FORM 8-A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
NATIONAL TECHTEAM, INC.
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(Exact name of registrant as specified in its charter)
Delaware 38-2774613
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(State of incorporation (I.R.S. Employer
or organization) Identification No.)
835 Mason Avenue, Suite 200
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Dearborn, Michigan 48124
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be registered each class is to be registered
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Preferred Stock Purchase Rights Nasdaq National Market
If this Form relates to the registration of a class of debt securities and is
effective upon filing pursuant to General Instruction A.(c)(l), please check
the following box.[]
If this Form relates to the registration of a class of debt securities and is
to become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1993 pursuant to General
Instruction A.(c)(2), please check the following box.[]
Securities to be registered pursuant to Section 12(g) of the Act:
None
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(Title of the Class)
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NATIONAL TECHTEAM, INC.
Description of Securities to be Registered
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Item 1.
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On April 29, 1997 the Board of Directors of National TechTeam, Inc.
("TechTeam") declared a dividend distribution of one Right for each share of
common stock, par value $.01 per share, which is outstanding on May 7, 1997,
or issued thereafter. The description and terms of the Rights are set forth
in a Rights Agreement dated as of May 6, 1997 (the "Rights Agreement")
between TechTeam and U.S. Stock Transfer Corporation, as Rights Agent.
Shareholders of record on May 7, 1997, will receive a detailed "Summary of
Rights to Purchase Preferred Shares," which will be evidence of the Rights
that have been distributed in connection with their shares. Stock
certificates for shares issued after that date will bear a legend evidencing
the attached Rights. No certificates for the Rights will be issued until such
time as they become exercisable.
Each Right entitles the holder (when and if the Right becomes
exercisable) to purchase one 1/100th of a share of TechTeam Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Preferred
Stock") for $80 (the "Purchase Price"). Initially, and until they become
exercisable, the Rights will trade automatically with TechTeam's common
stock. The Rights will have no voting powers and until the Right is
exercised, will not entitle its holder, as such, to any rights as a
shareholder. They will expire on May 6, 2007, if not exercised, redeemed or
exchanged before then.
The Rights will become exercisable only in three circumstances:
o 10 days after any person or group (an "Acquiror") acquires 15% or
more of TechTeam's common stock, or
o 10 business days after an Acquiror announces an offer which, if
completed, would result in its owning 15% or more of TechTeam's
common stock.
o Promptly after a declaration by the Board that a person who
acquires 15% or more of TechTeam's common stock is an "Adverse
Person".
Under those circumstances, separate "Rights Certificates" representing
the Rights will be sent to the holders, and the holders (other than the
Acquiror) will then be able to exercise their Rights. At that time, the
Rights will also begin to trade independently from TechTeam's common stock,
at prices the market establishes. Until that time, the Rights will be
transferred with, and only with, the TechTeam Common Stock. Any transfer of
the common stock, with or without a copy of the "Summary of Rights to
Purchase Preferred Shares, will also effect a transfer of the Rights
associated with the common stock associated therewith.
If the Rights become exercisable, instead of purchasing 1/100th of a
share of Preferred Stock from TechTeam, the holder of each Right (other than
the Acquiror) may elect to purchase from
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TechTeam (at the Purchase Price of $80) that number of shares of TechTeam
common stock that have a market value of twice the Purchase Price. The
Purchase Price payable, and the number of shares of Preferred Stock or other
securities or property issuable, upon the exercise of Rights, are subject to
adjustment from time to time to prevent dilution in the event of, among other
things, a stock split, reverse split, consolidation or reclassification.
If TechTeam is merged or otherwise combined with the Acquiror, the
holder of each Right which has not been used previously to purchase Preferred
Stock or TechTeam common stock (other than the Acquiror) may elect to
purchase from the Acquiror (at the Purchase Price of $80) that number of
shares of the Acquiror's common stock that have a market value of twice the
Purchase Price of the Right.
These alternatives are intended to deter an Acquiror from proceeding
with a takeover bid in a manner or on terms which the Board determines are
not in the best interests of TechTeam's shareholders. Actions of the Board
such as declaring a person to be an Adverse Person or an Acquiring Person,
adjusting the Purchase Price, issuing new Right Certificates, suspending the
exercisability of the Rights, valuing the Rights, or redeeming or exchanging
the Rights, shall be effective only upon approval by a majority of the
Continuing Directors (as defined in the Rights Agreement).
The Rights cannot be cancelled. However, they may be amended or
redeemed by TechTeam's Board for $.01 per Right (the "Redemption Price") at
any time before an Acquiror accumulates 15% or more of TechTeam's common
stock. This is intended to assure that the Rights do not interfere with a
negotiated merger or business combination which the Board determines is in
the best interests of the shareholders. Upon the effective action of the
Board ordering redemption, the Rights will terminate and its holders shall
only be entitled to receive the Redemption Price.
At any time after an Acquiror accumulates 15% but before the Acquiror
has accumulated 50% of TechTeam's outstanding shares of common stock, the
Board may exchange each Right (except those owned by the Acquiring Person)
for one share of TechTeam Common Stock.
The Rights have no voting or dividend rights. Each Share of Preferred
Stock will be entitled to a minimum quarterly dividend payment of $1 per
share as well as 100 times the dividend declared per common share.
Each share of Preferred Stock will have 100 votes.
The distribution of the rights will not be taxable to the holders or to
TechTeam. However, the holders may recognize taxable income if the Rights
become exercisable, are redeemed, or are exchanged. It is recommended that
the holders consult their tax advisors in any of those events.
A copy of the Rights Agreement is being filed with the Securities and
Exchange Commission as an exhibit to this Registration Statement on Form 8-A.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement.
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Item 2.
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EXHIBITS
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1. Rights Agreement, dated as of May 6, 1997, between National TechTeam, Inc.
and U.S. Stock Transfer Corporation, as Rights Agent, which includes as
Exhibit A thereto the Form of Certificate of Designations, as Exhibit B
thereto the Form of Right Certificate, and as Exhibit C thereto the Summary
of Rights to Purchase Preferred Stock. Pursuant to the Rights Agreement,
Right Certificates will not be mailed until the occurrence of one of the
certain events described more fully in Section 3 of the Rights Agreement.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
Registrant: NATIONAL TECHTEAM, INC.
Date: May 6, 1997
By: /s/ Lawrence A. Mills
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Lawrence A. Mills
Senior Vice President and Chief Financial Officer
RIGHTS AGREEMENT
Exhibit 1
RIGHTS AGREEMENT, dated as of May 6, 1997, (the "Agreement"), between
National TechTeam, Inc., a Delaware corporation (the "Company"), and U.S.
Stock Transfer Corporation (the "Rights Agent").
WITNESSETH:
WHEREAS, on April 29, 1997, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right for each share
of common stock, par value $.01 per share (the "Common Stock" ), of the
Company outstanding as of the close of business on May 7, 1997 (the "Record
Date"), and authorized the issuance of one Right in respect of each share of
Common Stock of the Company issued between the Record Date (whether
originally issued or delivered from the Company's treasury) and the
Distribution Date (as such term is defined in Section 3 hereof), each Right
representing the right to purchase one one-hundredth of a share of Series A
Junior Participating Preferred Stock, par value $.01 per share, of the
Company, having the rights, preferences and limitations set forth in the form
of Certificate of Designation attached hereto as Exhibit A, upon the terms
and subject to the conditions hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall be
the Beneficial Owner (as such term is hereinafter defined) of 15% or more of
the shares of Common Stock of the Company then outstanding, but shall not
include the Company, any Subsidiary (as such term is defined herein) of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company ("Plan"), or any Person or entity holding Common Stock for or
pursuant to the terms of any such Plan. For all purposes of this Agreement,
any calculation of the number of shares of Common Stock outstanding at any
time, including for purposes of determining the percentage of such
outstanding shares of Common Stock of which any Person is the Beneficial
Owner, shall be made in accordance with the provisions of Rule
13d-3(d)(1)(i)), as in effect on the date hereof, of the General Rules and
Regulations under the Securities Exchange Act of 1934. as amended (the
"Exchange Act").
(b) "Adverse Person" shall mean any Person declared to be an Adverse
Person by a majority of the Continuing Directors upon determination that the
criteria set forth in Section 11(a)(ii)(D) apply to such person.
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
promulgated under the Exchange Act as in effect on the date hereof.
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(d) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, for purposes of
Section 13(d) of the Exchange Act and Regulation 13D-G thereunder (or
any comparable or successor law or regulation), in each case as in
effect on the date hereof; or
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to acquire
(whether such right is exercisable immediately or only after the
passage of time or the fulfillment of a condition or both) pursuant
to any agreement, arrangement or understanding (whether or not in
writing), or upon the exercise of conversion rights, exchange rights,
rights (other than these Rights), warrants or options, or otherwise;
provided, however, that a person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," securities tendered pursuant to
a tender offer or exchange offer made by or on behalf of such Person
or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange; or (B) the right to
vote or dispose of, alone or in consent with others, or the
"beneficial ownership" of, as determined pursuant to Rule 13d-3, as
in effect on the date hereof, of the General Rules and Regulations
under the Exchange Act, including such right or such "beneficial
ownership" pursuant to any agreement, arrangement or understanding,
whether or not in writing; provided, however, that a Person shall not
be deemed the "Beneficial Owner" of, or to "beneficially own," any
security under this clause (B) as a result of an agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding (1) arises solely from a revocable proxy
given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations under the Exchange Act and (2) is not also then
reportable on Schedule 13D under the Exchange Act (or any comparable
or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which
the Person whose beneficial ownership is being determined or any of
such Person's Affiliates or Associates has any agreement, arrangement
or understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as
described in the proviso to clause (B) of subparagraph (ii) of this
paragraph (d) or disposing of any voting 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 Michigan are
authorized or obligated by law or executive order to close.
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(f) "Close of business" on any given date shall mean 5:00 P.M.,
Detroit time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Detroit time, on the next succeeding
Business Day.
(g) "Common Stock" when used with reference to the Company shall mean
the shares of common stock, $.01 par value per share, of the Company. "Common
Stock" when used with reference to any Person other than the Company shall
mean the capital stock (or equity interest) with the greatest voting power of
such other Person or if such other Person is a Subsidiary of another Person,
the Person or Persons which ultimately control such first-mentioned Person.
(h) "Continuing Director" shall mean (i) any member of the Board of
Directors of the Company, while such person is a member of the Board of
Directors, who is not an Acquiring Person, Adverse Person or an Affiliate or
Associate of an Acquiring Person, Adverse Person or a representative or
nominee of an Acquiring Person, Adverse Person or of any such Affiliate or
Associate thereof and who was a member of the Board of Directors prior to the
date of this Agreement, and (ii) any person who subsequently becomes a member
of the Board of Directors, who is not an Acquiring Person, Adverse Person or
an Affiliate or Associate of an Acquiring Person, Adverse Person or a
representative or nominee of an Acquiring Person, Adverse Person or of any
such Affiliate or Associate and is recommended, approved or elected by a
majority of the then Continuing Directors.
(i) The "current market price" shall have the meaning set forth in
Section 11(d) hereof.
(j) "Expiration Date" shall mean the earlier of the Final Expiration
Date or the date on which the Rights are redeemed as provided in Section 23
hereof.
(k) "Final Expiration Date" shall mean May 6, 2007.
(l) "Person" shall mean any individual, firm, corporation,
partnership, association, group (as such term is used in Rule 13d-5 under the
Exchange Act) or other entity, and shall include any successor (by merger or
otherwise) of such entity.
(m) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, $.01 par value per share, of the Company,
having the rights, preferences and limitations set forth in the form of
Certificate of Designation attached to this Agreement as Exhibit A, and, to
the extent there are not a sufficient number of shares of Series A Junior
Participating Preferred Stock authorized to permit the full exercise of the
then outstanding Rights, any other series of preferred stock of the Company
designated for such purpose by the Board of Directors of the Company
containing terms substantially similar to the terms of the Series A Junior
Participating Preferred Stock.
(n) "Principal Party" shall have the meaning set forth in Section
12(c) hereof.
