the Rights Dividend Declaration Date, the
Beneficial Owner of 20% or more of the shares of Common Stock then
outstanding, unless the event causing the 20% threshold to be crossed
is a transaction set forth in Section 13(a) hereof, or is pursuant to
a permitted offer;
then, and in each such case, proper provision shall be made so that each holder
of a Right, except as provided in Section 7(e) hereof, shall thereafter have the
right to receive for each Right, upon exercise thereof in accordance with the
terms of this Agreement and payment of the then-current Total Purchase Price,
such number of quarter (1/4) shares of
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Common Stock of the Company as shall equal the result obtained by (x)
multiplying the then-current Purchase Price by the number of quarter (1/4)
shares of Common Stock for which a Right was exercisable (or would have been
exercisable if the Distribution Date had occurred) immediately prior to the
first occurrence of a Section 11(a)(ii) Event, and (y) dividing that product by
50% of one-fourth (1/4) of the Current Per Share Market Price (determined
pursuant to Section 11(d) hereof) for Common Shares on the date of such first
occurrence (such number of shares being hereinafter referred to as the
"Adjustment Shares").
(iii) The right to buy Common Shares of the Company pursuant to Section
11(a)(ii) hereof shall not arise as a result of any Person becoming an Acquiring
Person through an acquisition of Common Shares pursuant to a Permitted Offer.
(iv) In the event that the number of shares of Common Stock which are
authorized by the Company's Certificate of Incorporation but are not outstanding
and are not reserved for issuance other than upon exercise of the Rights are not
sufficient to permit the exercise in full of the Rights in accordance with
Section 11(a)(ii), the Company, by a vote of the majority of the Board, shall:
(A) determine the excess of (1) the value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current Value")
over (2) the Purchase Price (such excess being 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)
other equity securities of the Company, (such other equity securities
being referred to as "Capital 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 a majority of the Board
after receiving advice from a nationally recognized investment banking
firm; provided, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty
(30) days following the later of (x) the first occurrence of a Section
11(a)(ii) Event and (y) the date on which the Company's right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y)
being referred to herein as the "Section 11(a)(ii) 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, Common Shares (to the extent available), except to the extent
that the Company has not obtained any necessary stockholder or
regulatory approval for such issuance, 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 Common Shares could be
authorized for issuance upon exercise in full of the Rights or that
any necessary regulatory approval for such issuance will be obtained,
the thirty (30) day period set forth above may be extended to the
extent necessary, but not more than ninety (90)
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days after the Section 11(a)(ii) Trigger Date, in order that the
Company may seek stockholder approval for the authorization of such
additional shares or take action to obtain such regulatory approval
(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)(iv), the Company (x) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding
Rights and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any
authorization of additional shares, to take any action to obtain any
required regulatory approval 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, and shall notify
the Rights Agent, that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement, and
notification to the Right Agent, at such time as the suspension is no
longer in effect. For purposes of this Section 11(a)(iv), the value
of the Common Shares shall be the Current Per Share Market Price (as
determined pursuant to Section 11(d) hereof) of the Common Shares 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
Shares on such date.
(b) In case the Company shall, at any time after the date of this
Agreement, fix a record date for the issuance of rights, options or warrants to
all holders of Common Shares or of any class or series of Equivalent Shares
entitling such holders (for a period expiring within forty-five (45) calendar
days after such record date) to subscribe for or purchase Common Shares or
Equivalent Shares or securities convertible into Common Shares or Equivalent
Shares at a price per share (or having a conversion price per share, if a
security convertible into Common Shares or Equivalent Shares) less than the then
Current Per Share Market Price of the Common Shares or Equivalent Shares (as
defined in Section 11(d)) on such record date, then, in each such case, 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 Common Shares and
Equivalent Shares (if any) outstanding on such record date, plus the number of
Common Shares or Equivalent Shares, as the case may be, which the aggregate
offering price of the total number of Common Shares or Equivalent Shares, as the
case may be, 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 Common Shares
and Equivalent Shares (if any) outstanding on such record date, plus the number
of additional Common Shares or Equivalent Shares, as the case may be, 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 in a consideration part or all of which shall 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. Common Shares and Equivalent Shares 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
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successively whenever such a record date is fixed, and in the event that such
rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(c) In case the Company shall, at any time after the date of this
Agreement, fix a record date for the making of a distribution to all holders of
the Common Shares or of any class or series of Equivalent Shares (including any
such distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend, if any, or a dividend
payable in Common Shares) or subscription rights, options or warrants (excluding
those referred to in Section 11(b)), then, in each such case, 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 Per Share Market Price (as
determined pursuant to Section 11(d) hereof) of a Common Share or an Equivalent
Share 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 Common Share or Equivalent
Share, as the case may be, and the denominator of which shall be such Current
Per Share Market Price (as determined pursuant to Section 11(d) hereof) of a
Common Share or Equivalent Share on such record date. Such adjustments shall be
made successively whenever such a record date is fixed, and in the event that
such distribution is not so made, the Purchase Price shall be adjusted to be the
Purchase Price which would have been in effect if such record date had not been
fixed.
