UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
This conforming paper format document is being submitted pursuant to rule
300(d) of regulation s-t.
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended November 30, 1994 Commission File No. 0-12867
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
____________
3COM CORPORATION
(Exact name of registrant as specified in its charter)
California 94-2605794
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5400 Bayfront Plaza 95052
Santa Clara, California (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (408) 764-5000
Former name, former address and former fiscal year, if changed since last
report: N/A
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes ....XX.... No ................
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of November 30, 1994, 65,972,423 shares of the Registrant's Common Stock
were outstanding.
3Com Corporation
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
November 30, 1994 and May 31, 1994
Consolidated Statements of Income
Quarter and Six Months Ended November 30, 1994 and 1993
Consolidated Statements of Cash Flows
Six Months Ended November 30, 1994 and 1993
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II.OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
3Com Corporation
Consolidated Balance Sheets
(dollars in thousands)
November 30, May 31,
1994 1994
---- ----
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 98,856 $ 66,284
Temporary cash investments 139,902 63,413
Trade receivables 157,275 118,653
Inventories 73,604 71,352
Deferred income taxes 32,312 31,236
Other 16,504 10,134
------- -------
Total current assets 518,453 361,072
Property and equipment-net 80,036 67,001
Other assets 32,292 16,270
------- -------
Total $630,781 $444,343
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 76,859 $ 51,827
Accrued and other liabilities 80,532 91,130
Income taxes payable 34,235 19,090
Current portion of long-term obligations 454 482
------- -------
Total current liabilities 192,080 162,529
Long-term debt 110,000 -
Other long-term obligations 926 1,058
Shareholders' Equity:
Preferred stock, no par value, 3,000,000
shares authorized; none outstanding - -
Common stock, no par value, 200,000,000 shares
authorized; shares outstanding: November 30, 1994:
65,972,423; May 31, 1994: 65,052,900 250,203 219,937
Unamortized restricted stock grants (170) (202)
Retained earnings 77,985 61,326
Accumulated translation adjustments (243) (305)
------- -------
Total shareholders' equity 327,775 280,756
------- -------
Total $630,781 $444,343
======== ========
See notes to consolidated financial statements.
3Com Corporation
Consolidated Statements of Income
(in thousands except per share data)
(unaudited)
Quarter Ended Six Months Ended
November 30, November 30,
---------------- ----------------
1994 1993 1994 1993
---- ---- ---- ----
Sales $304,808 $205,275 $554,088 $367,366
Costs and expenses:
Cost of sales 141,646 102,410 259,800 184,086
Sales and marketing 58,857 42,501 109,908 77,956
Research and development 29,590 18,163 55,647 34,041
General and administrative 10,272 8,689 19,760 16,893
Purchased in-process technology 60,796 - 60,796 -
Non-recurring items (1,100) - (1,100) -
------- ------- ------- -------
Total 300,061 171,763 504,811 312,976
======= ======= ======= =======
Operating income 4,747 33,512 49,277 54,390
Other expense-net (662) (492) (675) (812)
Gain on sale of investment - - - 17,746
------- ------- ------- -------
Income before income taxes 4,085 33,020 48,602 71,324
Income tax provision 1,471 11,557 17,497 23,747
------- ------- ------- -------
Net income $ 2,614 $ 21,463 $ 31,105 $ 47,577
======== ========= ========= =========
Net income per common and
equivalent share
Primary $ .04 $ .33 $ .44 $ .73
Fully diluted $ .04 $ .32 $ .44 $ .72
Common and equivalent shares used
in computing per share amounts
Primary 71,111 65,738 70,417 65,384
Fully diluted 71,401 66,318 71,138 66,248
See notes to consolidated financial statements.
3Com Corporation
Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
Six Months Ended
November 30,
1994 1993
---- ----
Cash flows from operating activities:
Net income $31,105 $47,577
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 23,312 13,604
Gain on sale of investment - (17,746)
Deferred income taxes (23,039) (1,707)
Purchased in-process technology 60,796 -
Non-cash restructuring costs (1,100) -
Changes in assets and liabilities, net of effects
of acquisitions:
Trade receivables (38,224) (16,632)
Inventories (2,854) 10,205
Other current assets (5,860) (3,726)
Accounts payable 24,358 5,594
Accrued and other liabilities (13,449) 85
Income taxes payable 27,086 12,392
------- -------
Net cash provided by operating activities 82,131 49,646
------- -------
Cash flows from investing activities:
Proceeds from sale of investment - 18,066
Purchase of property and equipment (28,232) (11,903)
Purchase of temporary cash investments (92,518) (35,327)
Proceeds from temporary cash investments 14,448 14,614
Acquisitions of businesses (48,692) -
Other-net 4,528 (1,567)
------- -------
Net cash used for investing activities (150,466) (16,117)
-------- -------
Cash flows from financing activities:
Sale of stock 10,921 7,334
Repurchases of common stock (16,893) (16,645)
Net proceeds from issuance of convertible
debt 106,945 -
Repayments of notes payable and capital
lease obligations (128) (830)
Other-net 62 (572)
------- -------
Net cash provided by (used for)
financing activities 100,907 (10,713)
------- -------
Increase in cash and cash equivalents 32,572 22,816
Cash and cash equivalents at beginning
of period 66,284 40,046
------- -------
Cash and cash equivalents at end of period $98,856 $62,862
======= =======
Non-cash financing and investing activities:
Tax benefit on stock option transactions $11,941 $3,574
Stock issued and options assumed in
business acquisitions 9,797 -
See notes to consolidated financial statements.
3Com Corporation
Notes to Consolidated Financial Statements
1. The consolidated financial statements include the accounts of 3Com
Corporation (the "Company") and its wholly-owned subsidiaries. All
significant intercompany balances and transactions have been eliminated.
In the opinion of management, these unaudited consolidated financial
statements include all adjustments necessary for a fair presentation of
the Company's financial position as of November 30, 1994, and the
results of operations and cash flows for the quarters and six months
ended November 30, 1994 and 1993.
The results of operations for the quarter and six months ended
November 30, 1994 may not necessarily be indicative of the results for the
fiscal year ending May 31, 1995.
These financial statements should be read in conjunction with the
consolidated financial statements and related notes thereto included in
the Company's Annual Report to Shareholders for the year ended May 31,
1994.
2. Investments
Effective June 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." This statement requires the Company to
classify debt and equity securities into one of three categories: held-
to-maturity, trading or available-for-sale. At November 30, 1994, all
temporary cash investments of the Company were classified as available-
for-sale and the difference between the carrying value and fair value of
those securities was not significant.
3. Inventories consisted of (in thousands):
November 30, May 31,
1994 1994
---- ----
Finished goods $32,652 $44,770
Work-in-process 8,763 8,232
Raw materials 32,189 18,350
------- -------
Total $73,604 $71,352
======= =======
4. Long-Term Debt
In November 1994, the Company completed a private placement under
Rule 144A of the Securities Act of 1933 for $110 million convertible
subordinated notes. The notes bear interest at 10.25% per annum, are
payable semi-annually, and mature in 2001. Beginning in November 1997,
the notes are convertible into the Company's common stock at an initial
conversion price of $69.125 per share. The Company has reserved
1,591,320 shares of common stock for the conversion of these notes.
5. Net Income Per Share
Net income per common and equivalent share is computed using the
weighted average number of common shares and the dilutive effects of
stock options outstanding during the period using the treasury stock
method. Weighted average shares outstanding and per share amounts have
been restated to reflect the two-for-one stock split on September 1,
1994 for shareholders of record on August 16, 1994.
6. Business Acquisitions
On October 18, 1994, the Company acquired substantially all the
assets and assumed substantially all the liabilities of NiceCom, Ltd.
("NiceCom"), and assumed all outstanding NiceCom stock options. The
purchase price consisted of approximately $53.2 million plus $5.7
million of stock options. The purchase price was paid using funds from
the Company's working capital and the issuance of 93,162 shares of
common stock of the Company, with an aggregate value of $3.7 million.
NiceCom is engaged in the development of ATM ("asynchronous transfer
mode") switches and an Ethernet/ATM solution for a streamlined, scalable
and seamless migration path from existing Ethernet LANs to ATM
networking.
On October 14, 1994, the Company acquired all of the outstanding
shares and assumed all outstanding stock options of a company engaged in the
development of network adapter technology. The purchase price consisted
of approximately $2.3 million plus $400,000 of stock options. The
purchase price was paid using funds from the Company's working capital.
The acquisitions were accounted for as purchases and, accordingly, the
acquired assets and liabilities were recorded at their estimated fair
market values at the dates of acquisitions. The aggregate purchase
price of $61.6 million plus $2.0 million of costs directly attributable
to the completion of the acquisitions has been allocated to the assets
and liabilities acquired. Approximately $60.8 million of the total
purchase price represented in-process technology that had not yet
reached technological feasibility and was charged to the Company's
operations.
The Company's consolidated results of operations include the operating
results of the acquired companies from their acquisition dates. Pro
forma results of operations are not presented as the amounts would not
significantly differ from the Company's historical results.
3Com Corporation
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Acquisitions
During the second fiscal quarter ended November 30, 1994, 3Com Corporation
enhanced its High Performance Scalable Networking solutions with the strategic
acquisition of NiceCom, Ltd. (see Note 6 of Notes to Consolidated Financial
Statements), an innovator of ATM technology. 3Com Corporation also acquired a
company developing network adapter technology. The acquisitions were
accounted for as purchases and accordingly the acquired assets and liabilities
were recorded at their estimated fair market values at the dates of
acquisition. The aggregate purchase price consisted of approximately $55.5
million plus $6.1 million of costs attributed to the exchange of the acquired
companies' stock options for 3Com stock options and $2.0 million of costs
directly attributable to the completion of the acquisitions. Approximately
$60.8 million of the total purchase price represented in-process technology
and was charged to the Company's operations during the quarter. The Company's
consolidated results of operations for the second fiscal quarter ended
November 30, 1994 included the operating results of the acquired companies
from the dates of acquisition. References to the Company herein refer to 3Com
and its subsidiaries.
Quarter ended November 30, 1994
The Company achieved record sales in the second quarter of fiscal 1995
totaling $304.8 million, an increase of $99.5 million or 48 percent from the
corresponding quarter a year ago. Compared with the first quarter of fiscal
1995, sales for the second quarter of fiscal 1995 increased $55.5 million or
22 percent.
The Company believes that the year-over-year increase in second quarter sales
is due to several factors, including general market strength in the data
networking market, increases in personal computer sales, rapid growth in sales
outside the U.S., the breadth of the Company's product offerings and its
ability to deliver complete data networking solutions for different
connectivity environments. Sales from products introduced in the last 12
months represented 43 percent of sales in the second quarter of fiscal 1995,
an increase from 35 percent of sales in the second quarter of the prior year
and from 25 percent of sales in the first quarter of fiscal 1995.
Sales of network adapters in the second quarter of fiscal 1995 represented 55
percent of total sales and increased 37 percent from the corresponding period
in fiscal 1994. The increase in network adapter sales represented an increase
in unit volume partially offset by continuation of the industry-wide trend
toward decreasing average selling prices, particularly in the token ring
market. The increase in unit volume primarily resulted from sales of the
EtherLink(registered trademark) III network adapter, but was also favorably
impacted by the recently introduced PCMCIA adapter. With the introduction of
the newest version of the EtherLink III in the second quarter of fiscal 1995,
the Company attained record sales of network adapters.
Sales of systems products (internetworking, remote access server, hub and
switching products) in the second quarter of fiscal 1995 represented 41
percent of total sales and increased 75 percent from the year-ago quarter.
The increase was led primarily by the LinkBuilder(registered trademark) FMS
II, a component of 3Com's SuperStack family of network system products, the
LANplex(registered trademark) 6000 switching product, and the high-performance
NETBuilder(registered trademark) Remote Office and NETBuilder II(registered
trademark) bridge/router. Similar to network adapters, the increase in
systems products sales represented an increase in unit volume which was
partially offset by a decrease in average selling prices. The Company
believes there is an industry-wide trend towards demand for fully-functional,
fault-tolerant, lower-priced network systems in a stackable format. 3Com is
currently delivering many components of its SuperStack network system
including stackable hubs, remote office routers, LAN switching products and a
redundant power system.
Sales of other products (terminal servers, customer service, protocols and
other products) represented four percent of second quarter sales. Sales of
other products increased six percent from the second quarter of fiscal 1994,
although they continued to represent a decreasing percentage of the Company's
total sales, as expected.
Sales outside the United States provided 52 percent of second quarter sales,
compared to 49 percent for the same period last year. Growth in international
sales was strong in all geographic regions, especially in the Asia Pacific and
Latin American regions. The Company believes that this increase reflected the
Company's continued expansion globally through the opening of new sales
offices in Latin America, Asia and Europe, and the expansion of worldwide
service and support programs.
Cost of sales as a percentage of sales was 46.5 percent for the quarter,
compared to 49.9 percent for the second quarter of fiscal 1994. The 3.4
percentage points improvement in gross margin from the year-ago period
resulted primarily from a favorable shipment mix towards the lower-cost
EtherLink III network adapter and higher-margin switching products and
continued improvement in the efficiency of the Company's manufacturing
operations.
Total operating expenses in the second quarter of fiscal 1995 were $158.4
million compared to $69.4 million in the second quarter of fiscal 1994.