(o) "Right Certificates" shall have the meaning set forth in Section
3(a) hereof.
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(p) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii)(A), (B), or (D) hereof.
(q) "Section 12(a) Event" shall mean any event described in clauses
(x), (y) or (z) of Section 12(a) hereof.
(r) "Stock Acquisition Date" shall mean the first date of public
announcement (which for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act or
the rules and regulations thereunder) by the Company or an Acquiring Person
that an Acquiring Person has become such.
(s) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity
securities or equity interests is owned, directly or indirectly' by such
Person.
(t) "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.
(u) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 12 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Stock) in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents
as it may deem necessary or desirable.
Section 3. Issue of Right Certificates.
(a) Until the earlier of
(i) the Close of business on the tenth day after the Stock
Acquisition Date,
(ii) the Close of business on the tenth day after the date
that a tender or exchange offer by any Person is first published or
sent or given within the meaning of Rule 14d- 4(a) promulgated under
the Exchange Act or any successor Rule, if upon consummation thereof,
such Person would be the Beneficial Owner of 15% or more of the
shares of Common Stock then outstanding (including any such date
which is after the date of this Agreement and prior to the issuance
of the Rights), or
(iii) the close of business on the tenth day after a majority
of the Continuing Directors determines, pursuant to the criteria set
forth in Section 11(a)(ii)(D) hereof, that a Person is an Adverse
Person
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(the earliest of (i), (ii) and (iii) being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject to
the provisions of paragraph (b) of this Section 3) by the
certificates for Common Stock registered in the names of the holders
thereof (which certificates for Common Stock shall also be deemed to
be Right Certificates (as defined below)) and not by separate Right
Certificates, and (y) the right to receive Right Certificates will be
transferable only simultaneously with and together with the transfer
of the underlying shares of Common Stock. Until the earlier of the
Distribution Date or the Expiration Date, the surrender for transfer
of such certificates for shares of Common Stock shall also constitute
the surrender for transfer of the Rights associated with the shares
of Common Stock represented thereby. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights
Agent will countersign, and the Company will send or cause to be sent
(and the Rights Agent will, if requested, send), by first-class,
insured, postage prepaid mail, to each record holder of the Common
Stock as of the Close of business on the Distribution Date, at the
address of such holder shown on the records of the Company, one or
more right certificates, in substantially the form attached hereto as
Exhibit B (the "Right Certificates"), evidencing one Right for each
share of Common Stock so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of Rights per
share of Common Stock has been made pursuant to Section 11(p) hereof,
at the time of distribution of the Right Certificates, the Company
shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Right 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 and may be transferred by the transfer of the Right
Certificates as permitted hereby, separately and apart from any
transfer of one or more shares of Common Stock, and the holders of
such Right Certificates as listed in the records of the Company or
any transfer agent or registrar for the Rights shall be the record
holders thereof.
(b) On the Record Date or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights, in substantially the form as
initially attached to this Agreement as Exhibit C (the "Summary of Rights"),
by first-class, postage prepaid mail, to each record holder of the Common
Stock as of the Close of business on the Record Date, at the address of such
holder then shown in the records of the Company. With respect to certificates
for the Common Stock outstanding as of the Record Date or issued pursuant to
Section 3(c) hereof, until the earlier of the Distribution Date or the
Expiration Date, the Rights will be evidenced by such certificates for the
Common Stock registered in the names of the holders of the Common Stock and
the registered holders of the Common Stock shall also be registered holders
of the associated Rights. Until the earlier of the Distribution Date or the
Expiration Date, the surrender for transfer of any of the certificates for
the Common Stock outstanding on the Record Date or issued pursuant to Section
3(c) hereof shall also constitute the surrender for transfer of the Rights
associated with the Common Stock represented by such certificates.
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(c) Rights shall be issued in respect of all shares of Common Stock
which are issued after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date. Certificates representing such
shares of Common Stock shall also be deemed to be certificates for Rights.
Certificates representing shares of Common Stock shall bear the following
legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between National TechTeam,
Inc. and U.S. Stock Transfer Corporation dated as of May 6, 1997, the terms
of which are incorporated herein by reference and a copy of which is on file
at the principal executive offices of National TechTeam, Inc. Under certain
circumstances, as set forth in the Rights Agreement, such Rights may be
redeemed, may expire, or may be evidenced by separate certificates and no
longer be evidenced by this certificate. National TechTeam, Inc. will mail to
the holder of this certificate a copy of the Rights Agreement (as in effect
on the date of mailing) without charge promptly after receipt of a written
request therefor. Under certain circumstances set forth in the Rights
Agreement, Rights issued to, or held by, any Person who is, was or becomes an
Acquiring Person or an Adverse Person or any Affiliate or Associate of an
Acquiring Person or an Adverse Person (as such terms are defined in the
Rights Agreement), whether currently held by or on behalf of such Person or
by any subsequent holder, will become null and void.
With respect to such certificates containing the foregoing legend,
until the earlier of the Distribution Date or the Expiration Date, the Rights
associated with the Common Stock represented by such Certificates shall be
evidenced by such Certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights; and the
surrender for transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificates.
(d) The Company shall cause to be maintained a sufficient supply of
Right Certificates at all times.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase
shares and of assignment to be printed on the reverse thereof ) shall be
substantially the same as Exhibit B to this Agreement and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law, rule or regulation or with any rule or
regulation of any stock exchange on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of Section 11 and
Section 22 hereof, the Right Certificates, whenever distributed, shall be
dated as of the Record Date and on their face shall entitle the holders
thereof to purchase such number of one one-hundredths of a share of Preferred
Stock as shall be set forth therein at the price per one one-hundredth of a
share of Preferred Stock set forth therein (the "Purchase Price"), but the
amount and type of securities purchasable upon the exercise of each Right and
the Purchase Price shall be subject to adjustment as provided herein.
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(b) Any Right Certificate issued pursuant to Section 3(a) or Section
22 hereof that represents Rights beneficially owned by:
(i) an Acquiring Person, an Adverse Person or any Associate
or Affiliate of an Acquiring Person or an Adverse Person,
(ii) a transferee of an Acquiring Person or an Adverse Person
(or of any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person or an Adverse Person becomes such, or
(iii) a transferee of an Acquiring Person or an Adverse Person
(or of any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the Acquiring Person or the Adverse
Person becoming such and receives such Rights pursuant to either (A)
a transfer (whether or not for consideration) from the Acquiring
Person or the Adverse Person to holders of equity interests in such
Acquiring Person or the Adverse Person or to any Person with whom the
Acquiring Person or Adverse Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B)
a transfer which the Board of Directors of the Company has determined
is part of a plan, arrangement or understanding which is as a primary
purpose or effect avoidance of Section 7(e) hereof, and any Right
Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence,
shall contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or an
Adverse Person or an Affiliate or Associate of an Acquiring Person or an
Adverse Person (as such terms are defined in the Rights Agreement ).
Accordingly, this Right Certificate and the Rights represented hereby may
become null and void in the circumstances specified in Section 7(e) of such
Agreement.
Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by its Chairman, 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 whose manual or facsimile
signature is affixed to 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 may nevertheless 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. 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
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Right Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
Following the Distribution Date. the Rights Agent will keep or cause
to be kept. at its principal office or offices designated as the appropriate
place for surrender of Right Certificates upon exercise or transfer, 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 the face of each of
the Right Certificates, the date of each of the Right Certificates and the
Right Certificate number.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
Subject to the provisions of Section 4(b), Section 7(e) and Section 14
hereof, at any time after the close of business on the Distribution Date, and
at or prior to the close of business on the Expiration Date, any Right
Certificate or Right Certificates may be transferred, split up, combined or
exchanged for another Right Certificate or Right Certificates, entitling the
registered holder to purchase a like number of one one-hundredths of a share
of Preferred Stock (or following a Triggering Event, Common Stock, other
securities, cash or other assets, as the case may be) as the Right
Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, 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 transferred, split up, combined or exchanged at the
principal office of the Rights Agent as set forth in Section 26 hereof.
Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Right
Certificates until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the company shall reasonably request. Thereupon the
Rights Agent shall countersign 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.
Upon (i) receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them (a) of the loss, theft, destruction or
mutilation of a Right Certificate, and, (b) in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, (ii)
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and (iii) in case of mutilation of a Right Certificate,
surrender to the Rights Agent and cancellation of such Right Certificate, the
Company will issue and deliver a new Right Certificate of like tenor to the
Rights Agent for delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights: Purchase Price; Expiration Date of
Rights. (a) Subject to Section 7(e) hereof, the registered holder of any
Right Certificate may exercise the Rights
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evidenced thereby (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 to the Rights Agent at its principal office as set
forth in Section 26 hereof, together with payment of the Purchase Price with
respect to one one-hundredths of a share of Preferred Stock as to which the
Rights are exercised, at or prior to the Close of business on the Expiration
Date.
(b) The Purchase Price for each one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be $80,
shall be subject to adjustment from time to time as provided in Sections 11
and 12 hereof and shall be payable in lawful money of the United States of
America in accordance with paragraph (c) of this Section 7, except to the
extent otherwise provided in Section 12(f).
(c) Upon receipt of a Right Certificate exercisable Rights, with the
form of election to purchase duly executed, accompanied by payment, with
respect to each Right so exercised, of the Purchase Price per one
one-hundredth of a share of Preferred Stock (or other shares, securities,
cash or other assets, as the case may be) to be purchased as set forth below
and an amount equal to any applicable transfer tax required to be paid by the
holder of such Right Certificate in accordance with Section 9 of this
Agreement, in cash, or by certified check or money order payable to the order
of the Company, the Rights Agent shall thereupon promptly:
(i)(A) requisition from any transfer agent of the Preferred
Stock (or make available, if the Rights Agent is the transfer agent)
certificates for the number of shares of Preferred Stock to he
purchased and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests, or, (B) requisition from the
depositary agent depositary receipts representing such number of one
one-hundredths of a share of Preferred Stock as are to be purchased
(in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent
with the depositary agent) and the Company hereby directs the
depositary agent to comply with such request,
(ii) requisition from the Company, when appropriate, the
amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof,
(iii) after receipt of such requisitioned Preferred Stock
certificates, promptly cause the certificates 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) when appropriate, after receipt of such cash, promptly
deliver that cash to or upon the order of the registered holder of
such Right Certificate. The payment of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii) hereof may be
made (x) in cash or by certified bank check or money order payable to
the order of the Company, or (y) by delivery of a certificate or
certificates (with appropriate stock powers executed in blank
attached thereto) evidencing a number of shares of Common
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Stock equal to the then Purchase Price divided by the closing price
(as determined pursuant to Section 11(d) hereof) per Common Share all
the Trading Day (as hereinafter defined) immediately preceding the
date of such exercise. In the event that the Company is obligated to
issue other securities (including Common Stock) of the Company, pay
cash and/or distribute other property pursuant to Section 11 (a)
hereof. the Company will make all arrangements necessary so that such
other securities, cash and/or other property are available for
distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate shall
exercise fewer 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, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by
(i) an Acquiring Person, an Adverse Person or an Associate or
Affiliate of an Acquiring Person or an Adverse Person,
(ii) a transferee of an Acquiring Person or an Adverse Person
(or of any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person or the Adverse Person becomes such, or
(iii) a transferee of an Acquiring Person or an Adverse Person
(or of any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the Acquiring Person or the Adverse
Person becoming such and receives such Rights pursuant to (A) a
transfer (whether or not for consideration) from the Acquiring Person
or the Adverse Person to holders of equity interests in such
Acquiring Person or Adverse Person or to any Person with whom the
Acquiring Person or the Adverse Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B)
a transfer which the Board of Directors of the Company has determined
is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e),
shall become null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company shall use all
reasonable efforts to insure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but shall have no liability to any
holder of Rights Certificates or other Person as a result of its failure to
make any determinations with respect to an Acquiring Person or an Adverse
Person or any of their respective Affiliates, Associates or transferees
hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder
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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.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in 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 Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement, and the Rights
Agent shall so cancel and retire, any other 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 Capital Stock
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, will use its best efforts, following the occurrence of
a Triggering Event, out of its authorized and unissued shares of common stock
and/or other securities or out of its authorized and issued shares held in
its treasury) the number of shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) that
will be sufficient to permit the exercise in full of all outstanding Rights.
