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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): FEBRUARY 28, 2000
SAFEGUARD SCIENTIFICS, INC.
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(Exact name of registrant specified in Charter)
PENNSYLVANIA 001-5620 23-1609753
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(State or other (Commission (IRS Employee
jurisdiction of File Number) Identification No.)
incorporation)
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435 DEVON PARK DRIVE
BUILDING 800 19087
WAYNE, PENNSYLVANIA
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(Address of principal executive offices) Zip Code
REGISTRANT'S TELEPHONE, INCLUDING AREA CODE: (610) 293-0600
Not Applicable
(Former name and former address, if changed since last report)
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Item 5. Other Events.
(a) On February 28, 2000, the Board of Directors of Safeguard
Scientifics, Inc. (the "Company") approved a three-for-one split (the "Stock
Split") of the outstanding shares of Common Stock of the Company, effected in
the form of a dividend of two shares of Common Stock of the Company for each
share of Common Stock of the Company outstanding at the close of business on
March 13, 2000.
(b) On February 28, 2000 the Board of Directors of the Company
also declared a dividend distribution of one right (a "Right") for each
outstanding share of Common Stock, $.10 par value (each, a "Common Share"), of
the Company to stockholders of record at the close of business on March 24,
2000, after completion of the Stock Split. All amounts in this Item 5(b) assume
the completion of the Stock Split. Each Right entitles the registered holder to
purchase from the Company a unit consisting of one one-thousandth of a share (a
"Unit") of the Series A Junior Participating Preferred Shares, par value $10.00
per share, of the Company (the "Preferred Shares"), or a combination of
securities and assets of equivalent value, at a Purchase Price of $300 per Unit,
subject to adjustment. The Rights are being issued in accordance with the Rights
Agreement (the "Rights Agreement") dated as of February 28, 2000 between the
Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent. The
description and terms of the Rights are set forth in the Rights Agreement. The
record date for the dividend distribution of Rights is subject to change
depending on the listing process of the New York Stock Exchange.
Initially, ownership of the Rights will be evidenced by the
Common Share certificates representing shares then outstanding, and no separate
Rights Certificates will be distributed. The Rights will separate from the
Common Shares and a Distribution Date will occur upon the earlier of (i) ten
(10) Business Days following a determination by the Board of Directors 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 Common Shares (the "Stock Acquisition Date"), or (ii) ten
(10) Business Days following the commencement of a tender offer or exchange
offer that would result in a person or group beneficially owning 15% or more of
the outstanding Common Shares. Until the Distribution Date, (i) the Rights will
be evidenced by the Common Share certificates, (ii) new Common Share
certificates issued after March 24, 2000 will contain a notation incorporating
the Rights Agreement by reference and (iii) the surrender for transfer of any
certificates for Common Shares outstanding will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate.
The Rights are not exercisable until the Distribution Date and
will expire at the close of business on February 28, 2010, unless earlier
redeemed by the Company as described below or unless a transaction under Section
13(d) of the Rights Agreement has occurred.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Shares as of the
close of business on the Distribution
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Date and thereafter, the separate Rights Certificates alone will represent the
Rights. Except as otherwise determined by the Board of Directors, and except in
connection with the exercise of employee stock options or stock appreciation
rights or under any other benefit plan for employees or directors or in
connection with the exercise of warrants or conversion of convertible
securities, only Common Shares issued after March 24, 2000 and prior to the
Distribution Date will be issued with Rights.
Except in the circumstances described below, after the
Distribution Date each Right will be exercisable for one one-thousandth of a
Preferred Share (a "Preferred Share Fraction"). Each Preferred Share Fraction
carries voting and dividend rights that are intended to produce the equivalent
of one Common Share. The voting and dividend rights of the Preferred Shares are
subject to adjustment in the event of dividends, subdivisions and combinations
with respect to the Common Shares of the Company. In lieu of issuing
certificates for Preferred Share Fractions which are less than an integral
multiple of one Preferred Share (i.e., 1000 Preferred Share Fractions), the
Company may pay cash representing the current market value of the Preferred
Share Fractions.
In the event that at any time following the Stock Acquisition
Date, (i) the Company is the surviving corporation in a merger with an Acquiring
Person and its Common Shares remain outstanding, (ii) a Person becomes the
beneficial owner of more than 15% of the then outstanding Common Shares other
than pursuant to a tender offer that provides fair value to all shareholders,
(iii) an Acquiring Person engages in one or more "self-dealing" transactions as
set forth in the Rights Agreement, or (iv) during such time as there is an
Acquiring Person an event occurs that results in such Acquiring Person's
ownership interest being increased by more than 1% (e.g., a reverse stock
split), each holder of a Right will thereafter have the right to receive, upon
exercise, Common Shares (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. In lieu of requiring payment of the Purchase Price upon exercise
of the Rights following any such event, the Company may permit the holders
simply to surrender the Rights, in which event they will be entitled to receive
Common Shares (and other property, as the case may be) with a value of 50% of
what could be purchased by payment of the full Purchase Price. Notwithstanding
any of the foregoing, following the occurrence of any of the events set forth in
clauses (i), (ii), (iii) or (iv) of this paragraph, all Rights that are, or
(under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person who was involved in the transaction
giving rise to any such event 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 by the Company as set forth
below.
For example, at an exercise price of $300 per Right, each
Right not otherwise voided following an event set forth in the preceding
paragraph would entitle its holder to purchase $600 worth of Common Shares (or
other consideration, as noted above) for $300. Alternatively, the Company could
permit the holder to surrender each Right in exchange for Common Shares having a
value of $300 without the payment of any consideration other than the surrender
of the Right.
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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 that is described in, or that follows a tender offer or exchange offer
described in, the second preceding paragraph), or (ii) 50% or more of the
Company's assets or earning power is sold or transferred, each holder of a Right
(except Rights that previously have been voided as set forth above) shall
thereafter have the right to receive, upon exercise, common shares of the
acquiring company having a value equal to two times the exercise price of the
Right. Again, provision is made to permit surrender of the Rights in exchange
for one-half of the value otherwise purchasable. The events set forth in this
paragraph and in the second preceding paragraph are referred to as the
Triggering Events.
The Purchase Price payable, and the number of Units of
Preferred Shares 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 Shares, (ii) if holders of the Preferred
Shares are granted certain rights or warrants to subscribe for Preferred Shares
or convertible securities at less than the current market price of the Preferred
Shares, or (iii) upon the distribution to holders of the Preferred Shares of
evidences of indebtedness or assets (excluding regular quarterly 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. No fractional Units will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred
Shares on the last trading date prior to the date of the exercise.
At any time until ten (10) days following the Stock
Acquisition Date, the Company may redeem the Rights in whole, but not in part,
at a price of $ .001 per Right. That ten (10) day redemption period may be
extended by the Board of Directors so long as the Rights are still redeemable.
Immediately upon the action of the Board of Directors ordering redemption of the
Rights, the Rights will terminate and the only right of the holders of Rights
will be to receive the $ .001 redemption price.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a shareholder of the Company, including, without limitation,
the right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to shareholders or to the Company, shareholders may,
depending upon the circumstances, recognize taxable income in the event that the
Rights become exercisable for Preferred Shares (or other consideration) of the
Company or for common shares of the acquiring company as set forth above.
Other than those provisions relating to the principal economic
terms of the Rights, any of 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 in order to cure any ambiguity, to make changes that 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;
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provided, however, that no amendment to adjust the time period governing
redemption shall be made at such time as the Rights are not redeemable.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, the form of
which is filed as Exhibit 4 hereto.
(c) On February 28, 2000, the Company and Textron Inc. entered
into a Transaction Agreement, dated February 28, 2000, providing for the
purchase by Textron Inc. of 727,273 Common Shares (or 2,181,819 Common Shares
after giving effect to the Stock Split) for an aggregate purchase price of $100
million. The Transaction Agreement is filed as Exhibit 10 hereto.
(d) On February 10, 2000, the Board of Directors of the
Company amended and restated the Bylaws of the Company. The amended and restated
Bylaws are filed as Exhibit 3 hereto.
(e) On February 24, the Company issued a press release
summarizing its financial results for the fourth quarter of 1999. The press
release is filed as Exhibit 99 hereto.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Exhibit
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<S> <C>
3 Amended and Restated Bylaws of Safeguard
Scientifics, Inc.
4 Form of Rights Agreement, dated as of March 1,
2000, between Safeguard Scientifics, Inc. and
ChaseMellon Shareholder Services LLC, as Rights
Agent
10 Transaction Agreement, dated February 28,
2000, between Safeguard Scientifics, Inc. and
Textron Inc.
99-1 Press Release dated February 24, 2000.
</TABLE>
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Signature
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
SAFEGUARD SCIENTIFICS, INC.
By: /s/ JAMES A. OUNSWORTH
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Name: James A. Ounsworth
Title: Senior Vice President
Dated: February 28, 2000
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit
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<S> <C>
3 Amended and Restated Bylaws of Safeguard
Scientifics, Inc.
4 Form of Shareholder Rights Agreement, dated as of
February 28, 2000, between Safeguard Scientifics, Inc.
and ChaseMellon Shareholder Services LLC, as Rights
Agent
10 Transaction Agreement, dated February 28,
2000, between Safeguard Scientifics, Inc. and
Textron Inc.
99-1 Press Release dated February 24, 2000.
</TABLE>
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EXHIBIT 3
SAFEGUARD SCIENTIFICS, INC.
AMENDED AND RESTATED BYLAWS
ARTICLE I
SHAREHOLDERS
SECTION 1. PLACE OF HOLDING MEETINGS. All meetings of the shareholders
shall be held at the registered office of the corporation in Philadelphia, in
the County of Philadelphia, in the Commonwealth of Pennsylvania, or such other
location within or without the Commonwealth of Pennsylvania as the Board of
Directors may designate.
SECTION 2. ANNUAL MEETING OF SHAREHOLDERS. The Board of Directors may
fix the date and time of the annual meeting of the shareholders, but if no such
date and time is fixed by the Board the meeting for any calendar year shall be
held on the fourth Thursday of April in such year, if not a legal holiday under
the laws of Pennsylvania, and, if a legal holiday, then on the next succeeding
business day, not a Saturday, at 2:00 o'clock P.M., and at said meeting the
shareholders then entitled to vote shall elect directors and shall transact such
other business as may properly be brought before the meeting.
SECTION 3. VOTING. Each shareholder entitled to vote in accordance with
the terms of the Articles of Incorporation and in accordance with the provisions
of these bylaws shall be entitled to one vote, in person or by proxy, for each
share of stock entitled to vote held by such shareholder: provided, however,
that in all elections for directors, every shareholder entitled to vote shall
have the right, in person or by proxy, to multiply the number of votes to which
he may be entitled by the number of directors to be elected, and he may cast the
whole number of such votes for one candidate or he may distribute them among any
two or more candidates, and the candidates receiving the highest number of votes
up to the number of directors to be elected shall be elected.
The vote for directors or upon any question which may come before a
shareholders' meeting need not be by ballot except upon demand made by a
shareholder at the election before the meeting begins.
All elections shall be had and all questions decided by plurality vote,
except as otherwise provided by the Articles of Incorporation and/or by the laws
of the Commonwealth of Pennsylvania.
The officer having charge of the transfer books, shall make, at least
five days before such meeting of the shareholders, a complete list of the
shareholders entitled to vote at the meeting, arrange in alphabetical order,
with the address of and the number of shares held by each, which list shall be
kept on file at the registered office and shall be subject to the inspection of
any shareholder at any time during the whole time of the meeting.
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SECTION 4. QUORUM. Any number of shareholders together holding at least
a majority of the stock issued and outstanding and entitled to vote thereat, who
shall be present in person or represented by proxy at any meeting duly called,
shall constitute a quorum for the transaction of business.
SECTION 5. ADJOURNMENT OF MEETINGS. If less than a quorum shall be in
attendance at any time for which the meeting shall have been called, the meeting
may, after the lapse of at least half an hour, be adjourned from day to day or
for such longer periods, not exceeding fifteen days each, as the holders of a
majority of the shares present in person or by proxy shall direct, provided,
however, that any meeting at which directors are to be elected shall be
adjourned only as herein provided until such directors have been elected and
those who attend the second of such adjourned meetings, although less than a
quorum, shall nevertheless constitute a quorum for the purpose of electing
directors.
SECTION 6. SPECIAL MEETINGS. HOW CALLED. Special meetings of the
shareholders may be called by the Chairman of the Board, President or Secretary,
and shall be called upon a request in writing therefor, stating the purpose or
purposes thereof, delivered to the Secretary, signed by a majority of the
directors.