Excluding the one-time charge of $60.8 million for purchased in-process
technology and a non-recurring credit of $1.1 million for the reduction in
accrued costs relating to the fiscal 1991 restructuring, total operating
expenses in the second quarter of fiscal 1995 would have been $98.7 million,
or 32.4 percent of sales, compared to 33.8 percent of sales a year ago. The
Company has been successful in its efforts to grow operating expenses at a
rate slower than sales growth. The increase in operating expenses of $29.3
million, or 42 percent, reflected increased selling costs related to higher
sales volume, increased investment in research and development activities and
growth in the number of employees in all parts of the Company, especially in
research and development. The Company's average headcount increased 22
percent in the second quarter of fiscal 1995 over the same period one year
ago. Annualized revenue per average headcount was $498,000 in the second
quarter of fiscal 1995, compared to $409,000 in the second quarter of fiscal
1994, an increase of 22 percent.
Other expense (net) was $662,000 for the second quarter of fiscal 1995,
compared with expense of $492,000 for the same quarter one year ago. The
increase from the prior year represents higher provisions for doubtful
accounts associated with increased sales partially offset by higher interest
income. Due to the interest expense associated with the issuance of $110.0
million in convertible subordinated notes in the second quarter, other expense
is expected to increase in future quarters above historical levels.
The Company's effective income tax rate was 36 percent in the second quarter
of fiscal 1995 and 35 percent in the second quarter of fiscal 1994.
Net income for the second quarter of fiscal 1995 was $2.6 million, or $.04 per
share, compared to net income of $21.5 million, or $0.32 per share, reported a
year ago. Excluding the charge for purchased in-process technology and the
non-recurring credit, the Company would have realized net income of $.55 per
share in the second quarter of fiscal 1995. Net income per share for the
second quarter of fiscal 1994 has been restated to reflect the two-for-one
stock split on September 1, 1994 for shareholders of record on August 16,
1994.
Six Months Ended November 30, 1994
The Company achieved record sales for the first six months of fiscal 1995
totaling $554.1 million, an increase of $186.7 million or 51 percent from the
corresponding period a year ago.
Cost of sales as a percentage of sales was 46.9 percent for the quarter,
compared to 50.1 percent for the second quarter of fiscal 1994. The 3.2
percentage points improvement in gross margin from the year-ago period
resulted primarily from a favorable shipment mix towards lower-cost
and higher-margin products and continued improvement in the efficiency of the
Company's manufacturing operations.
Total operating expenses in the first six months of fiscal 1995 were $245.0
million compared to $128.9 million in the first six months of fiscal 1994.
Excluding the one-time charge of $60.8 million for purchased in-process
technology and the non-recurring credit of $1.1 million for the reduction in
accrued restructuring costs, total operating expenses in the first six months
of fiscal 1995 would have been $185.3 million, or 33.4 percent of sales,
compared to 35.1 percent of sales a year ago. The increase in operating
expenses of $56.4 million, or 44 percent, reflected increased selling costs
related to higher sales volume, the cost of developing and promoting the
Company's products and an average headcount increase of 20 percent over the
first six months of fiscal 1994.
Nonoperating income was favorably impacted during the first six months of
fiscal 1994, as the Company realized a gain of $17.7 million from the sale of
the Company's investment in Madge N.V.
Net income for the first six months of fiscal 1995 was $31.1 million, or $.44
per share, compared to net income of $47.6 million, or $.72 per share, for the
first six months of fiscal 1994. Excluding the charge for purchased in-
process technology and the non-recurring credit, the Company would have
realized net income of $.95 per share for the first six months of fiscal 1995.
Excluding the gain from the sale of an investment and a $1.2 million tax
benefit, which resulted from retroactive changes to the Revenue Reconciliation
Act of 1993, net income for the first six months of fiscal 1994 would have
been $34.8 million, or $.53 per share. Net income per share for the first six
months of fiscal 1994 has been restated to reflect the two-for-one stock split
on September 1, 1994 for shareholders of record on August 16, 1994.
Business Environment and Risk Factors
The Company's future operating results may be affected by various trends and
factors which the Company must successfully manage in order to achieve
favorable operating results. In addition, there are trends and factors beyond
the Company's control which affect its operations. Such trends and factors
include adverse changes in general economic conditions, governmental
regulation or intervention affecting communications or data networking,
fluctuations in foreign exchange rates, and other factors listed below. The
data networking industry has become increasingly competitive, and the
Company's results may be adversely affected by the actions of existing or
future competitors. Such actions may include the development or acquisition
of new technologies, the introduction of new products, the assertion by third
parties of patent or similar intellectual property rights, and the reduction
of prices by competitors to gain or retain market share. Industry
consolidation or alliances may also affect the competitive environment.
The market for the Company's products is characterized by rapidly changing
technology. The Company's success depends in substantial part on the timely
and successful introduction of new products. An unexpected change in one or
more of the technologies affecting data networking or in market demand for
products based on a particular technology could have a material adverse effect
on the Company's operating results. For instance, a large portion of the
Company's revenues is comprised of sales of products based on the Ethernet
technology. The Company's operating results could be adversely affected if
there is an unexpected change in demand for products based on such technology
or if the Company does not respond timely and effectively to expected changes.
The Company is engaged in research and development activities in certain
emerging LAN and WAN high-speed technologies, such as 100 Mbps Ethernet, ATM
and ISDN. As the industry standardizes on high-speed technologies, there can
be no assurance that the Company will be able to respond timely to compete in
the marketplace.
Some key components of the Company's products are currently available only
from single sources. There can be no assurance that in the future the
Company's suppliers will be able to meet the Company's demand for components
in a timely and cost effective manner. The Company's operating results and
customer relationships could be adversely affected by either an increase in
prices for, or an interruption or reduction in supply of, any key components.
The Company is currently increasing its manufacturing facility capabilities in
two locations. While the Company has significant experience in expanding its
manufacturing operations, such expansion may be subject to unforeseen labor
issues, adverse weather and construction or other delays.
Over the remainder of the fiscal year, the Company will be integrating the
operations of its recent acquisition of NiceCom Ltd. into the Company's
worldwide operations. Although the Company does not anticipate any problems,
integrating a foreign entity presents complex regulatory, cultural and other
issues.
The market price of the Company's common stock has been, and may continue to
be, extremely volatile. Factors such as new product announcements by the
Company or its competitors, quarterly fluctuations in the Company's operating
results and general conditions in the data networking market may have a
significant impact on the market price of the Company's common stock. These
conditions, as well as factors which generally affect the market for stocks of
high technology companies, could cause the price of the Company's stock to
fluctuate substantially over short periods.
The Company's corporate headquarters and a large portion of its research and
development activities and other critical business operations are located near
major earthquake faults. Operating results could be materially adversely
affected in the event of a major earthquake. Because of the foregoing
factors, as well as other factors affecting the Company's operating results,
past trends should not be used by investors to anticipate future results or
trends. Further, the Company's prior performance should not be presumed to be
an accurate indicator of future performance.
Liquidity and Capital Resources
Cash, cash equivalents and temporary cash investments at November 30, 1994
were $238.8 million, increasing $109.1 million from May 31, 1994. During the
quarter ended November 30, 1994, the Company received net proceeds of $106.9
million from the issuance of convertible subordinated notes and spent
approximately $48.7 million in net cash for acquisitions (see Note 6 of Notes
to Consolidated Financial Statements).
For the six months ended November 30, 1994, net cash generated from operating
activities was $82.1 million. Net cash generated from operating activities was
offset by the final payment of $14.3 million to Centrum shareholders in the
first quarter of fiscal 1995 for the acquisition of Centrum Communications in
February 1994. Inventory levels increased $2.3 million from the prior fiscal
year end, with inventory turnover improving from 6.5 turns at May 31, 1994 to
8.6 turns at November 30, 1994. Trade receivables at November 30, 1994
increased $38.6 million from May 31, 1994 due primarily to an increase in
sales. Days sales outstanding in receivables was 46 days at the end of the
second quarter, compared to 44 days at May 31, 1994. Other noncurrent assets
increased primarily due to an increase in noncurrent deferred taxes of $20.1
million associated with the acquisition of NiceCom and related charge for
purchased in-process technology.
For the six months ended November 30, 1994, the Company made $28.2 million in
capital expenditures. Major capital expenditures included upgrades and
additions to manufacturing product lines, facility relocations, development of
a worldwide accounting and information system, and upgrades of desktop
systems.
During the six months ended November 30, 1994, the Company repurchased 725,000
shares of common stock with a cash outlay of $16.9 million. As of November
30, 1994, the Company was authorized to repurchase up to an additional 2.8
million shares of its common stock in the open market.
During the first quarter of fiscal 1995, the Company signed a five-year lease
for 225,000 square feet of office and manufacturing space to be built on land
adjacent to its existing headquarters in Santa Clara. Under such arrangement,
the Company has committed to fund up to a maximum of $33.5 million for the
construction of the buildings. The Company is obligated to purchase the
property or cause a third party to purchase the property at a future date.
The Company estimates that it will commence occupancy of portions of the
facility in early fiscal 1996, with payments on the lease to start no later
than April 1996.
The Company believes that its existing cash balances, cash generated from
operations and the available revolving credit agreement will be sufficient to
satisfy operating cash requirements through calendar 1995.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders was held on September 29,
1994.
(b) Each of the persons named in the Proxy Statement as a
nominee for director was elected and the selection of Deloitte & Touche LLP
as the Company's independent auditors for 1995 was ratified. The following
are the voting results on each of these matters (voting results reflect the
two-for-one stock split on September 1, 1994):
(1) Election of Directors In Favor Withheld
James L. Barksdale 55,591,380 1,459,054
Eric A. Benhamou 55,583,374 1,467,060
Gordon A. Campbell 55,581,826 1,468,608
Philip C. Kantz 55,587,750 1,462,684
(2) Ratification of the selection In Favor Opposed Abstained
of Deloitte & Touche LLP
as the Company's indepen-
dent auditors for 1995. 56,923,048 53,082 74,304
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
------ -----------
3.1 Amended and Restated Articles of Incorporation
(Exhibit 19.1 to Form 10-Q) (8)
3.2 Certificate of Amendment of the Amended and Restated
Articles of Incorporation (Exhibit 3.2 to Form 10-K) (19)
3.3 Bylaws, as amended and restated (Exhibit 3.2 to Form
10-K) (10)
4.1 Reference is made to Exhibit 3.1 (Exhibit 4.1 to Form
10-K) (19)
10.1 1983 Stock Option Plan, as amended (Exhibit 10.1 to
Form 10-K) (10)
10.2 Amended and Restated Incentive Stock Option Plan (4)
10.3 License Agreement dated March 19, 1981 (1)
10.4 First Amended and Restated 1984 Employee Stock
Purchase Plan, as amended (Exhibit 19.1 to Form 10-Q) (11)
10.5 License Agreement dated as of June 1, 1986 (Exhibit
10.16 to Form 10-K) (3)
10.6 3Com Corporation Director Stock Option Plan, as
amended (Exhibit 19.3 to Form 10-Q) (11)
10.7 Bridge Communications, Inc. 1983 Stock Option Plan, as
amended (Exhibit 4.7 to Form S-8) (2)
10.8 3Com Headquarters Lease dated December 1, 1988, as
amended (Exhibit 10.14 to Form 10-K) (10)
10.9 Ground Lease dated July 5, 1989 (Exhibit 10.19 to Form
10-K) (5)
10.10 Sublease Agreement dated February 9, 1989 (Exhibit
10.20 to Form 10-K) (5)
10.11 Credit Agreement dated April 21, 1993 (Exhibit 10.11
to Form 10-K) (16)
10.12 Asset Purchase Agreement dated as of January 24, 1992
(Exhibit 2.1 to Form 8-K) (12)
10.13 3Com Corporation Restricted Stock Plan dated July 9,
1991 (Exhibit 19.2 to Form 10-Q) (11)
10.14 Agreement and Plan of Merger dated December 16, 1992
(Exhibit 3 to Form 8-K) (13)
10.15 Form of Indemnity Agreement for Directors and Officers
(Exhibit 10.15 to Form 10-Q) (18)
10.16 Agreement and Plan of Reorganization dated December
16, 1993 among 3Com Corporation, 3Sub Corporation and
Synernetics, Inc. (Exhibit 7.1 to Form 8-K) (14)
10.17 Side Agreement Regarding Agreement and Plan of
Reorganization dated January 14, 1993 among 3Com
Corporation, 3Sub Corporation and Synernetics, Inc.