(b) So long as the Preferred Stock (and, following the occurrence of
a Triggering Event, Common Stock or other securities) issuable and
deliverable upon the exercise of Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from
and after such time as the Rights become exercisable, all shares reserved for
such issuance to be listed on such exchange upon official notice of issuance
upon such exercise.
(c) The Company shall use its best efforts to:
(i) file, as soon as practicable following the earliest date
after the first occurrence of a Section 11(a)(ii) Event on which the
consideration to be delivered by the Company upon exercise of the
Rights has been determined in accordance with Section 11(a)(iii)
hereof, or as soon as is required by law following the Distribution
Date, as the case may be, a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to the
securities purchasable upon exercise of the Rights on an appropriate
form,
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(ii) cause such registration statement to become effective as
soon as practicable after such filing, and
(iii) cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Act)
until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities, and (B) the date of the
expiration of the Rights.
The Company will also take such action as may be appropriate under, or to
ensure compliance with, the securities or "blue sky" laws of the various
states in connection with the exercisability of the Rights. The Company may,
acting by resolution of its Board of Directors (which resolution shall be
effective only if it is approved by a majority of the Continuing Directors)
temporarily suspend, for a period of time not to exceed ninety (90) days
after the date set forth in clause (i) of the first sentence of this Section
9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement 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.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to insure that all one one-hundredths of a share
of Preferred stock (and, following the occurrence of a Triggering Event,
Common Stock or other securities) delivered upon exercise of Rights shall, at
the time of delivery of the certificates for such shares (subject to payment
of the Purchase Price), be duly and validly authorized and issued and fully
paid and nonassessable shares.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the insurance or delivery of the Right
Certificates for a member of one one-hundredths of a share of Preferred Stock
(or shares of Common Stock and/or other securities, as the case may be) upon
the exercise of rights. The Company shall not, however, be required to pay
any transfer tax which may be payable in respect to any transfer or delivery
of Right Certificates to a person other than, or the issuance or delivery of
certificates or depositary receipts for a number of one one-hundredths of a
share of Preferred Stock (or shares of Common Stock and/or other securities,
as the case may be) in a name other than that of, the registered holder of
the Right Certificate evidencing Rights surrendered for exercise or to issue
or deliver any certificates for a number of one one-hundredths of a share of
Preferred Stock (or shares of Common Stock and/or other securities, as the
case may be) upon the exercise of any Rights until any such tax has 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 a number of one one-hundredths of a share of Preferred
Stock (or shares of Common Stock
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and/or other securities, as the case may be) is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record
of the Preferred Stock (or Common Stock or other securities, as the case may
be) represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered
and payment of the Purchase Price (and any applicable transfer taxes) was
made; provided, however, that if the date of such surrender and payment is a
date upon which the Preferred Stock (or Common Stock and/or other securities,
as the case may be) transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares (fractional
or otherwise) on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are open. Prior
to the exercise of the Rights evidenced thereby, the holder of a Right
Certificate shall not be entitled to any rights of a stockholder of the
Company with respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or
other distributions or to exercise any preemptive rights, and shall not be
entitled to receive any notice of any proceedings of the Company, except as
provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights. The Purchase Price, the number of shares, or fractions thereof,
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event that the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Stock payable
in shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock,
(C) combine the outstanding Preferred Stock into a smaller number of shares,
or (D) issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided under this Section 11(a) and
Section 7(e) hereof, the Purchase Price in effect at the time of the record
date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number 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 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 such date and at a time when
the Preferred Stock transfer books of the company were open, he would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or classification. If an event occurs
which would require an adjustment under both Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall
be in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.
(ii) In the event:
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<PAGE>
(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 merge into the Company or otherwise combine with the
Company and the Company shall be the continuing or surviving
corporation of such merger or combination and the Common Stock of the
Company shall remain outstanding and unchanged,
(2) shall, in one transaction or a series of transactions,
transfer any assets to the Company or to any of its Subsidiaries in
exchange (in whole or in part) for the Company's Common Stock, for
shares of other equity securities of the Company, or for securities
exercisable for or convertible into shares of equity securities of
the Company (whether Common Stock or otherwise) or otherwise obtain
from the Company or any of its subsidiaries, with or without
consideration, any additional shares of such equity securities or
securities exercisable for or convertible into such equity securities
(other than pursuant to a pro rata distribution to all holders of
Common Stock),
(3) shall sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise acquire or dispose of, in one transaction or a
series of transactions, to, from or with (as the case may be) the
Company or any of its Subsidiaries, assets on terms and conditions
less favorable to the Company than the Company would be able to
obtain in arm's-length negotiation with an unaffiliated third party,
other than pursuant to a transaction set forth in Section 12(a)
hereof,
(4) shall sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise acquire or dispose of in one transaction or a
series of transactions, to, from or with (as the case may be) the
Company or any of the Company's Subsidiaries (other than incidental
to the lines of business, if any, engaged in as of the date hereof
between the Company and such Acquiring Person or Associate or
Affiliate) assets having an aggregate fair market value of more than
$5,000,000, other than pursuant to a transaction set forth in Section
12(a), hereof,
(5) shall receive any compensation from the Company or any of
the Company's Subsidiaries other than compensation for full-time
employment as a regular employee at rates in accordance with the
company's (or its Subsidiaries') past practices, or
(6) shall receive the benefit, directly or indirectly (except
proportionately as a stockholder and except if resulting from a
requirement of law or governmental regulation), of any loans,
advances, guarantees, pledges or other financial assistance or any
tax credits or other tax advantage provided by the Company or any of
its subsidiaries, or
(B) any Person (other than the Company, any Plan of the Company, or
any Person or entity organized, appointed or established by the Company for
or pursuant to the terms of any
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<PAGE>
such Plan), alone or together with its Affiliates and Associates, shall, at
any time after the Record Date, become an Acquiring Person, unless the event
causing such Person to become an Acquiring Person is a transaction set forth
in Section 12(a) hereof or is an acquisition of shares of Common Stock
pursuant to a tender offer or an exchange offer for all outstanding shares of
Common Stock at a price and on terms determined by a majority of the
Continuing Directors who are not representatives, nominees, Affiliates or
Associates of an Acquiring person, after receiving advice from one or more
investment banking firms, to be (a) at a price which is fair to the Company's
stockholders (taking into account all factors which such members of the Board
of Directors deem relevant including, without limitation, prices which could
rationally be achieved if the Company or its assets were sold on an orderly
basis designed to realize minimum value) and (b) otherwise in the best
interests of the Company and its stockholders,
(C) during such time as there is an Acquiring Person, there shall be
any reclassification of securities (including any reverse stock split), or
recapitalization of the Company or any merger 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) other than a
transaction or transactions to which the provisions of Section 12(a) apply
(whether or not with or into or otherwise involving an Acquiring Person)
which has the effect, directly or indirectly, of increasing by more than 1%
the proportionate share of the outstanding shares of any class of equity
securities of the Company or any of its Subsidiaries which is directly or
indirectly beneficially owned by any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, or
(D) a majority of the Continuing Directors shall declare any Person
to be an Adverse Person, upon a determination that such Person, alone or
together with its Affiliates and Associates, has, at any time after the
Rights Dividend Declaration Date, become the Beneficial Owner of an amount of
Common Stock which a majority of the Continuing Directors determines to be
substantial (which amount shall in no event be less than 15% of the shares of
Common Stock then outstanding) and a determination by a majority of the
Continuing Directors after reasonable inquiry and investigation, including
consultation with such persons as such directors shall deem appropriate, that
(1) such Beneficial ownership by such Person is intended to
cause the Company to repurchase the Common Stock beneficially owned
by such person or to cause pressure on the Company to take action or
enter into a transaction or series of transactions intended to
provide such Person with short-term financial gain under
circumstances where such directors determine that the best long-term
interests of the Company and its stockholders would not be served by
taking such action or entering into such transaction or series of
transactions at that time, or
(2) such Beneficial Ownership is causing or reasonably likely
to cause a material adverse impact (including, but not limited to,
impairment of relationships with customers or impairment of the
Company's ability to maintain its competitive position) on the
business or prospects of the Company,
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then, promptly following five (5) days after the date of occurrence of an
event described in Section 11(a)(ii)(B) hereof and promptly following the
occurrence of any event described in Section 11(a)(ii)(A), (C) or (D) hereof,
proper provision shall be made so that each holder of a Right, except as
provided below and in Section 7(e) hereof, shall thereafter have the right to
receive, upon exercise thereof at the then-current Purchase Price in
accordance with the terms of this Agreement, in lieu of a number of one
one-hundredths of a share of Preferred Stock, such number of shares of Common
Stock of the Company as shall equal the result obtained by (x) multiplying
the then-current Purchase price by the then number of one one-hundredths of a
share of Preferred Stock for which a Right was exercisable immediately prior
to the first occurrence of such Section 11(a)(ii) Event, and (y) dividing
that product (which, following such first occurrence, shall thereafter be
referred to as the "Purchase Price" for each Right and for all purposes of
this Agreement) by 50% of the current market price per share of the Common
Stock of the Company (determined pursuant to Section 11 (d) hereof) on the
date of such first occurrence (such number of shares being hereinafter
referred to as the "Adjustment Shares"). The Company shall notify the Rights
Agent as to any Persons who are deemed by the Company to be Acquiring
Persons, Adverse Persons or any Associates or Affiliates of the Acquiring
Persons or Adverse Persons and shall identify any Rights pertaining thereto.
The Rights Agent shall have no responsibility to itself identify an Acquiring
Person or any Associate or Affiliate of the Acquiring Person, but shall rely
solely on the Company's identification.
(iii) In lieu of issuing shares of Common Stock in accordance with
Section 11(a)(ii) hereof, the Company may, acting by resolution of its Board
of Directors (which resolution shall be effective only if it is approved by a
majority of the Continuing Directors), determine that such action is
necessary or appropriate and not contrary to the interest of holders of
Rights (and, in the event that the number of shares of Common Stock which are
authorized by the Company's Certificate of Incorporation, as amended, but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights, are not sufficient to permit the exercise in full of the Rights
in accordance with the foregoing subparagraph (ii) of this Section 11(a),)
the Company shall:
(A) determine the excess of (1) the value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current Value"),
over (2) the Purchase Price attributable to each Right (such excess,
the "Spread") and
(B) with respect to each Right, make adequate provision to
substitute for the Adjustment Shares, upon payment of the applicable
Purchase Price,
(1) cash,
(2) a reduction in the Purchase Price,
(3) Common Stock or other equity securities of the
Company (including, without limitation, shares, or units of
shares, of preferred stock which the Board of Directors of the
Company (with the concurrence of a majority of the
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Continuing Directors) has deemed to have the same value as
shares of Common Stock (such shares of preferred stock as
herein called "common stock equivalents")),
(4) debt securities of the Company,
(5) other assets, or
(6) any combination of the foregoing having an
aggregate value equal to the Current Value, where such
aggregate value has been determined by action of the Board of
Directors of the Company (with the concurrence of a majority
of the Continuing Directors);
provided, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty
(30) days following the later of
(x) the first occurrence of a Section 11(a)(ii) Event and
(y) the date that the right to redeem the Rights pursuant to
Section 23 hereof, as such date may be amended pursuant to Section 27
hereof, shall expire (the later of (x) and (y) being referred to
herein as the "Section 11(a)(ii) Trigger Date"), then the Company
shall be obligated to deliver, upon the surrender for exercise of a
Right Certificate and without requiring payment of the Purchase
Price, shares of Common Stock (to the extent available) and then, if
necessary, cash, securities and/or assets that in the aggregate are
equal to the Spread. If the Company, acting by resolution of its
Board of Directors (which resolution shall be effective only if it is
approved by a majority of the Continuing Directors) shall determine
in good faith that it is likely that sufficient additional shares of
Common Stock could be authorized for issuance upon exercise in full
of the Rights, the thirty (30) day period set forth above may be
extended to the extent necessary, but not more than ninety (90) days
after the Section 11(a)(ii) Trigger Date, in order that the Company
may seek stockholder approval for the authorization of such
additional shares (such period as it may be extended, the
"Substitution Period"). To the extent that the Company determines
that some action is to be taken pursuant to the terms of this Section
11(a)(iii) contained above, the Company
(x) shall provide, subject to Section 7(e) hereof, that such
action shall apply uniformly to all outstanding Rights, and
(y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate
form of distribution to be made pursuant to such first sentence and
to determine the value thereof. In the event of any such suspension,
the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well
as a public announcement at such time as the suspension
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is no longer in effect. For purposes of this Section 11(a)(iii), the
value of the Common Stock shall be the current per share market price
of the Common Stock (as determined pursuant to Section 11(d) hereof)
on the date of the first occurrence of the event described in Section
11(a)(ii) hereof, and the value of any "common stock equivalents"
shall be deemed to have the same value as the Common Stock on such
date.