SECTION 7. NOTICE OF SHAREHOLDERS' MEETING. Written or printed notice,
stating the place and time of every meeting, and the general nature of the
business to be considered, shall be given by or at the direction of the person
authorized to call the meeting, to each shareholder entitled to vote thereat at
his last known post office address, at least ten days before the meeting in the
case of an annual meeting, and ten days before the meeting in the case of a
special meeting, unless otherwise provided by law.
No business other than that stated in the notice shall be transacted at
any meeting without unanimous consent of all shareholders entitled to vote
thereat.
SECTION 8. FINANCIAL REPORT TO SHAREHOLDERS. It shall not be necessary
for the directors to cause to be sent to the shareholders the financial report
set forth in section three hundred eighteen (318) of the Business Corporation
Law.
SECTION 9. DETERMINATION OF SHAREHOLDERS OF RECORD. The Board of
Directors may fix a time, which time may be more or less than fifty days prior
to the date of any meeting of shareholders, or the date fixed for the payment of
any dividend or distribution, or the date fixed for the allotment of rights, or
the date when any change or conversion or exchange of shares will be made or go
into effect, as the record date for the determination of shareholders entitled
to notice of, or to vote at, any such meeting, or entitled to receive payment of
any such dividend or distribution, or to receive any such allotment of rights,
or to exercise the rights in respect to any such change, conversion or exchange
of shares.
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ARTICLE II
DIRECTORS
SECTION 1. NUMBER, TERM, QUORUM. The number of directors shall be not
less than five nor more than fifteen, as shall be determined from time to time
by the Board of Directors. The directors shall be elected by plurality vote at
the annual meeting of the shareholders and each director shall be elected for a
term of at least one year and except in the event of his resignation shall serve
until his successor shall be elected and shall qualify. Directors need not be
shareholders.
A majority of the directors shall constitute a quorum for the
transaction of business, and the acts of a majority of the directors present at
a meeting at which a quorum is present shall be the acts of the Board of
Directors. If at any meeting of the board there shall be less than quorum
present, a majority of those present may adjourn the meeting from time to time
until a quorum is obtained, and no further notice thereof need be given other
than by announcement at said meeting which shall be so adjourned.
SECTION 2. ANNUAL MEETING OF DIRECTORS. The Board of Directors shall
hold an annual meeting immediately after the annual meeting of the shareholders,
if all the directors be present, for the purposes of organization, the election
of officers and the transaction of business; or such meeting may be held at such
other time and place as may be fixed by consent in writing of all the directors.
SECTION 3. ELECTION OF OFFICERS. At their annual meeting, or at any
subsequent meeting called for the purpose, the directors shall elect a Chairman
of the Board of Directors, a President, a Treasurer and a Secretary, and there
may also be one or more Vice-Presidents and such other officers and assistant
officers as the needs of the corporation may require, none of whom need be
directors. Such officers and assistant officers shall hold office until the next
annual election of officers and until their successors are elected and qualify.
SECTION 4. REGULAR MEETINGS. Regular meetings of the directors may be
held without notice at such places and times as shall be determined from time to
time by resolution of the directors.
SECTION 5. SPECIAL MEETINGS. HOW CALLED: NOTICE. Special meetings of
the board may be called by the Chairman of the Board of Directors, the
President, or by the Secretary on the written request of any two directors on
two days' notice to each director.
SECTION 6. GENERAL POWERS OF DIRECTORS; PERSONAL LIABILITY.
(a) The Board of Directors shall have the management of the business of
the corporation, and subject to the restrictions imposed by law, by the Articles
of
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Incorporation, or by these bylaws, may exercise all the powers of the
corporation as provided in Section 302 of the Business Corporation Law, as
amended.
(b) A director of the Company shall not be personally liable, as such,
for monetary damages for any action taken, or any failure to take any action,
unless the director has breached or failed to perform the duties of his or her
office under 42 Pa.C.S. Section 8363 and the breach or failure to perform
constitutes self-dealing, willful misconduct or recklessness. The provisions of
this subsection shall not apply to the responsibility or liability of a director
pursuant to any criminal statute or the liability of a director for the payment
of taxes pursuant to local, state or Federal law. The provisions of this
subsection shall be effective January 27, 1987, but shall not apply to any
action filed prior to that date nor to any breach of performance of duty or any
failure of performance of duty by a director occurring prior to that date.
SECTION 7. COMPENSATION OF DIRECTORS. Directors may receive
compensation for their services as directors, or by resolution of the Board a
fixed fee and expenses of attendance may be allowed for attendance at each
meeting. Any director may serve the corporation in any other capacity as an
officer, agent, or otherwise, and receive compensation therefor.
SECTION 8. EXECUTIVE COMMITTEE. The board of Directors may, by
resolution adopted by the majority of the whole Board, designate an executive
committee consisting of two or more of its members, which executive committee
shall have and may exercise the powers granted in these Bylaws to the Board of
Directors in the management of the business and affairs of the Company.
SECTION 9. CONFERENCE TELEPHONE MEETINGS. One or more Directors may
participate in a meeting of the Board or of an executive committee of the Board
by means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this section shall constitute presence in
person at such meeting.
ARTICLE III
OFFICERS
SECTION 1. The officers of the Corporation in addition to the
directors, shall be a Chairman of the Board of Directors, a President, a
Secretary and a Treasurer, and there may also be one or more Vice-Presidents,
and such other officers as may from time to time be elected or appointed by the
Board of Directors. Any two offices may be held by the same persons except the
office of President and Vice-President or President and Secretary.
SECTION 2. CHAIRMAN OF THE BOARD. The Chairman of the Board shall be
the Chief Executive Officer of the Corporation and shall preside at all meetings
of the Shareholders and of the Board of Directors and shall have the discretion
to exercise the powers granted to the President of the Corporation in Section 3
below.
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SECTION 3. PRESIDENT. The President, in the absence of the Chairman of
the Board, shall preside at all meetings of directors and shareholders. He shall
be the active executive officer of the corporation and shall exercise detailed
supervision over the business of the corporation and over its several officers,
subject, however, to the control of the Board of Directors.
SECTION 4. VICE-PRESIDENT. The Vice-President or Vice-Presidents, in
the order of their seniority, shall, in the absence of the Chairman of the Board
and the President, or in the event of their inability to act, perform the
functions of such officers and such other duties as may be assigned to them from
time to time by the Chairman of the Board, the President or the Board of
Directors.
SECTION 5. SECRETARY. The Secretary shall give notice of all meetings
of shareholders and directors, and all other notice required by law or by these
bylaws. He shall record all the proceedings of the meetings of the corporation
and of the directors, and shall perform such other duties as may be assigned to
him by the directors or the President. He shall have the custody of the seal of
the corporation, and shall affix the same to all instruments requiring it, when
authorized by the directors or the President, and attest the same.
SECTION 6. TREASURER. The Treasurer shall be the Chief Accounting
Officer of the Corporation, he shall have custody of all funds and securities,
and shall receive and give or cause to be given receipts and acquittances for
moneys paid in on account of the corporation and shall pay out of the funds on
hand all just debts of the corporation; and he shall perform all the other
duties incident to the office of Treasurer.
SECTION 7. OTHER OFFICERS. All other officers elected or appointed by
the Board of Directors shall have such powers and shall perform such duties as
shall be assigned to them by the directors.
ARTICLE IV
RESIGNATIONS; FILLING OF VACANCIES;
INCREASE OF NUMBER OF DIRECTORS
SECTION 1. RESIGNATIONS. Any director, member of a committee or other
officer may resign at any time. Such resignation shall be made in writing, and
shall take effect at the time specified therein, and if no time be specified, at
the time of its receipt by the President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 2. FILLING OF VACANCIES. If the office of any director, member
of a committee or other officer becomes vacant, the remaining directors in
office, though less than a quorum, by a majority vote, may elect any qualified
person to fill such vacancy, who shall hold office for the unexpired term and
until his successor
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shall be duly elected by the shareholders at the next annual meeting or at any
special meeting duly called for that purpose and held prior thereto.
SECTION 3. INCREASE OF NUMBER OF DIRECTORS. The number of directors may
be increased at any time, by amendment of these bylaws, by the affirmative vote
of a majority of the directors or, by the affirmative vote of a majority in
interest of the shareholders, at any regular or special meeting, called and held
for such purpose, and by like vote the additional directors may be elected at
such meeting to hold office until the next annual meeting of the shareholders or
at any special meeting duly called for that purpose and held prior thereto.
ARTICLE V
CAPITAL STOCK
SECTION 1. CERTIFICATES OF STOCK. The certificates or shares of the
corporation shall be numbered and registered in a share register as they are
issued. They shall exhibit the name of the registered holder and the number and
class of shares and the series, if any, represented thereby and the par value of
each share or a statement that such shares are without par value, as the case
may be. Every share certificate shall be signed by the President or
Vice-President and the Secretary or an Assistant Secretary or the Treasurer or
an Assistant Treasurer, and shall be sealed with the corporate seal, which may
be a facsimile, engraved or printed, but where such certificate is signed by a
transfer agent or by a transfer clerk of the corporation, the signature of any
corporate officer upon such certificate may be a facsimile, engraved or printed.
In case any officer who has signed or whose facsimile signature has been placed
upon any share certificate shall have ceased to be such officer because of
death, resignation or otherwise, before the certificate is issued, it may be
issued by the corporation with the same effect as if the officers had not ceased
to be such at the date of its issue.
SECTION 2. LOST CERTIFICATES. A new certificate of stock may be issued
in the place of any certificate theretofore issued by the corporation, alleged
to have been lost or destroyed, and the directors may, in their discretion,
require the owner of the lost or destroyed certificate, or his legal
representative, to give the corporation a bond, in such sum as they may direct,
not exceeding double the value of the stock, to indemnify the company against
any claim that may be made against it on account of the alleged loss of any such
certificate.
SECTION 3. TRANSFER OF SHARES. The shares of stock of the corporation
shall be transferable upon its books by the holders thereof in person or by
their duly authorized attorneys or legal representatives, and upon such transfer
the old certificates shall be surrendered to the corporation and cancelled, and
new certificates shall thereupon be issued. The corporation shall be entitled to
appoint or designate a transfer agent and when certificates are signed by a
transfer agent or an assistant transfer agent or a transfer clerk acting on
behalf of the corporation, the signature of the officers of the corporation
thereon may be facsimiles.
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SECTION 4. RIGHTS. Rights issued pursuant to the Rights Agreement,
dated March 31, 1988, between the corporation and Mellon Bank (East), N.A. (the
"Rights Agreement") may be transferred by an Acquiring Person or an Associate or
Affiliate of an Acquiring Person (as such terms are defined in the Rights
Agreement) only in accordance with the terms of, and subject to restrictions
contained in, the Rights Agreement.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 1. CORPORATE SEAL. The corporate seal shall be circular in form
and shall contain the name of the corporation, the year of its creation and the
words "CORPORATE SEAL PENNSYLVANIA." Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
SECTION 2. FISCAL YEAR. The fiscal year of the corporation shall be the
calendar year, commencing with the calendar year which began on January 1, 1966.
SECTION 3. OFFICES AND RECORDS. Unless and until changed, as provided
by law, the registered office of the corporation shall be established and
maintained at the address set forth in the Articles of Incorporation. An
original or duplicate record of the proceedings of the shareholders and of the
directors, and the original or a copy of the bylaws, certified by the Secretary,
shall be kept at the registered office and an original or duplicate share
register and the books or records of account shall likewise be kept at the
registered office.
SECTION 4. CHECKS, DRAFTS, NOTES. All checks, drafts or other evidence
of indebtedness issued in the name of the corporation shall be signed by such
officer or officers, agent or agents, of the corporation, and in such manner as
shall from time to time be determined by resolution of the Board of Directors.
SECTION 5. WAIVER OF NOTICE. Any notice required to be given under
these bylaws may be waived by the person entitled thereto. Shareholders not
entitled to vote shall not be entitled to receive notice of any meeting except
as otherwise provided by statute.
ARTICLE VII
AMENDMENTS
SECTION 1. AMENDMENT OF BYLAWS. The shareholders by the affirmative
vote of the holders of a majority of the shares issued and outstanding and
entitled to vote, or the directors, by the affirmative vote of a majority of the
directors, may at any meeting, provided the substance of the proposed amendment
shall have been stated in the notice of the meeting, amend or alter any of the
bylaws.
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ARTICLE VIII
INDEMNIFICATION OF DIRECTORS, OFFICERS, ETC.
SECTION 1. SCOPE OF INDEMNIFICATION.
