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FORM 8-A/A
-----------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12 (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
ADOBE SYSTEMS INCORPORATED
(Exact Name of Registrant as Specified in Charter)
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<S> <C>
DELAWARE 77-0019522
(State of Incorporation (IRS Employer
or Organization) Identification No.)
345 PARK AVENUE, SAN JOSE, CALIFORNIA 95110-2704
(Address of Principal Executive Offices) (Zip Code)
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Securities to be registered pursuant to Section 12(b) of the Act:
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<S> <C>
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
NONE NONE
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If this Form relates to the registration of a class of securities pursuant
to Section 12(b) of the Exchange Act and is effective upon filing pursuant to
General Instruction Act A.(c), please check the following box. / /
If this Form relates to the registration of a class of securities pursuant
to Section 12(g) of the Exchange Act and is effective pursuant to General
Instruction A.(d), please check the following box. / /
Securities Act registration statement file number to which this form
relates: _______________ (if applicable)
Securities to be registered pursuant to Section 12(g) of the Act:
Preferred Stock Purchase Rights
(Title of Class)
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AMENDMENT NO. 2 TO FORM 8-A
The undersigned registrant hereby amends the following items, exhibits or
other portions of its Application for Registration on Form 8-A dated July 24,
1990 for its Rights to Purchase Series A Preferred Stock, par value $0.001 per
share, as set forth in the pages attached hereto.
ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
Item 1 of the Form 8-A dated July 24, 1990 (as so amended, the "Form
8-A/A") filed by Adobe Systems Incorporated, a Delaware corporation (the
"Company"), is hereby amended to include the following:
On December 15, 1998, the Company amended its Rights Agreement, dated as
of July 11, 1990, as amended by the Amended and Restated Rights Agreement,
dated as of April 30, 1996 (the "First Amended and Restated Rights
Agreement"), and by the Amended and Restated Rights Agreement, dated as of
July 30, 1997 (the "Second Amended and Restated Rights Agreement"), by
entering into the Third Amended and Restated Rights Agreement, dated as of
December 15, 1998 (the "Third Amended and Restated Rights Agreement"), with
Harris Trust Company of California. Capitalized terms used herein and not
otherwise defined have the meanings ascribed to them in the Third Amended and
Restated Rights Agreement.
In general, the Second Amended and Restated Rights Agreement has been
amended principally as follows:
1. The provisions requiring the concurrence of a majority of the
Continuing Directors then in office to give effect to any action,
calculation, interpretation or determination made by the Board of Directors
of the Company in the administration of the Second Amended and Restated
Rights Agreement and the exercise of rights or powers granted to the Board of
Directors of the Company thereunder and providing that no effect shall be
given to any such action, calculation, interpretation or determination or
exercise of rights of powers unless at least two Continuing Directors who are
then in office are eliminated under the Third Amended and Restated Rights
Agreement.
A copy of the Third Amended and Restated Rights Agreement is attached
hereto as Exhibit 5 and is incorporated herein by reference. The foregoing
description of the changes to the Second Amended and Restated Rights Agreement
does not purport to be complete and is qualified in its entirety by reference to
the Third Amended Restated Rights Agreement.
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ITEM 2. EXHIBITS.
Item 2 of the Form 8-A is hereby amended by adding the following exhibit
attached hereto:
5. Third Amended and Restated Rights Agreement, dated as of
December 15, 1998, between the Company and Harris Trust Company of California.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereto duly authorized.
Adobe Systems Incorporated
(Registrant)
By: /s/ Colleen M. Pouliot
--------------------------------
Colleen M. Pouliot
Senior Vice President, General
Counsel and Secretary
Dated: December 15, 1998
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EXHIBIT INDEX
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Exhibit No. Description
- ----------- -----------
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5 Third Amended and Restated Rights Agreement, dated as of
December 15, 1998, between the Company and Harris Trust
Company of California.
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THIRD AMENDED AND RESTATED RIGHTS AGREEMENT
This agreement (this "AGREEMENT" or the "RIGHTS AGREEMENT"), dated
as of July 11, 1990, and amended and restated as of April 10, 1996 and as of
August 14, 1997, and further amended and restated as of December 15, 1998,
between Adobe Systems Incorporated, a Delaware corporation (the "COMPANY"),
and Harris Trust Company of California (the "RIGHTS AGENT").
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company on July 11, 1990 (i)
announced that it authorized the issuance and declared a dividend of one
right ("RIGHT") (as such number may be adjusted pursuant hereto) for each
share of the common stock of the Company ("COMMON STOCK") outstanding as of
the Close of Business (as defined herein) on July 24, 1990 (the "RECORD
DATE"), each Right initially representing the right to purchase one share of
Common Stock of the Company upon the terms and subject to the conditions
hereinafter set forth, and (ii) further authorized the issuance of one Right
(as such number may be adjusted pursuant hereto) with respect to each share
of Common Stock of the Company that shall become outstanding between July 24,
1990 and, except as provided in Section 22, the Distribution Date (as defined
herein); and
WHEREAS, pursuant to authorization of the Board of Directors at a
meeting properly noticed and convened on April 10, 1996, this Agreement has
been amended and restated, at a meeting properly noticed and convened on July
30, 1997, this Agreement has been further amended and restated, and at a
meeting properly noticed and convened on October 20, 1998, this Agreement has
been further amended and restated, each as of the respective date set forth
above, in accordance with the provisions of Section 27 hereof to provide,
among other things, that each Right outstanding as of and to be issued after
the date of this Third Amended and Restated Rights Agreement shall be
exercisable into one Unit (as defined herein) of Preferred Stock (as defined
herein).
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement
the following terms shall have the meanings indicated:
(a) "ACQUIRING PERSON" shall mean any Person (as defined herein)
who or which, alone or together with all Affiliates (as defined herein) and
Associates (as defined herein) of such Person, without the prior approval of
the Board of Directors, shall be the Beneficial Owner (as defined herein) of
15% or more of the outstanding Common Stock of the Company but shall not
include (x) an Exempt Person (as defined herein) or (y) any such Person who
has
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become and is such a Beneficial Owner solely because (A) of a change in the
aggregate number of shares of the Common Stock outstanding since the last
date on which such Person acquired Beneficial Ownership (as defined herein)
of any shares of the Common Stock (as defined herein) or (B) it acquired such
Beneficial Ownership in the good faith belief that such acquisition would not
(1) cause such Beneficial Ownership to equal or exceed 15% of the shares of
the Common Stock then outstanding and such Person relied in good faith in
computing the percentage of its Beneficial Ownership on publicly filed
reports or documents of the Company which are inaccurate or out-of-date or
(2) otherwise cause a Distribution Date or the adjustment provided for in
Section 11(a)(ii) to occur. Notwithstanding clause (B) of the prior
sentence, if any Person that is not an Acquiring Person due to such clause
(B) does not reduce its percentage of Beneficial Ownership of the Common
Stock to less than 15% by the Close of Business (as defined herein) on the
fifth Business Day (as defined herein) after notice from the Company (the
date of notice being the first day) that such person's Beneficial Ownership
of the Common Stock so equals or exceeds 15%, such Person shall at the end of
such five Business Day period become an Acquiring Person (and such clause (B)
shall no longer apply to such Person). For purposes of this definition, the
determination whether any Person acted in "good faith" shall be conclusively
determined by the Board of Directors of the Company.