(Exhibit 7.2 to Form 8-K) (14)
10.18 Agreement and Plan of Reorganization dated January 18,
1994 (Exhibit 7.2 to Form 8-K) (15)
10.19 Indemnity and Escrow Agreement dated February 2, 1994
(Exhibit 7.3 to Form 8-K) (15)
10.20 Amendment to Credit Agreement (Exhibit 10.20 to Form
10-Q) (17)
10.21 Second Amendment to Credit Agreement (Exhibit 10.21
to Form 10-Q) (17)
10.22 1994 Stock Option Plan (Exhibit 10.22 to Form 10-K)
(19)
10.23 Lease Agreement between BNP Leasing Corporation, as
Landlord, and 3Com Corporation, as Tenant, effective as
of July 14, 1994 (Exhibit 10.23 to Form 10-Q) (20)
10.24 Purchase Agreement between BNP Leasing Corporation
and 3Com Corporation, dated July 14, 1994 (Exhibit 10.24
to Form 10-Q) (20)
10.25 Asset Purchase Agreement dated September 18, 1994
(Exhibit 7.1 to Form 8-K) (21)
10.26 First Amendment to Asset Purchase Agreement dated
October 17, 1994 (Exhibit 7.2 to Form 8-K) (21)
10.27 Amended and restated Rights Agreement dated
December 21, 1994
(1) Incorporated by reference to the corresponding Exhibit
previously filed as an Exhibit to Registrant's Registration
Statement on Form S-1 filed January 25, 1984 (File No. 2-89045)
(2) Incorporated by reference to the Exhibit identified in
parentheses previously filed as an Exhibit to
Registrant's Registration Statement on Form S-8 filed
October 13, 1987 (File No. 33-17848)
(3) Incorporated by reference to the corresponding Exhibit
or the Exhibit identified in parentheses previously filed as
an Exhibit to Registrant's Form 10-K filed August 29, 1987
(File No. 0-12867)
(4) Incorporated by reference to Exhibit 10.2 to
Registrant's Registration Statement on Form S-4 filed
on August 31, 1987 (File No. 33-16850)
(5) Incorporated by reference to the corresponding Exhibit
or the Exhibit identified in parentheses previously filed as
an Exhibit to Registrant's Form 10-K filed on August 28, 1989
(File No. 0-12867)
(6) Incorporated by reference to Exhibit 19.1 to
Registrant's Form 10-Q on April 14, 1990 (File No. 0-12867)
(7) Incorporated by reference to the corresponding Exhibit
or the Exhibit identified in parentheses previously filed as
an Exhibit to Registrant's Form 10-K filed on August 28, 1990
(File No. 0-12867)
(8) Incorporated by reference to the Exhibit identified in
parentheses previously filed as an Exhibit to Registrant's
Form 10-Q filed on January 2, 1991 (File No. 0-12867)
(9) Incorporated by reference to the Exhibit identified in
parentheses previously filed as an Exhibit to Registrant's
Form 10-Q filed on April 15, 1991 (File 0-12867)
(10) Incorporated by reference to the Exhibit identified in
parentheses previously filed as an Exhibit to Registrant's
Form 10-K filed on August 27, 1991 (File No. 0-12867)
(11) Incorporated by reference to the Exhibit identified in
parentheses previously filed as an Exhibit to Registrant's
Form 10-Q filed January 10, 1992 (File No. 0-12867)
(12) Incorporated by reference to the Exhibit identified in
parentheses previously filed as an Exhibit to Registrant's
Form 8-K filed on February 18, 1992 (File No. 0-12867)
(13) Incorporated by reference to the Exhibit identified in
parentheses previously filed as an Exhibit to Registrant's
Form 8-K filed on February 12, 1993 (File No. 9-12867)
(14) Incorporated by reference to the Exhibit identified in
parentheses previously filed as an Exhibit to Registrant's
Form 8-K filed on January 31, 1994 (File No. 0-12867)
(15) Incorporated by reference to the Exhibit identified in
parentheses previously filed as an Exhibit to Registrant's
Form 8-K filed on February 11, 1994 (File No. 0-12867)
(16) Incorporated by reference to the Exhibit identified in
parentheses previously filed as an Exhibit to Registrant's
Form 10-K filed on August 27, 1993 (File No. 0-12867)
(17) Incorporated by reference to the Exhibit identified in
parentheses previously filed as an Exhibit to Registrant's
Form 10-Q filed on April 13, 1994 (File No. 0-12867)
(18) Incorporated by reference to the Exhibit identified in
parentheses previously filed as an Exhibit to Registrant's
Form 10-Q filed on January 14, 1994 (File No. 0-12867)
(19) Incorporated by reference to the Exhibit identified in
parentheses previously filed as an Exhibit to Registrant's
Form 10-K filed on August 31, 1994 (File No. 0-12867)
(20) Incorporated by reference to the Exhibit identified in
parentheses previously filed as an Exhibit to Registrant's
Form 10-Q filed on October 16, 1994 (File No. 0-12867)
(b) Reports on Form 8-K
The Company filed two reports on Form 8-K during the
fiscal quarter covered by this report, as follows:
(i) Report on Form 8-K filed on November 1, 1994,
reporting under Item 2 the completion of the
acquisition of NiceCom, Ltd. effective
October 18, 1994
(ii) Report on Form 8-K filed on November 22, 1994,
reporting under Item 5 the completion of a
Placement Agreement for the private placement
of convertible subordinated notes
A report on Form 8-K/A amending the Report on Form 8-K,
dated November 1, 1994 referenced above, was filed on
December 30, 1994, and included the following financial
statements:
- Financial statements of NiceCom, Ltd. for the
year ended December 31, 1993.
- Unaudited Pro Forma Condensed Combining
Financial Statements of 3Com Corporation.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
3Com Corporation
(Registrant)
Dated: January 13, 1995 By: /s/ Christopher B. Paisley
Christopher B. Paisley
Vice President Finance and
Chief Financial Officer
(Principal Financial Officer)
3Com Corporation
and
The First National Bank of Boston
Rights Agent
AMENDED AND RESTATED RIGHTS AGREEMENT
Dated as of December 21, 1994
TABLE OF CONTENTS
1. Certain Definitions
2. Appointment of Rights Agent.
3. Issuance of Right Certificates
4 Form of Right Certificates
5. Countersignature and Registration
6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates
7. Exercise of Rights; Purchase Price; Expiration Date of
Rights
8. Cancellation and Destruction of Right Certificates
9. Reservation and Availability of Shares of Common Stock
10. Common Stock Record Date
11. Adjustments to Number and Kind of Shares, Number of
Rights or Purchase Price
12. Certification of Adjustments
13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power
14. Fractional Rights and Fractional Shares
15. Rights of Action
16. Agreement of Right Holders
17. Right Certificate Holder Not Deemed a Shareholder
18. Concerning the Rights Agent
19. Merger or Consolidation or Changed Name of Rights Agent
20. Duties of Rights Agent
21. Change of Rights Agent
22. Issuance of New Right Certificates
23. Redemption
24. Exchange of Rights for Common Stock
25. Notice of Proposed Actions
26. Notices
27. Supplements and Amendments
28. Successors
29. Benefits of this Rights Agreement
30. Governing Law
31. Counterparts
32. Descriptive Headings
33. Severability
AMENDED AND RESTATED RIGHTS AGREEMENT
This AMENDED AND RESTATED RIGHTS AGREEMENT ("Rights
Agreement"), dated as of December 21, 1994, between 3Com
Corporation, a California corporation (the "Company"), and
The First National Bank of Boston, a national banking
association (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company on
September 8, 1989 (i) announced that it authorized the
issuance and declared a dividend of one right ("Right") for
each share of the common stock of the Company ("Common
Stock") outstanding as of the Close of Business on September
20, 1989, each Right representing the right to purchase one-
half share of Common Stock of the Company upon the terms and
subject to the conditions hereinafter set forth, and (ii)
further authorized the issuance of one Right with respect to
each share of Common Stock of the Company that shall become
outstanding between September 20, 1989, and the Distribution
Date (as defined herein) pursuant to that certain Rights
Agreement dated as of September 8, 1989 (the "Prior
Agreement");
WHEREAS, pursuant to Section 27 of the Rights
Agreement, the Company and the Rights Agent may, prior to
the time a Person becomes an Acquiring Person, amend any
provision of the Rights Agreement which the Company deems
necessary or desirable;
WHEREAS, to the knowledge of the Board of Directors,
no person has become an Acquiring Person;
WHEREAS, the Company believes it in the best interests
of the Company and its shareholders to adjust the Purchase
Price to reflect the long-term value of the Company's Common
Stock, to provide that each Right represents the right to
purchase one full share of Common Stock of the Company, to
extend the term of the Rights Agreement, and to make certain
technical corrections to the Rights Agreement;
WHEREAS, pursuant to Section 15.5 of that certain
Indenture by and between the Company and The First National
Bank of Boston, as trustee, dated as of November 1, 1994
(the "Indenture"), the Company agreed to amend the Prior
Agreement to provide that upon conversion of the Notes (as
defined below), the holders will be issued, in addition to
the Common Stock issuable upon such conversion, the Rights
(whether or not the Rights have separated from the Common
Stock at the time of the conversion);
WHEREAS, The First National Bank of Boston has been
appointed as successor Rights Agent, replacing Bank of
America, NT&SA, effective September 26, 1991;
WHEREAS, the Company requested that the Prior
Agreement be amended and restated as set forth herein and
the Rights Agent is willing to amend and restate the Prior
Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the Prior Agreement
is hereby amended and restated to read in full as follows:
1. Certain Definitions. For purposes of this Agreement
the following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person
(as such term is hereinafter defined) who or which, together
with all Affiliates (as such term is hereinafter defined)
and Associates (as such term is hereinafter defined) of such
Person, without the prior approval of the Board of Directors
shall be the Beneficial Owner (as such term is hereinafter
defined) of 20% or more of the outstanding Common Stock;
provided, however, that in no event shall a Person who or
which, together with all Affiliates and Associates of such
Person, is the Beneficial Owner of less than 20% of the
Company's outstanding shares of Common Stock, become an
Acquiring Person solely as a result of a reduction of the
number of shares of outstanding Common Stock, including
repurchases of outstanding shares of Common Stock by the
Company, which reduction increases the percentage of
outstanding shares of Common Stock beneficially owned by
such Person and provided further, that an Acquiring Person
shall not include an Exempt Person (as such term is
hereinafter defined).
(b) "Adjustment Shares" shall have the
meaning set forth in Section 11(a)(ii) hereof.
(c) "Affiliate" and "Associate" shall have
the respective meanings ascribed to such terms in Rule l2b-2
of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), as in
effect on September 8, 1989.
(d) A Person shall be deemed the "Beneficial
Owner" of any securities:
(i) which such Person or any of such
Person's Affiliates or Associates beneficially owns,
directly or indirectly;
(ii) which such Person or any of such
Person's Affiliates or Associates has (A) the right to
acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise of
conversion rights, exchange rights, rights (other than these
Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own", securities tendered
pursuant to a tender or exchange offer made by 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 (whether or not in writing);
provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own", any
securities if the agreement, arrangement or understanding to
vote such security (1) arises solely from a revocable proxy
or consent given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act and (2)
is not also then reportable by such Person on Schedule l3D
under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or
any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting
except as described in clause (B) of subparagraph (ii) of
Section 1(d) or disposing of any securities of the Company.
(e) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in
the Commonwealth of Massachusetts are authorized or
obligated by law or executive order to close.
(f) "Close of Business" on any given date shall
mean 5:00 p.m., Boston time, on such date; provided,
however, that if such date is not a Business Day it shall
mean 5:00 p.m., Boston time, on the next succeeding Business
Day.
(g) "Common Stock" when used with reference to the
Company shall mean the common stock of the Company. "Common
Stock" when used with reference to any Person other than the
Company which shall be organized in corporate form shall
mean the capital stock or other equity security with the
greatest per share voting power of such Person or, if such
Person is a Subsidiary of or is controlled by another
Person, the Person which ultimately controls such first-
mentioned Person. "Common Stock" when used with reference
to any Person other than the Company which shall not be
organized in corporate form shall mean units of beneficial
interest which shall represent the right to participate in
profits, losses, deductions and credits of such Person and
which shall be entitled to exercise the greatest voting
power per unit of such Person.
(h) "Common Stock Equivalents" shall have the
meaning set forth in Section 11(a)(iii) hereof.
(i) "Current Market Price" shall have the meaning
set forth in Section 11(d) hereof.
(j) "Current Value" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(k) "Distribution Date" shall mean (i) the earlier
of (A) the Stock Acquisition Date or (B) the tenth day (or
such later date as may be determined by action of the Board
of Directors prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any
Person (other than an Exempt Person) of, or of the first
public announcement of the intent of any Person (other than
an Exempt Person) to commence (which intention to commence
remains in effect for five business days after such
announcement), a tender or exchange offer upon the
successful consummation of which such Person, together with
its Affiliates and Associates, would be the Beneficial Owner
of 20% or more of the outstanding Common Stock (irrespective
of whether any shares are actually purchased pursuant to any
such offer), including any such date which is after the date
of this Agreement and prior to the issuance of the Rights
(also referred to herein as the "First Distribution Date");
or (ii) with respect to any shares of Common Stock issuable
upon conversion of any Notes after the First Distribution
Date, the day immediately following the date on which such
Notes are converted into shares of Common Stock.
(l) "Equivalent Common Stock" shall have the
meaning set forth in Section 11(b) hereof.
(m) "Exchange Act" shall have the meaning set
forth in Section 1(c) hereof.
(n) "Exempt Person" shall mean the Company, any
Subsidiary of the Company, any employee benefit plan or
employee stock plan of the Company or of any Subsidiary of
the Company, or any Person, organized, appointed,
established or holding Common Stock for or pursuant to the
terms of any such plan.
(o) "Final Expiration Date" shall have the meaning
set forth in Section 7(a) hereof.
(p) "Flip-In Event" shall mean any event described
in Section 11(a)(ii)(A), (B) or (C) hereof.
(q) "Flip-In Exercise Payment" shall have the
meaning set forth in Section 11(a)(ii) hereof.
(r) "Flip-In Trigger Date" shall have the meaning
set forth in Section 11(a)(iii) hereof.
(s) "Flip-Over Event" shall mean any event
described in clause (x), (y) or (z) of Section 13(a) hereof.
(t) "Flip-Over Exercise Payment" shall have the
meaning set forth in Section 13(a) hereof.
(u) "NASDAQ" shall have the meaning set forth in
Section 9(b) hereof.