(d) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iv) hereof, the "Current Per Share
Market Price" of any security (a "Security" for the purpose of this Section
11(d)) on any date shall be deemed to be the average of the daily closing prices
per share of such Security for the thirty (30) consecutive Trading Days (as such
term is hereinafter defined) immediately prior to such date; provided, however,
that in the event that the Current Per Share Market Price of the Security is
determined during a period following the announcement by the issuer of such
Security of (i) a dividend or distribution on such Security payable in shares of
such Security or securities convertible into such shares or (ii) any
subdivision, combination or reclassification of such Security, and prior to the
expiration of the requisite thirty (30) Trading Day period, after the exdividend
date for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the Current Per
Share Market Price shall be appropriately adjusted to reflect the current market
price per share equivalent of such Security. The "closing price" for each day
shall be, if the shares of Common Stock (or other securities) are listed and
admitted to trading on a national securities exchange, as reported in the
principal consolidated transaction reporting system for securities listed on the
principal national securities exchange on which such shares are listed or
admitted to trading or, if such shares of Common Stock (or other securities) are
not listed or admitted to trading on any national securities exchange, the last
quoted sales price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported on The Nasdaq Stock
Market's National Market (the "Nasdaq National Market") or such other system
then in use, or, if on any such date
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such shares 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 shares of Common Stock (or other securities) selected by a majority of
the Board. If on any such date no market maker is making a market in such
shares, the fair value of such shares on such date, as determined in good faith
by a majority of the Board, shall be used. The term "Trading Day" shall mean a
Business Day or, if such shares are listed or admitted to trading on any
national securities exchange or the Nasdaq National Market, a day on which the
principal national securities exchange on which such shares are listed or
admitted to trading or the Nasdaq National Market is open for the transaction of
business.
(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 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth of a Common Share or other share or one
hundred-thousandth of a Common Share, as the case may be. Notwithstanding the
first sentence of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three (3) years from the date of
the transaction which requires such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
13(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock other than Common Shares, thereafter the
number of such other shares so receivable upon exercise of any Right and if
required, 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 Shares contained in this Section 11, and
the provisions of Sections 7, 9, 10, 13 and 14 with respect to the Common Shares
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 shares of Common Stock that
may be purchased from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) and (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 quarter (1/4) shares of
Common Stock (calculated to the nearest one hundred-thousandth of a share)
obtained by (i) multiplying (x) the number of quarter (1/4) shares of Common
Stock 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.
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(i) The Company may elect on or after the date of any adjustment of the
Purchase Price as a result of the calculations made in Section 11(b) to adjust
the number of Rights, in substitution for any adjustment in the number of Common
Shares purchasable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercisable for the
number of quarter (1/4) shares of Common Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price.
The Company shall make a public announcement, and shall notify the Rights Agent,
of its election to adjust the number of Rights, indicating the record date for
the adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase Price is adjusted
or any day thereafter, but, if the Rights Certificates have been issued, shall
be at least ten (10) days later than the date of the public announcement. If
Rights Certificates have been issued, upon each adjustment of the number of
Rights pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Rights Certificates
on such record date Rights Certificates evidencing, subject to Section 14
hereof, the additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of quarter (1/4) shares of Common Stock issuable upon the exercise of
the Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per quarter (1/4) share of Common Stock
and the number of quarter (1/4) shares of Common Stock which were expressed in
the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the par or stated value, if any, of the number of
quarter (1/4) 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 as
fully paid and nonassessable shares 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 issuing to the holder of any Right exercised after such record date of
the number of quarter (1/4) shares of Common Stock and other capital stock or
securities of the
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Company, if any, issuable upon such exercise over and above the number of
quarter (1/4) 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) upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, prior
to the Distribution Date, 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 it in its sole discretion shall
determine to be advisable in order that any (i) consolidation or subdivision of
the Common Shares, (ii) issuance wholly for cash of any Common Shares at less
than the current market price, (iii) issuance wholly for cash of Common Shares
or securities which by their terms are convertible into or exchangeable for
Common Shares, (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 Shares shall not be taxable to such stockholders.
(n) The Company shall not, at any time after the Distribution Date, (i)
consolidate with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), (ii) merge with or into
any other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or (iii) sell or transfer (or permit any
Subsidiary to 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 22(o) hereof),
if (x) at the time or immediately after such consolidation, merger or sale 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 or sale, the
stockholders of the Person who constitutes, or would constitute, the "Principal
Party" for purposes of Section 13(a) hereof shall have received a distribution
of Rights previously owned by such Person or any of its Affiliates and
Associates.
(o) The Company shall not, after the Distribution Date, except as
permitted by Sections 23, 24 or 27 hereof, take (or permit to be taken) 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.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common
Shares a copy of such certificate and (c) mail a brief summary thereof to each
holder of a Rights Certificate in accordance with Section 26 hereof.