(a) The Company shall indemnify an indemnified representative against
any liability incurred in connection with any proceeding in which the
indemnified representative may be involved as a party or otherwise, by reason of
the fact that such person is or was serving in an indemnified capacity,
including without limitation liabilities resulting from any actual or alleged
breach or neglect of duty, error, misstatement or misleading statement,
negligence, gross negligence or act giving rise to strict or products liability,
except where such indemnification is expressly prohibited by applicable law or
where the conduct of the indemnified representative has been determined pursuant
to Section 6 to constitute willful misconduct or recklessness within the meaning
of 42 Pa.C.S. 8365(b) or any superseding provision of law or self-dealing
sufficient in the circumstances to bar indemnification against liabilities
arising from the conduct. "Self-dealing" shall mean the receipt of a personal
benefit from the Company to which the indemnified representative is not legally
entitled under Section 409.1 of the Pennsylvania Business Corporation Law or
otherwise.
(b) If an indemnified representative is entitled to indemnification in
respect of a portion, but not all, of any liabilities to which such person may
be subject, the Company shall indemnify such indemnified representative to the
maximum extent for such portion of the liabilities.
(c) The termination of a proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent shall not, of
itself, create a presumption that the indemnified representative is not entitled
to indemnification.
(d) For purposes of this Article:
(1) "indemnified capacity" means any and all past, present and
future service by an indemnified representative in one or more capacities as a
director, officer, employee or agent of the Company, or, at the request of the
Company, as a director, officer, employee, agent, fiduciary or trustee of
another Company, partnership, joint venture, trust, employee benefit plan or
other entity or enterprise;
(2) "indemnified representative" means any and all directors
and officers of the Company and any other person designated as an indemnified
representative by the Board of Directors of the Company (which may, but need
not, include any person serving at the request of the Company, as a director,
officer, employee, agent, fiduciary or trustee of another Company, partnership,
joint venture, trust, employee benefit plan or other entity or enterprise);
8
<PAGE> 9
(3) "liability" means any damage, judgment, amount paid in
settlement, fine, penalty, punitive damages, excise tax assessed with respect to
an employee benefit plan, or cost or expense of any nature (including, without
limitation, attorneys' fees and disbursements); and
(4) "proceeding" means any threatened, pending or completed
action, suit, appeal or other proceeding of any nature, whether civil, criminal,
administrative or investigative, whether formal or informal, and whether brought
by or in the right of the Company, a class of its security holders or otherwise.
SECTION 2. PROCEEDINGS INITIATED BY INDEMNIFIED REPRESENTATIVES.
Notwithstanding any other provision of this Article, the Company shall not
indemnify under this Article an indemnified representative for any liability
incurred in a proceeding initiated (which shall not be deemed to include
counterclaims or affirmative defenses) or participated in as an intervenor or
amicus curiae by the person seeking indemnification unless such initiation of or
participation in the proceeding is authorized, either before or after its
commencement, by the affirmative vote of a majority of the directors in office.
This section does not apply to reimbursement of expenses incurred in
successfully prosecuting or defending an arbitration under Section 6 of this
Article or otherwise successfully prosecuting or defending the rights of an
indemnified representative granted by or pursuant to this Article.
SECTION 3. ADVANCING EXPENSES. The Company shall pay the expenses
(including attorneys' fees and disbursements) incurred in good faith by an
indemnified representative in advance of the final disposition of a proceeding
described in Section 1 or 2 of this Article upon receipt of an undertaking by or
on behalf of the indemnified representative to repay such amount if it shall
ultimately be determined pursuant to Section 6 of this Article that such person
is not entitled to be indemnified by the Company pursuant to this Article. The
financial ability of an indemnified representative to repay an advance shall not
be a prerequisite to the making of such advance.
SECTION 4. SECURING OF INDEMNIFICATION OBLIGATIONS. To further effect,
satisfy or secure the indemnification obligations provided herein or otherwise,
the Company may maintain insurance, obtain a letter of credit, act as
self-insurer, create a reserve, trust, escrow, cash collateral or other fund or
account, enter into indemnification agreements, pledge or grant a security
interest in any assets or properties of the Company, or use any other mechanism
or arrangement whatsoever in such amounts, at such costs, and upon such other
terms and conditions as the board of directors shall deem appropriate. Absent
fraud, the determination of the Board of Directors with respect to such amounts,
costs, terms and conditions shall be conclusive against all security holders,
officers and directors and shall not be subject to voidability.
9
<PAGE> 10
SECTION 5. PAYMENT OF INDEMNIFICATION. An indemnified representative
shall be entitled to indemnification within 30 days after a written request for
indemnification has been delivered to the secretary of the Company.
SECTION 6. ARBITRATION. Any dispute related to the right to
indemnification, contribution or advancement of expenses as provided under this
Article, except with respect to indemnification for liabilities arising under
the Securities Act of 1933 which the Company has undertaken to submit to a court
for adjudication, shall be decided only by arbitration in the metropolitan area
in which the principal executive offices of the Company are located, in
accordance with the commercial arbitration rules then in effect of the American
Arbitration Association, before a panel of three arbitrators, one of whom shall
be selected by the Company, the second of whom shall be selected by the
indemnified representative and the third of whom shall be selected by the other
two arbitrators. In the absence of the American Arbitration Association, or if
for any reason arbitration under the arbitration rules of the American
Arbitration Association cannot be initiated, or if one of the parties fails or
refuses to select an arbitrator, or if the arbitrators selected by the Company
and the indemnified representative cannot agree on the selection of the third
arbitrator within 30 days after such time as the Company and the indemnified
representative have each been notified of the selection of the other's
arbitrator, the necessary arbitrator or arbitrators shall be selected by the
presiding judge of the court of general jurisdiction in such metropolitan area.
Each arbitrator selected as provided herein is required to be or have been a
director or executive officer of a Company whose shares of common stock were
listed during at least one year of such service on the New York Stock Exchange
or the American Stock Exchange or quoted on the National Association of
Securities Dealers Automated Quotations System. The party or parties challenging
the right of an indemnified representative to the benefits of this Article shall
have the burden of proof. The Company shall reimburse an indemnified
representative for the expenses (including attorneys' fees and disbursements)
incurred in successfully prosecuting or defending such arbitration. Any award
entered by the arbitrators shall be final, binding and nonappealable and
judgment may be entered thereon by any party in accordance with applicable law
in any court of competent jurisdiction. This arbitration provision shall be
specifically enforceable.
SECTION 7. DISCHARGE OF DUTY. An indemnified representative shall be
deemed to have discharged such person's duty to the Company if he or she has
relied in good faith on information, opinions, reports or statements prepared or
presented by any of the following:
(1) one or more officers or employees of the Company whom the
indemnified representative reasonably believes to be reliable and competent with
respect to the matter presented;
(2) legal counsel, public accountants or other persons as to
matters that the indemnified representative reasonably believes are within the
person's professional or expert competence; or
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<PAGE> 11
(3) a committee of the Board of Directors on which he or she
does not serve as to matters within its area of designated authority, which
committee he or she reasonably believes to merit confidence.
SECTION 8. CONTRACT RIGHTS; AMENDMENT OR REPEAL. All rights to
indemnification and advancement of expenses under this Article shall be deemed a
contract between the Company and the indemnified representative pursuant to
which the Company and each indemnified representative intend to be legally
bound. Any repeal, amendment or modification hereof shall be prospective only as
to conduct of an indemnified representative occurring thereafter and shall not
affect any rights or obligations then existing.
SECTION 9. SCOPE OF ARTICLE. The rights granted by this Article shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any statute,
agreement, vote of shareholders or disinterested directors or otherwise, both as
to action in an indemnified capacity and as to action in any other capacity. The
indemnification and advancement of expenses provided by or granted pursuant to
this Article shall continue as to a person who has ceased to be an indemnified
representative in respect of matters arising prior to such time, and shall inure
to the benefit of the heirs, executors, administrators and personal
representatives of such a person.
SECTION 10. RELIANCE ON PROVISIONS. Each person who shall act as an
indemnified representative of the Company shall be deemed to be doing so in
reliance upon the rights of indemnification and advancement of expenses provided
by this Article.
SECTION 11. INTERPRETATION. The provisions of this Article have been
approved and ratified by the shareholders of the Company and are intended to
constitute Bylaws authorized by Section 410F of the Pennsylvania Business
Company Law and Section 8365 of the Directors Liability Act (42 Pa.C.S. 8365).
ARTICLE IX
INAPPLICABILITY OF SUBCHAPTERS 25G AND 25H
OF 15 PA.C.S.
SECTION 1. CONTROL-SHARE ACQUISITIONS. Subchapter 25G (relating to
control-share acquisitions) of 15 Pa.C.S. or any corresponding provisions of
succeeding law shall not be applicable to the corporation. (Adopted by the Board
of Directors on July 25, 1990.)
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<PAGE> 12
SECTION 2. DISGORGEMENT. Subchapter 25H (relating to disgorgement by
certain controlling shareholders following attempts to acquire control) of 15
Pa.C.S. or any corresponding provision of succeeding law shall not be applicable
to the corporation. (Adopted by the Board of Directors on July 25, 1990.)
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Article II Section 1 was amended by resolution of the Board of Directors on
August 12, 1997
Article II Section 1 was amended by resolution of the Board of Directors on
September 26, 1998
Article II Section I was amended by resolution of the Board of Directors on
February 11, 1999
Article I, Section 6 was amended by resolution of the Board of Directors on
February 10, 2000
12
<PAGE> 1
EXHIBIT 4
SAFEGUARD SCIENTIFICS, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
as Rights Agent
RIGHTS AGREEMENT
Dated as of February 28, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C>
1. Certain Definitions. ...................................................................................... -1-
2. Appointment of Rights Agent. ............................................................................. -5-
3. Issue of Rights Certificates. ............................................................................. -6-
4. Form of Rights Certificates. .............................................................................. -7-
5. Countersignature and Registration.......................................................................... -9-
6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates................................................................................... -9-
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.............................................. -10-
8. Cancellation and Destruction of Rights Certificates. ...................................................... -12-
9. Reservation and Availability of Capital Stock; Registration of Securities.................................. -13-
10. Capital Stock Record Date. ............................................................................... -15-
11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights. ............................. -15-
12. Certificate of Adjusted Purchase Price or Number of Shares. .............................................. -24-
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power...................................... -24-
14. Fractional Rights and Fractional Shares................................................................... -27-
15. Rights of Action. ........................................................................................ -29-
16. Agreement of Rights Holders. ............................................................................. -29-
17. Rights Certificate Holder Not Deemed a Shareholder. ..................................................... -30-
18. Concerning the Rights Agent............................................................................... -30-
19. Merger or Consolidation or Change of Name of Rights Agent................................................. -31-
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
20. Duties of Rights Agent. .................................................................................. -31-
21. Change of Rights Agent. .................................................................................. -34-
23. Redemption and Termination................................................................................ -35-
25. Notice of Certain Events................................................................................... -37-
26. Notices. ................................................................................................. -38-
27. Supplements and Amendments. ............................................................................. -39-
28. Successors. .............................................................................................. -40-
29. Determinations and Actions by the Board of Directors, etc. ............................................... -40-
30. Benefits of this Agreement. .............................................................................. -41-
31. Severability. ............................................................................................ -41-
32. Governing Law. ........................................................................................... -42-
33. Counterparts. ............................................................................................ -42-
34. Descriptive Headings. .................................................................................... -42-
</TABLE>
Exhibit A Resolution of the Board of Directors with respect to
Series A Junior Participating Preferred Shares
Exhibit B Form of Rights Certificate
<PAGE> 4
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of February 28, 2000 (the
"Agreement"), between SAFEGUARD SCIENTIFICS, INC., a Pennsylvania corporation
(the "Company"), and CHASEMELLON SHAREHOLDER SERVICES, L.L.C., a New Jersey
limited liability company (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on February 28, 2000 (the "Rights Dividend
Declaration Date"), the Board of Directors of the Company authorized and
declared a dividend distribution of one Right for each Common Share (as
hereinafter defined) of the Company outstanding at the close of business on
March 24, 2000 (the "Record Date") (which for these purposes shall include all
Common Shares presently entitled to receive dividends) following the record date
on March 13, 2000 for a three for one stock split effected in the form of a
stock dividend (all share and per share amounts herein have been adjusted to
reflect such stock split), and has authorized the issuance of one Right (as such
number may hereafter be adjusted pursuant to the provisions of Section 11(i)
hereof) for each Common Share of the Company issued between the Record Date
(whether originally issued or delivered from the Company's treasury) and the
earlier of the Distribution Date or the Expiration Date (as such terms are
hereinafter defined), each Right initially representing the right to purchase
one one-thousandth of a Preferred Share (as hereinafter defined) of the Company
having the rights, powers and preferences set forth in the form of the
Resolution of the Board of Directors attached hereto as Exhibit A, upon the
terms and subject to the conditions hereinafter set forth (the "Rights"); and
WHEREAS, the Board of Directors of the Company has considered
whether approval of this Agreement and the distribution of the Rights is in the
best interests of the Company and has also considered the effects upon
employees, suppliers and customers of the Company and upon communities in which
offices or other establishments of the Company are located and all other
pertinent factors; and
WHEREAS, the Board of Directors of the Company has concluded
that approval of this Agreement and the distribution of the Rights is in the
best interests of the Company.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, and intending to be legally bound hereby,
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 who or
which, together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the Common Shares then outstanding, but shall
not include the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company
<PAGE> 5
(including without limitation any stock incentive or compensation plan), or any
Person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan. Notwithstanding the foregoing, no Person
shall become an "Acquiring Person" as the result of an acquisition of Common
Shares by the Company which, by reducing the number of Common Shares
outstanding, increases the proportionate number of Common Shares beneficially
owned by such Person to 15% or more of the Common Shares then outstanding;
provided, however, that if a Person shall become the Beneficial Owner of 15% or
more of the then outstanding Common Shares by reason of Common Shares purchased
by the Company and shall, after such share purchases by the Company, become the
Beneficial Owner of any additional Common Shares, then such Person shall be
deemed to be an "Acquiring Person." Notwithstanding the foregoing, if a majority
of the Continuing Directors then in office determines in good faith that a
Person who would otherwise be an "Acquiring Person", as defined pursuant to the
foregoing provisions of this paragraph (a), has become such inadvertently, and
such Person divests as promptly as practicable a sufficient number of Common
Shares so that such Person would no longer be an Acquiring Person, as defined
pursuant to the foregoing provisions of this paragraph (a), then such Person
shall not be deemed to be an "Acquiring Person" for purposes of this Agreement.