(b) "ADJUSTMENT SHARES" shall have the meaning set forth in
Section 11(a)(ii)(C) hereof.
(c) "AFFILIATE" and "ASSOCIATE" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended ("EXCHANGE ACT"), as
currently in effect.
(d) A Person shall be deemed the "BENEFICIAL OWNER" of, and shall
be deemed to "BENEFICIALLY OWN", and shall be deemed to have "BENEFICIAL
OWNERSHIP" 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 the Rights), warrants or options, or
otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed the
"BENEFICIAL OWNER" of, or to "BENEFICIALLY OWN", or to have "BENEFICIAL
OWNERSHIP" of, 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
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3
deemed the "BENEFICIAL OWNER" of, or to "BENEFICIALLY OWN", or to have
"BENEFICIAL OWNERSHIP" of, 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 13D or 13G 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 this 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 State of California are
authorized or obligated by law or executive order to close.
(f) "CLOSE OF BUSINESS" on any given date shall mean 5:00 P.M.,
California time, on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day it shall mean 5:00 P.M., California time, on the next succeeding
Business Day.
(g) "COMMON STOCK" 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 (as defined herein) 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) "CURRENT MARKET PRICE" shall have the meaning set forth in
Section 11(d) hereof.
(i) "CURRENT VALUE" shall have the meaning set forth in Section
11(a)(iii) hereof.
(j) "DEPOSITARY AGENT" shall have the meaning set forth in Section
7(c) hereof.
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(k) "DISTRIBUTION DATE" shall have the meaning set forth in
Section 3(a) hereof.
(l) "EQUIVALENT PREFERRED 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).
(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) "PERSON" shall mean any individual, firm, corporation,
partnership or other entity.
(w) "PREFERRED STOCK" shall mean the Series A Preferred Stock, par
value $.0001 per share, of the Company having the voting powers, designation,
preferences and relative, participating, optional or other special rights and
qualifications, limitations and restrictions described in the Certificate of
Designation set forth as EXHIBIT C hereto.
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(x) "PREFERRED STOCK EQUIVALENTS" shall have the meaning set forth
in Section 11(a)(iii) hereof.
(y) "PRINCIPAL PARTY" shall have the meaning set forth in Section
13(b) hereof.
(z) "PURCHASE PRICE" shall have the meaning set forth in Section
4(a) hereof.
(aa) "RECORD DATE" shall have the meaning set forth in the recitals
to this Agreement.
(bb) "REDEMPTION DATE" shall have the meaning set forth in Section
7(a) hereof.
(cc) "REDEMPTION PRICE" shall have the meaning set forth in Section
23(a) hereof.
(dd) "RIGHT CERTIFICATE" shall have the meaning set forth in
Section 3(a) hereof.
(ee) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
(ff) "STOCK ACQUISITION DATE" shall mean the first date of public
announcement (including, without limitation, the filing of any report
pursuant to Section 13(d) or 13(g) of the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such or such earlier
date as a majority of the directors shall become aware of the existence of an
Acquiring Person.
(gg) "SUBSTITUTION PERIOD" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(hh) "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 performing similar functions, are beneficially owned, directly
or indirectly, by such Person and any corporation or other entity that is
otherwise controlled by such Person.
(ii) "SUMMARY OF RIGHTS" shall have the meaning set forth in
Section 3(b) hereof.
(jj) "TRADING DAY" shall have the meaning set forth in Section
11(d) hereof.
(kk) "TRIGGERING EVENT" shall mean any event described in Section
11(a)(ii)(A), (B), or (C) or Section 13 hereof.
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(ll) "UNIT" has the meaning set forth in Section 7(b).
(mm) "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 any definition 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.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. With the consent of the Rights Agent, the Company may from time
to time appoint such Co-Rights Agents as it may deem necessary or desirable.
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SECTION 3. ISSUANCE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the Close of Business on the tenth
day after the Stock Acquisition Date and (ii) the Close of Business on the
tenth Business Day (or such later date as may be determined by action of the
Company's Board of Directors prior to such time as any Person becomes an
Acquiring Person) after the date that a tender or exchange offer by any
Person (other than an Exempt Person) is first published or sent or given
within the meaning of Rule 14d-4(a) of the Exchange Act Regulations or any
successor rule, if upon consummation thereof such Person would be the
Beneficial Owner of 15% or more of the shares of the outstanding Common Stock
(irrespective of whether any shares are actually purchased pursuant to any
such offer) (the earlier of (i) and (ii) above being the "DISTRIBUTION
DATE"), (x) the Rights will be evidenced (subject to the provisions of
Section 3(c) hereof) by the certificates for Common Stock registered in the
names of the holders of the Common Stock as of and subsequent to the Record
Date (which certificates for shares of Common Stock shall be deemed also to
be certificates for Rights) and not by separate Right certificates, and (y)
each Right will be transferable only in connection with the transfer of a
share (subject to adjustments as hereinafter provided) of Common Stock
(including a transfer to the Company). As soon as practicable after the
Distribution Date, the Rights Agent will mail, by first-class, postage
prepaid mail, at the expense of the Company, 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, one or more Right certificates, in substantially the form of EXHIBIT
A hereto (each, a "RIGHT CERTIFICATE"), evidencing one Right for each share
of Common Stock so held, subject to adjustment as provided herein. In the
event that an adjustment in the number of Rights per share of Common Stock of
the Company has been made pursuant to Section 11(p), at the time of
distribution of the Rights Certificates, the Company may make the necessary
and appropriate rounding adjustments (in accordance with Section 14(a)) so
that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of and
after the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
(b) On July 24, 1990 or as soon as practicable thereafter, the
Company sent a copy of a Summary of Terms of Rights Agreement, substantially
in the form attached hereto as EXHIBIT B ("SUMMARY OF RIGHTS") (Exhibit B
having been amended, however, to summarize the terms of the Rights as amended
as of April 10, 1996 and further amended as of August 14, 1997, and as of
December 15, 1998), by first-class, postage prepaid mail, to each record
holder of Common Stock as of the Close of Business on July 24, 1990, at the
address of such holder shown on the records of the Company.
(c) With respect to certificates for Common Stock outstanding as
of July 24, 1990, until the Distribution Date (or, if earlier, the Redemption
Date or the Final Expiration Date), the Rights will be evidenced by such
certificates for Common Stock registered in the
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names of the holders thereof. Until the Distribution Date (or, if earlier,
the Redemption Date or Final Expiration Date), the surrender for transfer of
any certificate for Common Stock outstanding on July 24, 1990, 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 July 24, 1990, 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:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement between Adobe Systems
Incorporated and Manufacturers Hanover Trust Company, as Rights Agent,
dated as of July 11, 1990 (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 Adobe Systems Incorporated. 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. Adobe Systems Incorporated will mail to the holder of this
certificate a copy of the Rights Agreement without charge within five (5)
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.