Notwithstanding the foregoing sentence, the failure of the Company to make such
certification or give such notice shall not affect the validity of such
adjustment or the force or effect of the requirement for such
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adjustment. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment contained therein and shall not be deemed to
have knowledge of such adjustment unless and until it shall have received such
certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, following the Shares Acquisition Date, directly
or indirectly:
(i) the Company shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction the
principal purpose of which is to change the state of incorporation of the
Company or that complies with Section 11(o) hereof), and the Company shall not
be the continuing or surviving corporation of such consolidation or merger;
(ii) any Person (other than a Subsidiary of the Company in a transaction
that complies with Section 11(o) hereof) shall consolidate with the Company, or
merge with and into the Company and the Company shall be the continuing or
surviving corporation of such consolidation or merger and, in connection with
such consolidation or merger, all or part of the outstanding shares of Common
Stock of the Company shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property; or
(iii) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or more transactions,
assets or earning power aggregating 50% or more 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 or one or more of its wholly owned Subsidiaries
in one or more transactions, each of which complies with Section 11(o) hereof),
then, and in each such case, proper provision shall be made so that
(A) each holder of a Right (except as provided in Section 7(e) or
otherwise provided herein) shall thereafter have the right to receive, upon
the exercise thereof in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid and nonassessable
Common Shares of the Principal Party (as hereinafter defined), free of any
liens, encumbrances, rights of first refusal or other adverse claims, as
shall be equal to the result obtained by (1) multiplying the then current
Purchase Price by the number of quarter (1/4) shares of Common Stock for
which a Right was exercisable immediately prior to the first occurrence of
a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to
the first occurrence of a Section 13 Event, multiplying the number of such
quarter (1/4) shares of Common Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event by
the Purchase Price in effect immediately prior to such first occurrence)
and (2) dividing that product by 50% of one-fourth (1/4) of the Current Per
Share Market
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Price (determined pursuant to Section 11(d) hereof) of the Common
Shares of such Principal Party on the date of consummation of such
Section 13 Event;
(B) 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;
(C) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such Principal
Party following the first occurrence of a Section 13 Event; and
(D) such Principal Party shall take such steps (including,
but not limited to, the reservation of a sufficient number of its
Common Shares) 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 Common Shares thereafter deliverable upon the exercise
of the Rights.
(b) "Principal Party" shall mean,
(i) in the case of any transaction described in clause (i) or (ii) of
Section 13(a), the Person that is the issuer of any securities into
which shares of Common Stock of the Company are converted in such
merger or consolidation, and if no securities are so issued, the
Person that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in clause (iii) of
Section 13(a), the Person that is the party receiving the greatest
portion of the assets or earning power transferred pursuant to such
transaction or transactions,
PROVIDED, HOWEVER, THAT IN ANY SUCH CASE, (w) IF THE COMMON STOCK OF
SUCH PERSON is not at such time and has not been continuously over the
preceding 12-month period registered under Section 12 of the Exchange
Act, and such Person is a direct or indirect subsidiary of another
corporation the common stock of which is and has been so registered,
"Principal Party" shall refer to such other corporation, (x) if the
common stock of such Person is not and has not been so registered and
such Person is not a direct or indirect subsidiary of another
corporation the common stock of which is and has been so registered,
"Principal Party" shall refer to the corporation which ultimately
controls such Person, (y) in case such Person is a subsidiary,
directly or indirectly, of more than one corporation, the common
stocks of all of which are and have been so registered, "Principal
Party" shall refer to whichever of such corporations is the issuer of
the common stock having the greatest market value of shares held by
the public, and (z) in case such Person is owned, directly or
indirectly, by a joint venture formed by two or more Persons that are
not owned, directly or indirectly, by the same
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Person, the rules set forth in (w) - (y) above shall apply to each of
the chains of ownership having an interest in such joint venture as if
such party were a subsidiary of both or all of such joint venturers
and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as their
direct or indirect interests in such Person bear to the total of such
interests.
(c) If, for any reason, the Rights cannot be exercised for Common Shares
of such Principal Party as provided in Section 13(a), then each holder of Rights
shall have the right to exchange its Rights for cash from such Principal Party
in an amount equal to the number of Common Shares that it would otherwise be
entitled to purchase, as determined pursuant to Section 13(a), times the Current
Per Share Market Price, as determined pursuant to Section 11(d) hereof, of such
Common Shares of such Principal Party. If, for any reason, the foregoing
formulation cannot be applied to determine the cash amount into which the Rights
are exchangeable, then the Board of Directors, upon the approval of a majority
of the Continuing Directors, based upon the advice of one or more nationally
recognized investment banking firms, shall determine such amount reasonably and
with good faith to the holders of Rights. Any such determination shall be final
and binding on the Rights Agent.
(d) Notwithstanding anything in this Agreement to the contrary, Section 13
shall not be applicable to a transaction described in clauses (i) and (ii) of
Section 13(a) if: (i) such transaction is consummated with a Person or Persons
(or a wholly-owned Subsidiary of any such Person or Persons) who acquired Common
Shares pursuant to a Permitted Offer; (ii) the price per share of Common Stock
offered in such transaction is not less than the price per share of Common Stock
paid to all holders of Common Shares whose shares were purchased pursuant to
such Permitted Offer; and (iii) the form of consideration being offered to the
remaining holders of Common Shares pursuant to such transaction is the same form
as the form of consideration paid pursuant to such Permitted Offer. Upon
consummation of any such transaction contemplated by this Section 13(d), all
Rights hereunder shall expire.