(b) In the event the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Stock entitling
them for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Stock (or shares having the same rights,
privileges or preferences as the shares of Preferred Stock ("equivalent
preferred stock") or securities convertible into Preferred Stock or
equivalent preferred stock at a price per share of Preferred Stock or per
share of equivalent preferred stock (or having a conversion or exercise price
per share, if a security convertible into or exercisable for Preferred Stock
or equivalent preferred stock) less than the "current market price" per share
of Preferred Stock (as defined in Section 11(d) hereof) on such record date,
the Purchase Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the number of shares of
Preferred Stock outstanding on such record date plus the number of shares of
Preferred Stock which the aggregate offering price of the total number of
shares of Preferred Stock and/or equivalent preferred stock so to be offered
(and/or the aggregate initial conversion price of the convertible securities
so to be offered) would purchase at such current market price, and the
denominator of which shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of additional shares of
Preferred Stock and/or equivalent preferred stock to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be
paid in a consideration, part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Company, acting by resolution of its Board of Directors (which resolution
shall be effective only if it is approved by a majority of the Continuing
Directors), 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 if 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 the event the Company shall fix a record date for the making
of 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 regular quarterly cash dividend or a dividend payable in
Preferred Stock, but including any dividend payable on stock other than
Preferred Stock) or convertible securities, 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,
of which the numerator shall be the current market price per share of
Preferred Stock (as defined
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<PAGE>
in Section 1 l(d) hereof) on such record date, less the fair market value (as
determined in good faith by the Company, acting by resolution of its Board of
Directors (which resolution shall be effective only if it is approved by a
majority of the Continuing Directors), whose determination shall be described
in a statement filed with the Rights Agent) of the portion of the assets or
evidences of indebtedness so to be distributed or of such convertible
securities, subscription rights or warrants applicable to one share of
Preferred Stock and the denominator of which shall be such current market
price (as determined pursuant to Section 11(d) hereof) per share of Preferred
Stock. Such adjustment 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 again be adjusted to be the Purchase Price which would
then be 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 such Common Stock for the 30
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 Common Stock shall
be deemed to be the average of the daily closing prices per share of such
Common Stock for the ten (10) consecutive Trading Days immediately following
such date; provided, however, that if the current market price per share of
Common Stock is determined during a period following the announcement by the
issuer of such Common Stock of (x) a dividend or distribution on such Common
Stock payable in shares of such Common Stock or securities convertible into
shares of such Common Stock (other than the Rights which are the subject of
this Agreement) or (y) any subdivision, combination or reclassification of
such Common Stock, and prior to the expiration of the requisite thirty (30)
Trading Day or ten (10) Trading Day period, as set forth above, after the
ex-dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification, then, and in each such
case, the current market price shall be appropriately 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 Common Stock is
listed or admitted to trading or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National
Association of Securities Dealers Automated Quotation System ("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 Company, acting by resolution of the
Board of Directors (which resolution shall be effective only if it is
approved by a majority of the Continuing Directors). If on any such date no
market
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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 Company, acting by resolution
of its Board of Directors (which resolution shall be effective only if it is
approved by a majority of the Continuing Directors), shall be used. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the shares of Common Stock are listed or admitted to
trading is open for the transaction of business or, if the shares of Common
Stock are not listed or admitted to trading on any national securities
exchange, a Business Day. If the Common Stock is not publicly held or not so
listed or traded, "current market price" per share shall mean the fair value
per share as determined in good faith by the Company, acting by resolution of
its Board of Directors (which resolution shall be effective only if it is
approved by a majority of the Continuing Directors), whose determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes. If on any such date the Common Stock is not
publicly held or not so listed or traded, "current market price" per share
shall mean the fair value per share as determined in good faith by a majority
of the Continuing Directors, 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 for the Common Stock in Section 11(d)(i) hereof (other
than the last sentence thereof). If the current market price per share of
Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner
described in Section 11(d)(i) hereof, the "current market price" per share of
Preferred Stock shall be conclusively deemed to be an amount equal to 80 (as
such number may be appropriately adjusted for such events as stock splits,
stock dividends and recapitalizations with respect to the Common Stock
occurring after the date of this Agreement) multiplied by the current market
price per share of the Common Stock. If neither the Common Stock nor the
Preferred Stock is publicly held or so listed or traded, "current market
price" per share of the Preferred Stock shall mean the fair value per share
as determined in good faith by the Company, acting by resolution of its Board
of Directors (which resolution shall be effective only if it is approved by a
majority of the Continuing Directors), whose determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all
purposes. For all purposes of this Agreement, the "current market price" of
one one-hundredth of a share of Preferred Stock shall be equal to the current
market price" of one share of Preferred Stock divided by 80.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in such price; provided, however, that
any adjustments which by reason of this Section 11(e) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the
nearest cent or to the nearest ten-thousandth of a share of Common Stock or
other share or one-millionth of a share of Preferred Stock, as the case may
be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i)
three
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years from the date of the transaction which mandates such adjustment or (ii)
the Expiration Date.
(f) If, as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 12(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 Purchase Price and the number of such
other shares so receivable upon exercise of any Right and the number of
Rights outstanding 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),
(e), (g), (h), (i), (j), (k) and (m) and the provisions of Sections 7, 9, 10,
12 and 14 hereof with respect to the Preferred Stock shall apply on like
terms to any such other shares; provided, however, that the Company shall not
be liable for its inability to reserve and keep available for issuance upon
exercise of the Rights pursuant to Section 11(a)(ii) a number of shares of
Common Stock greater than the number then authorized by the Restated
Certificate of Incorporation, as amended, of the Company but not outstanding
or reserved for other purposes.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of
a share of Preferred Stock purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of
the calculations made in Section 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence
the right to purchase, at the adjusted Purchase Price, that number of one
one-hundredths of a share of Preferred Stock (calculated to the nearest
one-millionth) obtained by
(i) multiplying (x) the number of one one-hundredths of a
share covered by a Right immediately prior to such adjustment to the
Purchase Price by (y) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in
effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect, on or after the date of any adjustment of
the Purchase Price, to adjust the number of Rights, in substitution for any
adjustment in the number of shares of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of
the number of Rights shall be exercisable for the number of one
one-hundredths of a share of Preferred Stock for which such Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one ten-thousandth) obtained by dividing
the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of its election
to adjust the number of Rights, indicating the
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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.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of shares of Preferred Stock, or fraction thereof, issuable upon
the exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one
one-hundredths of a share which were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the one
one-hundredths of a share of Preferred Stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable such number of one one-hundredths
of a share of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the shares of Preferred Stock, or fraction thereof, and any other capital
stock or securities of the Company, if any, issuable upon such exercise over
and above the shares of Preferred Stock, or fraction thereof, and other
capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to such holder
a due bill or other appropriate instrument evidencing such holder's right to
receive such additional shares (fractional or otherwise) or securities upon
the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company, acting by resolution of its Board of Directors (which resolution
shall be effective only if it is approved by a majority of the Continuing
Directors), 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
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that it in its sole discretion shall determine to be advisable in order that
any consolidation or subdivision of the Preferred Stock, issuance wholly for
cash of any Preferred Stock at less than the current market price, issuance
wholly for cash of Preferred Stock or securities which by their terms are
convertible into or exchangeable for Preferred Stock, stock dividends or
issuance of rights, options or warrants referred to herein-above in this
Section 11, hereafter made by the Company to the holders of its Preferred
Stock, shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not at any time
after the Distribution Date
(i) consolidate with any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o)
hereof),
(ii) merge with or into any other Person (other than a
Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), or
(iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one or more transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole), to any other Person
or Persons (other than the Company and/or any of its Subsidiaries in
one or more transactions each of which complies with Section 11(o)
hereof), if at the time of or immediately after such consolidation,
merger or sale there are any rights, warrants or other instruments or
securities outstanding which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the
Rights or 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 12(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 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 otherwise eliminate the benefits intended to be afforded by
the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time after the Record Date and prior
to the Distribution Date
(i) declare a dividend on the outstanding shares of Common
Stock payable in shares of Common Stock,
(ii) subdivide the outstanding shares of Common Stock, or
(iii) combine the outstanding shares of Common Stock into a
smaller number of shares, the number of Rights associated with each
share of common stock then
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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.
(q) The failure by the Directors to declare a Person to be an Adverse
Person following such Person becoming the Beneficial Owner of 15% or more of
the outstanding Common Stock shall not imply that such person is not an
Adverse Person or limit the Directors' right at any time in the future to
declare such Person to be an Adverse Person.
Section 12. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following the Stock Acquisition Date,
directly or indirectly,
(x) the Company shall consolidate with, or merge with
and into, any other Person (other than any Plan of the Company
or a Subsidiary of the Company, or any person holding shares
of Common Stock for or pursuant to the terms of any such Plan,
in a transaction which complies with Section 11(o) hereof),
and the Company shall not be the continuing or surviving
corporation of such consolidation or merger,
(y) any Person (other than any Plan of the Company or a
Subsidiary of the Company, or any person holding shares of
Common Stock for or pursuant to the terms of any such Plan)
shall consolidate with the Company or merge with and into the
Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection
with such consolidation or merger, all or part of the
outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person
(or the Company) or cash or any other property, or
(z) the Company shall sell or otherwise transfer (or
one or more of its Subsidiaries shall sell or otherwise
transfer), in one transaction or series of related
transactions, assets or earning power aggregating 50% or more
of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company or any Subsidiary of the Company in
one or more transactions each of which complies with Section
11(o) hereof), then, and in each such case (except as set
forth in Section 12(d) hereof), proper provision shall be made
so that
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<PAGE>
(i) each holder of a Right, except as provided
in Section 7(e) hereof, shall thereafter have the right
to receive, upon the exercise thereof at the
then-current Purchase Price in accordance with the
terms of this Agreement, such number of shares of
validly authorized and issued, fully paid and
non-assessable shares of Common Stock of the Principal
Party (as defined below), not subject to any liens,
encumbrances, rights of call or first refusal on other
adverse claims, as shall be equal to the result
obtained by (1) multiplying the then-current Purchase
Price by the then number of one one-hundredths of a
share of Preferred Stock for which a Right is
exercisable immediately prior to the first occurrence
of a Section 12(a) Event (or, if a Section 11(a)(ii)
Event has occurred prior to the Section 12(a) Event,
multiplying the number of such one one-hundredths of a
share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence
of such Section 11(a)(ii) Event by the Purchase Price
in effect immediately prior to such first occurrence),
and dividing that product by (2) 50% of the current
market price per share of the common stock of such
Principal Party (determined in the manner described in
Section 11(d)(i) on the date of consummation of such
Section 12(a) Event);
(ii) the Principal Party shall thereafter be
liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this
Agreement;
(iii) the term "Company" shall thereafter be
deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11
hereof shall apply to such Principal Party following
the occurrence of a Section 12(a) Event;
(iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a
sufficient number of share of its common stock in
accordance with Section 9 hereof) in connection with
such consummation as may be necessary to assure that
the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to the
shares of its common stock thereafter deliverable upon
the exercise of the Right; and
(v) the provisions of Section 11(a)(ii) hereof
shall be of no effect following the first occurrence of
any Section 12(a) Event.