PROVIDED, HOWEVER, that with respect to certificates issued for Common Stock
(including, without limitation, certificates issued upon transfer or exchange
of Common Stock) after December 15, 1998, but prior to the earlier of the
Distribution Date, the Redemption Date or the Final Expiration Date, the
first sentence of such legend shall be replaced with the following:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Third Amended and Restated Rights Agreement
between Adobe Systems Incorporated and Harris Trust Company of California,
as Rights Agent, dated as of December 15, 1998 (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 Adobe Systems Incorporated.
and the last sentence of such legend shall be replaced with the following:
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
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9
the Rights Agreement) or any subsequent holder of such Rights may become
null and void in the circumstances specified in Section 7(f) of the
Rights Agreement and 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 represented by such certificates
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.
SECTION 4. FORM OF RIGHT CERTIFICATES.
(a) The Right Certificates (and the forms of election to
purchase 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 July 24, 1990, whenever such certificates are issued, shall be
dated as of July 24, 1990, and the Right Certificates evidencing Rights
to holders of record of Common Stock issued after July 24, 1990 shall be
dated as of July 24, 1990, 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 Unit of
Preferred Stock, or other securities or property as provided herein, as
the same may from time to time be adjusted after the date hereof as
provided herein, at the price per Unit of $115.00, 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: (i) an Acquiring Person or any
Affiliate or Associate thereof, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) which becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) which becomes a transferee
prior to or concurrently with the Acquiring Person becoming such and
which receives such Rights pursuant to either (A) a transfer (whether or
not for consideration) from the Acquiring Person (or any such Associate
or Affiliate) to holders of equity interests in such Acquiring Person (or
such Associate or Affiliate) or to any Person with whom such Acquiring
Person (or such Associate or Affiliate) has any continuing agreement,
arrangement or understanding regarding either the transferred Rights,
shares of Common Stock or the Company
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10
or (B) a transfer which the Board of Directors of the Company has
determined to be part of a plan, arrangement or understanding which has
as a primary purpose or effect the avoidance of Section 7(f), shall have
(to the extent feasible) 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, this Right
Certificate and the Rights represented hereby may become null and void in
the circumstances specified in Section 7(f) of the Rights Agreement and may
be limited as provided in Section 11(a)(ii) and Section 24 of the Rights
Agreement.
SECTION 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.
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SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Sections 4(b), 7(f) and 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 Units of Preferred 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 make
such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be split up, combined or
exchanged at the 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 and the Rights Agent 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 and
representing the equivalent number of Rights to the Rights Agent for delivery
to the registered owner in lieu of the Right Certificate so lost, stolen,
destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) The Rights shall become exercisable, and may be exercised to
purchase Units of Preferred 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
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12
Rights Agent at 311 West Monroe Street, 14th Floor, Chicago, Illinois 60606,
Attention: Corporate Trust Department, 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) July 23, 2000 (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 Units of Preferred 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) As promptly as practicable following the occurrence of the
Distribution Date, the Company shall deposit with a corporation in good
standing organized under the laws of the United States or any State of the
United States, 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 (such institution being the "DEPOSITARY
AGENT"), certificates representing the shares of Preferred Stock that may be
acquired upon exercise of the Rights, and shall cause such Depositary Agent
to enter into an agreement pursuant to which the Depositary Agent shall issue
receipts representing interests in the shares of Preferred Stock so
deposited. Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly
executed, accompanied by payment, with respect to each Right so exercised, of
the Purchase Price for the Units of Preferred Stock (or, following a
Triggering Event, other securities, cash or other assets, as the case may be)
to be purchased thereby as set forth below and an amount equal to any
applicable transfer tax or evidence satisfactory to the Company of payment of
such tax, the Rights Agent shall, subject to Section 20(k), thereupon
promptly (i) requisition from the Depositary Agent depositary receipts
representing such number of Units of Preferred Stock as are to be purchased
and the Company will direct, and hereby authorizes and directs, the
Depositary Agent to comply with such request, (ii) requisition from the
Company the amount of cash, if any, to be paid in lieu of fractional shares
in accordance with Section 14, (iii) after receipt of such depositary
receipts, promptly 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 (iv) after receipt thereof, promptly
deliver such cash, if any, to or upon the order of the registered holder of
such Right Certificate; PROVIDED, HOWEVER, that in the case of a purchase of
securities pursuant to Section 13 hereof, the Rights Agent shall promptly
take the appropriate actions corresponding to the foregoing clauses (i)
through (iv). In the event that the Company is obligated to issue Common
Stock or other securities of the Company, pay cash and/or distribute other
property pursuant to Section 11(a), the Company will make all arrangements
necessary so that such Common Stock, other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when
appropriate. The
<PAGE>
13
payment of the Purchase Price (as such amount may be reduced pursuant to
Section 11(a)(iii)) may be made in cash or by certified or bank check payable
to the order of the Company, or by wire transfer of immediately available
funds to the account of the Company (provided that notice of such wire
transfer shall be given by the holder of the related Right to the Rights
Agent).
(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.
(f) Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of any Flip-In Event or Flip-Over Event,
any Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) which becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) which becomes a transferee prior to
or concurrently with the Acquiring Person becoming such and which receives
such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person (or any such Associate or Affiliate)
to holders of equity interests in such Acquiring Person (or such Associate or
Affiliate) or to any Person with whom such Acquiring Person (or such
Associate or Affiliate) has any continuing agreement, arrangement or
understanding regarding the transferred Rights, shares of Common Stock or the
Company or (B) a transfer which the Board of Directors of the Company has
determined to be part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(f), shall be null
and void without any further action, and no holder of such Rights shall have
any rights whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise. The Company shall use all
reasonable efforts to ensure that the provisions of this Section 7(f) and
Section 4(b) are complied with, but shall have no liability to any holder of
Rights or any other Person as a result of its failure to make any
determination under this Section 7(f) or Section 4(b) with respect to an
Acquiring Person or its Affiliates, Associates or transferees.
<PAGE>
14
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.
All Right Certificates surrendered for the purpose of exercise, transfer,
splitup, 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
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled 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 Right 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 cancelled Right Certificates to
the Company, or shall, at the written request of the Company, destroy such
cancelled Right Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF SHARES OF PREFERRED
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 Preferred 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 Preferred 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 Preferred Stock or other securities sufficient to permit
the exercise in full of all outstanding Rights pursuant to the adjustments
set forth 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 Preferred Stock (and following the occurrence by a Triggering Event, other
securities) issued or reserved for issuance upon exercise thereof to be
reported by The Nasdaq Stock Market Consolidated Quotations Service
("NASDAQ") or such other system then in use, and if the Preferred 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
Preferred 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 Preferred Stock (and, following occurrence of a Triggering Event, other
securities), register and qualify such shares of Preferred 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
<PAGE>
15
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 Preferred 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 which may be
payable in respect of the issuance or delivery of the Right Certificates or
of any Units of Preferred 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 or depository receipts for Units of Preferred 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 or depository receipt for Units of Preferred 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.
SECTION 10. PREFERRED STOCK RECORD DATE. Each Person in whose
name any certificate for Units of Preferred 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 Units of Preferred 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.