(e) 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 that have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
confirming that such Principal Party shall, upon consummation of such
consolidation, merger, sale or transfer, assume this Agreement in accordance
with Sections 13(a) and (b) hereof, that all rights of first refusal or
preemptive rights in respect of the issuance of Common Shares of such Principal
Party upon exercise of outstanding Rights have been waived, that there are no
rights, warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights and that such transaction shall not result in a default by such Principal
Party under this Agreement, and further providing that, as soon as practicable
after the date of such consolidation, merger, sale or transfer, such Principal
Party will:
<PAGE>
(i) prepare and file a registration statement under the Securities
Act, with respect to the Rights and the securities purchasable upon
exercise of the Rights, on an appropriate form, use its best efforts to
cause such registration statement to become effective as soon as
practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the Expiration Date,
and similarly comply with applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of) the
Rights and the securities purchasable upon exercise of the Rights on a
national securities exchange or to meet the eligibility requirements for
quotation on Nasdaq; and
(iii) deliver to holders of the Rights historical financial
statements for such Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act.
In the event that at any time after the occurrence of a Section 11(a)(ii)
Event, some or all of the Rights shall not have been exercised at the time of a
transaction described in this Section 13, the Rights which have not theretofore
been exercised shall thereafter be exercisable in the manner described in
Section 13(a) (without taking into account any prior adjustment required by
Section 11(a)(ii)).
(f) The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Rights Certificates that 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 the 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, as determined pursuant to the second sentence of
Section 11(d) hereof.
(b) The Company shall not be required to issue fractions of Common Shares
(or other securities) upon exercise of the Rights or to distribute certificates
which evidence fractional Common Shares. In lieu of fractional Common Shares
(or other securities), the Company shall 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 a Common
Share. For purposes of this Section 14(b), the current market value of a Common
Share shall be the closing price of a Common Share (as determined pursuant to
the second sentence of Section 11(d) hereof) for the Trading Day immediately
prior to the date of such exercise.
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(c) The holder of a Right by the acceptance of the Right expressly waives
his or her right to receive any fractional Rights or any fractional shares upon
exercise of a Right.
Section 15. Rights of Action.
All rights of action in respect of this Agreement, excepting the rights of
action given to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares); and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
of the Common Shares), 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 Shares), may, in his or her own behalf and for his or her 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 or her 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 will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders.
Every holder of a Right, by accepting the same, consents and agrees with
the Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of the Common Shares;
(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 Sections 6(a) and 7(f) hereof, the Company and the Rights
Agent may deem and treat the person in whose name the Rights Certificate (or,
prior to the Distribution Date, the associated Common Shares certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights Certificate
or the associated Common Shares certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the contrary;
and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission,
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<PAGE>
or any statute, rule, regulation or executive order promulgated or enacted by
any governmental authority prohibiting or otherwise restraining performance of
such obligation.
Section 17. Rights Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the shares of
Common Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 25 hereof), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent such compensation as
shall be agreed to in writing between the Company and the Rights Agent for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and expenses and other
disbursements incurred in the administration and execution of this Agreement and
the exercise and performance of its duties hereunder. The Company also agrees
to indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability in the premises. The provisions of this Section 18(a) shall survive
the termination of this Agreement.
(b) The Rights Agent shall be protected and shall incur no liability for,
or in respect of any action taken, suffered or omitted by it in connection with,
its administration of this Agreement in reliance upon any Rights Certificate or
certificate for the Common Shares 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 and executed by the
proper Person or Persons and, where necessary, verified or acknowledged, or
otherwise upon the advice of counsel as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
shareholder services business of the Rights Agent or any
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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 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent.
The Rights Agent undertakes the duties and obligations expressly 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 of its selection (who
may be legal counsel for the Company), and the opinion or advice 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 or advice.
(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 Per Share 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 any one of the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer, or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful misconduct.
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(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any change in the exercisability of the Rights or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Sections 3, 11, 13, 23 or 24, or the ascertaining of
the existence of facts that would require any such change or adjustment (except
with respect to the exercise of Rights evidenced by Rights Certificates after
receipt by the Rights Agent of a certificate furnished pursuant to Section 12
describing such change or adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Common Shares to be issued pursuant to this Agreement or any
Rights Certificate or as to whether any Common Shares will, when issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Chief Financial Officer, or the Secretary 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 by
it in good faith in accordance with instructions of any such officer or for any
delay in acting while waiting for those instructions. Any application by the
Rights Agent for written instructions from the Company may, at the option of the
Rights Agent, set forth in writing any action proposed to be taken or omitted by
the Rights Agent under this Rights Agreement and the date on and/or after which
such action shall be taken or such omission shall be effective. The Rights
Agent shall not be liable for any action taken by, or omission of, the Rights
Agent in accordance with a proposal included in any such application on or after
the date specified in such application (which date shall not be less than five
(5) Business Days after the date any officer of the Company actually receives
such application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken
or omitted.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract
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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 of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
Section 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 for the Common Shares by
registered or certified mail. The Company may remove the Rights Agent or any
successor Rights Agent upon thirty (30) days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent for the Common Shares by registered or certified 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 or
her Rights Certificate for inspection by the Company), then the Rights Agent or
the registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of any state of the United States, in good standing, which is authorized under
such laws to exercise corporate trust or stockholder services powers and is
subject to supervision or examination by Federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million. 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
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Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent for the Common Shares,
and mail a notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Common Shares following the
Distribution Date and prior to the redemption or expiration of the Rights, the
Company (a) shall, with respect to Common Shares 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 the convertible subordinated debentures
of the Company outstanding at the date hereof 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 and this sentence shall be null and void ab
initio if, and to the extent that, such issuance or this sentence would create a
significant risk of or result in material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued or would
create a significant risk of or result in such options' or employee plans' or
arrangements' failing to qualify for otherwise available special tax treatment
and (ii) no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 23. Redemption.