(b) "Act" shall mean the Securities Act of 1933, as
amended.
(c) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as amended and in
effect on the date hereof (the "Exchange Act").
(d) A Person shall be deemed the "Beneficial Owner"
of, and shall be deemed to "beneficially own," any securities:
(i) that such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to
acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by such Person or
any of such Person's Affiliates or Associates until such tendered
securities are accepted for payment, purchase or exchange, or (B)
securities issuable upon exercise of Rights at any time prior to the
occurrence of a Triggering Event, or (C) securities issuable upon
exercise of Rights from and after the occurrence of a Triggering Event
which Rights were
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<PAGE> 6
acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(a)
or Section 22 hereof (the "Original Rights") or pursuant to Section
11(i) hereof in connection with an adjustment made with respect to any
Original Rights;
(ii) that such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to vote
or dispose of or has "beneficial ownership" of (as determined pursuant
to Rule 13d-3 of the General Rules and Regulations under the Exchange
Act), including without limitation pursuant to any agreement,
arrangement or understanding (whether or not in writing); provided,
however, that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," any security under this subparagraph (ii) as
a result of an oral or written agreement, arrangement or understanding
to vote such security if such agreement, arrangement or understanding:
(A) arises solely from a revocable proxy given in response to a public
proxy or consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and Regulations under
the Exchange Act, and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iii) that are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof)
with which such Person (or any of such Person's Affiliates or
Associates) has any agreement, arrangement or understanding (whether or
not in writing), for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to
subparagraph (ii) of this paragraph (c)) or disposing of any voting
securities of the Company,
provided, however, that nothing in this paragraph (c) shall cause a person
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of, or to "beneficially own," any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.
(e) "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in the State of New
Jersey, the Commonwealth of Pennsylvania, and the state in which the offer of
the Rights Agent is located are authorized or obligated by law or executive
order to close.
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<PAGE> 7
(f) "Close of Business" on any given date shall mean
5:00 P.M., Philadelphia time, on such date; provided, however, that if such date
is not a Business Day it shall mean 5:00 P.M., Philadelphia time, on the next
succeeding Business Day.
(g) "Common Share" shall mean, when used with
reference to the Company, a share of common stock, par value $.10 per share, of
the Company and, to the extent that there are not a sufficient number of Common
Shares authorized to permit the full exercise of the Rights, shares of any other
class or series of the Company designated for such purpose containing terms
substantially similar to the terms of the Common Shares, except that "Common
Share" when used with reference to any Person other than the Company shall mean
the shares of common stock of such Person with the greatest voting power, or the
equity securities or other equity interest having power to control or direct the
management, of such Person.
(h) "Continuing Director" shall mean (i) any member
of the Board of Directors of the Company, while such Person is a member of such
Board, who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative of an Acquiring Person or of any such
Affiliate or Associate, and was a member of such Board prior to the date of this
Agreement, or (ii) any Person who subsequently becomes a member of the Board,
while such Person is a member of such Board, who is not an Acquiring Person, or
an Affiliate or Associate of an Acquiring Person, or a representative of an
Acquiring Person or of any such Affiliate or Associate, if such Person's
nomination for election or election to the Board is recommended or approved by a
majority of the Continuing Directors.
(i) "Distribution Date" shall have the meaning set
forth in Section 3(a) hereof.
(j) "Expiration Date" shall have the meaning set
forth in Section 7(a) hereof.
(k) "Final Expiration Date" shall mean February 28,
2010.
(l) "Initial Purchase Price" shall mean $300.
(m) "Person" shall mean any individual, firm,
corporation, partnership, limited liability company, trust or other entity, and
shall include any successor (by merger or otherwise) to such entity.
(n) "Preferred Share" shall mean a share of Series A
Junior Participating Preferred Shares, par value $10.00 per share, of the
Company and, to the extent that there are not a sufficient number of shares of
Series A Junior Participating Preferred Shares authorized to
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<PAGE> 8
permit the full exercise of the Rights, shares of any other series of Series
Preferred Stock of the Company designated for such purpose containing terms
substantially similar to the terms of the Series A Junior Participating
Preferred Shares.
(o) "Preferred Share Fraction" shall mean one
one-thousandth of a Preferred Share.
(p) "Redemption Price" shall have the meaning set
forth in Section 23(a) of this Agreement.
(q) "Rights Certificates" shall have the meaning set
forth in Section 3(a) of this Agreement.
(r) "Section 11(a)(ii) Event" shall mean any event
which results in any Person becoming an Acquiring Person.
(s) "Section 13 Event" shall mean any event described
in clauses (x), (y) or (z) of Section 13(a) hereof, subject to Section 13(d).
(t) "Stock Acquisition Date" shall mean the first
date of public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d) under the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has
become such.
(u) "Subsidiary" shall have the meaning ascribed to
such term in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act.
(v) "Trading Day" shall have the meaning set forth in
Section 11(d)(i) hereof.
(w) "Triggering Event" shall mean any Section
11(a)(ii) Event or any Section 13 Event.
Unless otherwise specified, where reference is made
in this Agreement to sections of, and the General Rules and Regulations under,
the Exchange Act, such reference shall mean such sections and rules as amended
from time to time and any successor provisions thereto.
SECTION 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to
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<PAGE> 9
time appoint such Co-Rights Agents as it may deem necessary or desirable. The
Rights Agent shall have not duty to supervise, and in no event shall be liable
for, the acts or omissions of any such co-Rights Agent.
SECTION 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the Close of Business on
the tenth Business Day after a Stock Acquisition Date, or (ii) the Close of
Business on the tenth Business Day (or such later date as may be determined by
action of the Board of Directors of the Company prior to such time any Person
becomes an Acquiring Person) after the date that a tender or exchange offer by
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or pursuant to
the terms of any such plan) is first published or sent or given within the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange
Act, if upon consummation thereof, such Person would be the Beneficial Owner of
15% or more of the Common Shares then outstanding (the earlier of (i) and (ii)
being herein referred to as the "Distribution Date"), (x) beneficial interests
in the Rights will be evidenced (subject to the provisions of paragraph (b) of
this Section 3) by the certificates for the Common Shares registered in the
names of the holders of the Common Shares (which certificates for Common Shares
shall be deemed also to be certificates for beneficial interests in the Rights)
and not by separate certificates, and (y) the Rights and beneficial interests
therein will be transferable only in connection with the transfer of the
underlying Common Shares (including a transfer to the Company). The Company must
promptly notify the Rights Agent of such Distribution Date and request that its
transfer agent provide the Rights Agent with a list of the record holders of the
Company"s Common Shares as of the Close of Business on the Distribution Date. As
soon as practicable after the Rights Agent receives such notice and list, the
Rights Agent will, if requested and provided with all necessary information,
send to each record holder of the Common Shares as of the Close of Business on
the Distribution Date, at the address of such holder shown on the records of the
Company, one or more rights certificates, in substantially the form of Exhibit B
hereto (the "Rights Certificates"), evidencing one Right for each Common Share
so held, subject to adjustment as provided herein. In the event that an
adjustment in the number of Rights per Common Share has been made pursuant to
Section 11(p) hereof, at the time of distribution of the Rights Certificates,
the Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing
only whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
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<PAGE> 10
(b) With respect to certificates for the Common
Shares outstanding as of the Record Date, until the Distribution Date, the
registered holders of the Common Shares shall also be the registered holders of
the beneficial interests in the associated Rights. Until the earlier of the
Distribution Date or the Expiration Date, the transfer of any certificates
representing Common Shares in respect of which Rights have been issued shall
also constitute the transfer of the Rights associated with such Common Shares.
Certificates issued after the Record Date upon the transfer of Common Shares
outstanding on the Record Date shall bear the legend set forth in subsection (c)
below.
(c) Except as provided in Section 22 hereof, Rights
shall be issued in respect of all Common Shares that are issued (whether
originally issued or delivered from the Company's treasury) after the Record
Date but prior to the earlier of the Distribution Date or the Expiration Date.
Certificates representing such Common Shares shall also be deemed to be
certificates for beneficial interests in the associated Rights, and shall bear
the following legend:
"This certificate also evidences a beneficial
interest in and entitles the holder hereof to certain Rights as set
forth in the Rights Agreement between Safeguard Scientifics, Inc. (the
"Company") and ChaseMellon Shareholder Services, L.L.C. (the "Rights
Agent") dated as of February 28, 2000 (the "Rights Agreement"), and as
the same may be amended from time to time, the terms of which are
hereby incorporated herein by reference and a copy of which is on file
at the principal offices of the Company. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and beneficial interests therein will no longer
be evidenced by this certificate. The Company 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 any Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement), whether currently held
by or on behalf of such Person or by any subsequent holder, may become
null and void."
Until the earlier of the Distribution Date or the Expiration Date, beneficial
interests in the Rights associated with the Common Shares represented by such
certificates shall be evidenced by such certificates alone and registered
holders of Common Shares shall also be the registered holders of beneficial
interests in the associated Rights, and the transfer of any of such certificates
shall also constitute the transfer of beneficial interests in the Rights
associated with the Common Shares represented by such certificates.
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<PAGE> 11
SECTION 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of
election to purchase and of assignment to be printed on the reverse thereof)
shall each be substantially in the form set forth in Exhibit B hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate (which do not
affect the duties or responsibilities of the Rights Agent) and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange, securities
quotation system or the Nasdaq Stock Market on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Section 11
and Section 22 hereof, the Rights Certificates, whenever distributed, shall
entitle the holders thereof to purchase such number of Preferred Share Fractions
as shall be set forth therein at the price set forth therein (such exercise
price per Preferred Share Fraction, the "Purchase Price"), but the amount and
type of securities purchasable upon the exercise of each Right and the Purchase
Price thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section
3(a) or Section 22 hereof that represents Rights that the Company knows are
beneficially owned by: (i) an Acquiring Person or any Associate or Affiliate of
an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
such Acquiring Person has any continuing oral or written plan, agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
that the Board of Directors of the Company has determined is part of an oral or
written plan, agreement, arrangement or understanding that has as a primary
purpose or effect avoidance of Section 7(e) hereof, and provided that the
Company shall have notified the Rights Agent that this Section 4(b) applies, any
Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Rights Certificate
referred to in this sentence, shall contain (to the extent feasible) the
following legend:
"The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may
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become null and void in the circumstances specified in Section 7(e) of
such Agreement."