(v) "Note" or "Notes" shall mean one or more of
those certain Notes as defined in the Indenture, each
convertible into a share or shares of Common Stock of the
Company.
(w) "Person" shall mean any individual, firm,
corporation, partnership or other entity.
(x) "Principal Party" shall have the meaning set
forth in Section 13(b) hereof.
(y) "Redemption Date" shall have the meaning set
forth in Section 7(a) hereof.
(z) "Purchase Price" shall have the meaning set
forth in Section 4(a) hereof.
(aa) "Redemption Price" shall have the meaning set
forth in Section 23(a) hereof.
(bb) "Right Certificate" shall have the meaning set
forth in action 3(a) hereof.
(cc) "Securities Act" shall mean the Securities Act
of 1933, as amended.
(dd) "Stock Acquisition Date" shall mean the first
date of public announcement by the Company or an Acquiring
Person that an Acquiring Person has become such or such
earlier date as a majority of the directors shall become
aware of the existence of an Acquiring Person.
(ee) "Substitution Period" shall have the meaning
set forth in Section 11(a)(iii) hereof.
(ff) "Subsidiary" of a Person shall mean any
corporation or other entity of which securities or other
ownership interests having ordinary voting power sufficient
to elect a majority of the board of directors or other
persons performingsimilar functions are beneficially owned,
directly or indirectly, by such Person andany corporation or
other entity that is otherwise controlled by such Person.
(gg) "Summary of Rights" shall have the meaning set
forth in
Section 3(b) hereof.
(hh) "Trading Day" shall have the meaning set forth
in Section 11(d) hereof.
(ii) "Triggering Event" shall mean any event
described in Section 11(a)(ii)(A), (B), or (C) or Section 13
hereof.
(jj) "Voting Power" shall mean the voting power of
all securities of the Company then outstanding and generally
entitled to vote for the election of directors of the
Company.
Any determination required by the definitions
contained in this Section 1 shall be made by the Board of
Directors of the Company in its good faith judgment, which
determination shall be binding on the Rights Agent and the
holders of the Rights.
2. Appointment of Rights Agent. The Company hereby
appoints the
Rights Agent to act as agent for the Company in accordance
with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. The Company may from time
to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
3. Issuance of Right Certificates.
(a) Until the Distribution Date, (x) the
Rights will be evidenced (subject to the provisions of
Section 3(c) hereof) by the certificates for the Common
Stock registered in the names of the holders of the Common
Stock and not by separate Right certificates, and (y) each
Right will be transferable only in connection with the
transfer of a share (subject to adjustment as hereinafter
provided) of Common Stock. As soon as practicable after the
Distribution Date, the Rights Agent
will mail, by first-class, postage prepaid mail, to each
record holder of the Common Stock as of the Close of
Business on the Distribution Date as shown by the records of
the Company, to the address of such holder shown on such
records, a Right certificate in substantially the form of
Exhibit A hereto ("Right Certificate") evidencing one Right
for each share of Common Stock so held. As of and after the
Distribution Date the Rights will be evidenced solely by
such Right Certificates.
Rights shall be issued in respect of all shares of
Common Stock issued after the Record Date but prior to the
Distribution Date (or, if earlier, the Redemption Date or
the Final Expiration Date, as such terms are hereinafter
defined). Notwithstanding any provision of this Rights
Agreement to the contrary, the Rights shall be issued in
respect of all shares of Common Stock issued upon conversion
of the Notes prior to
the earlier of the Redemption Date or the Final Expiration
Date, whether the Notes are converted into shares of Common
Stock before or after the First Distribution Date.
(b) On September 20, 1989 or as soon as
practicable thereafter, the Company will send a copy of a
Summary of Rights to Purchase Common Stock, substantially in
the form attached to the Prior Agreement as Exhibit B
("Summary of Rights"), by first-class, postage prepaid mail,
to each record holder of Common Stock as of the Close of
Business on September 20, 1989, at the address of such
holder shown on the records of the Company.
(c) With respect to certificates for Common
Stock outstanding as of September 20, 1989, until the
Distribution Date (or, if earlier, the "Redemption Date" or
the "Final Expiration Date," as such terms are hereinafter
defined), the Rights will be evidenced by such certificates
for Common Stock registered in the names of the
holders thereof together with a copy of the Summary of
Rights. Until the
Distribution Date (or, if earlier, the Redemption Date or
Final Expiration Date), the surrender for transfer of any
certificate representing shares of Common Stock, with or
without a copy of the Summary of Rights attached thereto,
shall also constitute the
surrender for transfer of the Rights associated with the
Common Stock represented thereby.
(d) Certificates issued for Common Stock
(including, without limitation, certificates issued upon
transfer or exchange of Common Stock) after September 20,
1989 but prior to the earlier of the Distribution Date, the
Redemption Date or the Final Expiration Date shall have
impressed on, printed on, written on or otherwise affixed to
them the following legend (or with respect to any
certificates for
issued for Common Stock prior to the date of this Rights
Agreement, a legend substantially similar to the following
legend as set forth in the Prior Agreement):
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in the Amended and
Restated Rights Agreement between 3Com Corporation and The
First National Bank of Boston, as Rights Agent, dated as of
December 21, 1994 (as amended from time to time in
accordance with its terms, the "Rights Agreement"), the
terms of which are incorporated herein by reference and a
copy of which is on file at the principal executive office
of 3Com 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. 3Com Corporation will mail to the holder
of this certificate a copy of the Rights Agreement without
charge within five days after receipt by it of a written
request therefor. Under certain circumstances as provided
in the Rights Agreement, Rights issued to or beneficially
owned by Acquiring Persons or their Associates or Affiliates
(as defined in the Rights Agreement) or any subsequent
holder of such Rights may be limited as provided in Section
11(a)(ii) and Section 24 of the Rights Agreement.
With respect to such certificates containing the
foregoing legend, the Rights associated with the Common
Stock shall, until the Distribution Date, be evidenced by
such certificates alone, and the surrender for transfer of
any such certificate shall also constitute the surrender for
transfer of the Rights associated with the Common Stock
represented thereby.
4. Form of Right Certificates.
(a) The Right Certificates (and the forms of
election to purchase shares and of assignment to be printed
on the reverse thereof), when, as and if issued, shall be
substantially in the form set forth in Exhibit A hereto and
may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as
the Company may deem appropriate and as are not inconsistent
with the provisions of this Rights Agreement, or as may be
required to
comply with any 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 Sections 11 and 22 hereof, the Right Certificates
evidencing the Rights issued on September 20, 1989, whenever
such certificates are issued, shall be dated as of September
20, 1989, and
the Right Certificates evidencing Rights to holders of
record of Common Stock issued after September 20, 1989,
shall be dated as of September 20, 1989, but shall also be
dated to reflect the date of issuance of such Right
Certificate. On their face Right Certificates shall entitle
the holders thereof to purchase, for each Right, one share
of
Common Stock, or other securities or property as provided
herein, as the same may from time to time be adjusted as
provided herein, at the price per share of $250 set forth
therein, as the same may from time to time be adjusted as
provided herein (the "Purchase Price").
(b) Notwithstanding any other provision of
this Rights Agreement, any Right Certificate that represents
Rights that are or were at any time on or after the earlier
of the Stock Acquisition Date or the Distribution Date
beneficially owned by an Acquiring Person or any Affiliate
or Associate thereof (or any transferee of such Rights)
shall have impressed on, printed on, written on or otherwise
affixed to
it (if the Company or the Rights Agent has knowledge that
such Person is an Acquiring Person or an Associate or
Affiliate thereof or transferee of such Persons or a nominee
of any of the foregoing) the following legend:
The beneficial owner of the Rights represented by this Right
Certificate is an Acquiring Person or an Affiliate or
Associate (as defined in the Rights Agreement) of an
Acquiring Person or a subsequent holder of such Right
Certificates beneficially owned by such Persons.
Accordingly, under certain circumstances as provided in the
Rights Agreement, this Right Certificate and the Rights
represented hereby may be limited as provided in Section
11(a)(ii) and Section 24 of the Rights Agreement. The
provisions of Section 11(a)(ii) and Section 24 of the Rights
Agreement shall be operative whether or not the foregoing
legend is contained on any such Right Certificates.
5. Countersignature and Registration.
(a) The Right Certificates shall be executed
on behalf of the Company by its President or any Vice
President, either manually or by facsimile signature, and
have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be
manually countersigned by the Rights Agent and shall not be
valid for any purpose unless so
countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such
Right Certificates, nevertheless, may be countersigned by
the Rights Agent, issued and delivered with the same force
and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the
Company; and any Right Certificate may be signed on behalf
of the Company by any person who, at the actual date of the
execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right 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 one of its
offices designated for such purposes, books for registration
and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right
Certificates, the date of
each of the Right Certificates and the certificate numbers
for each of the Right Certificates.
6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates.
(a) Subject to the provisions of Section 14(b) hereof, at
any time after the Close of Business on the Distribution
Date and at or prior to the Close of Business on the earlier
of the Redemption Date or the Final Expiration Date, any
Right Certificate or Certificates may be (i) transferred or
(ii) split up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered
holder to purchase a like number of shares of Common Stock
as the Right Certificate or Right Certificates surrendered
then entitled such holder to purchase. Any registered
holder desiring to transfer any Right Certificate shall
surrender the Right Certificate at the office of the Rights
Agent designated for such purposes with the form of
assignment on the reverse side thereof duly endorsed (or
enclose with such Right Certificate a written instrument of
transfer in form satisfactory to the Company and the Rights
Agent), duly executed by the registered holder thereof or
his attorney duly authorized in writing, and with such
signature duly guaranteed. Any registered holder desiring
to split up, combine or exchange any Right Certificate shall
surrender the
Right Certificate or Right Certificates to be split up,,
combined or exchanged at th principal office of the Rights
Agent. Thereupon the Rights Agent shall countersign (by
manual signature) and deliver to the person entitled thereto
a Right Certificate or Right 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 Right 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 Right
Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and,
if requested by the Company, reimbursement to the Company of
all reasonable expenses incidental thereto, and upon
surrender to the
Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will execute and deliver a new Right
Certificate of like tenor to the Rights Agent for delivery
to the registered owner in lieu of the Right Certificate so
lost, stolen, destroyed or mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date
of Rights.
(a) The Rights shall become exercisable, and may be
exercised to purchase Common Stock, except as otherwise
provided herein, in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side
thereof duly executed (with such signature duly guaranteed),
to the Rights Agent at the principal office of the Rights
Agent, together with payment of the Purchase Price with
respect to each Right exercised, subject to adjustment as
hereinafter provided, at or prior to the Close of Business
on the earlier of (i) December 13, 2004 (the "Final
Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (such date being
herein referred to as the "Redemption Date") or (iii) the
time at which all such Rights are exchanged as provided in
Section 24 hereof.
(b) The Purchase Price and the number of shares of
Common Stock
or other securities or consideration to be acquired upon
exercise of a Right shall be subject to adjustment from time
to time as provided in Sections 11 and 13 hereof. The
Purchase Price shall be payable in lawful money of the
United States of America, in accordance with Section 7(c)
hereof.
(c) Except as provided in Section 11(a)(ii) hereof,
upon receipt of a Right Certificate with the form of
election to purchase duly executed, accompanied by payment
of the Purchase Price or so much thereof as is necessary for
the shares to be purchased and an amount equal to any
applicable transfer tax, by cash, certified check or
official bank check payable to the order of the Company or
the Rights
Agent, the Rights Agent shall thereupon promptly (i)
requisition from any transfer agent of the Common Stock
certificates for the number of shares of Common Stock so
elected to be purchased and the Company will comply and
hereby authorizes and directs such transfer agent to comply
with all such requests, (ii) requisition from the Company
the amount of cash to be paid in lieu of issuance of
fractional shares in accordance with Section 14(b) hereof,
and (iii) promptly after receipt of such
Common Stock certificates cause the same to be delivered to
or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be
designated by such holder, and, when appropriate, after
receipt promptly deliver such cash to or upon the order of
the registered holder of such Right Certificate; provided,
however, that in the case of a purchase of securities, other
than Common
Stock, pursuant to Section 11(a) or Section 13 hereof, the
Rights Agent shall promptly take the appropriate actions
corresponding to the foregoing clauses (i) through (iii).
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 Right
Certificate shall exercise less than all the Rights
evidenced thereby, a new Right Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such
Right Certificate or to his duly authorized assigns, subject
to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to
the contrary,
neither the Rights Agent nor the Company shall be obligated
to undertake any action with respect to a registered holder
upon the occurrence of any purported exercise as set forth
in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the
form of election to purchase set forth on the
reverse side of the Right Certificate surrendered for such
exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial
Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
8. Cancellation and Destruction of Right Certificates.
All Right 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 Right Certificates
shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Rights Agreement.
The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so
cancel and retire, any Right Certificate purchased or
acquired
by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all canceled Right
Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Right
Certificates, and in such case shall deliver a certificate
of destruction thereof to the Company.
9. Reservation and Availability of Shares of Common
Stock.