<PAGE>
16
SECTION 11. ADJUSTMENTS TO NUMBER AND KIND OF SECURITIES, NUMBER
OF RIGHTS OR PURCHASE PRICE. The number and kind of securities 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 Preferred Stock
payable in shares of Preferred Stock, (B) subdivide or split the
outstanding shares of Preferred Stock into a greater number of shares, (C)
combine or consolidate the outstanding shares of Preferred Stock into a
smaller number of shares or effect a reverse split of the outstanding
shares of Preferred Stock, or (D) issue any shares of its capital stock in
a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of
the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of
shares of Preferred Stock or capital stock, as the case may be, issuable on
such date, shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive, upon payment
of the Purchase Price then in effect, the aggregate number and kind of
shares of Preferred Stock or capital stock, as the case may be, which, if
such Right had been exercised immediately prior to such date, 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(i)(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
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17
(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 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 or 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 stockholder), 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, 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 of Directors of the Company; or
<PAGE>
18
(B) any Person, alone or together with its Affiliates
and Associates, shall become an Acquiring Person other than pursuant
to any transaction set forth in Section 13(a) hereof; 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
share 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, subject to the last sentence of Section 23(a)(i) and 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 and the then
number of Units of Preferred 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 Units of Preferred Stock as shall
equal the result obtained by dividing the Flip-In Exercise Payment by 50%
of the Current Market Price per Unit of Preferred Stock on the date of the
first occurrence of a Flip-In Event (such number of Units of Preferred
Stock is herein called the "ADJUSTMENT SHARES"); provided that the Purchase
Price per Unit 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 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).
<PAGE>
19
(iii) 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 may: (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, make adequate provision to
substitute for the Adjustment Shares not received upon exercise of such
Right (1) cash, (2) Common Stock or 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 Units of Preferred Stock, are deemed
in good faith by the Board of Directors of the Company to have
substantially the same value as Units of Preferred Stock (such shares or
units of shares of preferred stock are herein called "PREFERRED 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 Units of Preferred 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) first occurrence of a Flip-In Event and (y) the
date of 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") (such thirty day period is herein called the "SUBSTITUTION
PERIOD"), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the
Purchase Price, Units of Preferred Stock (to the extent available) and
then, if necessary, cash, which Units and/or cash have an aggregate value
equal to the excess of the Current Value over the Purchase Price. To the
extent that the Company determines to take action pursuant to the first
sentence of this Section 11(a)(iii), the Company (x) shall provide, subject
to the first 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 decide the appropriate form of distribution to be made
pursuant to such first sentence and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension
is no longer in effect. For purposes of this Section 11(a)(iii), the value
of a Unit of Preferred Stock shall be the Current Market Price per Unit on
the Flip-In Trigger Date and the per share or per unit value of any
Preferred Stock Equivalent shall be deemed to equal the Current Market
Price per share or unit on such date. The Board of Directors may, but
shall not be required to, establish procedures to allocate the right to
receive Preferred Stock upon the exercise of the Rights among holders of
Rights pursuant to this Section 11(a)(iii).
<PAGE>
20
(b) In case the Company shall fix a record date for the issuance
of rights (other than the Rights), options or warrants to all holders of
Preferred Stock entitling them to subscribe for or purchase (for a period
expiring within forty-five calendar days after such record date) Preferred
Stock, shares having the same rights, privileges and preferences as the
Preferred Stock ("EQUIVALENT PREFERRED STOCK") or securities convertible into
Preferred Stock or Equivalent Preferred Stock at a price per share of
Preferred Stock or Equivalent Preferred Stock (or having a conversion price
per share, if a security convertible into Preferred Stock or Equivalent
Preferred Stock) less than the Current Market Price per share of Preferred
Stock on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock outstanding on such record
date, plus the number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred Stock and/or
Equivalent Preferred Stock (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such Current
Market Price, and the denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or Equivalent Preferred Stock to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid by delivery of consideration part or all of
which may be in a form other than cash, the value of such non-cash
consideration shall be as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a statement filed
with the Rights Agent. Shares of Preferred 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 Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash, assets (other
than a dividend payable in Preferred Stock, but including any dividend
payable in stock other than Preferred 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 Preferred Stock on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent)
of the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to a share
of Preferred Stock and the denominator of which shall be such Current Market
Price per share of Preferred Stock. Such
<PAGE>
21
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) (i) 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 is 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, 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 such organization, the average of the
closing bid and asked prices as furnished by a professional market maker
making a market in the Common Stock selected by the Board of Directors of the
Company. If on any such date no market maker is making a market in the
Common Stock, the fair value of such shares on such date as determined in
good faith by the Board of Directors of the Company shall be used. The term
"TRADING DAY" shall mean a day on which the principal national securities
exchange on which the shares of Common Stock are listed or admitted to
trading is open for the transaction of business or, if the shares of Common
Stock are not listed or admitted to trading on any national securities
exchange, a Business Day. If the Common Stock is not publicly held or not so
listed or traded, "CURRENT MARKET PRICE" per share shall mean the fair value
per share as determined in
<PAGE>
22
good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "CURRENT
MARKET PRICE" per share of Preferred Stock shall be determined in the same
manner as set forth above for Common Stock in clause (i) of this Section
11(d) (other than the third sentence thereof). If the current market price
per share of Preferred Stock cannot be determined in the manner provided
above or if the Preferred Stock is not publicly held or listed or traded in a
manner described in clause (i) of this Section 11(d), the "CURRENT MARKET
PRICE" per share of Preferred Stock shall be conclusively deemed to be an
amount equal to 1,000 (as such amount may be appropriately adjusted for such
events as stock splits, stock dividends and recapitalizations with respect to
Common Stock occurring after the date of this Agreement) multiplied by the
current market price per share of Common Stock. If neither Common Stock nor
Preferred Stock is publicly held or so listed or traded, "CURRENT MARKET
PRICE" per share of the Preferred Stock shall mean the fair value per share
as determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent
and shall be binding on the Rights Agent and the holders of the Rights. For
all purposes of this Agreement, the "CURRENT MARKET PRICE" of a Unit of
Preferred Stock shall be equal to the "CURRENT MARKET PRICE" of one share of
Preferred Stock divided by 1,000.
(e) Anything herein to the contrary notwithstanding, no adjustment
in the Purchase Price shall be required unless such adjustment would require
an increase or decrease of at least one percent 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 Redemption 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 Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Right and the Purchase Price thereof shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred
Stock contained in Section 11(a), (b), (c), (g), (h), (i), (j), (k) and (m)
hereof, and the provisions of Sections 7, 9, 10, 13 and 14 hereof with
respect to the Preferred Stock shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted
<PAGE>
23
Purchase Price, the number of Units of Preferred Stock purchasable from time
to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Section 11(b) and (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 Units of Preferred Stock (calculated to the nearest
ten-thousandth) obtained by (i) multiplying (x) the number of Units 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 Units of Preferred
Stock for which a Right may be exercised, to adjust the number of Rights, in
lieu of any adjustment in the number of Units of Preferred Stock purchasable
upon the exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the number of
Units of Preferred Stock for which a Right was exercisable immediately prior
to such adjustment. Each Right held of record prior to such adjustment of
the number of Rights shall become that number of Rights (calculated to the
nearest 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 Right 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 Right Certificates on such record date Right
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 Right Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Right
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 Right Certificates on the record date specified in
the public announcement.