SECTION 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on
behalf of the Company by its Chairman of the Board, its President or any Vice
President, either manually or by facsimile signature, and shall have affixed
thereto the Company's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the Person who signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificates may be signed on behalf of the
Company by any Person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Agreement any such
Person was not such an officer.
(b) Following the Distribution Date and upon receipt
by the Rights Agent of the notice and list of recordholders of the Rights
referred to in Section 3(a), the Rights Agent will keep or cause to be kept, at
its office or offices, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of the Rights Certificates, the number of Rights
evidenced on its face by each of the Rights Certificates, the Certificate number
and the date of each of the Rights Certificates.
SECTION 6. Transfer, Split Up, Combination and
Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.
(a) Subject to the provisions of 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 Rights Certificate or Certificates may be transferred,
split up, combined or exchanged for another Rights Certificate or Certificates,
entitling the registered holder to purchase a like number of Preferred Share
Fractions (or, following a Triggering Event, Common Shares or other securities,
cash or other assets, as the case may be), as the Rights Certificate or
Certificates surrendered then entitled such holder or former holder in the case
of a transfer to purchase. Any registered holder desiring to transfer,
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split up, combine or exchange any Rights Certificate or Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent designated for such purpose. Neither
the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate or Certificates until the registered holder shall have completed and
signed the certificate contained in the form of assignment on the reverse side
of such Rights Certificate and shall have provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company or the Rights Agent shall reasonably
request. Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e)
and Section 14 hereof, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as so requested.
The Rights Agent shall not be obligated to process the transaction until it has
received evidence that all taxes and charges arising from the transaction have
been paid. The Company may require payment of a sum sufficient to cover any tax
or charge that may be imposed in connection with any transfer, split up,
combination or exchange of Rights Certificates. The Rights Agent shall have no
duty or obligation under this Section unless and until it is satisfied that all
such taxes and charges have been paid.
(b) Upon receipt by the Company and the Rights Agent
of evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or destruction,
of indemnity or security satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights.
(a) Subject to subsection (e), the registered holder
of any Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly and properly executed, to the
Rights Agent at the office of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price (except as provided in
Section 11(q)
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hereof) with respect to the total number of Preferred Share Fractions (or Common
Shares, other securities, cash or other assets, as the case may be) as to which
such surrendered Rights are then exercisable (except as provided in Section
11(q) hereof), at or prior to the earliest of (i) the Close of Business on the
Final Expiration Date, (ii) the consummation of a transaction contemplated by
Section 13(d) hereof, or (iii) the time at which the Rights are redeemed or
terminated as provided in Section 23 hereof (the earliest of (i), (ii) and (iii)
being herein referred to as the "Expiration Date").
(b) The Purchase Price for each Preferred Share
Fraction pursuant to the exercise of a Right shall be the Initial Purchase Price
as of the date of this Agreement, and shall be subject to adjustment from time
to time as provided in Sections 11 and 13(a) hereof and shall be payable in
accordance with subsection (c).
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
duly and properly executed, accompanied by payment, with respect to each Right
so exercised, of the Purchase Price per Preferred Share Fraction (or Common
Shares, other securities, cash or other assets, as the case may be) to be
purchased as set forth below and an amount equal to any applicable tax or
charge, the Rights Agent shall, subject to Section 20(k) and Section 14(b)
hereof, thereupon promptly (i) (A) requisition from any transfer agent of the
Preferred Shares (or make available, if the Rights Agent is the transfer agent
for the Common Shares) certificates for the total number of Preferred Shares to
be purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company shall have elected to
deposit some or all of the total number of Preferred Shares issuable upon
exercise of the Rights hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing such number of Preferred Share
Fractions as are to be purchased (in which case certificates for the Preferred
Shares represented by such receipts shall be deposited by the transfer agent
with the depositary agent) and the Company will direct the depositary agent to
comply with such request, (ii) requisition from the Company the amount of cash,
if any, to be paid in lieu of fractional shares in accordance with Section 14
hereof, (iii) after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be designated by
such holder, and (iv) after receipt thereof, deliver such cash, if any, to or
upon the order of the registered holder of such Rights Certificate. The payment
of the Purchase Price (as such amount may be reduced pursuant to Section
11(a)(iii) hereof) may be made, at the election of the holder of the Rights
Certificate, (x) in cash or by certified bank check or money order payable to
the order of the Company or (y) by delivery of Rights if and to the extent
authorized by Section 11(q) hereof. In the event that the Company is obligated
to issue other securities of the Company (including Common Shares) 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
necessary to comply with this agreement.
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(d) In case the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced thereby, a new
Rights Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to, or upon the
order of, the registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder, subject to the provisions of
Section 6 and 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 or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any Person
with whom the Acquiring Person has any continuing oral or written plan,
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
an oral or written plan, agreement, 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; provided, however, that the Rights held by an
Acquiring Person, an Affiliate or Associate of an Acquiring Person or the
transferees of such persons referred to above shall not be voided unless the
Acquiring Person in question or an Affiliate or Associate of such Acquiring
Person shall be involved in the transaction giving rise to the Section 11(a)(ii)
Event. The Company shall notify the Rights Agent when this Section 7(e) applies
and shall use all reasonable efforts to insure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but neither the Company
nor the Rights Agent shall have any liability to any holder of Rights
Certificates or other Person as a result of the Company's failure to make any
determinations with respect to an Acquiring Person or its 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 upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) properly completed and signed the certificate contained in
the form of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise, and (ii) provided such additional
evidence of the
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identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall or the Rights Agent reasonably request.
SECTION 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
SECTION 9. Reservation and Availability of Capital Stock;
Registration of Securities.
(a) The Company covenants and agrees that it will
cause to be reserved and kept available for issuance upon the exercise of
outstanding Rights as many of its authorized and unissued Preferred Shares (and,
following the occurrence of a Triggering Event, out of its authorized and
unissued or treasury Common Shares and/or other securities) or out of its
authorized and issued shares held in its treasury, which together, shall at all
times after the Distribution Date be sufficient to permit the exercise in full
of all outstanding Rights.
(b) So long as the Preferred Shares (and, following
the occurrence of a Triggering Event, Common Shares or other securities)
issuable and deliverable upon the exercise of the Rights may be listed on any
stock exchange, or quoted on the Nasdaq Stock Market or other securities
quotation system, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares and other
securities reserved for such issuance to be listed on such exchange or quotation
system 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 or
statements under the Act, with respect to the securities purchasable upon
exercise of the Rights on an appropriate form or forms,
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(ii) cause such registration statement or statements to become effective as soon
as practicable after such filing, and (iii) cause such registration statement or
statements 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 Expiration
Date. The Company will also take such action as may be appropriate under, or to
ensure compliance with, the securities or "blue sky" laws of the various states
in connection with the exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days after the date set
forth in clause (i) of the first sentence of this subsection (c), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. In addition, if the Company shall
determine that a registration statement is required following the Distribution
Date, the Company may, by issuing a public announcement, temporarily suspend the
exercisability of the Rights until such time as a registration statement has
been declared effective. The Company shall promptly notify the Rights Agent
whenever it makes a public announcement pursuant to this subsection (c) and give
the Rights Agent a copy of the announcement. 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, nor shall the Rights be exercisable if the exercise thereof shall
not be permitted under applicable law or a registration statement shall not have
been declared effective.
(d) The Company covenants and agrees that it will
take all such action as may be necessary to ensure that all Preferred Shares
(and, following a Triggering Event, Common Shares or other securities) delivered
upon exercise of Rights shall, at the time of delivery of the certificates for
such shares or other securities (subject to payment of the Purchase Price), be
duly and validly authorized and issued and, with respect to Preferred Shares,
Common Shares or other shares of capital stock, fully paid and nonassessable.
(e) The Company further covenants and agrees that it
will pay when due and payable any and all taxes and charges that may be payable
in respect of the issuance or delivery of the Rights Certificates and of any
certificates for a number of Preferred Share Fractions (or Common Shares or
other securities, as the case may be) upon the exercise of Rights. The Company
shall not, however, be required to pay any tax or charge that may be payable in
respect of any transfer or delivery of Rights Certificates to a Person other
than, or the issuance or delivery of a number of Preferred Share Fractions (or
Common Shares or other securities, as the case may be) in respect of a name
other than that of the registered holder of the Rights Certificates evidencing
Rights surrendered for exercise or to issue or deliver any certificates for a
number of Preferred Share Fractions (or Common Shares or other securities, as
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the case may be) in a name other than that of the registered holder upon the
exercise of any Rights until such tax or charge shall have been paid (any such
tax or charge being payable by the holder of such Rights Certificate at the time
of surrender) or until it has been established to the Company's satisfaction
that no such tax or charge is due.
SECTION 10. Capital Stock Record Date. Each Person in whose
name any certificate for a number of Preferred Share Fractions (or Common Shares
or other securities, as the case may be) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of such
Preferred Share Fractions (or Common Shares or other securities, as the case may
be) represented thereby on, and such certificate shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and all applicable taxes or charges) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the applicable 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 applicable transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Rights Certificate
shall not be entitled to any rights of a shareholder 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 and Kind of
Shares or Number of Rights. The Purchase Price, the number and kind of shares
and other securities covered by each Right and the number of Rights issued (or
to be issued) and outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on any security
of the Company payable in Preferred Shares, (B) subdivide the
outstanding Preferred Shares, (C) combine the outstanding Preferred
Shares into a smaller number of shares, or (D) issue any shares of its
capital stock in a reclassification of the Preferred Shares (including
any such reclassification in connection with a consolidation or merger
in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a) and Section 7(e)
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 Preferred Shares or
capital stock, as the case may be, issuable on such date, shall be
adjusted to the extent appropriate so that the holder of any Right
exercised after such time shall be entitled to receive, upon exercise
of such Right and any Rights
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<PAGE> 19
received as a consequence of issuance of such Preferred Shares in
connection with such dividend or subdivisions and Payment of the
Purchase Price then in effect, the aggregate number and kind of
Preferred Shares or capital stock, as the case may be, that, if such
Right had been exercised immediately prior to such date and at a time
when the Preferred Share transfer books were open, such holder would
have owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification. If an
event occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event any Person becomes an Acquiring
Person then, promptly following the first occurrence of a Section
11(a)(ii) Event, proper provision shall be made so that each holder of
a Right (except as provided in Section 7(e) hereof) shall thereafter
have the right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, in lieu
of a number of Preferred Share Fractions, such number of Common Shares
of the Company as shall equal the result obtained by (x) multiplying
the then current Purchase Price by the then number of Preferred Share
Fractions for which a Right was exercisable immediately prior to such
Person becoming an Acquiring Person, and (y) dividing that product by
50% of the current market price (as defined in and determined pursuant
to Section 11(d) hereof) per Common Share on the date of such
occurrence (such number of shares, the "Adjustment Shares").
(iii) In the event that the number of Common Shares
that are authorized by the Company's Articles 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 the value of the
Adjustment Shares issuable upon the exercise of a Right (the "Current
Value") over the Purchase Price (such excess, the "Spread"), and (B)
with respect to each Right, make adequate provision to substitute for
the Adjustment Shares, upon payment of the applicable Purchase Price,
(1) cash, (2) a reduction in the Purchase Price, (3) Common Shares of
the same or a different class or other equity securities of the Company
(including, without limitation, preferred shares or units of preferred
shares that a majority of the Continuing Directors in office at the
time has deemed (based, among other things, on the dividend and
liquidation rights of such preferred shares) to have substantially the
same economic value as Common Shares (such preferred shares,
hereinafter referred to as "common share equivalents")), (4) debt
securities of the Company, (5) other assets, or (6) any combination of
the foregoing,
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<PAGE> 20
having an aggregate value equal to the Current Value, where such
aggregate value has been determined by a majority of the Continuing
Directors in office at the time after considering the advice of a
nationally recognized investment banking firm selected by the Board of
Directors of the Company; provided, however, if the Company shall not
have made adequate provision to deliver value pursuant to clause (B)
above within thirty (30) days following the later of (x) the occurrence
of a Section 11(a)(ii) Event and (y) the date on which the Company"s
right of redemption pursuant to Section 23(a) expires (the later of (x)
and (y) being referred to herein as the "Section 11(a)(ii) Trigger
Date"), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the
Purchase Price, Common Shares (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate value equal
to the Spread. If the Board of Directors of the Company shall determine
in good faith that it is likely that sufficient additional Common
Shares could be authorized for issuance upon exercise in full of the
Rights, the thirty (30) day period set forth above may be extended to
the extent necessary, but not more than ninety (90) days after the
Section 11(a)(ii) Trigger Date, in order that the Company may seek
shareholder approval for the authorization of such additional shares
(such period, as it may be extended, the "Substitution Period"). To the
extent that the Company determines that some action need be taken
pursuant to the first and/or second sentences of this Section
11(a)(iii), the Company shall provide, subject to Section 7(e) hereof,
that such action shall apply uniformly to all outstanding Rights, and
may suspend the exercisability of the Rights until the expiration of
the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of distribution
to be made pursuant to such first sentence and to determine the value
thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. The Company shall
promptly notify the Rights Agent of the suspension of the
exercisability of the Rights, and provide the Rights Agent with a copy
of such public announcement. For purposes of this Section 11(a)(iii),
the value of the Common Shares shall be the current market price (as
determined pursuant to Section 11(d) hereof) per Common Share on the
Section 11(a)(ii) Trigger Date and the value of any "common share
equivalent" shall be deemed to have the same value as the Common Shares
on such date.