(a) The Company covenants and agrees that at all
times it will 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,
following the occurrence of a Triggering Event, other
securities) or held in its treasury, the number of shares of
Common Stock (and, following the occurrence of a Triggering
Event, other securities) that, as provided in this
Agreement, including Section
11(a)(iii) hereof, will be sufficient to permit the exercise
in full of all outstanding Rights, provided, however, that
the Company shall not be required to reserve and keep
available shares of Common Stock or other securities
sufficient to permit the exercise in full of all outstanding
Rights pursuant to the adjustments set forth in Section
11(a)(ii), Section 11(a)(iii) or Section 13 hereof unless,
and only to the extent
that, the Rights become exercisable pursuant to such
adjustments. (b) The Company shall (i) use its best
efforts to cause, from and after such time as the Rights
become exercisable, the Rights and all shares of Common
Stock (and following the occurrence of a Triggering Event,
other securities) issued or reserved for issuance upon
exercise thereof to be reported by the National Association
of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or such other system then in use, and if the
Common Stock shall become listed on any national securities
exchange, to cause, from and after such time as the Rights
become
exercisable, the Rights and all shares of Common Stock (and,
following the occurrence of a Triggering Event, other
securities) issued or reserved for issuance upon exercise
thereof to be listed on such exchange upon official notice
of issuance upon such exercise and (ii) if then necessary,
to permit the offer and issuance of such
shares of Common Stock (and, following the occurrence of a
Triggering Event, other securities), register and qualify
such shares of Common Stock (and, following the occurrence
of a Triggering Event, other securities) under the
Securities Act and any applicable state securities or "blue
sky" laws (to the extent exemptions therefrom are
not available), cause such registration statement and
qualifications to become effective as soon as possible after
such filing and keep such registration and qualifications
effective until the earlier of the Redemption Date or the
Final Expiration Date of the Rights. The Company may
temporarily suspend, for a period of time not to exceed
ninety (90) days, the exercisability of the Rights in order
to prepare and file a
registration statement under the Securities Act and permit
it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended,
as well as a public announcement at such time as the
suspension is no longer in effect. Notwithstanding any
provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction
shall have been obtained and until a registration statement
under the Securities Act (if required) shall have been
declared effective.
(c) The Company covenants and agrees that it will
take all such
action as may be necessary to ensure that all shares of
Common Stock (and following the occurrence of a Triggering
Event, other securities) delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such
shares (subject to payment of the Purchase Price in respect
thereof), be duly and validly authorized and issued and
fully paid and nonassessable shares in accordance with
applicable law.
(d) The Company further covenants and agrees that
it will pay when due and payable any and all federal and
state transfer taxes and charges which may be payable in
respect of the issuance or delivery of the Right
Certificates or of any shares of Common Stock (or other
securities, as the case may be) upon the exercise of Rights.
The Company shall not, however, be required to pay any
transfer tax which
may be payable in respect of any transfer or delivery of
Right Certificates to a Person other than, or the issuance
or delivery of certificates for Common Stock (or other
securities, as the case may be) upon exercise of Rights in a
name other than that of, the registered holder of the Right
Certificate, and the Company shall not be required
to issue or deliver a Right Certificate or certificate for
Common Stock (or other securities, as the case may be) to a
person other than such registered holder until any such tax
shall have been paid (any such tax being payable by the
holder of such Right Certificate at the time of surrender)
or until it has been established to the Company's
satisfaction that no such tax is due.
10. Common Stock Record Date. Each Person in whose name
any certificate for shares of Common Stock (or other
securities, as the case may be) is issued upon the exercise
of Rights shall for all purposes be deemed to have become
the holder of record of the Common Stock (or other
securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the
Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right
Certificate, as such, shall not be entitled to any rights of
a shareholder of the Company with respect to the shares for
which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
11. Adjustments to Number and Kind of Shares, Number of
Rights or Purchase Price. The number and kind of shares
subject to purchase upon the exercise of each Right, the
number of Rights outstanding and the Purchase Price 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 Rights Agreement (A) declare or pay
any dividend on Common Stock payable in shares of Common
Stock, (B) subdivide or split the outstanding shares of
Common Stock into a greater number of shares, (C) combine or
consolidate the outstanding shares of Common Stock into a
smaller number of shares or effect a reverse split of the
outstanding shares of Common Stock, or (D) issue any shares
of its capital stock in a reclassification of the Common
Stock (including any such reclassification in connection
with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the
effective date of such subdivision, combination or
reclassification, and the number and kind of shares of
Common Stock or capital stock, as the case may be, issuable
on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be
entitled to receive, upon payment of the Purchase Price then
in effect, the aggregate number and kind of shares of Common
Stock or capital stock,
as the case may be, which, if such Right had been exercised
immediately prior to such date, the holder thereof 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).
(ii) Subject to Section 24, in the event:
(A) any Acquiring Person or any Associate or Affiliate of
any Acquiring Person, at any time after the date of this
Agreement, directly or indirectly, (1) shall consolidate
with or merge with and 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
consolidation, merger or combination and the Common Stock of
the Company shall remain outstanding and no shares thereof
shall be changed into or exchanged for stock or other
securities of the Company or of any other Person or cash or
any other property, or (2) shall, in one or more
transactions, other than in connection with the exercise of
a Right or Rights and other than in connection with the
exercise or conversion of securities exercisable for or
convertible into securities of the Company or of any
Subsidiary of the Company, transfer any assets or property
to the Company or any of its Subsidiaries in exchange (in
whole or in part) for any shares of any class of capital
stock of the Company or any of its Subsidiaries or any
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 any 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 offer or distribution by
the Company or such Subsidiary to all holders of such
shares), or (3) shall sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise acquire (other than
as a pro rata dividend) or dispose, to, from or with, as the
case may be, in one transaction or a
series of transactions, the Company or any of its
Subsidiaries, assets (including securities) 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, or (4) shall receive any compensation from the
Company or any of its Subsidiaries for services other than
compensation for employment as a regular or part-time
employee, or fees for serving as a director, at
rates in accordance with the Company's (or its Subsidiary's)
past practices, or (5) shall receive the benefit, directly
or indirectly (except proportionately as a shareholder), of
any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or tax advantage provided by
the Company or any of its Subsidiaries, or (6) shall engage
in any transaction with the Company (or any of its
Subsidiaries) involving the sale, license, transfer or grant
of any right in, or disclosure of any patents, copyrights,
trade secrets, trademarks or know-how (or any other
intellectual or industrial property rights recognized under
any country's intellectual property laws) which the Company
(including its Subsidiaries) owns or has the right to use on
terms and conditions not approved by the Board; or
(B) any Person, alone or together with its Affiliates and
Associates, shall become an Acquiring Person other than
pursuant to (1) any transaction set forth in Section 13(a)
hereof, or (2) a tender or exchange offer for all
outstanding shares of Common Stock of the Company at a price
and on terms determined by the Board of Directors to be both
adequate and otherwise in the best interests of the Company
and its shareholders other than the Acquiring Person or an
Affiliate or Associate thereof on whose behalf the offer is
being made (a "Permitted Offer"); or
(C) during such time as there is an Acquiring Person,
there shall be any reclassification of securities (including
any reverse stock split), or any recapitalization of the
Company, or any merger or consolidation of the Company with
any of its Subsidiaries or any other transaction or series
of transactions involving the Company or any of its
Subsidiaries (whether or not with or into or otherwise
involving an Acquiring Person or any Affiliate or Associate
of such Acquiring Person) which has the effect, directly or
indirectly, of increasing by more than 1% the proportionate
share of the outstanding shares of any class of equity
securities of the Company or any of its Subsidiaries, or
securities exercisable for or convertible into equity
securities of the Company or any of its Subsidiaries, which
is directly or indirectly beneficially owned by any
Acquiring Person or any Affiliate or Associate of any
Acquiring Person, then, except as otherwise provided in
this Section 11, each holder of a Right shall thereafter
have a right to receive for each Right, upon payment of an
amount equal to the product of the then current Purchase
Price per share and the then number of shares of Common
Stock for which a Right was exercisable immediately prior to
the first occurrence of a Flip-In Event (the "Flip-In
Exercise Payment") and exercise of a Right in accordance
with the terms of this Rights Agreement, such number of
shares of Common Stock as shall equal the result obtained by
dividing the Flip-In Exercise Payment by 50% of the Current
Market Price per share of Common Stock on the date of the
first occurrence of a Flip-In Event (such number of shares
is herein called the "Adjustment Shares"); provided that the
Purchase Price per share and the number of Adjustment Shares
shall be further adjusted as provided in this Agreement to
reflect any events occurring after the date of such first
occurrence; and provided, further, that if the transaction
that would otherwise give rise to the foregoing adjustment
is also subject to the provisions of Section 13 hereof, then
only the provisions of Section 13 hereof shall apply and no
adjustment shall be made pursuant to this Section 11(a)(ii).
Notwithstanding the foregoing, the adjustment pursuant to
this Section 11(a)(ii) shall not occur with respect to any
Rights that are or were at any time on or after the earlier
of the Stock Acquisition Date or the First Distribution Date
beneficially owned by the Acquiring Person or any Associate
or Affiliate of the Acquiring Person which is or was
involved in or which caused or facilitated, directly or
indirectly, the event or transaction or transactions listed
above in this Section 11(a)(ii) in respect of which such
adjustment occurs (or any subsequent transferee of such
Rights), and upon exercise of such Rights, the holders
thereof shall continue to receive upon exercise the number
of shares of Common Stock otherwise provided for herein
without giving effect to such adjustment.
(iii) In the event that the number of shares of Common
Stock which are authorized by the Company's articles of
incorporation but not outstanding or reserved for issuance
for purposes other than upon exercise of the Rights is not
sufficient to permit the exercise in full of the Rights in
accordance with Section 11(a)(ii) and the Rights shall
become so exercisable, to the extent permitted by applicable
law and any agreements in effect on the date hereof to which
the Company is a party, the Company shall: (A) determine
the value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current
Value") and (B) with respect to each Right, upon exercise of
such Right, issue shares of Common Stock to the extent
available for the exercise in full of such Right and, to the
extent shares of Common Stock are not so available, make
adequate provision to substitute for the Adjustment Shares
not received upon exercise of such Right (1) cash, (2) other
equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock
which, by virtue of having dividend, voting and liquidation
rights substantially comparable to those of the Common
Stock, are deemed in good faith by the Board of Directors of
the Company to have substantially the same value as shares
of Common Stock (such shares or units of shares of preferred
stock are herein called "common stock equivalents"), (3)
debt securities of the Company, (4) other assets, or (5) any
combination of the foregoing, having a value which, when
added to the value of the shares of Common Stock actually
issued upon exercise of such Right, shall have an aggregate
value equal to the Current Value, where such aggregate value
has been determined in good faith by the Board of Directors
of the Company based upon the advice of a nationally
recognized independent investment banking firm selected in
good faith by the Board of Directors of the Company;
provided, however, if the Company shall not have made
adequate provision to deliver value pursuant to clause (B)
above within thirty days following the later of (x) the
first occurrence of a Flip-In 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 "Flip-In Trigger Date"), then the Company
shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the
Purchase Price, shares of Common Stock (to the extent
available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the excess of the
Current Value over the Purchase Price. If the Board of
Directors of the Company shall determine in good faith that
it is likely that sufficient additional shares of Common
Stock could be authorized for issuance upon exercise in full
of the Rights, the thirty day period set forth above may be
extended to the extent necessary, but not more than ninety
days after the Flip-In Trigger Date, in order that the
Company may seek shareholder approval for the authorization
of such additional shares (such thirty day period, as it may
be extended, is herein called the "Substitution Period").
To the extent that the Company determines that some action
need be taken pursuant to the first and/or second sentence
of this Section 11(a)(iii), the Company (x) shall provide,
subject to the last sentence of Section 11(a)(ii) hereof,
that such action shall apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to
seek any authorization of additional shares and/or to decide
the appropriate form of distribution to be made pursuant to
the first sentence of Section 11(a)(iii) and to determine
the value thereof. In the event of any such suspension, the
Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended,
as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of the Common Stock shall be
the Current Market Price per share of the Common Stock on
Flip-In Trigger Date and the per share or per unit value of
any "common stock equivalent" shall be deemed to equal the
Current Market Price per share of the Common Stock on such
date. The Board of Directors may, but shall not be required
to, establish procedures to allocate the right to receive
Common Stock upon the exercise of the Rights among holders
of Rights pursuant to this Section 11(a)(iii).
(b) In case the Company shall fix a record date for
the issuance of rights (other than the Rights), options or
warrants to all holders of Common Stock entitling them to
subscribe for or purchase (for a period expiring within
forty-five calendar days after such record date) Common
Stock, shares having the same rights, privileges and
preferences as the Common Stock ("equivalent common stock")
or securities convertible into Common Stock or equivalent
common stock at a price per share of Common Stock or
equivalent common stock (or having a conversion price per
share, if a security convertible into Common Stock or
equivalent common stock) less than the Current Market Price
per share of Common Stock on such record date, the Purchase
Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Common
Stock outstanding on such record date, plus the number of
shares of Common Stock which the aggregate offering price of
the total number of shares of Common Stock and/or equivalent
common stock (and/or the aggregate initial conversion price
of the convertible securities so to be offered) would
purchase at such Current Market Price, and the denominator
of which shall be the number of shares of Common Stock
outstanding on such record date, plus the number of
additional shares of Common Stock and/or equivalent common
stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are
initially convertible). In case such subscription price may
be paid by delivery of consideration part or all of which
may be in a form other than cash, the value of such non-cash
consideration shall be whose determination shall be
described in a statement filed with the Rights Agent.
Shares of Common Stock owned by or held for the account of
the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed, and in
the event that such rights or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase
Price which would then be in effect if such record date had
not been fixed.