(b) Notwithstanding the foregoing, if the event referred to in the
preceding sentence is the sale or transfer of assets or earning power in one
or more transactions aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole), but less than 100%
thereof, then each Person acquiring all or a portion thereof shall assume the
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<PAGE>
obligations of the Company as to a fraction of the Rights held by each holder
thereof equal to the fraction of the assets of the Company and its
Subsidiaries (taken as a whole) acquired by such Person, and the remaining
fraction of the Rights shall continue in full force and effect as obligations
of the Company.
(c) "Principal Party" shall mean
(1) in the case of any transaction described in (x) or (y) of
the first sentence of Section 12(a), the Person that is the issuer of
any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are
so issued, the Person that is the other party to such merger or
consolidation; and
(2) in the case of any transaction described in (z) of the
first sentence of this Section 12, the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (x) if the Common Stock of such
Person are not at such time and have 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, "Principal Party" shall refer to such
other Person; (y) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Stock of all of which are and
have been so registered, "Principal Party" shall refer to whichever of such
Persons is the issuer of the Common Stock having the greatest market value of
shares held by the public; and (z) in case such Person is owned, directly or
indirectly, by a joint venture formed by two or more Persons that are not
owned, directly or indirectly, by the same Person, the rules set forth in (x)
and (y) above shall apply to each of the chains of ownership having an
interest in such joint venture as if such party were a "Subsidiary" of both
or all of such joint venturers and the Principal Parties in each such chain
shall bear the obligation set forth in this Section 12 in the same ratio as
their direct or indirect interests in such Person bear the total of such
interests.
(d) The Company shall not consummate any such consolidation, merger,
sale or transfer unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a supplemental
agreement confirming that such issues shall, upon consummation of such
consolidation, merger or sale or transfer of assets or earning power, assume
the Rights Agreement in accordance with Sections 12(a) and (b) hereof and
that all rights of first refusal or preemptive rights in respect of the
issuance of shares of Common Stock of such Principal Party upon exercise of
outstanding Rights have been waived and that such transactions shall not
result in a default by such Principal Party under the Rights Agreement and
further providing that, as soon as practicable after the date of any
consolidation, merger or sale or transfer of assets or earning power referred
to in Section 12(a) hereof, such Principal Party will:
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<PAGE>
(i) prepare and file a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to the
Rights and the securities purchasable upon exercise of the Rights on
an appropriate form; use its best efforts to cause such registration
statement to become effective as soon as practicable after such
filing; and use its best efforts to cause such registration statement
to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the date of expiration of the Rights,
and similarly comply with applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of)
the Rights and the securities purchasable upon exercise of the Rights
on a national securities exchange or to meet the eligibility
requirements for quotation on NASDAQ; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form
10 (or any successor form) under the Exchange Act.
(e) In the event that a Section 12(a) Event shall occur at any time
after a Section 11(a)(ii) Event, the Rights which have not theretofore been
exercised shall thereafter be exercisable in the manner described in Section
12(a) (without taking into account any prior adjustment required by Section
11(a)(ii)).
(f) Upon the exercise of a Right following a Section 11(a)(ii) Event
or Section 12(a) Event, the Purchase Price may be paid, to the extent
permitted by the charter of the Principal Party, in cash, or tangible or
intangible property, or any combination of the foregoing. The provisions of
this Section 12 shall similarly apply to successive mergers or consolidations
or sales or other transfers.
(g) Notwithstanding anything in this Agreement to the contrary,
Section 12 shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 12(a) if (i) such transaction is
consummated with a Person or Persons who acquired shares of Common Stock
pursuant to a tender offer or exchange offer for all outstanding shares of
Common Stock which complies with the provisions of Section 11(a)(ii)(B)
hereof (or a wholly owned subsidiary of any such Person or Persons), (ii) the
price per share of Common Stock offered in such transaction is not less than
the price per share of Common Stock paid to all holders of shares of Common
Stock whose shares were purchased pursuant to such tender offer or exchange
offer and (iii) the form of consideration being offered to the remaining
holders of shares of Common Stock pursuant to such transaction is the same as
the form of consideration paid pursuant to such tender offer or exchange
offer. Upon consummation of any such transaction contemplated by this Section
12(g), all Rights hereunder shall expire.
Section 13. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or Section
12 of this Agreement, the Company shall
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(a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such
adjustment,
(b) promptly file with the Rights Agent, and with each
transfer agent for the Common Stock and 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 of this Agreement). Notwithstanding the foregoing
sentence, the failure of the Company to make such certificates or
give such notice shall not affect the validity or the force or effect
of the requirement for such adjustment. The Rights Agent shall be
fully protected in relying on any such certificate and on any
adjustment therein contained. Any adjustment to be made pursuant to
Sections 11 and 12 of this Agreement shall be effective as of the
date of the event giving rise to such adjustment.
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 registered holders of the
Right Certificates with regard to which such fractions of Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section
14(a), the current market value of a whole Right shall be the closing price
of the Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for
any day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted
price, or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by NASDAQ or such other system
then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
a professional market maker (selected by the Company, acting by resolution of
its Board of Directors (which resolution shall be effective only if it is
approved by a majority of the Continuing Directors) making a market in the
Rights. If on any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined in good faith
by the Company, acting by resolution of its Board of Directors (which
resolution shall be effective only if it is approved by a majority of the
Continuing Directors), shall be used.
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<PAGE>
(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-hundredth 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-hundredth
of a share of Preferred Stock). Fractions of shares of Preferred Stock in
integral multiples of one one-hundredth of a share of Preferred Stock may, at
the election of the Company, be evidenced by depositary receipts, pursuant to
an appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such
depositary receipts shall have all the rights. privileges and preferences to
which they are entitled as beneficial owners of the shares of Preferred
Stock. With respect to fractional shares of Preferred Stock that are not
integral multiples of one one-hundredth of a share of Preferred Stock, if the
Company does not issue fractional shares of depositary receipts in lieu
thereof, the Company shall pay to the registered holders 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 current market
value of one one-hundredth of a share of Preferred Stock. For purposes of
this Section 14(b), the current market value of one one-hundredth of a share
of Preferred Stock shall be one one-hundredth of the closing price of a share
of Preferred Stock (as determined pursuant to Section 11(d)(ii)) for the
Trading Day immediately prior to the date of such exercise.
(c) The Company shall not be required to issue fractions of shares of
Common Stock upon exercise of the Rights pursuant to Sections 11(a)(ii) or
12(a) hereof or to distribute certificates which evidence fractional shares
of Common Stock. In lieu of fractional shares of Common Stock, the company
may pay to the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market price of one share of Common Stock. For the
purposes of this Section 14(c), the current market price of one share of
Common Stock shall be the closing price of a share of Common Stock (as
determined pursuant to Section 11 (d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
(d) The holder of a Right, by the acceptance of such Right, expressly
waives his right to receive any fractional Rights or any fractional shares
upon exercise of a Right except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
Common Stock); and any registered holder 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 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 shall
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be entitled to specific performance of the obligations hereunder, and
injunctive relief against actual or threatened violations of the obligations
of any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting such Right, 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 shall be evidenced by
the certificates for shares of Common Stock registered in the name of the
holders of such shares (which certificates for shares of Common Stock shall
also constitute certificates for Rights) and each Right will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer and with the appropriate form and certificates
fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, 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 certificate
for Common Stock) 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 certificate for Common
Stock made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent, subject to
the last sentence of Section 7(e) hereof, shall be affected by any notice to
the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or other Person as a result of its inability to perform any
of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated
Section 17. Right Holder and Right Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Right or Right Certificate shall be
entitled to vote, receive dividends or be deemed or any purpose the holder of
one one-hundredth of a share of Preferred Stock or any other securities of
the Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right or Right
Certificate, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25), or to receive dividends or
subscription rights, or otherwise, until the
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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 services rendered by it hereunder and, from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the administration and execution of this
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
negligence, bad faith or willful misconduct on the part of the Rights Agent
for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement. including the costs and
expenses of defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Right Certificate or certificate for Preferred Stock or Common Stock or for
other securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons or otherwise upon the advice of
counsel as set forth in Section 20 hereof.
In no event shall the Rights Agent be responsible or liable to anyone
for consequential damages, lost profits, interest or other special or
consequential damages, even if informed of the possibility thereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting form any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. The purchase of all or
substantially all of the Rights Agent's assets employed in the performance of
transfer agent activities shall be deemed a merger or consolidation for
purposes of this Section 19. In case at the time such successor Rights Agent
shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the counter signature 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
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been countersigned, any successor Rights Agent may countersign such Right
Certificate 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
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 counter signature under its
prior name and deliver 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 Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (which may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person or
Adverse Person and the determination of "current market price") be proved or
established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proven and
established by a certificate signed or reasonably believed by the Rights
Agent to be signed by the Chief Executive Officer or President or any Vice
President and by the Treasurer or any Assistant Treasurer or the Secretary or
any Assistant Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
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 Agreement or in the
Rights Certificate (except its countersignature thereof or be required to
verify the same, and all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the
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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 Agreement or in any Right Certificate; nor shall it be
responsible for any change in the exercisability of the Rights or any
adjustment required under the provisions of Sections 11 or 12 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 adjustments (except
with respect to the exercise of Rights evidenced by Right Certificates after
actual notice of any such adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Common Stock or Preferred Stock to be issued
pursuant to this Agreement or any Right Certificate or as to whether any
shares of Common Stock or 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 Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chief Executive Officer or President or any Vice President or the Secretary
or any Assistant Secretary or the Treasurer or any Assistant Treasurer of the
Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken
or suffered to be taken by it in good faith in accordance with instructions
of any such officer or for any delay in acting while waiting for those
instructions.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were
not the Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys, or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys, or agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock or Preferred Stock by registered or
certified mail, and to the holders of the Right Certificates by first-class
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mail. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 days notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common
Stock or Preferred 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. 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 registered holder 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, (a) shall be a corporation
organized and doing business under the laws of the United States or one of
the States thereof, in good standing, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent, a combined capital and surplus of at
least $20 million or (b) an affiliate of a corporation described in clause
(a) of this sentence. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock or Preferred 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 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 resolution of its Board of Directors (which
resolution shall be effective only if it is approved by a majority of the
Continuing Directors), to reflect any adjustment or change in the purchase
price and the number or kind of class of shares of stock or other securities
or property purchasable under the Right Certificates made in accordance with
the provisions of this Agreement.
Section 23. Redemption.
(a) The Company may, at its option, by resolution of its board of
Directors (which resolution shall be effective only if it is approved by a
majority of the Continuing Directors), at any time prior to the Close of
business on the earlier of (i) the tenth day following the Stock Acquisition
Date, or (ii) 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
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adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"). Notwithstanding the foregoing, the
Board of Directors may not redeem any Rights following a determination
pursuant to Section 11(a)(ii)(D) that any Person is an Adverse Person.
(b) In the event that, following the occurrence of a Stock
Acquisition Date and following the expiration of the right of redemption
under subparagraph (a) of this Section 23, but prior to any Triggering Event,
(i) a person who is an Acquiring Person shall have transferred
or otherwise disposed of a number of shares of Common Stock in one
transaction, or a series of transactions (not directly or indirectly
involving a purchase by the Company or any of its Subsidiaries),
which did not result in the occurrence of a Triggering Event, such
that such person is thereafter a Beneficial Owner of 10% or less of
the outstanding Common Stock of the Company, and
(ii) there are no other Persons, immediately following the
occurrence of the event described in clause (i), who are Acquiring
Persons, then the right of redemption provided in subparagraph (a) of
this Section 23 shall be reinstated and thereafter all outstanding
Rights shall again be subject to the provisions of this Section 23.
Notwithstanding anything contained in this Agreement to the contrary,
the Rights shall not be exercisable after the first occurrence of a
Section 11(a)(ii) Event until such time as the Company's right of
redemption hereunder has expired.