(b) In case the Company shall fix a record date for
the issuance of rights, options or warrants to holders of any security of the
Company entitling them to subscribe for or purchase (for a period expiring
within forty-five (45) calendar days after such record date) Preferred Shares
(or shares having the same rights, privileges and preferences as the Preferred
Shares ("equivalent preferred shares")) or securities convertible into Preferred
Shares or
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<PAGE> 21
equivalent preferred shares at a price per Preferred Share or per equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
current market price (as determined pursuant to Section 11(d) hereof) per
Preferred Share 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 Preferred Shares outstanding on such record date, plus
the number of Preferred Shares that the aggregate offering price of the total
number of Preferred Shares and/or equivalent preferred shares 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 Preferred Shares outstanding on such record
date, plus the number of additional Preferred Shares and/or equivalent preferred
shares to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid by delivery of consideration part or all of which
may be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Company, the Rights Agent and the holders of the Rights,
and shall be conclusive for all purposes. Preferred Shares owned by or held for
the account of the Company shall not be deemed outstanding for the purpose of
any such computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price that would
then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to all
holders of Preferred Shares (including any such distribution made in connection
with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular quarterly
dividend out of the earnings or retained earnings of the Company), assets (other
than a regular quarterly dividend referred to above or dividend payable in
Preferred Shares, but including any dividend payable in stock other than
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price (as determined pursuant to Section 11(d)
hereof) per Preferred Share on such record date, less the then fair market value
(as determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such subscription rights or
warrants applicable to a Preferred Share and the denominator of which shall be
such current market price (as determined pursuant to Section 11(d) hereof) per
Preferred Share. Such
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<PAGE> 22
adjustments shall be made successively whenever such a record date is fixed, and
in the event that such distribution is not so made, the Purchase Price shall be
adjusted to be the Purchase Price which would have been in effect if such record
date had not been fixed.
(d) (i) For the purpose of any computation hereunder,
other than computations made pursuant to Section 11(a)(iii) hereof, the
"current market price" per Common Share on any date shall be deemed to
be the average of the daily closing prices per Common Share for the
thirty (30) consecutive Trading Days (as such term is hereinafter
defined) immediately prior to and not including such date, and for
purposes of computations made pursuant to Section 11(a)(iii) hereof,
the "current market price" per Common Share on any date shall be deemed
to be the average of the daily closing prices per Common Share for the
ten (10) consecutive Trading Days immediately following and not
including such date; provided, however, that in the event that the
current market price per Common Share is determined during a period
following the announcement by the issuer of such Common Share of (A) a
dividend or distribution on such Common Share payable in Common Shares
or securities convertible into Common Shares (other than the Rights),
or (B) any subdivision, combination or reclassification of such Common
Shares, and prior to the expiration of the requisite thirty (30)
Trading Day or ten (10) Trading Day period, as set forth above, after
but not including the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "current market
price" shall be properly adjusted to take into account ex-dividend
trading. The closing price for each Trading 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 Common Shares 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 Shares are listed or admitted to trading or, if the
Common Shares 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,
Inc. Automated Quotation System ("Nasdaq") or such other system then in
use, or, if on any such date the Common Shares are not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common
Shares selected by the Board of Directors of the Company. If on any
such date no market maker is making a market in the Common Shares, the
fair value of such shares on such date as determined in good faith by
the Board of Directors of the Company shall be used.
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<PAGE> 23
The term "Trading Day" shall mean a day on which the principal national
securities exchange on which the Common Shares are listed or admitted
to trading is open for the transaction of business or, if the Common
Shares are not listed or admitted to trading on any national securities
exchange, a Business Day. If the Common Shares are not publicly held or
not so listed or traded, "current market price" per share shall mean
the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all
purposes.
(ii) For the purpose of any computation hereunder,
the "current market price" per Preferred Share shall be determined in
the same manner as set forth above for the Common Shares in clause (i)
of this Section 11(d) (other than the last sentence thereof). If the
current market price per Preferred Share cannot be determined in the
manner provided above or if the Preferred Shares are not publicly held
or listed or traded in a manner described in clause (i) of this Section
11(d), the "current market price" per Preferred Share shall be
conclusively deemed to be an amount equal to one hundred (as such
number may be appropriately adjusted for such events as stock splits,
stock dividends and recapitalizations with respect to the Common Shares
occurring after the date of this Agreement) multiplied by the current
market price per Common Share. If neither the Common Shares nor the
Preferred Shares are publicly held or so listed or traded, "current
market price" per Preferred Share shall mean the fair value per share
as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes. For all purposes
of this Agreement, the "current market price" of a Preferred Share
Fraction shall be equal to the "current market price" of one Preferred
Share divided by 1000.
(e) Anything herein to the contrary notwithstanding,
no adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least one percent (1%) in the
Purchase Price; provided, however, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest ten-thousandth of a
Common Share or one millionth of a Preferred Share, as the case may be.
Notwithstanding the first sentence of this subsection (e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction that mandates such adjustment, or
(ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive
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<PAGE> 24
any shares of capital stock other than Preferred Shares, thereafter the number
of such other shares so receivable upon exercise of any Right and the Purchase
Price thereof shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect to
the Preferred Shares contained in Sections 11(a), (b), (c), (e), (g), (h), (i),
(j), (k), (m) and (q), and the provisions of Sections 7, 9, 10, 13 and 14 hereof
with respect to the Preferred Shares shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder shall evidence
the right to purchase, at the adjusted Purchase Price, the number of Preferred
Share Fractions 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 subsections (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 Preferred Share Fractions (calculated to the nearest one-one millionth
of a Preferred Share) obtained by (i) multiplying (x) the number of Preferred
Share Fractions covered by a Right immediately prior to this adjustment, by (y)
the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price, and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of Preferred Share Fractions purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of Preferred Share
Fractions for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest one-one
millionth of a Preferred Share) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price. The Company
shall make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. The Company shall promptly forward a copy
of such public announcement to the Rights Agent. The record date for the
adjustment may be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Rights Certificates have been issued, shall be at least
ten (10) days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of
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<PAGE> 25
record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of Preferred Share Fractions issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per Preferred Share Fraction
and the number of Preferred Share Fractions that were expressed in the initial
Rights Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then stated or par value, if
any, of the number of Preferred Share Fractions issuable upon exercise of the
Rights, the Company shall take any corporate action that may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue such number of fully paid and nonassessable Preferred Share Fractions 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 with prompt
notice thereof to the Rights Agent until the occurrence of such event the
issuance to the holder of any Right exercised after such record date the number
of Preferred Share Fractions and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the number of
Preferred Share Fractions 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, and the Company
shall also deliver a copy of such bill or instrument to the Rights Agent.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those
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<PAGE> 26
adjustments expressly required by this Section 11, as and to the extent that in
their good faith judgment the Board of Directors of the Company shall determine
to be advisable in order that any (i) consolidation or subdivision of the
Preferred Shares, (ii) issuance wholly for cash of any Preferred Shares at less
than the current market price, (iii) issuance wholly for cash for Preferred
Shares or securities which by their terms are convertible into or exchangeable
for Preferred Shares, (iv) stock dividends or (v) issuance of rights, options or
warrants referred to in this Section 11, hereafter made by the Company to
holders of its Preferred Shares shall not be taxable to such shareholders.
(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 transaction, or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other person or persons
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger or sale there are any
rights, warrants or other instruments or securities outstanding or agreements in
effect that would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the shareholders of the
Person who constitutes, or would constitute, the "Principal Party" for purposes
of Section 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or Section 26
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
Rights Dividend Declaration Date and prior to the Distribution Date (excluding,
however, in the case of (i) and (ii) following, the stock dividend declared on
February 28, 2000 in connection with the Company's three-for-one common stock
split) (i) declare a dividend on the outstanding Common Shares payable in Common
Shares, (ii) subdivide the outstanding Common Shares, or (iii) combine the
outstanding Common Shares into a smaller number of shares, the number of Rights
associated with each Common Share then
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<PAGE> 27
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 Common Share following any such event shall equal the
result obtained by multiplying the number of Rights associated with each Common
Share immediately prior to such event by a fraction the numerator of which shall
be the total number of Common Shares outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the total number
of Common Shares outstanding immediately following the occurrence of such event.
(q) In the event that the Rights become exercisable
following a Section 11(a)(ii) Event, the Company, by action of a majority of the
Continuing Directors in office at the time, may authorize that the Rights,
subject to Section 7(e) hereof, either (i) will only be, or (ii) may, at the
option of the holder entitled to exercise the Rights be, exercisable for, in
either case 50% of the Common Shares (or cash or other securities or assets to
be substituted for the Adjustment Shares pursuant to subsection (a)(iii)) that
would otherwise be purchasable under subsection (a), in consideration of the
surrender to the Company of the Rights so exercised and without other payment of
the Purchase Price. Rights exercised under this subsection (q) shall be deemed
to have been exercised in full and shall be canceled.
SECTION 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Section 11 or Section
13 hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment and a brief, reasonably detailed statement of the facts and
computations accounting for such adjustment, (b) promptly file with the Rights
Agent, and with each transfer agent for the Preferred Shares and the Common
Shares, a copy of such certificate, and (c) mail a brief summary thereof to each
holder of a Rights Certificate (or, if prior to the Distribution Date, to each
holder of a certificate representing Common Shares) in accordance with Section
25 hereof. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall have no duty with
respect to and shall not be deemed to have knowledge of any such adjustment
unless and until it shall have received such a certificate.
SECTION 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
(a) In the event that, following the Stock
Acquisition Date, directly or indirectly, (x) the Company shall consolidate
with, or merge with and into, any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof), and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(o) hereof) shall consolidate
with, or merge with or into, the
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<PAGE> 28
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 Common Shares shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one transaction or a
series of related transactions, assets or earning power aggregating more than
50% of the assets, operating income, cash flow or earning power of the Company
and its Subsidiaries (taken as a whole) to any Person or Persons (other than the
Company or any Subsidiary of the Company in one or more transactions each of
which complies with Section 11(o) hereof), then, and in each such case and
except as contemplated by subsection (d), proper provision shall be made so
that:
(i) each holder of a Right, except as
provided in Section 7(e) hereof or subsection (e), shall thereafter
have the right to receive, upon the exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement,
such number of validly authorized and issued, fully paid, non
assessable and freely tradeable Common Shares of the Principal Party
(as such term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall
be equal to the result obtained by (1) multiplying the then current
Purchase Price by the number of Preferred Share Fractions for which a
Right is exercisable immediately prior to the first occurrence of a
Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior
to the first occurrence of a Section 13 Event, multiplying the number
of such shares for which a Right was exercisable immediately prior to
the first occurrence of a Section 11(a)(ii) Event by the Purchase Price
in effect immediately prior to such first occurrence), and (2) dividing
that product (which, following the first occurrence of a Section 13
Event, shall be referred to as the "Purchase Price" for each Right and
for all purposes of this Agreement) by 50% of the current market price
(determined pursuant to Section 11(d)(i) hereof) per Common Share of
such Principal Party on the date of consummation of such Section 13
Event;
(ii) such Principal Party shall thereafter
be liable for, and shall assume, by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this
Agreement;
(iii) the term "Company" shall thereafter be
deemed to refer to such Principal Party, it being specifically intended
that the provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13 Event;
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<PAGE> 29
(iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares) in connection with the consummation of any
such transaction as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably may be,
in relation to its Common Shares thereafter deliverable upon the
exercise of the Rights; and
(v) the provisions of Section 11(a)(ii)
hereof shall be of no effect following the first occurrence of any
Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described
in clause (x) or (y) of the first sentence of subsection (a), the
Person that is the issuer of any securities into which Common Shares of
the Company are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to such
merger or consolidation; and
(ii) in the case of any transaction
described in clause (z) of the first sentence of subsection (a), the
Person that is the party receiving the greatest portion of the assets
or earning power transferred pursuant to such transaction or
transactions;
provided, however, that in the case of either (i) or (ii) above, (1) if the
Common Shares of such Person are not at such time and have not been continuously
over the preceding twelve (12) month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of another
Person the Common Shares of which are and have been so registered, "Principal
Party" shall refer to such other Person, and (2) in case such Person is a
Subsidiary, directly or indirectly, of more than one Person, the Common Shares
of two or more of which are and have been so registered, "Principal Party" shall
refer to whichever of such Persons is the issuer of the Common Shares having the
greatest aggregate market value.