(c) In case the Company shall fix a record date for
a distribution to all holders of Common Stock (including any
such distribution made in connection with a consolidation or
merger in which the Company is the continuing corporation)
of evidences of indebtedness, cash, assets (other than a
dividend payable in Common Stock, but including any dividend
payable in stock other than Common Stock) or subscription
rights or warrants (excluding those referred to in Section
11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the Current Market
Price per share of Common Stock on such record date, less
the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent) of
the portion of the cash, assets or evidences of indebtedness
so to be distributed or of such subscription rights or
warrants applicable to a share of Common Stock and the
denominator of which shall be such Current Market Price per
share of Common Stock. Such adjustments shall be made
successively whenever such a record date is fixed, and in
the event that such distribution is not so made, the
Purchase Price shall be adjusted to be the Purchase Price
which would have been in effect if such record date had not
been fixed.
(d) For the purpose of any computation hereunder,
other than
computations made pursuant to Section 11(a)(iii) hereof, the
"Current Market Price" per share of Common Stock on any date
shall be deemed to be the average of the daily closing
prices per share of the Common Stock for the thirty
consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date, and for purpose of
computations made pursuant to Section 11(a)(iii) hereof, the
"Current Market Price" per share of the Common Stock on any
date shall be deemed to be the average of the daily closing
prices per share of the Common Stock for the ten consecutive
Trading Days immediately following such date; provided,
however, that in the event that the Current Market Price per
share of the Common Stock i determined during a period
following the announcement by the issuer of the Common Stock
of (i) any dividend or distribution on the Common Stock
(other than a regular quarterly cash dividend and other than
the Rights), (ii) any subdivision, combination or
reclassification of the Common Stock, and prior to the
expiration of the requisite thirty Trading Day or ten
Trading Day period, as set forth above, after the ex-
dividend date for such dividend or distribution, or the
record date for such subdivision, combination or
reclassification occurs, then, and in each such case, the
Current Market Price shall be properly adjusted to take into
account ex-dividend trading. The closing price for each day
shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of
Common Stock are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities
exchange on which the shares of Common Stock are listed or
admitted to trading or, if the shares of Common Stock are
not listed or admitted to trading on any national securities
exchange, the last quoted sale price or, if not so quoted,
the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other
system then in use, or, if on any such date the shares of
Common Stock are not quoted by any suc organization, the
average of the closing bid and asked prices as furnished by
a professional market maker making a market in the Common
Stock selected by the Board of Directors of the Company. If
on any such date no market maker is making a market in the
Common Stock, the fair value of such shares on such date as
determined in good faith by the Board of Directors of the
Company shall be used and shall be binding on the Rights
Agent. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the shares
of Common Stock are listed or admitted to trading is open
for the transaction of business or, if the shares of Common
Stock are not listed or admitted to trading on any national
securities exchange, a Business Day. If the Common Stock is
not publicly held or not so listed or traded, "Current
Market Price" per share shall mean the fair value per share
as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be
conclusive for all purposes.
(e) Anything herein to the contrary
notwithstanding, no adjustment in the Purchase Price shall
be required unless such adjustment would require an increase
or decrease of at least one percent in the Purchase Price;
provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be
carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest ten-thousandth of
a share, 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 years from the date of the transaction which
mandates such adjustment, or (ii) the Expiration Date. (f)
If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any
shares of capital stock other than Common Stock, thereafter
the number of such other shares so receivable upon exercise
of any Right and the Purchase Price thereof shall be subject
to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with
respect to the shares of Common Stock contained in Section
11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m)
hereof, and the provisions of Sections 7, 9, 10, 13 and 14
hereof with respect to the Common Stock shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price
hereunder shall evidence the right to purchase, at the
adjusted Purchase Price, the number of shares of Common
Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided
herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment
of the Purchase Price as a result of the calculations made
in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of shares of Common Stock
(calculated to the nearest ten-thousandth) obtained by (i)
multiplying (x) the number of shares covered by a Right
immediately prior to this adjustment, by (y) the Purchase
Price in effect immediately prior to such adjustment of the
Purchase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of
any adjustment of the Purchase Price or any adjustment to
the number of shares of Common Stock for which a Right may
be exercised, to adjust the number of Rights, in lieu of any
adjustment in the number of shares of Common Stock
purchasable upon the exercise of a Right. Each of the
Rights outstanding after the adjustment in the number of
Rights shall be exercisable for the number of shares of
Common Stock for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior
to such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest ten-thousandth)
obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, 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 Right
Certificates have been issued, shall be at least ten 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 shares of Common Stock
issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue
to express the Purchase Price per share and the number of
shares which were expressed in the initial Rights
Certificates issued hereunder.
(k) In the event that shares of Common Stock have
hereafter par value, then, before taking any action that
would cause an adjustment reducing the Purchase Price below
the then par value of the shares of Common Stock issuable
upon exercise of the Rights, the Company shall take any
corporate action, including using its best efforts to obtain
any required shareholder approvals, which may, in the
opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and
nonassessable shares of Common Stock at such adjusted
Purchase Price.
(l) In any case in which this Section 11 shall
require that an for a specified event, the Company may elect
to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date the
shares of Common Stock and other capital stock or securities
of the Company, if any, issuable upon such exercise over and
above the shares of Common Stock and other capital stock or
securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company
shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such
additional shares of Common Stock and other capital stock or
securities upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment the Board of
Directors of the Company shall determine to be advisable in
order that any (i) consolidation or subdivision of the
Common Stock, (ii) issuance for cash of any shares of Common
Stock at less than the current market price, (iii) issuance
for cash of shares of Common Stock or securities which by
their terms are convertible into or exchangeable for shares
of Common Stock, (iv) stock dividends or (v) issuance of
rights. options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Common Stock
shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall
not, at any time after the First Distribution Date, (i)
consolidate with any other Person (other than a Subsidiary
of the Company), (ii) merge with or into any other Person
(other than a Subsidiary of the Company), 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), if (x) at the time
of or immediately after such consolidation, merger or sale
there are any charter or bylaw provisions of any rights,
warrants or other instruments securities outstanding or
agreements in effect which 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
shareholders of the Person who constitutes, or would
constitute, the "Principal Party" for purposes of Section
13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and
Associates. The Company shall not consummate any such
consolidation, merger or sale unless prior thereto the
Company and such other Person shall have executed and
delivered to the Rights Agent a supplemental agreement
evidencing compliance with this subsection.
(o) The Company covenants and agrees that, after
the First Distribution Date, it will not, except as
permitted by Section 23, Section 24 or Section 27 hereof,
take (or permit any Subsidiary to take) any action if at the
time such action is taken it is reasonably foreseeable that
such action will diminish substantially or eliminate the
benefits intended to be afforded by the Rights.
12. Certification of Adjustments.
Whenever an adjustment is made as provided in Sections 11
and 13 hereof, the Company shall (a) promptly prepare a
certificate signed by the President or any Vice President
and by the Treasurer or any Assistant Treasurer or the
Secretary or any Assistant Secretary of the Company setting
forth such adjustment and a brief statement of the facts
giving rise to such adjustment, (b) promptly file with the
Rights Agent and with each transfer agent for the Common
Stock a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate (or,
if prior to the Distribution Date, to each holder
Section 26 hereof. Notwithstanding the foregoing sentence,
the failure of the Company to give such notice shall not
affect the validity of or the force or effect of or the
requirement for such adjustment. The Rights Agent shall be
fully protected in relying on any certificate prepared by
the Company pursuant to Sections 11 and 13 and on any
adjustment therein contained and shall not be deemed to have
knowledge of any such adjustment unless and until it shall
have received such certificate. Any adjustment to be made
pursuant to Sections 11 and 13 of this Rights Agreement
shall be effective as of the date of the event giving rise
to such adjustment.
13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power.
(a) In the event that, at any time on or after the
First Distribution Date, directly or indirectly, (x) the
Company shall consolidate with, or merge with and into, any
other Person or Persons and the Company shall not be the
surviving or continuing corporation of such consolidation or
merger, or (y) any Person or Persons shall consolidate with,
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 shall be changed into or exchanged
for stock or other securities of any other Person or of the
Company or each or any other property (other than in the
case of the transactions described in subparagraphs (x) or
(y), a merger or consolidation which would result in all of
the Voting Power represented by the securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into securities of the surviving entity) all of
the Voting Power represented by the securities of the
Company or such surviving entity outstanding immediately
after such merger or consolidation and the holders of such
securities not having changed as a result of such
transactions), or (z) the Company or one or more of its
Subsidiaries shall sell, mortgage or otherwise transfer to
any other Person or any Affiliate or Associate of such
Person, 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), then, on the first
occurrence of any such event, proper provision shall be made
so that (i) each holder of record of a Right shall
thereafter have the right to receive, upon exercise thereof
and payment of an amount equal to the product of the then
current Purchase Price per share and the then number of
shares of Common Stock for which a Right was exercisable
immediately prior to the first occurrence of a Flip-Over
Event (or, if a Flip-In Event hereof has occurred prior to
the first occurrence of a Flip-Over Event, multiplying the
Purchase Price per share in effect immediately prior to the
first occurrence of a Flip-In Event by the number of shares
of Common Stock for which a Right was exercisable
immediately prior to such first occurrence of a Flip-In
Event) (the "Flip-Over Exercise Payment") and the exercise
of a Right in accordance with the terms of this Rights
Agreement, such number of shares of validly issued, fully
paid and nonassessable and freely tradeable Common Stock of
the Principal Party (as defined herein) not subject to any
liens, encumbrances, rights of first refusal or other
adverse claims, as shall be equal to the result obtained by
dividing the Flip-Over Exercise Payment by 50% of the
Current Market Price (determined as provided in Section
11(d) hereof with respect to the Common Stock) per share of
the Common Stock of such Principal Party on the date of
consummation of such Flip Over Event (or the fair market
value on such date of other securities or property of the
Principal Party, as provided for herein); provided that the
Purchase Price per share and the number of shares of Common
Stock of such Principal Party issuable upon exercise of each
Right shall be further adjusted as provided in this
Agreement to reflect any events occurring after the date of
the first occurrence of Flip-Over Event; (ii) such Principal
Party shall thereafter be liable for, and shall assume, by
virtue of such Flip-Over Event, all the obligations and
duties of the Company pursuant to this Rights Agreement;
(iii) the term "Company" for all purposes of this Rights
Agreement shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall only apply to such
Principal Party following the first occurrence of a Flip-
Over Event; and (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock in
accordance with Section 9 hereof) in connection with the
consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to
its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; provided, however, that, upon the
subsequent occurrence of any merger, consolidation, sale of
all or substantially all assets, recapitalization,
reclassification of shares, reorganization or other
extraordinary transaction in respect of such Principal
Party, each holder of a Right shall thereupon be entitled to
receive, upon exercise of a Right and payment of the
Purchase Price, such cash, shares, rights, warrants and
other property which such holder would have been entitled to
receive had he, at the time of such transaction, owned the
shares of Common Stock of the Principal Party purchasable
upon the exercise of a Right, and such Principal Party shall
take such steps (including, but not limited to, reservation
of shares of stock) as may necessary to permit the
subsequent exercise of the Rights in accordance with the
terms hereof for such cash, shares, rights, warrants and
other property.
(b) "Principal Party" shall mean (i) in the case
of any transaction described in (x) or (y) of the first
sentence of Section 13(a) hereof; (A) the Person that is the
issuer of the securities into which shares of Common Stock
of the Company are converted in such merger or
consolidation, or, if there is more than one such issuer,
the issuer the Common Stock of which has the greatest market
value or (B) if no securities are so issued, (x) the Person
that is the other party to the merger or consolidation and
that survives said merger or consolidation, or, if there is
more than one such Person, the Person the Common Stock of
which has the greatest market value or (y) if the Person
that is the other party to the merger or consolidation does
not survive the merger or consolidation, the Person that
does survive the merger or consolidation (including the
Company if it survives); and
(ii) in the case of any transaction described
in (z) of the first sentence in Section 13(a) hereof, the
Person that is the party receiving the greatest portion of
the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a
party to such transaction or transactions receives the same
portion of the assets or earning power so transferred or if
the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such
Persons as is the issuer of Common Stock having the greatest
market value of shares outstanding; provided, however, that
in any such case described in the foregoing (b)(i) or
(b)(ii), 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 Person the Common Stock of which is and has been so
registered, the term "Principal Party" shall refer to such
other Person, or if such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Stocks of
all of which are and have been so registered, the term
"Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Stock having the greatest market
value of shares outstanding.
(c) The Company shall not consummate any
consolidation, merger, sale or transfer referred to in
Section 13(a) unless prior thereto the Company and the
Principal Party involved therein shall have executed and
delivered to the Rights Agent an agreement confirming that
the requirements of Sections 13(a) and (b) hereof shall
promptly be performed in accordance with their terms and
that such consolidation, merger, sale or transfer of assets
shall not result in a default by the Principal Party under
this Rights Agreement as the same shall have been assumed by
the Principal Party pursuant to Sections 13(a) and (b)
hereof and further providing that, as soon as practicable
after executing such agreement pursuant to this Section 13,
the Principal Party at its own expense shall: (i) prepare
and file a registration statement under the Securities Act,
if necessary, 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 Act)
until the date of expiration of the Rights, and similarly
comply with applicable state securities laws;
(ii) use its best efforts, if the Common Stock
of the Principal Party shall become listed on a national
securities exchange, to list (or continue the listing of)
the Rights and the securities purchasable upon exercise of
the Rights on such securities exchange and, if the Common
Stock of the Principal Party shall not be listed on a
national securities exchange, to cause the Rights and the
securities purchased upon exercise of the Rights to be
reported by NASDAQ or such other system then in use;
(iii) deliver to holders of the Rights
historical financial statements for the Principal Party
which comply in all respects with the requirements for
registration on Form 10 (or any successor form) under the
Exchange Act; and
(iv) obtain waivers of any rights of first
refusal or preemptive rights in respect of the shares of
Common Stock of the Principal Party subject to purchase upon
exercise of outstanding Rights. In the event that any of the
transactions described in Section 13(a) hereof shall occur
at any time after the occurrence of a transaction described
in Section 11(a)(ii) hereof, the Rights which have not
theretofore been exercised shall thereafter be exercisable
in the manner described in Section 13(a). The provisions of
this Section 13 shall similarly apply to all successive
Flip-Over Events.