(c) Immediately upon the action of the Company, acting by resolution
of its Board of Directors (which resolution shall be effective only if
approved by a majority of the Continuing Directors) electing to redeem the
Rights, evidence of which shall have been filed with the Rights Agent, and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price for each Right so held. Promptly
after the action of the Company ordering the redemption of the Rights, the
Company shall give notice of such redemption to the holders of the then
outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent
for the Common Stock. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at any
time after any Person becomes an Acquiring Person by resolution (which
resolution shall be effective only if it is approved by a majority of the
Continuing Directors) exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
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pursuant to the provisions of Section 11(a)(ii) hereof) for shares of Common
Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or any such Subsidiary,
or entity holding Common Stock for or pursuant to the terms of any such plan
or any trust agreement entered into by the Company to secure benefits payable
under any employee benefit plan of the Company or any Subsidiary of the
Company), together with all Affiliates and Associates of such Person, becomes
the Beneficial Owner of Common Stock representing 50% or more of the shares
of 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 subsection (a) of
this Section 24 and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter
of a holder of such Rights shall be to receive that number of shares of
Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange; provided, however, that the failure to give, or
any defect in, such notice shall not affect the validity of such exchange.
The Company shall promptly mail a notice of any such exchange to all of the
holders of such last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such
notice of exchange will state the method by which the exchange of the shares
of Common Stock for Rights will be effected and, in the event of any partial
exchange, the number and kind of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights being
exchanged (other than Rights which have become void pursuant to the
provisions of Section 11(a)(ii) hereof) held by each holder of such Rights.
(c) In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize
additional shares of Common Stock for issuance upon exchange of the Rights.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Distribution Date,
(i) to declare or pay any dividend payable in stock of any
class to the holders of its Preferred Stock or to make any other
distribution to the holders of its Preferred Stock (other than a
regular quarterly cash dividend out of earnings on retained earnings
of the Company) or
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(ii) to offer to the holders of its Preferred Stock options,
rights or warrants to subscribe for or to purchase any additional
Preferred Stock or shares of stock of any class or any other
securities, rights or options, or
(iii) to effect any reclassification of its Preferred Stock
(other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock),
(iv) to effect any consolidation or merger with or into any
other Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof), or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one transaction or a series of
related transactions, of more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with
Section 11(o), hereof), or
(v) to effect the liquidation, dissolution or winding up of
the Company
then, in each such case, the Company shall give to each holder of a Right
Certificate, to the extent feasible and in accordance with Section 26 hereof,
a notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, or distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of record of the shares of
Preferred Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at least
twenty (20) days prior to the record date for determining holders of the
shares of Preferred Stock for purposes of such action, and in the case of any
such other action, at least twenty (20) days prior to the date of the taking
of such proposed action or the date of participation therein by the holders
of the Preferred Stock, whichever shall be the earlier. The failure to give
notice required by this Section 25 or any defect therein shall not affect the
legality or validity of the action taken by the Company or the vote upon any
such action.
(b) In case any Section 11(a)(ii) Event shall occur, then, in any
such case, (i) the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate, to the extent feasible and in accordance
with Section 26 hereof, a notice of the occurrence of such event, which shall
specify tho event and the consequences thereof to holders of Rights under
Section l 1(a)(ii) hereof, and (ii) all references in Section 25(a) hereof to
Preferred Stock shall be deemed thereafter to refer to Common Stock and/or,
if appropriate, other securities.
Section 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
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Attention: Treasurer
National TechTeam, Inc.
835 Mason Avenue, Suite 200
Dearborn, MI 48124
with a copy to:
Robert A. Hudson, Esquire
Berry Moorman P.C.
600 Woodbridge Place
Detroit, MI 48226
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
U.S. Stock Transfer Corporation
Attn: Mr. Richard Brown
1745 Gardena Avenue
Glendale, CA 91204-2991
Notices or demands authorized by this Agreement to be given or made
by the Company or the Rights Agent to the holder of any Right Certificate
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on
the registry books of the Company.
Section 27. Supplements and Amendments. Prior to the Distribution
Date and subject to the penultimate sentence of this Section 27, the Company
and the Rights Agent shall, if the Company so directs, supplement or amend
any provision of this Agreement without the approval of any holders of
certificates representing shares of Common Stock. From and after the
Distribution Date and subject to the penultimate sentence of this Section 27,
the Company and the Rights Agent shall, if the Company so directs, supplement
or amend this Agreement without the 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 provisions
herein,
(iii) to shorten or lengthen any time period hereunder,
(iv) to change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable and which
shall not adversely affect the
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interests of the holders of Right Certificates (other than an
Acquiring Person, an Adverse Person, or an Affiliate or Associate of
an Acquiring Person or an Adverse Person);
provided, this Agreement may not be supplemented or amended to lengthen,
pursuant to clause (iii) of this sentence, (A) a time period relating to when
the Rights may be redeemed at such time as the Rights are not then
redeemable, or (B) any other time period unless such lengthening is for the
purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights. Upon the delivery of a certificate from
an appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 27,
the Rights Agent shall execute such supplement or amendment. Notwithstanding
anything contained in this Agreement to the contrary, no supplement or
amendment shall be made which changes the Redemption Price, the Final
Expiration Date, the Purchase Price or the number of one one-hundredths of a
share of Preferred Stock for which a Right is exercisable. 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.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Determinations and Actions by the Board of Directors,
etc. The Board of Directors of the Company (and, where specifically provided
for herein, the Board of Directors and a majority of the Continuing
Directors) shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board (or, as expressly provided, the Board of Directors and a majority of
the Continuing Directors) or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (a) interpret the provisions of this
Agreement, and (b) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or
not redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for purpose of
clause (ii) below, all omissions with respect to the foregoing) which are
done or made by the Board (or, as provided for, by the Board of Directors and
a majority of the Continuing Directors), in good faith, (i) shall be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Right Certificates and all other parties, and (ii) shall not subject the
Board or the Continuing Directors to any liability to the holders of the
Right Certificates.
Section 30. Benefits of this Agreement Nothing in this 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, registered holders of the
Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of
the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, registered holders of the
Common Stock).
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Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated; provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company (with the concurrence
of a majority of the Continuing Directors ) determines in its good faith
judgment that severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the Close of business on the tenth day following the date of
such determination by the Board of Directors.
Section 32. Force Majeure. If the Rights Agent shall be delayed in
its performance of services or prevented entirely or in part from performing
services due to causes and events beyond its control, including and without
limitation, acts of God, interruption of power or other utilities, failure,
lack of certificates, transportation or communication services, acts of civil
or military authority, national agencies, war, explosion, flood, earthquake
or other catastrophe, fire, strike or other labor problem, inside or without
New York, present or future law, governmental order, rule or regulation, or
shortages of suitable parts, materials, or transportation, such delay or
nonperformance shall be excused and the reasonable time for performance in
connection with this Agreement shall be extended to include the period of
such delay or nonperformance. It is understood that in the event that any of
the conditions set forth in this paragraph does take place, the Rights Agent
will use its best efforts to cause any work in progress which has been sent
to it at the time of such condition to be processed in a proper manner as
quickly as reasonably possible.
Section 33. Governing Law. This Agreement and each Right certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts to
be made and performed entirely within the State of Delaware.
Section 34. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 35. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
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<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
Attested: NATIONAL TECHTEAM, INC.
By:______________________________ By:_____________________________
Robert A. Hudson
Secretary Its:
Attested: U.S. STOCK TRANSFER CORPORATION
By:______________________________ By:_____________________________
Its: Its:
- 41 -
<PAGE>
Exhibit A
FORM OF CERTIFICATE OF DESIGNATIONS OF SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK
$.01 Par Value
of
NATIONAL TECHTEAM, INC.
Pursuant to Section 151 of the General Corporation
Law of the State of Delaware
We, Lawrence A. Mills, Senior Vice President, and Robert A. Hudson,
Secretary, of National TechTeam, Inc. a corporation organized and existing
under the General Corporation Law of the State of Delaware, in accordance
with the provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Certificate of Incorporation of the said Corporation, the said Board
of Directors on April 29, 1997, adopted the following resolution creating a
series of one million (1,000,000) shares of Preferred Stock designated as
Series A Junior Participating Cumulative Preferred Stock, $.01 Par Value:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Restated Certificate of Incorporation, a series of Preferred Stock of the
Corporation be, and it hereby is, created, and that the designation and
amount thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such
series, and the qualifications, limitations or restrictions thereof are as
follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as Series A Junior Participating Preferred Stock, $.01 Par Value
(the "Series A Preferred Stock") and the number of shares constituting such
series shall be 1,000,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number
less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any similar stock) ranking prior and superior to the
Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of Common Stock, $.01
par value, of the Corporation (the "Common Stock") and of any other junior
stock which may be outstanding, shall be entitled to receive, when, as and if
declared by
<PAGE>
the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of January, April, July
and October in each year (each such date being referred to herein as a
Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series A Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $1.00 per share or (b) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 10 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions,
other than a dividend payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at any time
declare or pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior
to such event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided 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 $1.00 per
share on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series A Preferred Stock,
unless the date of issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or unless the
date of issue is a Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of Series 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 accumulate but shall not bear interest.
Dividends paid on the shares of Series A Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a record
date for the
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<PAGE>
determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights. The holders of Shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provisions for adjustment as hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 100 votes (and each one one-hundredth of a share 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 declare or pay any dividend on Common Stock
payable in shares of Common Stock or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case
the number of votes per share to which holders of shares 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 is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in the Restated Certificate
of Incorporation, in any other certificate of designation creating a series
of preferred stock or any similar stock, or by law, the holders of shares of
Series A Preferred Stock and the holders of shares of Common Stock and any
other capital stock of the Corporation having general voting rights shall
vote together as one class on all matters submitted to a vote of stockholders
of the Corporation.