<PAGE>
24
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Units of Preferred Stock issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to express
the Purchase Price per Unit and the number of Units of Preferred Stock which
were expressed in the initial Right Certificate issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value of the number of Units of Preferred
Stock issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue such fully paid and nonassessable number
of Units of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the Units of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the Units of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; PROVIDED, HOWEVER, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's right
to receive such additional shares (fractional or otherwise) and other capital
stock or securities upon the occurrence of the event requiring such adjustments.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance for cash of any shares of
Preferred Stock at less than the current market price, (iii) issuance for cash
of shares of Preferred Stock or securities which by their terms are convertible
into or exchangeable for shares of Preferred Stock, (iv) stock dividends or (v)
issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Preferred Stock shall not be
taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company), (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
<PAGE>
25
after, such consolidation, merger or sale there are 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 stockholders of the Person who
constitutes, or would constitute, the "PRINCIPAL PARTY" for purposes of
Section 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the 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.
(p) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time prior to the Distribution Date
(i) declare a dividend on the outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding shares of Common Stock,
(iii) combine the outstanding shares of Common Stock into a smaller number of
shares, or (iv) issue any shares of its capital stock in a reclassification of
Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), the number of Rights associated with each share of Common Stock
then outstanding, or issued or delivered thereafter but prior to the
Distribution Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event by a
fraction the numerator of which shall be the total number of shares of Common
Stock outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
SECTION 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 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 Preferred 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 of a
certificate representing shares of Common Stock) in accordance with 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
<PAGE>
26
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.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
<PAGE>
27
(a) In the event that, at any time on or after the Distribution Date,
directly or directly, (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 payment of an
amount equal to the product of the then current Purchase Price per Unit and the
then number of Units of Preferred 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 Unit in effect immediately prior to the first
occurrence of a Flip-In Event by the number of Units of Preferred 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 a 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
<PAGE>
28
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, such cash, shares, warrants
and other property which such holder would have been entitled to receive had
he, at the time of such transaction, owned the shares of Common Stock of the
Principal Party purchasable upon the exercise of a Right, and such Principal
Party shall take such steps (including, but not limited to, reservation of
shares of stock) as may be necessary to permit the subsequent exercise of the
right 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
<PAGE>
29
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 the Principal Party shall have a
sufficient number of authorized shares of its Common Stock which have not been
issued or reserved for issuance to permit the exercise of the Rights in
accordance with this Section 13 and 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 Section 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.
<PAGE>
30
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 cancelled, 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.
SECTION 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 Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred
Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock). In lieu of issuing fractions
of shares of Preferred Stock that are not integral multiples of one
one-thousandth of a share, there shall be paid to the holder 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
<PAGE>
31
of Preferred Stock. For purposes of this Section 14(b), the then current
market value of a share of Preferred 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.
SECTION 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.
SECTION 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 offices 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, 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
<PAGE>
32
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, subject to the last sentence of
Section 7(f), 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.
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. 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 Preferred 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 stockholder of the Company or any right to vote in
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to receive dividends or subscription rights
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.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all service 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 the 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.
<PAGE>
33
(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 Preferred 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.
(c) Notwithstanding anything in this Rights Agreement to the
contrary, in no event shall the Rights Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Rights Agent has been advised of the likelihood of
such loss or damage and regardless of the form of the action.
SECTION 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.
<PAGE>
34
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Rights Agreement upon the following terms
and conditions, and no implied duties or obligations shall be read into this
Agreement against the Rights Agent by all of which the Company and the holder of
Right Certificates, by their acceptance thereof, shall be bound:
(a) Before the Rights Agent acts or refrains from acting, 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 Chief Financial Officer 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 Right 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 a 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
<PAGE>
35
shares of Preferred Stock to be issued pursuant to this Rights Agreement or
any Right Certificate or as to whether any shares of Preferred 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 of Directors, the President or any Vice President or the
Secretary or any Assistant Secretary or the Chief Financial Officer 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
or for any delay in acting while waiting for such instructions. Any application
by the Rights Agent for written instructions from the Company may, at the option
of the Rights Agent, set forth in writing any action proposed to be taken or
omitted by the Rights Agent under this Rights Agreement and the date on and/or
after which such action shall be taken or such omission shall be effective
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 stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not 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.
<PAGE>
36
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Right 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 or transfer without first
consulting with the Company.
(l) The Rights Agent shall not be required to take notice or be
deemed to have notice of any fact, event or determination (including, without
limitation, any dates or events defined in this Rights Agreement or the
designation of any Person as an Acquiring Person, Affiliate or Associate) under
this Rights Agreement unless and until the Rights Agent shall be specifically
notified in writing by the Company of such fact, event or determination.
SECTION 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 Preferred Stock and the Common Stock by registered or certified
mail, and, at the expense of the Company, 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 Preferred Stock and 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 registration 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
<PAGE>
37
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 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 Preferred Stock and
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.
SECTION 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.
<PAGE>
38
SECTION 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 Close of Business on the tenth
day following a Stock Acquisition Date, subject to extension by the Board
of Directors as provided in Section 27 hereof 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"), and the Company
may, at its option, by action of a majority of the Company's Board of
Directors, pay the Redemption Price either in shares of Common Stock (based
on the Current Market Price, determined in accordance with Section 11(d),
of the shares of Common Stock at the time of redemption) or cash. Subject
to the foregoing, the redemption of the Rights may be made effective at
such time, on such basis and with such conditions as the Board of Directors
in its sole discretion may establish. Notwithstanding anything contained
in this Agreement to the contrary, the Rights shall not be exercisable
after the first occurrence of a Flip-In Event until such time as the Board
of Directors' right of redemption under this Section 23(a)(i) has expired.
(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 or 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 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
<PAGE>
39
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 of the Common Stock, and upon such action, all
outstanding Right Certificates shall be null and void without any further action
by the Company.
SECTION 24. EXCHANGE.
(a) (i) The Board of Directors of the Company may, at its option,
at any time after any person becomes an Acquiring Person, upon resolution
adopted by a majority of the Company's Board of Directors, exchange all or
part of the then outstanding and exercisable Rights (which shall not
include Rights that have become null and void pursuant to Section 7(f)) for
Units of Preferred Stock at an exchange ratio of one Unit of Preferred
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 "SECTION 24(a)(i)
EXCHANGE RATIO"). Notwithstanding the foregoing, the Company may not
effect such exchange at any time after any Person (other than an Exempt
Person), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the shares of Common Stock
then outstanding.
(ii) The Board of Directors of the Company may, at its option,
at any time after any person becomes an Acquiring Person, upon resolution
adopted by a majority of the Company's Board of Directors, exchange all or
part of the then outstanding and exercisable Rights (which shall not
include Rights that have become null and void pursuant to Section 7(f)) for
Units of Preferred Stock at an exchange ratio specified in the following
sentence, as appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof. Subject
to such adjustment, each Right may be exchanged for that number of Units of
Preferred Stock obtained by dividing the Adjustment Spread (as defined
below) by the then Current Market Price (determined pursuant to
Section 11(d)) per Unit of Preferred Stock on the earlier of (i) the date
on which any Person becomes an Acquiring Person and (ii) the date on which
a tender or exchange offer by any Person (other than an Exempt Person) is
first published or sent or given within the meaning of Rule 14d-4(a) of the
Exchange Act Regulations or any successor rule, if upon consummation
thereof such Person would be
<PAGE>
40
the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding (such exchange ratio being the "SECTION 24(a)(ii) EXCHANGE
RATIO"). The "ADJUSTMENT SPREAD" shall equal (x) the aggregate market
price on the date of such event of the number of Adjustment Shares
determined pursuant to Section 11(a)(ii), minus (y) the Purchase Price.