(d) Furthermore, in case the Principal Party which
is to be a party to a transaction referred to in this
Section 13 has a provision in any of its authorized
securities or in its Certificate of Incorporation or By-laws
or other instrument governing its corporate affairs, which
provision would have the effect of (i) causing such
Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred
to in this Section 13, shares of Common Stock of such
Principal Party at less than the then Current Market Price
per share (determined pursuant to Section 11(d) hereof) or
securities exercisable for, or convertible into, Common
Stock of such Principal Party at less than such then current
market price (other than to holders of Rights pursuant to
this Section 13) or (ii) providing for any special payment,
tax or similar provisions in connection with the issuance of
the Common Stock of such Principal Party pursuant to the
provisions of Section 13; then, in such event, the Company
hereby agrees with each holder of Rights that it shall not
consummate any such transaction unless prior thereto the
Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement
providing that the provision in question of such Principal
Party shall have been canceled, waived or amended, or that
the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with,
or as a consequence of, the consummation of the proposed
transaction.
(e) Notwithstanding anything in this Agreement to
the contrary, Section 13 shall not be applicable to a Flip-
Over Event of the type described in subparagraphs (x) or (y)
of Section 13(a) if (i) such transaction is consummated with
a Person or Persons (or a wholly owned subsidiary of any
such Person) who acquired shares of Common Stock 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 Stock
whose shares were purchased pursuant to such Permitted Offer
and (iii) the form of consideration being offered to the
remaining holders of Common Stock pursuant to such
transaction is the same as the form of consideration paid
pursuant to such Permitted Offer. Upon consummation of any
such transaction contemplated by this subsection (e), all
Rights hereunder shall expire.
14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue
fractions of Rights or to distribute Right Certificates
which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the holders of
record of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in
cash equal to the same fraction of the then current market
value of a whole Right. For the purposes of this Section
14(a), the then current market value of a Right shall be
determined in the same manner as the Current Market Price of
a share of Common Stock shall be determined pursuant to
Section 11(d) hereof.
(b) The Company shall not be required to issue
fractions of shares of Common Stock upon exercise of the
Rights or to distribute certificates which evidence
fractional shares. In lieu of issuing fractions of shares
of Common Stock, there shall be paid to the holders of
record of Right Certificates at the time such Right
Certificates are exercised as herein provided an amount in
cash equal to the same fraction of the then current market
value of a share of Common Stock. For purposes of this
Section 14(b), the then current market value of a share of
Common Stock shall be the Current Market Price thereof as
determined pursuant to Section 11(d) hereof.
(c) The holder of a Right by the acceptance of a
Right expressly waives his right to receive any fractional
Right or any fractional shares upon exercise of a Right.
15. Rights of Action. All rights of action in respect
of this Agreement, other than any rights of action vested in
the Rights Agent pursuant to Sections 18 and 20 below, are
vested in the respective holders of record of the Right
Certificates (and, prior to the Distribution Date, the
holders of record of the Common Stock); and any holder of
record of any Right Certificate (or, prior to the
Distribution Date, of the Common Stock), without the consent
of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company or any other Person
to enforce, or otherwise act in respect of, his right to
exercise the rights evidenced by such Right Certificate in
the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies
available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Agreement and,
accordingly, that they 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. Holders of Rights
shall be entitled to recover the reasonable costs and
expenses, including attorneys' fees, incurred by them in any
action to enforce the provisions of this Agreement.
16. Agreement of Right 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
not be evidenced by a Right Certificate and will be
transferable only in connection with the transfer of Common
Stock;
(b) after the Distribution Date, the Right
Certificates will be transferable only on the registry books
of the Rights Agent if surrendered at the principal office
of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer;
(c) the Company and the Rights Agent may deem and
treat the person in whose name the Right Certificate or, if
prior to the Distribution Date, the associated Common Stock
certificate, is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificate
or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent or the transfer
agent of the Common Stock) 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, or any statute, rule, regulation or executive
order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must use its best
efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as
possible.
17. Right Certificate Holder Not Deemed a Shareholder.
No holder of a Right, as such, shall be entitled to vote,
receive dividends in respect of or be deemed for any purpose
to be the holder of Common Stock or any other securities of
the Company which may at any time be issuable upon the
exercise of the Rights, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the
holder of any Right Certificate, as such, any of the rights
of a shareholder of the Company or any right to vote in the
election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as
provided in Section 25 hereof), or to receive dividends or
subscription rights in respect of any such stock or
securities, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been
exercised in accordance with the provisions hereof.
18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights
Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution
of this Rights 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 to be done by
the Rights Agent in connection with the acceptance and
administration of this Rights Agreement, including the cost
and expenses of defending against any claim of liability in
the premises. The indemnity provided herein shall survive
the expiration of the Rights and the termination of this
Rights 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 Rights Agreement in reliance upon any
Right Certificate, certificate for Common Stock or other
securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement or other
paper or document believed by it to be genuine and to be
signed, executed and, where necessary, guaranteed, verified
or acknowledged, by the proper Person or Persons.
19. Merger or Consolidation or Changed Name of Rights
Agent.
(a) Any corporation into which the Rights Agent or
any successor Rights Agent may be merged or with which it
may be consolidated, or any corporation resulting from any
merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business
of the Rights Agent or any successor Rights Agent, shall be
the successor to the Rights Agent under this Rights
Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto,
provided that such 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
Rights Agreement, any of the Right 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 Right Certificates
so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Rights
Agreement.
(b) In case at any time the name of the Rights
Agent shall be changed and at such time any of the Right
Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver such Right Certificates so
countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its
prior name or in its changed name; and in all such cases
such Right Certificate shall have the full force provided in
the Right Certificates and in this Rights Agreement.
20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Rights Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion
of such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or
omitted to be taken by it in good faith and in accordance
with such opinion.
(b) Whenever in the performance of its duties under
this Rights Agreement the Rights Agent shall deem it
necessary or desirable that any fact or matter (including,
without limitation, the identity of any Acquiring Person) 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 certificate signed by the President or any
Vice President and by the Treasurer or any Assistant
Treasurer or the Secretary or any Assistant Secretary of the
Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent
for any action taken or suffered in good faith by it under
the provisions
of this Rights Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only
for its own gross negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals
contained in this Rights Agreement or in the Right
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 Rights
Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except
its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or condition
contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment
required under the provisions of Sections 11, 13, 23 or 24
hereof or responsible for the manner, method or amount of
any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Right
Certificates after receipt of Certificate furnished pursuant
to Section 12 describing any such adjustment); nor shall it
by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any
shares of Common Stock to be issued pursuant to this Rights
Agreement or any Right Certificate or as to whether any
shares of Common Stock 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
Rights Agreement.
(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the
performance of its duties hereunder from the Chairman of the
Board, the President or any Vice President or the Secretary
or any Assistant Secretary or the Treasurer or any Assistant
Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with instructions of
any such officer. 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. Subject
to Section 20(c) hereof, 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 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 shareholder, director,
officer or employee of the Rights Agent may buy, sell or
deal in any of the Rights or other securities of the Company
or become pecuniarily interested in any transaction in which
the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as
though it were not the Rights Agent under this Rights
Agreement. Nothing herein shall preclude the Rights Agent
from acting in any other capacity for the Company or for any
other 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 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 contained in the form of assignment or the
form of election to purchase set forth on the reverse
thereof, as the case may be, has either not been completed
or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action
with respect to such requested exercise of transfer without
first consulting with the Company.
21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its
duties under this Rights Agreement upon 30 days notice in
writing, or such earlier period as shall be agreed to in
writing, mailed to the Company and to each transfer agent of
the Common Stock by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights
Agent (with or without cause) upon 30 days notice in
writing, or such earlier period as shall be agreed to in
writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the
Common Stock by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. If
the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. Notwithstanding
the foregoing provisions of this Section 21, in no event
shall the resignation or removal of a Rights Agent be
effective until a successor Rights Agent shall have been
appointed and have accepted such appointment. If the
Company shall fail to make such appointment within a period
of 30 days after such removal or after it has been notified
in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of
a Right Certificate (who shall, with such notice, submit his
Right Certificate for inspection by the Company), then the
incumbent Rights Agent or the holder of record of any Right
Certificate may apply to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a
court, shall be (a) a corporation organized and doing
business under the laws of the United States or any State
thereof, in good standing, which is authorized under such
laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment
as Rights Agent a combined capital and surplus of at least
$50,000,000 or (b) an Affiliate controlled by a corporation
described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further
act or deed; but the predecessor Rights Agent shall deliver
and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such
appointment the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of
the Common Stock, and mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure
to give any notice provided for in this Section 21, however,
or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent
or the appointment of the successor Rights Agent, as the
case may be.
22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Rights
Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing
Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the
purchase price per share and the number or kind or class of
shares of stock or other securities or property purchasable
under the Right Certificates made in accordance with the
provisions of this Rights Agreement. In addition, in
connection with the issuance or sale of shares of Common
Stock following the Distribution Date and prior to the
redemption or expiration of the Rights, the Company (a)
shall, with respect to shares of Common Stock so issued or
sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereinafter issued by
the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the
Company, issue Right Certificates representing the
appropriate number of Rights in connection with such
issuance or sale; provided, however, that (i) no such Right
Certificate shall be issued if, and to the extent that, the
Company shall be advised by counsel that such issuance would
create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Right
Certificate would be issued, and (ii) no such Right
Certificate shall be issued, if, and to the extent that,
appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof.
23. Redemption.
(a) (i) The Board of Directors of the Company
may, at its option, at any time prior to the earlier of (x)
the occurrence of a Stock Acquisition Date or (y) the Close
of Business on the Final Expiration Date, redeem all but not
less than all the then outstanding Rights at a redemption
price of $.01 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the
"Redemption Price").
(ii) Notwithstanding anything contained in this
Agreement to the contrary, the Board of Directors of the
Company may redeem all but not less than all of the then
outstanding Rights at the Redemption Price following the
occurrence of a Stock Acquisition Date but prior to any
Flip-Over Event in connection with a Flip-Over Event in
which all holders of Common Stock are treated alike and not
involving (other than as a holder of Common Stock being
treated like all other such holders) an Acquiring Person or
an Affiliate or Associate of an Acquiring Person or any
other Person in which such Acquiring Person, Affiliate or
Associate has an interest, or any other Person or Persons
acting directly or indirectly on behalf of or in association
with any such Acquiring Person, Affiliate or Associate.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the
Rights (the date of such action being the Redemption Date),
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, without any interest thereon.
Within 10 days after the Redemption Date, 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(s) of the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such
notice of redemption will state the method by which the
payment of the Redemption Price will be made. The failure
to give notice required by this Section 23(b) or any defect
therein shall not affect the legality or validity of the
action taken by the Company.
(c) In the case of a redemption permitted under
Section 23(a), the Company may, at its option, discharge all
of its obligations with respect to the Rights by (i) issuing
a press release announcing the manner of redemption of the
Rights and (ii) mailing payment of the Redemption Price to
the registered holders of the Rights at their last addresses
as they appear on the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the
transfer agent(s) of the Common Stock, and upon such action,
all outstanding Right Certificates shall be null and void
without any further action by the Company.
24. Exchange of Rights for Common Stock.
(a) The Board of Directors of the Company may, at
its option, at any time after the occurrence of a Flip-In
Event, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that do
not receive adjustments upon the occurrence of a Flip-In
Event) for shares of Common Stock at an exchange ratio of
one share of Common Stock per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "Exchange
Ratio").
(b) Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any Rights
pursuant to subsection (a) of this Section 24 and without
any further action and without any notice, the right to
exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive
that number of shares of Common Stock equal to the number of
such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any
such exchange; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity
of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books
of the Rights Agent. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the
shares of Common Stock for Rights will be effected and, in
the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than
Rights which do not receive adjustments upon the occurrence
of a Flip-In Event) held by each holder of Rights.
(c) In the event that there shall not be sufficient
shares of Common Stock issued but not outstanding or
authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company
shall take all such action as may be necessary to authorize
additional shares of Common Stock for issuance upon exchange
of the Rights.
(d) The Company shall not be required to issue
fractions of shares of Common Stock or to distribute
certificates which evidence fractional shares of Common
Stock. In lieu of such fractional shares of Common Stock,
the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional shares of
Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a
whole share of Common Stock. For the purposes of this
paragraph (d), the current market value of a whole share of
Common Stock shall be the Current Market Price of a share of
Common Stock (as defined in Section 11(d) hereof for the
purposes of computations made other than pursuant to Section
11(a)(iii)) for the Trading Day immediately prior to the
date of exchange pursuant to this Section 24.