(C) In addition, the holders of shares of Series A Preferred Stock
shall have the following special voting rights:
If and whenever accrued dividends on Series A Preferred Stock shall
not have been paid or declared and a sum sufficient for the payment thereof
set aside, in an amount equivalent to six (6) quarterly dividends on all
share of Series A Preferred Stock at the time outstanding, then, and in each
such event:
(i) the holders of Series A Preferred Stock and each other
series of preferred stock now or hereafter issued which shall be
accorded such class voting right by the Board of Directors and which
shall have the right to elect two (2) directors as the result of a
prior or subsequent default in payment of dividends on such series
(each such other series being hereinafter called "Other Series of
Preferred Stock"), voting separately as a class without regard to
series, shall be entitled to elect two (2) directors, in addition to
the directors to be elected by the holders of all shares of this
Corporation entitled to vote for the election of directors, and
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<PAGE>
(ii) the holders of all shares (including the Series A
Preferred Stock) otherwise entitled to vote for directors, voting
separately as a class, shall be entitled to elect the remaining
members of the Board of Directors. Such special voting right of the
holders of Series A Preferred Stock may be exercised until all
dividends in default on the Series A Preferred Stock shall have been
paid in full or declared and funds sufficient therefor set aside, and
when so paid or provided for, such special voting right of the
holders of Series A Preferred Stock shall cease, but subject always
to the same provisions for the vesting of such special voting rights
in the case of any such future dividend default or defaults. At any
time after such special voting rights shall have so vested in the
holders of Series A Preferred Stock, the Secretary of the Corporation
may, and upon the written request of the holders of record of ten
percent (10%) or more in number of shares of Series A Preferred Stock
and each Other Series of Preferred Stock then outstanding addressed
to him at the principal executive office of the Corporation shall,
call a special meeting of the holders of Preferred Stock so entitled
to vote, for the election of the directors to be elected by them as
herein provided, to be held within fifty (50) days after such call
and at the place and upon the notice provided by law and in the
bylaws for the holding of meetings of stockholders; provided,
however, that the Secretary shall not be required to call such
special meeting in the case of any such request received less than
ninety (90) days before the date fixed for any annual meeting of
stockholders, and if in such case such special meeting is not called,
the holders of Preferred Stock so entitled to vote shall be entitled
to exercise the special voting rights provided in this paragraph at
such annual meeting. If any such special meeting required to be
called as above provided shall not be called by the Secretary within
thirty (30) days after receipt of any such request, then the holders
of record of ten percent (10%) or more in number of shares of Series
A Preferred Stock and each Other Series of Preferred Stock then
outstanding may designate in writing one of their number to call such
meeting, and the person so designed may, at the expense of the
Corporation, call such meeting to be held at the place and upon the
notice above provided, and for that purpose shall have access to the
stock books of the Corporation. No such special meeting and no
adjournment thereof shall be held on a date later than sixty (60)
days before the annual meeting of the stockholders or a special
meeting held in place thereof next succeeding the time when the
holders of Series A Preferred Stock become entitled to elect
directors as above provided. If, at any meeting so called or at any
annual meeting held while the holders of shares of Series A Preferred
Stock have the special voting rights provided for in this paragraph,
the holders of not less than forty percent (40%) of the then
outstanding shares of Series A Preferred Stock and each Other Series
of Preferred Stock are present in person or by proxy, which
percentage shall be sufficient to constitute a quorum for the
election of additional directors as herein provided, the then
authorized number of directors of the corporation shall be increased
by two (2), as of the time of such special meeting or the time of the
first such annual meeting held while such holders have said special
voting rights and such quorum is present, and the holders of the
Series A Preferred Stock and each Other Series of Preferred Stock,
voting as a class, shall be entitled to elect the additional
directors so provided for. If the directors of the Corporation are
then divided into classes under provisions of the Restated
Certificate of Incorporation or the bylaws,
- 4 -
<PAGE>
the two (2) additional directors shall be members of those respective
classes of directors in which a vacancy is created as a result of
such increase in the authorized number of directors. Upon the
election at such meeting by the holders of the shares of Series A
Preferred Stock and each Other Series of Preferred Stock, voting as a
class, of the two (2) directors they are entitled so to elect, the
persons so elected, together with such persons as may be or may have
been elected as directors by the holders of all shares (including
Series A Preferred Stock) otherwise entitled to vote for directors,
shall constitute the duly elected directors of this Corporation. The
additional directors so elected by holders of Series A Preferred
Stock and each Other Series of Preferred Stock, voting as a class,
shall serve until the next annual meeting or until their respective
successors shall be elected and qualified, or if any such director is
a member of a class of directors under provisions dividing the
directors into classes as aforesaid, each such director shall serve
until the annual meeting at which the term of office of his class
shall expire or until his successor shall be elected and shall
qualify, and at each subsequent meeting of stockholders at which the
directorship of any director elected by the vote of holders of Series
A Preferred Stock and each Other Series of Preferred Stock under the
special voting rights set forth in this paragraph is up for election,
said special voting rights shall apply in the re-election of such
director or in the election of his successor provided, however, that
whenever the holders of Series A Preferred Stock and each Other
Series of Preferred Stock shall be divested of the special rights to
elect two (2) directors as above provided, the terms of office of all
persons elected as directors by the holders of Series A Preferred
Stock and each Other Series of Preferred Stock, voting as a class, or
elected to fill any vacancies resulting from the death, resignation,
or removal of directors so elected by the holders of Series A
Preferred Stock and each Other Series of Preferred Stock, shall
forthwith terminate and the authorized number of directors shall be
reduced accordingly. If, at any time after a special meeting of
stockholders or an annual meeting of stockholders at which the
holders of Series A Preferred Stock and each Other Series of
Preferred Stock have elected additional directors as provided above,
and while the holders of Series A Preferred Stock and each Other
Series of Preferred Stock shall be entitled to elect two (2)
directors, the number of directors who have been elected by the
holders of Series A Preferred Stock and each Other Series of
Preferred Stock (or who by reason of one or more resignations, deaths
or removals have succeeded any directors so elected) shall be reason
of resignation, death or removals be less than two (2) but at least
one (1), the vacancy in the directors elected by the holders of the
Series A Preferred Stock and each Other Series of Preferred Stock may
be filled by the remaining director elected by such holders, and
failing such election within thirty (30) days after such vacancy
arises, or if there shall not be incumbent at least one (1) director
elected by such holders, the Secretary of the Corporation may, and
upon the written request of the holders of record of ten percent
(10%) or more in number of shares of Series A Preferred Stock and
each Other Series of Preferred Stock then outstanding addressed to
him at the principal office of the Corporation shall, call a special
meeting of the holders of Preferred Stock so entitled to vote, for an
election to fill such vacancy or vacancies, to be held within fifty
(50) days after such call and at the place and upon the notice
provided by law and in the bylaws for the holding of meetings of
shareholders;
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<PAGE>
provided, however, that the Secretary shall not be required to call
such special meeting in the case of any such request received less
than ninety (90) days before the date fixed for any annual meeting of
stockholders, and if in such case such special meeting is not called,
the holders of Preferred Stock so entitled to vote shall be entitled
to fill such vacancy or vacancies at such annual meeting. If any such
special meeting required to be called as above provided shall not be
called by the Secretary within thirty (30) days after receipt of any
such request, then the holders of record of ten percent (10%) or more
in number of shares of Series A Preferred Stock and each Other Series
of Preferred Stock then outstanding may designate in writing one of
their number to call such meeting, and the person so designated may,
at the expense of the Corporation, call such meeting to be held at
the place and upon the notice above provided, and for that purpose
shall have access to the stock books of the Corporation and no such
special meeting and no adjournment thereof shall be held on a date
later than sixty (60) days before the annual meeting of the
stockholders or a special meeting held in place thereof next
succeeding the time when the holders of Series A Preferred Stock and
each Other Series of Preferred Stock became entitled to elect
directors as above provided.
(D) Nothing herein shall prevent the directors or stockholders from
taking any action to increase the number of authorized shares of Series A
Preferred Stock, increasing the number of authorized shares of Preferred
Stock of the same class as the Series A Preferred Stock or the number of
authorized shares of Common Stock, or changing the par value of the Common
Stock or Preferred Stock, or issuing options, warrants, or rights to any
class of stock of this Corporation as authorized by the Certificate of
Incorporation now, or as it may hereafter be amended.
(E) Except as set forth herein, holders of Series A Preferred Stock
shall have no special voting rights and their consent shall not be required
(except to the extent they are entitled to vote as set forth in the Restated
Certificate of Incorporation or herein or by law) for taking any corporate
action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions
on any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends, or make any other
distributions, on or make any other distributions on any shares of
stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred
Stock, except
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<PAGE>
dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such parity
stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on
a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares
upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in
good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued
shares of preferred stock, without designation as to series, and may be
reissued as part of a new series of preferred stock to be created by
resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein, in the Restated
Certificate of Incorporation, in any other certificate of designation
creating a series of preferred stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any voluntary
or involuntary liquidation, dissolution or winding up of the Corporation, no
distribution shall be made
(A) to the holders of shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock unless, prior thereto, the holders of
shares of Series A Preferred Stock shall have received the higher of:
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<PAGE>
(i) $10,000 per share ($100 per one one-hundredth of a
share), plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the
date of such payment, or
(ii) an aggregate amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to
holders of Common Stock;
nor shall any distribution be made
(B) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the
Series A Preferred Stock and all other such parity stock in
proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up.
In the event the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the aggregate amount to which holders of
shares of Series A Preferred Stock were entitled immediately prior to such
event under the proviso in clause (A) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. Consolidation, Merger. etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or any other property, or otherwise changed,
then in any such case each share of Series A Preferred Stock shall at the
same time be similarly exchanged or changed into an amount per share (subject
to the provision for adjustment hereinafter set forth) equal to 100 times the
aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the Corporation shall at
any time declare or pay any dividend on Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount set forth
in the preceding sentence with respect to the exchange or change of shares of
Series A Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
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<PAGE>
Section 8. No Redemption. The shares of Series A Preferred Stock
shall not be redeemable.
Section 9. Rank. Unless otherwise provided in the Restated
Certificate of Incorporation of the Corporation or a Certificate of
Designation relating to a subsequent series of preferred stock of the
Corporation, the Series A Preferred Stock shall rank junior to all other
series of the Corporation's preferred stock as to the payment of dividends
and the distribution of assets on liquidation, dissolution or winding up, and
senior to the Common Stock of this Corporation.
Section 10. Amendment. The Restated Certificate of Incorporation of
the Corporation, as amended, shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least two-thirds of the outstanding
shares of Series A Preferred Stock, voting together as a single series.
Section 11. Fractional Shares. Series A Preferred Stock may be issued
in fractions of a share (in one one-hundredths (1/100) of a share and
integral multiples thereof) which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all other
rights of holders of Series A Preferred Stock.
IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation by its Senior Vice President and attested by its
Secretary this 5th day of May, 1997.
-------------------------------------
Senior Vice President
ATTEST:
-------------------------------------
Secretary
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<PAGE>
Exhibit B
[Form of Right Certificate]
Certificate No. R-_____ _______ Rights
NOT EXERCISABLE AFTER MAY 6, 2007, OR EARLIER IF REDEEMED BY THE COMPANY. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN ADVERSE
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY
THIS RIGHT CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
BECAME AN ACQUIRING PERSON OR ADVERSE PERSON OR AN AFFILIATE OR AN ASSOCIATE
OF AN ACQUIRING PERSON OR ADVERSE PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY WILL BECOME VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION
7(e) OF THE RIGHTS AGREEMENT.](1)
RIGHT CERTIFICATE
NATIONAL TECHTEAM, INC.
This certifies that ________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the Rights Agreement, as of May 6, 1997, (the "Rights Agreement"), between
National TechTeam, Inc., a Delaware corporation (the "Company"), and U.S.
Stock Transfer Corporation, (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as defined in the Rights
Agreement) and prior to 5:00 P.M., Detroit time, on May 6, 2007 (the "Final
Expiration Date") at the principal office of the Rights Agent designated for
such purpose, or its successors as Rights Agent, one one-hundredth of a fully
paid, nonassessable share of the Series A Junior Participating Preferred
Stock, with par value of $.01 (the "Preferred Stock"), of the Company, at a
purchase price of $80 per one one-hundredth of a share of Preferred Stock
(the "Purchase Price") upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase and related Certificate
duly executed.
The Purchase Price shall be paid, at the election of the holder, in
cash or shares of Common Stock of the Company having an equivalent value. The
number of Rights evidenced by this Right Certificate (including the number of
one one-hundredths of a share which may be purchased upon exercise of each
Right) set forth above and the Purchase Price per share set forth
- ---------
(1) The portion of the legend in brackets shall be inserted only if applicable.
<PAGE>
above, are the number and Purchase Price as of May 7, 1997, based on the
shares of Preferred Stock of the Company as constituted on such date.
Upon the occurrence of a Section 11(a)(ii) Event (as set forth in the
Rights Agreement), if the Rights evidenced by this Right Certificate are
beneficially owned by (i) an Acquiring person or Adverse Person or an
Affiliate or Associate of any such Acquiring Person or Adverse Person (as
such terms are defined in the Rights Agreement), (ii) a transferee of any
such Acquiring Person, Adverse Person, Associate or Affiliate, or (iii) under
certain circumstances specified in the Rights Agreement, a transferee of a
person who, after such transfer, became an Acquiring Person or Adverse Person
or an Affiliate or Associate of an Acquiring Person or Adverse Person, such
Rights shall become null and void and no holder thereof shall have any right
with respect to such Rights from and after the occurrence of such Section
11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the
number of one one-hundredths of a share of Preferred Stock or other
securities which may be purchased upon the exercise of each of the Rights
evidenced by this Right Certificate are subject to modification and
adjustment upon the occurrence of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Right Certificates,
which limitations of Rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in
the Rights Agreement. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available upon
written request to the Company.