(a) The Company may, at its option and with the approval of the Board of
Directors, at any time prior to the Close of Business on the earlier of (i) the
tenth day following the Shares Acquisition Date or such later date as may be
determined by action of a majority of Continuing Directors then in office and
publicly announced by the Company or (ii) the Final Expiration Date, redeem all
but not less than all of the then outstanding Rights at a redemption price of
$0.01 per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such redemption
price being herein referred to as the "Redemption Price"), and the Company may,
at its option, pay the Redemption Price either in Common Shares (based on the
Current Per Share Market Price thereof (as determined pursuant to Section 11(d)
hereof) at the time of redemption) or cash; provided, however, if the Board of
Directors of the Company authorizes redemption of the Rights in either of the
circumstances set
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forth in clauses (i) or (ii) below, then there must be Continuing Directors then
in office and such authorization shall require the concurrence of a majority of
such Continuing Directors: (i) such authorization occurs on or after the time a
Person becomes an Acquiring Person, or (ii) such authorization occurs on or
after the date of a change (resulting from a proxy or consent solicitation) in a
majority of the directors in office at the commencement of such solicitation if
any Person who is a participant in such solicitation has stated (or, if upon the
commencement of such solicitation, a majority of the Board has determined in
good faith) that such Person (or any of its Affiliates or Associates) intends to
take, or may consider taking, any action which would result in such Person
becoming an Acquiring Person or which would cause the occurrence of a Triggering
Event.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights, evidence of which shall have been filed
with the Rights Agent, and without any further action and without any notice,
the right to exercise the Rights will terminate and the only right thereafter of
the holders of Rights shall be to receive the Redemption Price. Within ten (10)
days 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 their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Shares. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. Neither the Company nor any of
its Affiliates or Associates may redeem, acquire or purchase for value any
Rights at any time in any manner other than that specifically set forth in this
Section 23 or in Section 24 hereof, and other than in connection with the
purchase of Common Shares prior to the Distribution Date.
Section 24. Exchange.
(a) Subject to applicable laws, rules and regulations, and subject to
subsection (c) below, the Company may, at its option, by majority vote of the
Board of Directors and a majority vote of the Continuing Directors, at any time
after the occurrence of a Section 11 (a)(ii) Event, exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 7(e) hereof) for Common
Shares at an exchange ratio of a quarter (1/4) 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 the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any such Subsidiary, or any
entity holding Common Shares for or pursuant to the terms of any such plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors ordering the
exchange of any Rights pursuant to subsection (a) of this Section 24 and without
any further action and
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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 Common Shares 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 Shares for Rights will
be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become void pursuant to
the provisions of Section 7(e) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common Shares issued
but not outstanding or authorized but unissued to permit any exchange of Rights
as contemplated in accordance with Section 24(a), the Company shall either take
such action as may be necessary to authorize additional Common Shares for
issuance upon exchange of the Rights or alternatively, at the option of a
majority 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 Shares 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 Shares 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 by majority vote of
the Board of Directors, or (iii) deliver any combination of cash, property,
Common Shares 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 Shares (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 quarter (1/4) 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 Shares and/or
to decide 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, and shall send a
written notice to the Rights Agent, stating that the exercisability of the
Rights has been temporarily suspended.
(d) The Company shall not be required to issue fractions of Common Shares
or to distribute certificates that evidence fractional Common Shares. In lieu
of such fractional Common Shares, there shall be paid to the registered holders
of the Rights Certificates with regard to which such fractional Common Shares
would otherwise be issuable, an amount in cash equal to the same fraction of the
Current Per Share Market Value of a whole Common Share (as determined pursuant
to the second sentence of Section 11(d) hereof).
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(e) The Company may, at its option, by majority vote 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.
(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 therefor as has been determined
by the Board of Directors in accordance with subsection (e) above. The Company
shall give public notice, and written notice to the Rights Agent, of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The 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 Shares 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.
Section 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) hereof), or to effect any sale or other transfer (or
to permit one or more of its Subsidiaries to effect any sale or other transfer),
in one transaction or a series of related transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section
11(o) hereof), or (v) to effect the liquidation, dissolution or winding up of
the Company, then, in each such case, the Company shall give to each holder of a
Rights Certificate, to the extent feasible and in accordance with Section 26
hereof, a notice of such proposed action, which shall specify the record date
for the purpose 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 twenty (20) days prior to the
record date for determining holders of the shares of Common Stock for purposes
or such action, and in the case of any such other action, at least twenty (20)
days prior to the date of the taking of such
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proposed action or the date of participation therein by the holders of the
shares of Common Stock, whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event or Section 13 Event shall occur,
then, in any such case, the Company shall as soon as practicable thereafter give
to each holder of a Rights Certificate, and to the Rights Agent, in accordance
with Section 26 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under
Sections 11 (a)(ii) and 13 hereof.