Notwithstanding the foregoing, the Company may not effect such exchange
at any time after any Person (other than an Exempt Person), together
with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the shares of the Common Stock then
outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to Section 24(a) 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 Units of Preferred Stock equal to the number
of such Rights held by such holder multiplied by the Section 24(a)(i) Exchange
Ratio or Section 24(a)(ii) Exchange Ratio, as the case may be. 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 shall state the method by which the
exchange of Units of Preferred 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 have become void pursuant to Section 7(f)) held by each
holder of Rights.
(c) In the event that the number of shares of Preferred Stock which
are authorized by the Company's Certificate of Incorporation but not outstanding
or reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient 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 Preferred Stock for issuance upon exchange of
the Rights or make adequate provision to substitute (1) cash, (2) Common Stock
or other equity securities of the Company, (3) debt securities of the Company,
(4) other assets or (5) any combination of the foregoing, having an aggregate
value equal to the Adjustment Spread, where such aggregate value has been
determined by the Board of Directors of the Company.
(d) The Company shall not be required to issue fractions of Units of
Preferred Stock or to distribute certificates which evidence fractional Units.
In lieu of fractional Units, the Company may pay to the registered holders of
Right Certificates at the time such Rights are exchanged as herein provided an
amount in cash equal to the same fraction of the Current Market Price
(determined pursuant to Section 11(d)) of one Unit of Preferred Stock.
<PAGE>
41
SECTION 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 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 the 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.
<PAGE>
42
SECTION 26. NOTICES. Notices or demands authorized by the 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:
Adobe Systems Incorporated
345 Park Avenue
San Jose, California 95110-2704
Attention: General Counsel
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 behalf of the Rights Agent
shall be sufficiently given or made if sent by registered or certified mail,
addressed (until another address is filed in writing with the Company) as
follows (and shall be deemed given upon receipt at):
Harris Trust Company of California
311 West Monroe Street, 14th Floor
Chicago, Illinois 60606
Attention: Corporate Trust Department
Notices or demands authorized by this Rights Agreement to be given or made by
the Company of 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.
SECTION 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 Close of
Business on the tenth day following the Stock Acquisition Date and subject to
extension by the Board of Directors by amendment hereof, to change or supplement
any of the provisions herein which the Company may deem necessary or desirable,
or (iv) following the time at which the Board of Directors' right of redemption
under Section 23(a)(i) has expired, to amend 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; PROVIDED, HOWEVER, that this Agreement may not be amended or
supplemented pursuant to this clause (iv) to lengthen a time period relating to
when the Rights may be redeemed. Upon delivery of a certificate from an
appropriate officer of the Company or,
<PAGE>
43
so long as any Person is an Acquiring Person hereunder, from the Board of
Directors 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.
Notwithstanding anything in this Rights Agreement to the contrary, no
supplement or amendment that changes the rights and duties of the Rights
under this Rights Agreement will be effective against the Rights Agent
without the execution of such supplement or amendment by the Rights Agent.
SECTION 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.
SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS,
ETC. For all purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Exchange Act
Regulations as in effect on the date hereof. The Board of Directors of the
Company shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board of Directors of the Company or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power (a) to interpret the provisions of this
Agreement and (b) to make all determinations deemed necessary or advisable for
the administration of this Agreement. All such actions, calculations,
interpretations and determinations (including, for purposes of clause (ii)
below, all omissions with respect to the foregoing) which are done or made by
the Board of Directors of the Company in good faith shall (i) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (ii) not subject the Board of Directors of the
Company or any member thereof to any liability to the holders of the Rights.
SECTION 30. 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).
<PAGE>
44
SECTION 31. GOVERNING LAW. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware (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.
SECTION 32. 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.
SECTION 33. 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.
SECTION 34. 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; PROVIDED, HOWEVER, that notwithstanding anything in
this Agreement to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company determines in its good
faith judgment that severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement and the Rights shall
not then be redeemable, the right of redemption set forth in Section 23 shall be
reinstated and shall not expire until the Close of Business on the tenth
Business Day following the date of such determination by the Board of Directors
of the Company.
<PAGE>
45
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly amended and restated as of the day and year first above
written.
[SEAL]
ATTEST: ADOBE SYSTEMS INCORPORATED
By: /s/ Manuela O. Salvador By: /s/ Colleen M. Pouliot
-------------------------------- ----------------------------------
Name: Manuela O. Salvador Name: Colleen M. Pouliot
Title: Legal Secretary Title: Senior Vice President,
General Counsel and
Secretary
[SEAL]
ATTEST: HARRIS TRUST
COMPANY OF CALIFORNIA, as Rights Agent
By: /s/ Donald W. Koslow By: /s/ Charles V. Zade
-------------------------------- ----------------------------------
Name: Donald W. Koslow Name: Charles V. Zade
Title: Vice President Title: Vice President
<PAGE>
EXHIBIT A
[Form of Right Certificate]
Certificate No._______ _______________________ Rights
NOT EXERCISABLE AFTER JULY 23, 2000, OR EARLIER IF REDEEMED OR EXCHANGED. AT
THE OPTION OF THE COMPANY, THE RIGHTS MAY BE REDEEMED AT $.01 PER RIGHT OR
EXCHANGED FOR UNITS OF PREFERRED 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 BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(f) OF THE RIGHTS AGREEMENT AND MAY BE LIMITED AS PROVIDED IN
SECTION 11(A)(II) AND SECTION 24 OF THE RIGHTS AGREEMENT.
RIGHT CERTIFICATE
ADOBE SYSTEMS INCORPORATED
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 Third Amended and Restated Rights Agreement dated as of December 15,
1998 ("RIGHTS AGREEMENT") between Adobe Systems Incorporated, a Delaware
corporation ("COMPANY"), and Harris Trust Company of California ("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.
(California time) on July 23, 2000, at the office of the Rights Agents, or
its successors as Rights Agent, designated for such purposes, one
one-thousandth of a fully paid and nonassessable share of Series A Preferred
Stock of the Company, par value $.0001 per share ("PREFERRED STOCK") at a
purchase price of $115.00 per one-thousandth of a share (each such one
one-thousandth of a share being a "UNIT") of Preferred Stock, as the same may
from time to time after the date of the Rights Agreement 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 Units of Preferred Stock which may be purchased upon the exercise of the
Rights evidenced by this
A-1
<PAGE>
Right Certificate are subject to modification and adjustment upon the
happening of certain events, and, upon the happening of certain events,
securities other than Units of Preferred 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 of 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 corporate agency service center 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 Close of Business on the tenth day following Stock
Acquisition Date and subject to extension by the Board of Directors by amendment
of 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 if exchanged by the Company at its option in whole or in
part for Units of Preferred Stock.