25. Notice of Proposed Actions.
(a) In case the Company, after the Distribution
Date, shall propose (i) to effect any of the transactions
referred to in Section 11(a)(i) or to pay any dividend to
the holders of record of its Common Stock payable in stock
of any class or to make any other distribution to the
holders of record of its Common Stock (other than a regular
periodic cash dividend), or (ii) to offer to the holders of
record of its Common Stock or options, warrants, or other
rights to subscribe for or to purchase shares of Common
Stock (including any security convertible into or
exchangeable for Common Stock) or shares of stock of any
class or any other securities, options, warrants,
convertible or exchangeable securities or other rights, or
(iii) to effect any reclassification of its Common Stock or
any recapitalization or reorganization of the Company, or
(iv) to effect any consolidation or merger with or into, or
to effect any sale or other transfer (or to permit one or
more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of more than 50% of
the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person or
Persons, 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 record of a Right
Certificate, in accordance with Section 26 hereof, notice of
such proposed action, which shall specify the record date
for the purposes of such transaction referred to in Section
11(a)(i), or such dividend or distribution, or the date on
which such reclassification, recapitalization,
reorganization, consolidation, merger, sale or transfer of
assets, liquidation, dissolution or winding up is to take
place and the record date for determining participation
therein by the holders of record 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 10 days prior to the record date for
determining holders of record of the Common Stock for
purposes of such action, and in the case of any such other
action, at least 10 days prior to the date of the taking of
such proposed action or the date of participation therein by
the holders of record of Common Stock, whichever shall be
the earlier.
(b) In case any of the transactions referred to in
Section 11(a)(ii) or Section 13 of this Rights Agreement are
proposed, then, in any such case, the Company shall give to
each holder of Rights, in accordance with Section 26 hereof
notice of the proposal of such transaction at least 10 days
prior to consummating such transaction, which notice shall
specify the proposed event and the consequences of the event
to holders of Rights under Section 11(a)(ii) or Section 13
hereof, as the case may be, and, upon consummating such
transaction, shall similarly give notice thereof to each
holder of Rights.
(c) The failure to give notice required by this
Section 25 or any defect therein shall not affect the
legality or validity of the action taken by the Company or
the vote upon any such action.
26. Notices. Notices or demands authorized by this
Rights Agreement to be given or made by the Rights Agent or
by the holder of record of any Right Certificate or Right to
or on behalf of 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:
3Com Corporation
5400 Bayfront Plaza
P.O. Box 58154
Santa Clara, California 95052-8415
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice
or demand authorized by this Rights Agreement to be given or
made by the Company or by the holder of
record of any Right Certificate or Right 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:
The First National Bank of Boston
P.O. Box 1865
Boston, Massachusetts 02105-1865
Attention: Shareholder Services Division
Notices or demands authorized by this Rights Agreement to be
given or made by the Company or the Rights Agent to the
holder of record of any Right Certificate or Right 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 it appears upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the
registry books of the Transfer Agent.
27. Supplements and Amendments. The Company and
the Rights Agent may from time to time supplement or amend
this Agreement without approval of any holders of Right
Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein which
may be defective or inconsistent with any other provision
herein, (iii) prior to the time a Person becomes an
Acquiring Person, to change or supplement any of the
provisions herein which the Company may deem necessary or
desirable (including, but not limited to, an amendment that
provides that the Rights shall become exercisable or
exchangeable for shares or fractions of shares of Preferred
Stock of the Company that are economically Common Stock
Equivalents) or (iv) following the time a Person becomes an
Acquiring Person, to change or supplement the provisions
hereunder in any manner which the Company may deem necessary
or desirable and which shall not adversely affect the
interests of the holders of Right Certificates. Upon the
delivery of a certificate from an appropriate officer of the
Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or
amendment unless the Rights Agent shall have determined in
good faith that such supplement or amendment would adversely
affect its interests under this Agreement. Notwithstanding
anything contained in this Rights Agreement to the contrary,
no supplement or amendment shall be made which changes the
Redemption Price. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common
Stock.
28. Successors. All of the covenants and provisions of
this Rights Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of
their respective successors and assigns hereunder.
29. Benefits of this Rights Agreement. Nothing in this
Rights Agreement shall be construed to give to any person or
corporation other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Stock) any legal or
equitable right, remedy or claim under this Rights
Agreement; but this Rights Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and
the holders of record of the Right Certificates (and, prior
to the Distribution Date, the Common Stock).
30. Governing Law. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be contract
made under the laws of the State of California (or the laws
of the state of incorporation of any successor of the
Company) and for all purposes shall be governed by and
construed in accordance with the laws of such state
applicable to contracts to be made solely by residents of
such state and performed entirely within such state.
31. Counterparts. This Rights 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.
32. Descriptive Headings. Descriptive headings of the
several sections of this Rights Agreement are inserted for
convenience only and shall not control or affect the meaning
or construction of any of the provisions hereof.
33. Severability. If any term, provision, covenant or
restriction of this Rights Agreement is held by a court of
competent jurisdiction or other authority to be invalid,
illegal or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
IN WITNESS WHEREOF, the parties hereto have caused this
Amended and Restated Rights Agreement to be duly executed,
all as of the day and year first above written.
ATTEST: THE FIRST
NATIONAL BANK OF
BOSTON
By: /s/ J. T. Gunning By: /s/ Gordon C. Stevenson
Name: J. T. Gunning Name: Gordon C. Stevenson
Title: Account Manager Title: Administration Manager
ATTEST: 3COM CORPORATION
By: /s/ Ron Friedman By: /s/ Christopher B. Paisley
Name: Ron Friedman Name: Christopher B. Paisley
Title: Assistant Secretary Title: Chief Financial Officer
EXHIBIT A
[Form of Right Certificate]
Certificate No. W-
Rights
NOT EXERCISABLE AFTER DECEMBER 13, 2004, OR EARLIER IF
REDEEMED OR EXCHANGED. AT THE OPTION OF THE COMPANY, THE
RIGHTS MAY BE REDEEMED AT $.01 PER RIGHT OR EXCHANGED FOR
COMMON STOCK ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
IN THE EVENT THAT THE RIGHTS REPRESENTED BY THIS CERTIFICATE
ARE ISSUED TO A PERSON WHO IS AN ACQUIRING PERSON OR A
TRANSFEREE OF THE RIGHTS PREVIOUSLY OWNED BY SUCH PERSONS,
THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BE SUBJECT TO CERTAIN LIMITATIONS IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 11(a)(ii) AND SECTION 24 OF THE RIGHTS
AGREEMENT.
RIGHT CERTIFICATE
3Com Corporation
This certifies that
, or registered assigns, is the registered owner of the
number of Rights set forth above, each of which entitles the
owner thereof, subject to the terms, provisions and
conditions of the Amended and Restated Rights Agreement
dated as of December 21, 1994 ("Rights Agreement") between
3Com Corporation, a California corporation ("Company"), and
The First National Bank of Boston, a national banking
association ("Rights Agent"), to purchase from the Company
at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and prior to 5:00 p.m.
(Boston time) on December 13, 2004, at the office of the
Rights Agent, or its successors as Rights Agent, designated
for such purposes, one fully paid and nonassessable share of
Common Stock of the Company ("Common Stock") at a purchase
price of $250 per share, as the same may from time to time
be adjusted in accordance with the Rights Agreement
("Purchase Price"), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase duly
executed.
As provided in the Rights Agreement, the
Purchase Price and the number of shares of Common Stock
which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain
events and, upon the happening of certain events, securities
other than shares of Common Stock, or other property, may be
acquired upon exercise of the Rights evidenced by this Right
Certificate, as provided by the Rights Agreement.
This Right Certificate is subject to all the terms,
provisions and conditions of the Rights Agreement, which
terms, provisions and conditions are 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 of the Rights Agent, the Company and the holders
of record of the Right Certificates. Copies of the Rights
Agreement are on file at the principal executive office of
the Company.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the
Rights Agent, may be exchanged for another Right Certificate
or Right Certificates of like tenor and date evidencing
Rights entitling the holder of record to purchase a like
aggregate number of shares of Common Stock as the Rights
evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If
this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof,
another Right Certificate or Right Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, at
any time prior to the earlier of (i) the occurrence of a
Stock Acquisition Date (as such term is defined in the
Rights Agreement) or (ii) the Final Expiration Date, the
Rights evidenced by this Certificate may be redeemed by the
Company at its option at a redemption price of $.01 per
Right or exchanged by the Company at its option in whole or
in part for shares of Common Stock.
No fractional shares of Common Stock shall be issued
upon the exercise or exchange of any Right or Rights
evidenced hereby, and in lieu thereof, as provided in the
Rights Agreement, fractions of shares of Common Stock shall
receive an amount in cash equal to the same fraction of the
then Current Market Price (as such term is defined in the
Rights Agreement) of a share of Common Stock.
No holder of this Right Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any
purpose the holder of Common Stock or of any other
securities of the Company which may at any time be issuable
on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a shareholder
of the Company or any right to vote in the election of
directors; or upon any matter submitted to shareholders at
any meeting thereof, or to give or withhold consent to any
corporate action or to receive notice of meetings or other
actions affecting shareholders (other than certain actions
specified in the Rights Agreement) or to receive dividends
or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been
exercised or exchanged as provided in the Rights Agreement.
This Right Certificate shall not be valid or
obligatory for any purpose until it
shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers
of the Company and its
corporate seal. Dated as of , 19 .
ATTEST: 3Com Corporation
By:
Secretary
Title:
COUNTERSIGNED:
By:
Authorized Signature
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer any or all of the Rights
represented by this Right Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers unto
(Name, address and social security or other identifying
number of transferee)
___________________________________ (_______________) of the
Rights represented by this Right Certificate, together with
all right, title and interest in and to said Rights, and
hereby irrevocably constitutes and appoints
________________________ attorney to transfer said Rights on
the books of the within-named Company with full power of
substitution.
Dated:___________________, 19__.
(Signature)
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the rights evidenced by this Right Certificate
[ ] are [ ] are not being sold, assigned and transferred
by or on behalf of a Person who is or was an Acquiring
Person (as such capitalized terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of
the undersigned, it [ ] did [ ] did not acquire the Rights
evidenced by this Right Certificate from any Person who is
or was an Acquiring Person or an Affiliate or Associate of
an Acquiring Person or any transferee of such Persons.
Dated:__________________, 19__
(Signature)
Signature Guaranteed:
Form of Reverse Side of Right Certificate (continued)
NOTICE
The signatures to the foregoing Assignment and the
foregoing Certificate, if applicable, must correspond to the
name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a member firm
of a registered national securities exchange, a member of
the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or
correspondent in the United States.
In the event that the foregoing Certificate is not
duly executed, with signature guaranteed, the Company may
deem the Rights represented by this Right Certificate to be
Beneficially Owned by an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such capitalized terms
are defined in the Rights Agreement), and not issue any
Right Certificate or Right Certificates in exchange for this
Right
Certificate.
Form of Reverse of Right Certificate (continued)
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder
desires to exercise any or all of the Rights represented by
this Right Certificate)
To 3Com Corporation:
The undersigned hereby irrevocably elects to exercise
_______________ (__________) of the Rights represented by
this Right Certificate to purchase the shares of the Common
Stock of the Company, or other securities or property
issuable upon the exercise of said number of Rights pursuant
to the Rights Agreement.
The undersigned hereby requests that a certificate for
any such securities and any such property be issued in the
name of and delivered to:
(Name, address and social security or other identifying
number of issuee)
The undersigned hereby further requests that if said
number of Rights shall not be all the Rights represented by
this Right Certificate, a new Right Certificate for the
remaining balance of such Rights be issued in the name of
and delivered to:
(Name, address and social security or other identifying
number of issuee)
Dated:__________________, 19__
(Signature)
Signature Guaranteed:
Form of Reverse Side of Right Certificate (continued)
CERTIFICATE
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Right 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 Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of
the undersigned, it [ ] did [ ] did not acquire the Rights
evidenced by this Right Certificate from any Person who is
or was an Acquiring Person or an Affiliate or Associate of
an Acquiring Person or any transferee of such Persons.
Dated:__________________, 19__
(Signature)
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase
and the foregoing Certificate, if applicable, must
correspond to the name as written upon the face of the this
Right Certificate in every particular, without alteration or
enlargement or any change whatsoever, and must be guaranteed
by a member firm of a registered national securities
exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having
an office or correspondent in the United States.
In the event that the foregoing Certificate is not executed,
with signature guaranteed, the Company may deem the Rights
represented by this Right Certificate to be Beneficially
Owned by an Acquiring Person or an Affiliate or Associate of
an Acquiring Person (as such capitalized terms are defined
in the Rights Agreement), and not issue any Right
Certificate or Right Certificates in exchange for this Right
Certificate.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-END> NOV-30-1994
<CASH> 98,856
<SECURITIES> 139,902
<RECEIVABLES> 180,938
<ALLOWANCES> (23,663)
<INVENTORY> 73,604
<CURRENT-ASSETS> 518,453
<PP&E> 185,577
<DEPRECIATION> (105,541)
<TOTAL-ASSETS> 630,781
<CURRENT-LIABILITIES> 192,080
<BONDS> 0
<COMMON> 250,203
0
0
<OTHER-SE> 77,572
<TOTAL-LIABILITY-AND-EQUITY> 630,781
<SALES> 554,088
<TOTAL-REVENUES> 554,088
<CGS> 259,800
<TOTAL-COSTS> 369,708
<OTHER-EXPENSES> 131,539
<LOSS-PROVISION> 3,659
<INTEREST-EXPENSE> 580
<INCOME-PRETAX> 48,602
<INCOME-TAX> 17,497
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,105
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
</TABLE>