(c) The Company shall not consummate any such
consolidation, merger, sale or transfer unless the Principal Party shall have a
sufficient number of authorized shares of its Common Shares that have not been
issued or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs (a) and
(b) of this Section 13 and further providing that, as soon as practicable after
the date of any consolidation, merger or sale of assets mentioned in paragraph
(a) of this Section 13, the Principal Party will
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<PAGE> 30
(i) prepare and file a registration
statement under the Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, and
will use its best efforts to cause such registration statement to (A)
become effective as soon as practicable after such filing and (B)
remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date;
(ii) use its best efforts to qualify or
register the Rights and the securities purchasable upon exercise of the
Rights under blue sky laws of such jurisdiction, as may be necessary or
appropriate; and
(iii) deliver to holders of the Rights
historical financial statements for the Principal Party and each of its
Affiliates that comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event
shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the
Rights that have not theretofore been exercised shall thereafter become
exercisable solely in the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the
contrary, Section 13 (other than this subsection (d)) shall not be applicable
to, and the term "Section 13 Event" shall not include, a transaction described
in subparagraphs (x) and (y) of Section 13(a) if (i) such transaction is
consummated with a Person, or Persons who acquired Common Shares pursuant to a
Qualifying Offer (or a wholly owned Subsidiary of any such Person or Persons),
(ii) the price per Common Share offered in such transaction is not less than the
price per Common Share paid to all holders of Common Shares 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 Common Shares pursuant
to such transaction is the same as the form of consideration paid pursuant to
such tender or exchange offer. Upon consummation of any such transaction
contemplated by this subsection (d), all Rights hereunder shall expire.
(e) In the event that the Rights become exercisable
under subsection (a) (except as provided in subsection (d)), the Company, by
action of a majority of the Continuing Directors in office at the time, may
authorize that the Rights either (i) will only be or (ii) may, at the option of
the Principal Party be, exercisable for, 50% of the Common Shares of the
Principal Party that would otherwise be purchasable under subsection (a), in
consideration of the surrender to the Principal Party, as the successor to the
Company under subsection (a) (ii), of the Rights so exercised and without other
payment of the Purchase Price. Rights exercised under this subsection (e) shall
be deemed to have been exercised in full and shall be canceled.
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<PAGE> 31
SECTION 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue
fractions of Rights, except prior to the Distribution Date as provided in
Section 11(p) hereof, or to distribute Rights Certificates that evidence
fractional Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Rights Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Right. For purposes of this
subsection (a), the current market value of a whole Right shall be the closing
price of the Rights for the Trading Day immediately prior to the date on which
such fractional Rights would have been otherwise issuable. The closing price of
the Rights for any day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading, or if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
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 making a market
in the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights the fair value of the
Rights on such date as determined in good faith by the Board of Directors of the
Company shall be used.
(b) The Company shall not be required to issue
fractions of Preferred Shares upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares, except in each case for
fractions which are integral multiples of Preferred Shares. In lieu of
fractional Preferred Shares that are not integral multiples of Preferred Shares,
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of a Preferred Share. For purposes of this
subsection (b), the current market value of one Preferred Share shall be the
closing price of a Preferred Share (as determined pursuant to Section 11(d)(ii)
hereof) for the Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event,
the Company shall not be required to issue fractions of Common Shares upon
exercise of the Rights or to distribute
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<PAGE> 32
certificates that evidence fractional Common Shares. In lieu of fractional
Common Shares, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one Common
Share. For purposes of this subsection (c), the current market value of one
Common Share shall be the closing price of one Common Share (as determined
pursuant to Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
(d) Whenever a payment for fractional Rights or
fractional shares is to be made by the Rights Agent, the Company shall (i)
promptly prepare and deliver to the Rights Agent a certificate setting forth in
reasonable detail the facts related to such payment and the process and/or
formulas utilized in calculating such payments, and (ii) provide sufficient
monies to the Rights Agent in the form of fully collected funds to make such
payments. The Rights Agent shall be fully protected in relying on such
certificate and shall have no duty with respect to and shall not be deemed to
have knowledge of any payment for fractional Rights or fractional shares under
this Section 4 unless and until it shall have received such a certificate and
sufficient monies.
(e) The holder of a Right or a beneficial interest in
a Right by the acceptance thereof expressly waives his right to receive any
fractional Rights or any fractional Common 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, excepting the rights of action given to the Rights Agent
under this Agreement, are vested in the respective registered holders of the
Rights Certificates (and, prior to the Distribution Date, the registered holders
of the Common Shares); and any registered holder of any Rights Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the holder of any other Rights Certificate (or, prior to
the Distribution Date, of the Common Shares), may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Rights Certificate in the manner
provided in such Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights or beneficial
interests therein, it is specifically acknowledged that the holders of Rights or
beneficial interests therein would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
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SECTION 16. Agreement of Rights Holders. Every holder of a
Right or a beneficial interest in a Right by accepting the same consents and
agrees with the Company and the Rights Agent and with every other such holder
that:
(a) prior to the Distribution Date, beneficial
interests in the Rights will be transferable only in connection with the
transfer of Common Shares;
(b) after the Distribution Date, the Rights
Certificates are transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof,
the Company and the Rights Agent may deem and treat the Person in whose name a
Rights Certificate (or, prior to the Distribution Date, the associated Common
Share certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Share certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent shall be required to be affected by any
notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or a beneficial interest in 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,
judgment or ruling (whether interlocutory or final) issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree, judgment or ruling lifted or otherwise
overturned as soon as possible.
SECTION 17. Rights Certificate Holder Not Deemed a
Shareholder. No holder, as such, of any Rights Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of the number of
Preferred Share Fractions or any other securities of the Company (including the
Common Shares) that may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate
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action, or to receive notice of meetings or other actions affecting shareholders
(except as provided in Section 24 hereof), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Rights Certificate shall have been exercised in accordance with the provisions
hereof.
SECTION 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent
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 disbursements and other disbursements incurred in the preparation,
execution, delivery, amendment, administration and execution of this Agreement
and the exercise and performance of its duties hereunder. The Company also
agrees to indemnify the Rights Agent and its directors, officers, employees and
agents, for and to hold each of them harmless against, any loss, liability,
damage, judgment, fine, penalty, claim, demand, settlement, cost or expense,
incurred without gross negligence, bad faith or willful misconduct (its finally
determined by a court of competent jurisdiction) on the part of the Rights Agent
or any such indemnified party, for any action taken, suffered or omitted by the
Rights Agent in connection with the acceptance or administration of this
Agreement or the exercise of its duties hereunder, including without limitation
the costs and expenses of defending against any claim of liability arising
therefrom directly or indirectly. The indemnity provided herein shall survive
the resignation or removal of the Rights Agent, termination of this Agreement
and the termination and the expiration of the Rights. The costs and expenses
incurred in enforcing this right of indemnification shall be paid by the
Company. Anything to the contrary notwithstanding, in no event shall the Rights
Agent be liable for special, punitive, indirect, consequential or incidental
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Right Agent has been advised of the likelihood of such
loss or damage. Any liability of the Rights Agent under this Right Agreement
will be limited to the amount of fees paid by the Company to the Rights Agent.
(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 the acceptance and administration of this Agreement or in
the exercise of its duties hereunder in reliance upon any Rights Certificate or
certificate for Common Shares or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
SECTION 19. Merger or Consolidation or Change of Name of
Rights Agent.
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(a) Any Person into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any Person resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any Person succeeding to the
shareholder services business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto; provided, however, that such Person would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof.
(b) In case at any time the name of the Rights Agent
shall be changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
SECTION 20. Duties of Rights Agent. The Rights Agent
undertakes only the duties and obligations, and only the duties and obligations,
expressly imposed by this Agreement (and no implied duties or obligations) upon
the following terms and conditions, by all of which the Company and the holders
of Rights Certificates or beneficial interests in the Rights, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the advice or opinion of such
counsel shall be full and complete authorization and protection to the Rights
Agent, and the Rights Agent shall incur no liability for or in respect of, any
action taken, suffered or omitted by it in good faith and in accordance with
such advice or opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any Acquiring
Person and the determination of "current market price") be proved or established
by the Company prior to taking, suffering or omitting any action hereunder, such
fact or matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization and protection to the Rights Agent and
the
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Rights Agent shall incur no liability for or in respect of any action taken,
suffered or omitted 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 gross negligence, bad faith or willful misconduct as finally
determined by a court of competent jurisdiction; provided, however that the
Rights Agent shall not be liable for special, indirect, incidental or
consequential loss or damage of any kind whatsoever, even if the Rights Agent
has been advised of the likelihood of such loss or damage.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in this Agreement
or in the Rights Certificates or be required to verify the same (except as to
its countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any liability
or responsibility in respect of the validity of any provision of this Agreement
or the execution and delivery hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it be responsible
or liable for any breach by the Company of any covenant or condition contained
in this Agreement or in any Rights Certificate; nor shall it be responsible or
liable for any adjustment required under the provisions of this Agreement or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Rights Certificates
after 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 Common Shares to be issued pursuant to this Agreement or any
Rights Certificate or as to whether any Common Shares or Preferred Shares will,
when so issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the President, any Vice
President, the Secretary, any Assistant Secretary, 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 such instructions shall be full
authorization and protection for the Rights Agent and the Rights Agent shall
incur no liability for or in respect of
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any action taken, suffered or omitted to be taken by it in good faith in
accordance with instructions of any such officer. The Rights Agent may
conclusively rely on the most recent instructions provided to it by any such
officer.
(h) The Rights Agent and any shareholder, affiliate,
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 and none of such
actions shall constitute a breach of trust. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any other
Person.
(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 or any other Person
resulting from any such act, default, neglect or misconduct, absent gross
negligence, bad faith or willful misconduct (as finally determined by a court of
competent jurisdiction) in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of its rights if it believes that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to purchase, as the case
may be, has either not been completed or indicates an affirmative response to
clause 1 and/or 2 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise or transfer without first consulting
with the Company.