No fractional Units of Preferred 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 Units Preferred 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 Units of
Preferred 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 Preferred
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote in the
election of directors; or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action or to
receive notice of meetings or other actions affecting stockholders (other than
certain actions specified in the Rights Agreement) or to receive
A-2
<PAGE>
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.
A-3
<PAGE>
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of , .
ATTEST: Adobe Systems Incorporated
By: By:
-------------------------- ---------------------------
Secretary Title:
COUNTERSIGNED:
Harris Trust Company of California,
as Rights Agent
By:
--------------------------------
Authorized Signature
A-4
<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the
Right Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint Attorney, to transfer
the within Right Certificate on the books of the within-named Company, with full
power of substitution.
Dated: ,
-------------- ----------
Signature
Signature Guaranteed:
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<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ,
-------------- -------------------------------
Signature
Signature Guaranteed:
---------------------------------------
NOTICE
The signature to the foregoing Assignment and Certificate 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.
Signatures must be guaranteed by an approved eligible financial
institution acceptable to the Rights Agent in its sole discretion.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Right
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Right Certificates issued in exchange for this
Right Certificate.
A-5
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder
desires to exercise Rights represented
by the Right Certificate.)
To: Adobe Systems Incorporated
The undersigned hereby irrevocably elects to exercise
Rights represented by this Right Certificate to purchase the Units of Preferred
Stock issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person or other property which may be issuable upon the
exercise of the Rights) and requests that certificates for such Units be issued
in the name of and delivered to:
(Please print name and address)
Please insert social security
or other identifying number:
-------------
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance of such Rights shall
be registered in the name of and delivered to:
(Please print name and address)
Please insert social security
or other identifying number:
-------------
Dated: ,
-------------- -------- --------------------------
Signature
A-6
<PAGE>
Signature Guaranteed:
A-7
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not beneficially owned by an Acquiring Person or an Affiliate or an Associate
thereof (as defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned
[ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate thereof.
Dated: ,
-------------- ------- --------------------------
Signature
Signature Guaranteed:
------------------------------------------
NOTICE
The signature in the foregoing Election to Purchase and Certificate
must conform to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
Signatures must be guaranteed by an approved eligible financial
institution acceptable to the Rights Agent in its sole discretion.
In the event the certification set forth above is not completed,
the Company will deem the beneficial owner of the Rights evidenced by this
Right Certificate to be an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement) and, in the case of an
Assignment, will affix a legend to that effect on any Right Certificates
issued in exchange for this Right Certificate.
A-8
<PAGE>
EXHIBIT B
ADOBE SYSTEMS INCORPORATED
Summary of Terms of
Rights Agreement
<TABLE>
<S> <C>
Nature of Right: When exercisable, each Right (a "RIGHT") will initially
entitle the holder to purchase one one-thousandth of a
share (a "UNIT") of the Preferred Stock ("PREFERRED
STOCK") of Adobe Systems Incorporated (the "COMPANY").
Means of Distribution: The Rights will be distributed to holders of the
Company's outstanding Common Stock as a dividend of one
Right for each share of Common Stock. The Rights will
also be attached to all future issuances of Common
Stock prior to the Distribution Date (as defined
below).
Exercisability: Rights become exercisable on the earlier of: (i) the
Close of Business on the tenth day following a public
announcement by the Company or any person or group (an
"ACQUIRING PERSON") that such person or group has
acquired, without the approval of the Board of
Directors, beneficial ownership of 15% or more of the
Company's outstanding Common Stock, or (ii) the tenth
business day (unless extended by the Board of Directors
prior to the time a person becomes an Acquiring Person)
following the commencement, or announcement of an
intention to commence, by any person or group, of a
tender offer which would result in such person owning
15% or more of the outstanding Common Stock of the
Company (the earlier of such dates is referred to as
the "DISTRIBUTION DATE"). Rights may be traded
separately from the Common Stock once the Rights become
exercisable.
Exercise Price: $115.00 per share, which is the amount that in the
judgment of the Board of Directors represents the long-
term value of the Common Stock (the "EXERCISE PRICE").
Term: The Rights will expire ten years after the date of
issuance, or July 23, 2000, unless earlier redeemed by
the Company as described below.
B-1
<PAGE>
Redemption of Rights: Rights are redeemable at a price of $0.01 per Right, by
the vote of the Company's Board of Directors, at any
time until the Close of Business on the tenth day
following the date on which a person has become an
Acquiring Person (the "STOCK ACQUISITION DATE"). After
the Stock Acquisition Date, Rights are also redeemable
prior to any business combination in which all holders
of Common Stock are treated alike and not involving
(except as a holder of Common Stock treated like all
other holders) an Acquiring Person.
Rights in Event If the Company is acquired by any person in a merger or
of Business other business combination transaction or 50% or more
Combination: of its assets or earnings powers are sold to any person
after the Distribution Date, each holder of a Right
shall thereafter have the right to purchase, upon
payment of the then current Exercise Price, such number
of shares of common stock of the acquiring company
having a current market value equal to twice the
Exercise Price.
Rights in Event of In the event that an Acquiring Person engages in
Self-Dealing certain self-dealing transactions with the Company, or
Transaction or a person becomes the beneficial owner of 15% or more of
Acquisition of the outstanding Common Stock, each holder of a Right
Substantial Amount of thereafter has the right to purchase, upon payment of
Common Stock (a "FLIP- the then current Exercise Price, such number of Units
IN EVENT"): of Preferred Stock having a market value at the time of
the transaction equal to twice the Exercise Price. If
insufficient authorized but unissued shares of
Preferred Stock are available for issuance, the Company
must deliver all the available shares of Preferred
Stock and an amount of cash or other property of the
Company, so that the aggregate value received is equal
to twice the Exercise Price. Rights held by the
Acquiring Person will not be entitled to the benefit of
such an adjustment.
Self-dealing transactions are defined to include a
merger of an Acquiring Person into the Company in which
the Common Stock remains outstanding and unchanged, the
issuance of securities of the Company to an Acquiring
Person, the transfer of assets to an Acquiring Person
on other than an arm's length basis, compensation to an
B-2
<PAGE>
Acquiring Person on a basis inconsistent with the
Company's past practice, a loan or provision of other
financial assistance (except proportionately as a
stockholder) to an Acquiring Person or the licensing,
sale or other transfer of proprietary technology or
know-how from the Company to the Acquiring Person on
terms not approved by the Board of Directors.
Exchange Option: In the event any person or group becomes an Acquiring
Person, the Board of Directors may require all or any
portion of the outstanding Rights to be exchanged for
(i) one Unit of Preferred Stock or (ii) such number of
Units of Preferred Stock as will equal (x) the
difference between the aggregate market price of the
number of Units to be received upon a Flip-In Event and
the purchase price set forth in the Rights Agreement,
divided by (y) the market price per Unit of Preferred
Stock upon the Flip-In Event. However, any rights held
by an Acquiring Person would not be entitled to
participate in this exchange.
Fractional Shares: No fractional Units of Preferred Stock will be issued
upon exercise of the Rights and, in lieu thereof, a
payment in cash will be made to the holder of such
Rights equal to the same fraction of the current market
value of a Unit of Preferred Stock.