Section 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:
Mylex Corporation
34551 Ardenwood Boulevard
Fremont, California 94555-3607
Attention: Al Montross, President
Subject to the provisions of Section 21 hereof, 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:
BankBoston, N.A.
c/o Boston EquiServe Limited Partnership
435 Tasso Street
Palo Alto, California 94301
Attention: Geoffrey Anderson
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to or on the holder of any Rights Certificate shall
be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments.
Prior to the Distribution Date, the Company may supplement or amend this
Agreement in any respect without the approval of any holders of Rights, and the
Rights Agent shall, if the Company so directs, execute such supplement or
amendment. From and after the Distribution Date, the Company and the Rights
Agent may from time to time supplement or amend this Agreement without the
approval of any holders of Rights in order to (i) cure any ambiguity, (ii)
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) shorten or lengthen any
time period hereunder (which
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lengthening or shortening, following the first occurrence of an event set forth
in clauses (i) and (ii) of the proviso to Section 23(a) hereof, shall be
effective only if there are Continuing Directors and shall require the
concurrence of a majority of such Continuing Directors) or (iv) to change or
supplement the provisions hereunder in any manner that the Company may deem
necessary or desirable and that shall not adversely affect the interests of the
holders of Rights (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person); provided, this Agreement may not be supplemented or
amended to lengthen, pursuant to clause (iii) of this sentence, (A) a time
period relating to when the Rights may be redeemed at such time as the Rights
are not then redeemable or (B) any other time period unless such lengthening is
for the purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights. Upon the delivery of a certificate from an
appropriate officer of the Company that 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. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the interests
of the holders of Common Shares. Notwithstanding any other provision hereof,
the Rights Agent's consent must be obtained regarding any amendment or
supplement pursuant to this Section 27 which alters the Rights Agents rights or
duties, which consent shall not be unreasonably withheld.
Section 28. Successors.
All covenants and provisions of this Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of Common
Shares outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding Common Shares 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 Rules and Regulations. The Board of Directors of the
Company (and, where specifically provided for herein, the Continuing Directors)
shall have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board, or the Company
(or, where specifically provided for herein, the Continuing Directors), 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 a determination
to redeem or not redeem the Rights or to amend the 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 (or, where specifically provided for herein, by
the Continuing Directors) in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights Certificates
and all other parties and (y) not subject the Board or the Continuing Directors
to any liability to the holders of the Rights.
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Section 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, the registered holders of the
Common Shares) any legal or equitable right, remedy or claim under this
Agreement; this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, the registered holders of the Common
Shares).
Section 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 a majority of the Continuing Directors
determines in its good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof shall be reinstated and
shall not expire until the close of business on the tenth day following the date
of such determination by the Continuing Directors.
Section 32. Governing Law.
This Agreement and each Right and each Rights Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of Delaware
and for all purposes shall be governed by and construed in accordance with the
laws of such State applicable to contracts to be made and performed entirely
within such State.
Section 33. Counterparts.
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
Section 34. Descriptive Headings.
Descriptive headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning or construction
of any of the provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the date first above written.
MYLEX CORPORATION
By:
-----------------------------------------
Name:
--------------------------------------
Title:
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BANKBOSTON, N.A. (AS RIGHTS AGENT)
By:
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Name:
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Title:
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37
<PAGE>
EXHIBIT A
FORM OF RIGHTS CERTIFICATE
OF
MYLEX CORPORATION
-A1-
<PAGE>
FORM OF RIGHTS CERTIFICATE
Certificate No. R-
Rights
NOT EXERCISABLE AFTER MAY 23, 2007, OR EARLIER IF TERMINATED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $0.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
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 RIGHTS AGREEMENT.]*
RIGHTS CERTIFICATE
This certifies that ______________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of May 23, 1997 (the "Rights Agreement"), between Mylex
Corporation, a Delaware corporation (the "Company"), and BankBoston, N.A., as
Rights Agent (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 2:00 p.m., California time, on May 23, 2007, at the office of the
Rights Agent designated for such purpose, or at the office of its successor as
Rights Agent, a quarter (1/4) share of Common Stock, $0.01 par value, of the
Company (the "Common Shares"), at a purchase price initially of $2.65 per
quarter (1/4) share of Common Stock (the "Purchase Price"), upon presentation
and surrender of this Rights Certificate with the Form of Election to Purchase
and related Certificate duly executed. The number of Rights evidenced by this
Rights Certificate (and the number of shares of Common Stock which may be
purchased upon exercise hereof) set forth above, are the number and Purchase
Price as of May 23, 1997, based on the Common Shares as constituted at such
date.
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.
*The portion of the legend in bracket shall be inserted only if applicable and
shall replace the preceding sentence.
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<PAGE>
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder 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 principal executive offices of
the Company and the above-mentioned office of the Rights Agent.