Upon surrender at the principal office of the Rights Agent, this
Right Certificate, with or without other Right Certificates, may be exchanged
for another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
one one-hundredths of a share of Preferred 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, the Rights
evidenced by this Right Certificate may, but are not required to, be redeemed
by the Company at its option at a redemption price of $.01 per Right at any
time prior to the earliest of the close of business on (i) the tenth day
following the Stock Acquisition Date (as defined in the Rights Agreement), or
(ii) 5:00 P.M., Detroit time, on the Final Expiration Date. Notwithstanding
the foregoing, the Board of Directors may not redeem any Rights following a
determination that any person is an Adverse Person. Under certain
circumstances set forth in the Rights Agreement, the decision to
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<PAGE>
redeem shall require the concurrence of a majority of the Continuing
Directors (as such term is defined in the Rights Agreement). After the
expiration of the redemption period, the Company's right of redemption may be
reinstated if an Acquiring Person reduces his beneficial ownership to 10% or
less of the outstanding shares of Common Stock in a transaction or series of
transactions not involving the Company.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which
are integral multiples of one one-hundredth of a share of Preferred Stock,
which may, at the election of the Company, be evidenced by depositary
receipts); but in lieu thereof, a cash payment will be made, as provided in
the Rights Agreement.
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 upon the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such,
any of the rights of a stockholder of the Company or any right to vote for
the election of directors 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 the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Rights evidenced by this Right Certificate
have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it has been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper of officers of the
Company and its corporate seal. Dated as of this _____ day of
_________________________________.
Attest: NATIONAL TECHTEAM, INC.
By:______________________________ By:__________________________________
Secretary Title:_______________________________
Countersigned:
U.S. STOCK TRANSFER CORPORATION
By:______________________________
Authorized signature
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<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 Right Certificate on
the books of the Company named within, with full power of substitution.
Dated: ____________________ Signature__________________________________
Signature Guaranteed:
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
Adverse Person or an Affiliate or Associate of any such Acquiring Person or
Adverse Person (as such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it t ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or
Adverse Person or an Affiliate or Associate of any Acquiring Person or
Adverse Person.
Dated:_____________________ Signature__________________________________
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment 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.
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<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights represented by the Right
Certificate.)
To NATIONAL TECHTEAM, INC.:
The undersigned hereby irrevocably elects to exercise
_____________________ Rights represented by this Right Certificate to
purchase the one one-hundredths of a share of Preferred Stock (or such other
securities of the Company or of any other person which may be issuable upon
the exercise of such Rights) and requests that certificates for such shares
be issued in the name of:
Please insert social security or other identifying number
______________________________________________________________________________
(Please print name and address)
Should the number of Rights being exercised hereunder not be all the Rights
evidenced by this Right Certificate, a new Right Certificate for the balance
remaining of such Rights shall be registered in the name of and delivered to:
Please insert social security or other identifying number ____________________
_______________________________________________________________________________
(Please print name and address)
Dated:_____________________ Signature:__________________________________
(Signature must conform in all respects
to the name of the holder as specified on
the face of this Right Certificate)
Signature Guaranteed:
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<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Adverse Person or an Affiliate or Associate of any such
Acquiring Person or Adverse Person (as such terms are defined pursuant to the
Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Adverse Person or an Affiliate or Associate of any Acquiring Person or
Adverse Person.
Dated:_____________________ ___________________________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment 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.
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<PAGE>
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On April 29, 1997, the Board of Directors of National TechTeam, Inc.
(the Company) declared a dividend distribution of one Right for each
outstanding share of the Company's Common Stock, $.01 par value per share
(the "Common Stock"), to stockholders of record at the close of business on
May 7, 1997. Each Right entitles the registered holder to purchase from the
Company one one-hundredth of a share of Series A Junior Participating
Preferred Stock, par value $.01 per share (the "Preferred Stock"), at a
Purchase Price of $80 per one one-hundredth of a share of Preferred Stock
("Purchase Price"), subject to adjustment. The Purchase Price may be paid, at
the option of the holder, in cash or shares of Common Stock having a value at
the time of exercise equal to the Purchase Price. The description and terms
of the Rights are set forth in a Rights Agreement, dated as of May 6, 1997
(the "Rights Agreement"), between the Company and U.S. Stock Transfer
Corporation, as Rights Agent.
Initially, the Rights will be represented by the certificates
evidencing the Common Stock and no separate Right Certificates will be
distributed. Upon the earlier of the following dates (the "Distribution
Date"), the Rights will separate from the Common Stock: (i) 10 days following
a public announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding shares of
Common Stock (the "Stock Acquisition Dates); (ii) 10 days following the date
that a tender or exchange offer by any Person is first published or sent or
given within the meaning of Rule 14d-4(a) promulgated under the Exchange Act
or any successor rule, if upon consummation thereof, such Person would be the
Beneficial Owner of 15% or more of the outstanding shares of Common Stock; or
(iii) promptly after a majority of the Continuing Directors (as defined
below) of the Company shall declare any person to be an "Adverse Person" upon
a determination that such person, together with its affiliates and
associates, has become the beneficial owner of an amount of Common Stock
which a majority of the Continuing Directors determines to be substantial
(but in no event less than 15% of the shares of Common Stock then
outstanding), and a determination by a majority of the Continuing Directors
that (a) such beneficial ownership by such person is intended to cause the
Company to repurchase the Common Stock beneficially owned by such person or
to cause pressure on the Company to take action or enter into a transaction
or series of transactions intended to provide such person with short-term
financial gain under circumstances where a majority of the Continuing
Directors determines that the best long-term interests of the Company and its
stockholders would not be served by taking such action or entering into such
transactions or series of transactions at that time or (b) such beneficial
ownership is causing or reasonably likely to cause a material adverse impact
(including impairment of relationships with customers or impairment of the
Company's ability to maintain its competitive position) on the business or
prospects of the Company.
Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred with, and only with, such
Common Stock certificates, (ii) new Common Stock certificates issued after
May 7, 1997 will contain a notation incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any certificates for
<PAGE>
Common Stock outstanding will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and will
expire at 5:00 P.M. Detroit time, on May 6, 2007 (the "Final Expiration
Date"), unless earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Right
Certificates will be mailed to the holders of record of the Common Stock as
of the close of business on the Distribution Date and, thereafter, the
separate Right Certificates alone will represent the Rights. Only shares of
Common Stock issued prior to the Distribution Date will be issued with
Rights.
In the event that the Board of Directors determines that a person is
an Adverse Person or, at any time following the Distribution Date, (i) the
Company is the surviving corporation in a merger or other business
combination with an Acquiring Person and its Common Stock is not changed or
exchanged, (ii) a Person becomes the beneficial owner of more than 15% of the
then outstanding shares of Common Stock (except pursuant to an offer for all
outstanding shares of Common Stock which a majority of the Continuing
Directors determines to be fair to and otherwise in the best interests of the
Company and its stockholders), (iii) an Acquiring Person engages in one or
more "self-dealings transactions as set forth in the Rights Agreement, or
(iv) during such time as there is an Acquiring Person, an event occurs which
results in such Acquiring Person's ownership interest being increased by more
than 1% (e.g., a reverse stock split); each holder of a Right promptly
thereafter (but in the case of (ii) above, 5 days thereafter) will have the
right to receive, upon exercise, Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to
two times the exercise price of the Right. Notwithstanding any of the
foregoing, following the occurrence of any of the events set forth in this
paragraph, all Rights that are, or (under certain circumstances specified in
the Rights Agreement) were, beneficially owned by any Acquiring Person or an
Adverse Person will be null and void. However, Rights are not exercisable
following the occurrence of any of the events set forth above until such time
as the Rights are no longer redeemable or exchangeable by the Company as set
forth below.
For example, at an exercise price of $80 per Right, each Right not
owned by an Acquiring Person (or by certain related parties) following an
event set forth in the preceding paragraph would entitle its holder to
purchase $160 worth of Common Stock (or other consideration, as noted above)
for $80. Assuming that the Common Stock had a per share value of $20 at such
time, the holder of each valid Right would be entitled to purchase eight
shares of Common Stock for $80.
Unless the Rights are earlier redeemed or exchanged, in the event
that, at any time following the Stock Acquisition Date, (i) the Company is
acquired in a merger or other business combination transaction in which the
Company is not the surviving corporation (other than a merger which follows
an offer described in the second preceding paragraph and is at the same
price), or (ii) 50% or more of the Company's assets or earning power is sold
or transferred;
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<PAGE>
each holder of a Right (except rights which previously have been voided as
set forth above) shall thereafter have the right to receive, upon exercise of
such holder's Right, common stock of the acquiring company having a value
equal to two times the exercise price of the Right.
The events set forth in the third preceding paragraph, and the events
set forth in subsections (i) and (ii) of the first preceding paragraph shall
collectively be termed "Triggering Events" and each a "Triggering Event."
The Purchase Price payable, and the number of one one-hundredths of a
share 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) if holders of
the Preferred Stock are granted certain rights or warrants to subscribe for
Preferred Stock or convertible securities at less than the current market
price of the Preferred Stock, or (iii) upon the distribution to holders of
the Preferred Stock of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants (other than
those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price.
At any time on or prior to the close of business on the tenth day
following the Stock Acquisition Date, the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right, payable in cash or
stock (the "Redemption Price"). The Company may not redeem the Rights if a
majority of the Continuing Directors has previously determined a person to be
an Adverse Person. After the redemption period has expired, the Company's
right of redemption may be reinstated if an Acquiring Person reduces his
beneficial ownership to 10% or less of the outstanding shares of Common Stock
in a transaction or series of transactions not involving the Company.
Immediately upon the action of the Board of Directors ordering redemption of
the Rights with, where required, the concurrence of a majority of the
Continuing Directors, the Rights will terminate and the only right of the
holders of Rights will be to receive the $.01 Redemption Price.
In addition, at any time after the Stock Acquisition Date - but
before the Acquiring Person has acquired a 50% stake - the Board may, at its
discretion, exchange each Right (except those owned by the Acquiring Person)
for one share of TechTeam Common Stock.
The shares of Preferred Stock purchasable upon exercise of the Rights
will have a minimum preferential quarterly dividend of $1.00 per share, but
will be entitled to receive, in the aggregate, a dividend of 100 times the
dividend declared per share of Common Stock. In the event of liquidation, the
holders of the shares of Preferred Stock will be entitled to receive a
minimum liquidation payment of $100 per share, but will be entitled to
receive an aggregate liquidation payment equal to 100 times the payment made
per share of Common Stock. Each share of Preferred Stock will have one
hundred votes, voting together with the shares of
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<PAGE>
Common Stock. In the event of any merger, consolidation or other transaction
in which shares of Common Stock are exchanged, each share of Preferred Stock
will be entitled to receive 100 times the amount and type of consideration
received per share of Common Stock. The rights of the shares of Preferred
Stock as to dividends and liquidation, and in the event of mergers and
consolidation, are protected by customary anti-dilution provisions.
The term "Continuing Directors" means any member of the Board of
Directors of the Company who was a member of the Board prior to the date of
the Rights Agreement, and any person who is subsequently elected to the Board
if such person is recommended or approved by a majority of the Continuing
Directors, but shall not include an Acquiring Person nor an Adverse Person,
nor an affiliate or associate of an Acquiring Person or an Adverse Person,
nor any representative of the foregoing entities.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, other than rights resulting from such
holder's ownership of shares of Common Stock, including, without limitation,
the right to vote or to receive dividends. While the distribution of the
Rights will not be taxable to stockholders or to the Company, stockholders
may, depending upon the circumstances, recognize taxable income in the event
that the Rights become exercisable for Common Stock (or other consideration)
of the Company or for common stock of the acquiring company as set forth
above.
In general, other than those provisions relating to the principal
economic terms of the Rights, the provisions of the Rights Agreement may be
amended by the Board of Directors of the Company prior to the Distribution
Date. After the Distribution Date, the provisions of the Rights Agreement may
be amended by the Board (with the concurrence of a majority of the Continuing
Directors) in order to cure any ambiguity, to make changes which do not
adversely affect the interests of holders of Rights (excluding the interests
of any Acquiring Person), or to shorten or lengthen any time period under the
Rights Agreement; provided, however, that no amendment to adjust the time
period governing redemption shall be made at such time as the Rights are not
redeemable.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
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