Adjustment: The Exercise Price payable, and the number of Units of
Preferred Stock or other securities or property
issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred
Stock, (ii) upon the grant to holders of the Preferred
Stock or convertible securities at less than the
current market price of the Preferred Stock or (iii)
upon the distribution to holders of the Preferred Stock
of evidences of indebtedness or assets (excluding
dividends payable in Preferred Stock) or of
subscription rights or warrants (other than those
referred to above).
Voting Power of The Rights themselves do not entitle the holder thereof
Rights: to any voting rights.
B-3
<PAGE>
Amendment of Rights: Until the Distribution Date, the Company may, except
with respect to the redemption price, amend the Rights
in any manner (including an amendment that provides
that the Rights shall become exercisable for shares or
fractions of shares of preferred stock that are
economically common stock equivalents). After the
Distribution Date, the Company may amend the Rights in
any manner that does not adversely affect the interests
of the holders of the Rights.
</TABLE>
A COPY OF THE RIGHTS AGREEMENT IS AVAILABLE, FREE OF CHARGE, FROM THE COMPANY,
345 PARK AVENUE, SAN JOSE, CALIFORNIA, 95110-2704, ATTENTION: GENERAL COUNSEL.
THIS SUMMARY DESCRIPTION OF THE RIGHTS AGREEMENT DOES NOT PURPORT TO BE COMPLETE
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE RIGHTS AGREEMENT WHICH IS
INCORPORATED IN THIS SUMMARY DESCRIPTION BY REFERENCE.
B-4
<PAGE>
EXHIBIT C
CERTIFICATE OF DESIGNATION
OF THE VOTING POWERS, DESIGNATION,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS OF THE
SERIES A PREFERRED STOCK
-------------------
Pursuant to Section 151 of the
General Corporation Law of
the State of Delaware
-------------------
I, John E. Warnock, Chairman of the Board and Chief Executive Officer
of Adobe Systems Incorporated, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "CORPORATION"), DO HEREBY
CERTIFY:
that, pursuant to authority conferred upon the Board of Directors of
the Corporation by its Certificate of Incorporation (the "CERTIFICATE"), and,
pursuant to the provisions of Section 151 of the General Corporation Law of the
State of Delaware, said Board of Directors, at a duly called meeting held on
July 30, 1997, at which a quorum was present and acted throughout, adopted the
following resolutions, which resolutions remain in full force and effect on the
date hereof creating a series of 100,000 shares of Preferred Stock having a par
value of $.0001 per share, designated as Series A Preferred Stock (the "SERIES A
PREFERRED STOCK") out of the class of 2,000,000 shares of preferred stock of the
par value of $.0001 per share (the "PREFERRED STOCK"):
RESOLVED, that pursuant to the authority vested in the Board of
Directors in accordance with the provisions of the Certificate, the Board of
Directors does hereby create, authorize and provide for the issuance of the
Series A Preferred Stock having the voting powers, designation, relative,
participating, optional and other special rights, preferences, and
qualifications, limitations and restrictions thereof that are set forth as
follows:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall
be designated as "SERIES A PREFERRED STOCK" and the number of shares
constituting such series shall be 100,000.
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<PAGE>
Section 2. DIVIDENDS AND DISTRIBUTIONS. (A) Subject to the prior
and superior rights of the holders of any shares of any other series of
Preferred Stock or any other shares of preferred stock of the Corporation
ranking prior and superior to the shares of Series A Preferred Stock with
respect to dividends, each holder of one one-thousandth (1/1,000) of a share
(a "UNIT") of Series A Preferred Stock shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally available for
that purpose, (i) quarterly dividends payable in cash on the last day of
March, June, September and December in each year (each such date being a
"QUARTERLY DIVIDEND PAYMENT DATE"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of such Unit of Series A
Preferred Stock, in an amount per Unit (rounded to the nearest cent) equal to
the greater of (a) $.01 or (b) subject to the provision for adjustment
hereinafter set forth, the aggregate per share amount of all cash dividends
declared on shares of the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of a Unit of Series A
Preferred Stock, and (ii) subject to the provision for adjustment hereinafter
set forth, quarterly distributions (payable in kind) on each Quarterly
Dividend Payment Date in an amount per Unit equal to the aggregate per share
amount of all non-cash dividends or other distributions (other than a
dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock, by reclassification or otherwise)
declared on shares of Common Stock since the immediately preceding Quarterly
Dividend Payment Date, or with respect to the first Quarterly Dividend
Payment Date, since the first issuance of a Unit of Series A Preferred Stock.
In the event that the Corporation shall at any time after July 11, 1990 (the
"RIGHTS DECLARATION DATE") (i) declare any dividend on outstanding shares of
Common Stock payable in shares of Common Stock, (ii) subdivide outstanding
shares of Common Stock or (iii) combine outstanding shares of Common Stock
into a smaller number of shares, then, in each such case, the amount to which
the holder of a Unit of Series A Preferred Stock was entitled immediately
prior to such event pursuant to the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which shall be the
number of shares of Common Stock that are outstanding immediately after such
event and the denominator of which shall be the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on Units
of Series A Preferred Stock as provided in paragraph (A) above immediately after
it declares a dividend or distribution on the shares of Common Stock (other than
a dividend payable in shares of Common Stock); PROVIDED, HOWEVER, that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $.01 per Unit on the
Series A Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and shall be cumulative on each
outstanding Unit of Series A Preferred Stock from the Quarterly Dividend Payment
Date next
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<PAGE>
preceding the date of issuance of such Unit of Series A Preferred Stock,
unless the date of issuance of such Unit is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on such Unit
shall begin to accrue from the date of issuance of such Unit, or unless the
date of issuance is a Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of Units of Series A Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin
to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on
Units of Series A Preferred Stock in an amount less than the aggregate amount
of all such dividends at the time accrued and payable on such Units shall be
allocated pro rata on a unit-by-unit basis among all Units of Series A
Preferred Stock at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of Units of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date
fixed for the payment thereof.
Section 3. VOTING RIGHTS. The holders of Units of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
Unit of Series A Preferred Stock shall entitle the holder thereof to one vote on
all matters submitted to a vote of the stockholders of the Corporation. In the
event the Corporation shall at any time after the Rights Declaration Date (i)
declare any dividend on outstanding shares of Common Stock payable in shares of
Common Stock, (ii) subdivide outstanding shares of Common Stock or (iii) combine
the outstanding shares of Common Stock into a smaller number of shares, then in
each such case the number of votes per Unit to which holders of Units of Series
A Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the numerator of which shall
be the number of shares of Common Stock outstanding immediately after such event
and the denominator of which shall be the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of Units of
Series A Preferred Stock and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote of stockholders of the
Corporation.
(C) (i) If at any time dividends on any Units of Series A Preferred Stock
shall be in arrears in an amount equal to six quarterly dividends thereon, then
during the period (a "DEFAULT PERIOD") from the occurrence of such event until
such time as all accrued and unpaid dividends for all previous quarterly
dividend periods and for the current quarterly dividend period on all Units of
Series A Preferred Stock then outstanding shall have been declared and paid or
set apart for payment, all holders of Units of Series A Preferred Stock, voting
separately as a class, shall have the right to elect two Directors.
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