Upon the occurrence of a Section 11(a)(ii) Event (as defined in the Rights
Agreement), if the Rights evidenced by this Rights Certificate are beneficially
owned by (i) an Acquiring Person or an Associate or Affiliate of any such Person
(as such terms are defined in the Rights Agreement), (ii) a transferee of any
such Acquiring Person, Associate or Affiliate who becomes a transferee after
such Acquiring Person, Associate or Affiliate becomes such, or (iii) under
certain circumstances specified in the Rights Agreement, a transferee of any
such Acquiring Person, Associate or Affiliate who becomes a transferee prior to
or concurrently with such 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.
Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Rights Certificate (i) may be redeemed by the Company, at its option, at a
redemption price of $0.01 per Right or (ii) may be exchanged by the Company in
whole or in part for a quarter (1/4) share of Common Stock per Right,
substantially equivalent rights or other consideration as determined by the
Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office 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.
No fractional shares of Common Stock 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 the Common Shares
or of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or
-A3-
<PAGE>
to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose until
it shall have been countersigned by an authorized signatory of the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and its
corporate seal. Dated as of ___________________, 19_____.
MYLEX CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
BANKBOSTON, N.A. (AS RIGHTS AGENT)
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-A4-
<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: _____________________, 19_____
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Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent in
the United States or any other member of a medallion signature guarantee program
approved by the Securities Transfer Association.
-A5-
<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
in 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: ___________________, 19___
------------------------------------
Signature
Signature Guaranteed:
NOTICE
The signatures to the foregoing Assignment and Certificate must conform to the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent in
the United States or any other member of a medallion signature guarantee program
approved by the Securities Transfer Association.
In the event the certification set forth above is not completed, the Company
will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
-A6-
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights
represented by the Rights Certificate)
To: Mylex Corporation
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the shares of Common Stock
issuable upon the exercise of such Rights and requests that certificates for
such Common Shares (or other shares, securities or property, as the case may be)
be issued in the name of: ____________________________
(Please insert social security or other identifying number) ___________________
_______________________________________________________________________________
_______________________________________________________________________________
(PLEASE PRINT NAME AND ADDRESS)
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance shall be registered in the
name of and delivered to:
_______________________________________________________________________________
_______________________________________________________________________________
(Please insert social security or other identifying number)____________________
_______________________________________________________________________________
_______________________________________________________________________________
(PLEASE PRINT NAME AND ADDRESS)
Dated:________________, 19__
------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent in
the United States or any other member of a medallion signature guarantee program
approved by the Securities Transfer Association.
-A7-
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate are [ ] are not [
] being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Person (as
such terms are defined in 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:__________________, 19__
------------------------------------
Signature
Signature Guaranteed:
NOTICE
The signatures to the foregoing Election to Purchase and Certificate must
conform to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent in
the United States or any other member of a medallion signature guarantee program
approved by the Securities Transfer Association.
In the event the certification set forth above is not completed, the Company
will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
-A8-
<PAGE>
EXHIBIT B
MYLEX CORPORATION
SUMMARY OF RIGHTS TO
PURCHASE COMMON STOCK
-B1-
<PAGE>
EXHIBIT B
MYLEX CORPORATION
SUMMARY OF RIGHTS TO PURCHASE COMMON STOCK
On May 12, 1997, the Board of Directors of Mylex Corporation (the
"Company") authorized the distribution of one common stock purchase right (a
"Right") for each outstanding share of common stock, $0.01 par value per share,
of the Company ("Common Stock") to stockholders of record at the close of
business on May 23, 1997 (the "Record Date"). In addition, the Company has
authorized the issuance of one Right with respect to each share of Common Stock
that shall become outstanding between the Record Date and the earlier of the
Distribution Date or Expiration Date (as such terms are hereinafter defined) or
the date, if any, on which the Rights may be redeemed. Each Right, when
exercisable, entitles the registered holder to purchase from the Company a
quarter (1/4) share of Common Stock (or other shares, securities or property, as
the case may be, of equivalent value) at a price of $2.65 per share (the
"Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between the
Company and BankBoston, N.A., as Rights Agent.
Initially, the Rights will not be exercisable and will be attached to, and
evidenced only by, the Common Stock certificates representing the shares of
Common Stock then outstanding. The Rights will become exercisable, will
separate from the Common Stock, and will become transferrable apart from the
Common Stock on a date (the "Distribution Date") that is the earlier of the
close of business on the tenth business day following (i) a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") has acquired or obtained the right to acquire, in a transaction or
series of transactions not approved by the Board of Directors of the Company
(the "Board"), beneficial ownership of 20% or more of the outstanding shares of
Common Stock (the "Shares Acquisition Date") or (ii) the commencement of a
tender or exchange offer by any person (other than the Company or an employee
benefit plan of the Company or any of its subsidiaries) for 20% or more of the
outstanding shares of Common Stock.
Until the Distribution Date (or earlier redemption, exchange or expiration
of the Rights), the Rights will be transferred with and only with the Common
Stock certificates to which the Rights are attached. New Common Stock
certificates after the Record Date upon transfer or new issuance of Common Stock
will contain a notation incorporating the Rights Agreement by reference, and the
surrender for transfer of any certificates for Common Stock outstanding on or
after the Record Date, with or without such notation or a copy of this Summary
of Rights being attached thereto, will also constitute the transfer of the
Rights associated with the shares of Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights (the "Rights Certificates") will be mailed to
holders of record of the Common Stock as of the
-B2-
<PAGE>
close of business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will evidence the Rights.
In the event that at any time following the Distribution Date, (i) the
Company is the surviving corporation in a merger with an Acquiring Person and
the Company's Common Stock is not changed or exchanged, (ii) a person becomes
the beneficial owner of 20% or more of the then outstanding shares of Common
Stock (except pursuant to an offer for which all outstanding shares of Common
Stock which the Continuing Directors (as defined) determine to be fair to and
otherwise in the best interest of the Company and its stockholders), (iii) an
Acquiring Person engages in one or more "self dealing" transactions as set forth
in the Rights Agreement, or (iv) during such time as there is an Acquiring
Person, an event occurs which results in such Acquiring Person's ownership
interest being increased by more than 1% (e.g., a reverse stock split), each
holder of a Right will thereafter have the right to receive, upon exercise and
payment of the Purchase Price, Common Stock (or, in certain circumstances, cash,
property or other securities of the Company, subject to certain limitations)
having a value equal to two times the Purchase Price of the Right.
Notwithstanding the foregoing, all Rights that are, under certain circumstances
specified in the Rights Agreement were, beneficially owned by an Acquiring
Person (or any of its affiliates or associates, as defined) will be null and
void. The Rights are, however, not exercisable following the occurrence of any
of the events set forth above until such time as the Rights are no longer
redeemable by the Company.
For example, at a Purchase Price of $2.65 per Right, each Right not owned
by an Acquiring Person (or certain related parties) following an event described
in the preceding paragraph would entitle its holder to purchase $5.30 worth of
Common Stock (or other consideration) as noted above, for $2.65. Assuming that
the Common Stock had a per share value of $10.60 at such time, the holder of
each valid Right would be entitled to purchase one-half (1/2) share of Common
Stock for $2.65.
In the event that at any time following the Share Acquisition Date, (i) the
Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving Corporation, or (ii) 50 percent or more
of the Company's assets or earning power is sold or transferred, each holder of
a Right (except Rights which previously have been voided as set forth above)
shall thereafter have the right to receive, upon exercise thereof and payment of
the then current Purchase Price, Common Stock of the acquiring company having a
value equal to two times the Purchase Price of the Right.
The Purchase Price payable, and the number of shares of Common Stock (or
the number and kind of other securities or property, as the case may be)
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on or a
subdivision combination or reclassification of, the Common Stock, (ii) upon the
grant to owners of the Common Stock of certain rights or warrants to subscribe
for Common Stock or convertible securities at less than the current market price
of the Common Stock, or (iii) upon the distribution of 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)). At any time after a
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<PAGE>
person or group of affiliated or associated person becomes an acquiring person,
an until the beneficial ownership level of such acquiring person, together with
all affiliates and associates of such acquiring person, reaches 50 percent, the
Board of Directors may exchange the Rights (other than the Rights held by the
acquiring person, affiliates or associates of the acquiring person and certain
other persons whose Rights can be traced to an acquiring person) in whole or in
part, at an exchange ratio of a quarter (1/4) share of the Common Stock per
Right. The exchange must also be approved by a majority of the Continuing
Directors.
At any time prior to the close of business on the 10th business day
following the Share Acquisition Date, the Company may redeem the Rights in whole
but not in part at a redemption price of $0.01 per Right. Under certain
circumstances, the redemption must also be approved by a majority of the
Continuing Directors. Immediately upon the action of the Board of Directors
electing to redeem the Rights, with, where required, the concurrence of the
Continuing Directors, the Rights will terminate and the only right of the
holders of Rights will be to receive the redemption price. With certain
exceptions, no adjustment in the Purchase Price will be required until
accumulative adjustments amount to at least 1 percent of the Purchase Price. No
fractional shares will be issued and in lieu thereof an adjustment in cash will
be made based on the market price of the Common Stock on the last trading day
prior to the date of exercise.
The term "Continuing Directors" means any member of the Board of Directors
of the Company who was a member of the Board prior to the date of the Rights
Agreement, and any person who is subsequently elected to the Board if such
person is recommended or approved by a majority of the Continuing Directors, but
shall not include an Acquiring Person or an affiliate or associate of an
Acquiring Person or any representative of the foregoing entities.
Until the Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
At any time prior to the Distribution Date, the Board of Directors may
amend any provision of the Rights Agreement in any manner, including to change
the Purchase Price, without the approval of the holders of the Common Stock.
Thereafter, subject to certain limitations, the Board of Directors (with the
concurrence of the Continuing Directors) may amend the Rights Agreement without
the approval of the holders of the Common Stock in order to cure any ambiguity,
to make changes which do not adversely affect the interest of holders of Rights
(excluding the interest of any acquiring person), or to shorten or lengthen any
time period under the Rights Agreement. A copy of the Rights Agreement has been
filed with the Securities and Exchange Commission as an exhibit to a
Registration Statement on Form 8-A dated June 11, 1997. A copy of the Rights
Agreement is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement which is hereby incorporated
herein by reference.
-B4-