SECTION 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty (30) days' prior written notice mailed to the Company and
to each transfer agent of the Common Shares and Preferred Shares by registered
or certified mail, and to the holders of the Rights Certificates by first- class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
thirty (30) days' prior written notice mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common
Shares and Preferred Shares, by
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registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of thirty (30) days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by the Company),
then any registered holder of any Rights Certificate or the Rights Agent may
apply to any court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Company or by such a
court, shall be (a) a Person organized, doing business and in good standing
under the laws of the United States or of any state that is authorized to do
business and is subject to supervision or examination by federal or state
authority and that has at the time of its appointment as Rights Agent a combined
capital and surplus of at least $50,000,000 or (b) an Affiliate of any such
Person. 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 Shares
and Preferred Shares and mail a notice thereof in writing to the registered
holders of the Rights Certificates or, prior to the Distribution Date, to the
registered holders of the Common Shares. In case at the time such successor
Rights Agent shall succeed to the agency and trust created by this Agreement,
any of the Rights Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of a predecessor
Rights Agent and deliver such Rights Certificates so countersigned; and in case
at that time any of the Rights Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Rights Certificates either in
the name of the predecessor or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
SECTION 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Rights
Certificates made in
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accordance with the provisions of this Agreement. In addition, in connection
with the issuance, sale or delivery of Common Shares following the Distribution
Date and prior to the redemption or expiration of the Rights, the Company (a)
shall, with respect to Common Shares so issued, sold or delivered pursuant to
the exercise of stock options, stock appreciation rights, grants or awards
outstanding on the Distribution Date under any benefit plan or arrangement for
employees or directors, or upon the exercise, conversion or exchange of
securities outstanding on the Record Date or hereinafter issued by the Company,
and (b) may, in any other case, if deemed necessary or appropriate by the Board
of Directors of the Company, issue Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided,
however, that (i) no such Rights Certificate shall be issued if, and to the
extent that, the Company shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to the Company or
the Person to whom such Rights Certificate would be issued, and (ii) no such
Rights Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
SECTION 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its
option, at any time prior to the earlier of (i) the Close of Business on the
tenth day following a Stock Acquisition Date (or, if the Stock Acquisition Date
shall have occurred prior to the Record Date, the Close of Business on the tenth
day following the Record Date), or (ii) the Close of Business on the Final
Expiration Date, redeem all but not less than all the then outstanding Rights at
a redemption price of $.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price") and the Company may, at its option, pay
the Redemption Price either in Common Shares (based on the "current market
price", as defined in Section 11(d)(i) hereof, of the Common Shares at the time
of redemption) or cash; provided, however, if the Board of Directors of the
Company authorizes redemption of the Rights in either of the circumstances set
forth in clauses (i) and (ii) of this proviso, then there must be Continuing
Directors then in office and such authorization shall require the concurrence of
a majority of such Continuing Directors. Notwithstanding anything contained in
this Agreement to the contrary, the Rights shall not be exercisable after the
occurrence of a Section 11(a)(ii) Event until such time as the Company's right
of redemption hereunder has expired.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights, without any
notice, or further action, 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 Board
of
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Directors ordering the redemption of the Rights, the Company shall mail notice
of such redemption to the Rights Agent and the holders of the then outstanding
Rights by, in the case of notice to holders, mailing such notice to all such
holders at each holder's last address as it appears upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry books of
the Transfer Agent for the Common Shares. Any notice that 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, exchange all
or part of the then outstanding and exercisable Rights (which shall not include
Rights that have become null and void pursuant to the provisions of Section 7(e)
hereof) for Common Shares at an exchange ratio of one Common Share 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 Company"s Board of Directors shall not be empowered to effect such exchange
at any time after any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any such Subsidiary, or any
Person organized, appointed or established by the Company for or pursuant to the
terms of any such plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of fifty percent (50%) or more of the
Common Shares 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 the holders of such Rights shall be to receive that number of
Common Shares equal to the number of such Rights held by such holder multiplied
by the 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 notify the Rights Agent of any such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the Common Shares for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange shall be effected
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pro rata based on the number of Rights (other than Rights which have become null
or void pursuant to the provisions of Section 7(e) hereof) held by each holder
of Rights.
(c) In the event that there shall not be sufficient
Common Shares issued but not outstanding or authorized but issued 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
Common Shares for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue
fractions of Common Shares or to distribute certificates which evidence
fractional Common Shares. In lieu of such fractional Common Shares, there shall
be paid to the registered holders of the Rights Certificates with regard to
which such fractional Common Shares would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value of a whole Common
Share. For the purposes of this subsection (d), the current market value of a
whole Common Share shall be the closing price of a Common Share (as determined
pursuant to the second sentence of Section 11(d) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.
SECTION 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time
after the Distribution Date, (i) to pay any dividend payable in stock of any
class to the holders of Preferred Shares or to make any other distribution to
the holders of Preferred Shares (other than a regular quarterly dividend out of
earnings or retained earnings of the Company), or (ii) to offer to the holders
of Preferred Shares rights or warrants to subscribe for or to purchase any
additional Preferred Shares or shares of stock of any class or any other
securities, rights or options, or (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares), or (iv) to effect any consolidation or merger
into or with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one transaction or a series of related transactions, of
more than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the Company and/or
any of its Subsidiaries in one or more transactions each of which complies with
Section 11(o) hereof), or (v) to effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company shall give to the Rights
Agent and to each holder of a Rights Certificate, to the extent feasible and in
accordance with Section 26 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer,
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liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of Preferred Shares, 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 Preferred Shares 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 Preferred Shares, whichever shall be the earlier.
(b) In case any of the events set forth in Section
11(a)(ii) hereof shall occur, then, in any such case (i) the Company shall as
soon as practicable thereafter give to each holder of a Rights Certificate and
the Rights Agent, to the extent feasible and in accordance with Section 26
hereof, a notice of the occurrence of such event, which shall specify the event
and the consequences of the event to holders of Rights under Section 11(a)(ii)
hereof, and (ii) all references in the preceding paragraph to Preferred Shares
shall be deemed thereafter to refer to Common Shares 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 Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Safeguard Scientifics, Inc.
800 The Safeguard Building
435 Devon Park Drive
Wayne, Pennsylvania 19087-1945
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
450 W. 23rd Street, 10th Floor
New York, New York 10001
Attention: Monty Harry
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date to the
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holder of certificates representing Common Shares) 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 may 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 Common Shares. From and after the
Distribution Date and subject to the penultimate sentence of this Section 27,
the Company may and the Rights Agent shall, if the Company so directs,
supplement or amend this Agreement without the approval of any holders of Rights
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,
or (iv) to change or supplement the provisions hereunder in any manner that the
Company may deem necessary or desirable and that shall not adversely affect the
interests of the holders of Rights Certificates; provided, this Agreement may
not be supplemented or amended to lengthen, pursuant to clause (iii) of this
sentence, (A) a time period relating to when the Rights may be redeemed at such
time as the Rights are not then redeemable, or (B) any other time period unless
such lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Company that states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, and if requested by the Rights Agent, an opinion of counsel and such
supplement or amendment does not change or increase the Rights Agent"s duties,
liabilities, obligations, the Rights Agent shall execute such supplement or
amendment. Notwithstanding anything contained in this Agreement to the contrary,
(i) no supplement or amendment shall be made that changes the Redemption Price,
the Final Expiration Date, the Purchase Price or the number of Preferred Share
Fractions for which a Right is exercisable, (ii) any supplement or amendment
shall be effective only if there are Continuing Directors and shall require the
concurrence of a majority of such Continuing Directors if: (x) such supplement
or amendment occurs on or after the time a Person becomes an Acquiring Person,
or (y) such supplement or amendment occurs on or after the date of a change
(resulting from a proxy or consent solicitation) in a majority of the directors
in office at the commencement of such solicitation if any Person who is a
participant in such solicitation has stated (or, if upon the commencement of
such solicitation, a majority of the Board of Directors of the Company has
determined in good faith) that such Person (or any of its Affiliates or
Associates) intends to take, or may consider taking, any action that would
result in such Person becoming an Acquiring Person or that would cause the
occurrence of a Triggering Event unless, concurrent with such solicitation, such
Person (or one or more of its Affiliates or Associates) is making a cash tender
offer pursuant to a
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Schedule 14D-1 (or any successor form) filed with the Securities and Exchange
Commission for all outstanding Common Shares not beneficially owned by such
Person (or by its Affiliates or Associates), and (iii) no supplement or
amendment that changes or increases the obligations and duties of the Rights
Agent under this Agreement shall be effective without the consent of the Rights
Agent. Prior to the Distribution Date, the interests of the beneficial owners of
Rights shall be deemed coincident with the interests of the holders of Common
Shares.
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. For all purposes of this Agreement, any calculation of the
number of Common Shares outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding Common
Shares of which any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act. The Board of Directors of the Company (with,
where specifically provided for herein, the concurrence 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 (with, where specifically provided for herein, the concurrence 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 (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend or supplement the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) that are done or made by the Board
(with, where specifically provided for herein, the concurrence of the Continuing
Directors) in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other Persons, and
(y) not subject the Board or the Continuing Directors to any liability to the
holders of the Rights. For purposes of this Agreement, the Rights Agent shall be
allowed to assume that all such actions, calculations, interpretations and
determinations have been done or made by the Board in good faith.
SECTION 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, registered holders of the Common Shares) 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
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<PAGE> 45
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Shares).
SECTION 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable for any purpose or under
any set of circumstances or as applied to any Person, such invalid, void or
unenforceable term, provision, covenant or restriction shall continue in effect
to the maximum extent possible for all other purposes, under all other
circumstances and as applied to all other Persons; and the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 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.
Without limiting the foregoing, if any provisions requiring that a determination
be made by less than the entire Board (or at a time or with the concurrence of a
group of directors consisting of less than the entire Board) is held by a court
of competent jurisdiction or other authority to be invalid, void or
unenforceable, such determination shall then be made by the Board in accordance
with applicable law and the Company's Certificate of Incorporation and by-laws.
SECTION 32. Governing Law. This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the Commonwealth of Pennsylvania and for all purposes shall be
governed by and construed in accordance with the laws of such jurisdiction
applicable to contracts made and to be performed entirely within such
jurisdiction; except that all provisions regarding the rights, duties and
obligations of the Rights Agent shall by governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed entirely within such jurisdiction.
SECTION 33. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
SECTION 34. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
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<PAGE> 46
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SAFEGUARD SCIENTIFICS, INC.
By
Name:
Title:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By
Name:
Title: Assistant Vice President
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<PAGE> 47
EXHIBIT A
RESOLUTION OF THE BOARD OF DIRECTORS OF
SAFEGUARD SCIENTIFICS, INC.
ESTABLISHING AND DESIGNATING
SERIES A JUNIOR PARTICIPATING PREFERRED SHARES
AS A SERIES OF THE PREFERRED STOCK
RESOLVED, that pursuant to the authority expressly vested in the Board of
Directors of Safeguard Scientifics, Inc. (the "Corporation") by Article FIFTH of
the Articles of Incorporation of the Corporation, the Board of Directors hereby
fixes and determines the voting rights, designations, preferences,
qualifications, privileges, limitations, restrictions, options, conversion
rights and other special or relative rights of the first series of the Series
Preferred Stock, par value $10.00 per share, which shall consist of 150,000
shares and shall be designated as Series A Junior Participating Preferred Shares
(the "Series A Preferred Shares").
Special Terms of the Series A Preferred Shares
SECTION 1. Dividends and Distributions.
(a) The rate of dividends payable per share of Series A
Preferred Shares on the first day of January, April, July and October in each
year or such other quarterly payment date as shall be specified by the Board of
Directors (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 the Series A Preferred
Shares, shall be (rounded to the nearest cent) equal to the greater of (i)
$10.00 or (ii) subject to the provision for adjustment hereinafter set forth,
1,000 times the aggregate per share amount of all cash dividends, and 1,000
times the aggregate per share amount (payable in cash, based upon the fair
market value at the time the non-cash dividend or other distribution is declared
or paid as determined in good faith by the Board of Directors) 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, $.10 par value per
share, of the Corporation 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 the Series A
Preferred Shares. Dividends on the Series A Preferred Shares shall be paid out
of funds legally available for such purpose. In the event the Corporation shall
at any time after February 28, 2000 (the Rights Declaration Date), (excluding,
however, the stock dividend declared on February 28, 2000 in connection with the
Company's three-for-one common stock split) (i) declare any dividend on 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, then in each such case the amounts to which holders of
Series A Preferred Shares were entitled
<PAGE> 48
immediately prior to such event under clause (ii) of the preceding sentence
shall be adjusted by multiplying each 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) Dividends shall begin to accrue and be cumulative on
outstanding Series A Preferred Shares from the Quarterly Dividend Payment Date
next preceding the date of issue of such Series A Preferred Shares, 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 Series A Preferred Shares entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in either of
which events such dividends shall begin to accrue and be cumulative from such
quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the Series A Preferred Shares 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.
SECTION 2. Voting Rights. In addition to any other voting
rights required by law, the holders of Series A Preferred Shares shall have the
following voting rights:
(a) Subject to the provision for adjustment hereinafter set
forth, each Series A Preferred Share shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the shareholders of the Corporation.
In the event the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on 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, then in each
such case the number of votes per share to which holders of Series A Preferred
Shares 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) In the event that dividends upon the Series A Preferred
Shares shall be in arrears to an amount equal to six full quarterly dividends
thereon, the holders of such Series A Preferred Shares shall become entitled to
the extent hereinafter provided to vote noncumulatively at all elections of
directors of the Corporation, and to receive notice of all shareholders'
meetings to be held for such purpose. At such meetings, to the extent that
directors are being elected, the holders of such Series A Preferred Shares
voting as a class shall be entitled solely to elect two members of the Board of
Directors of the Corporation; and all other directors of the Corporation shall
be elected by the other shareholders of the Corporation entitled to vote in the
election of directors. Such voting rights of the holders of such Series A
Preferred Shares shall continue until all accumulated and unpaid dividends
thereon shall have been paid or funds sufficient therefor
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<PAGE> 49
set aside, whereupon all such voting rights of the holders of shares of such
series shall cease, subject to being again revived from time to time upon the
reoccurrence of the conditions above described as giving rise thereto.
At any time when such right to elect directors separately as a
class shall have so vested, the Corporation may, and upon the written request of
the holders of record of not less than 20% of the then outstanding total number
of shares of all the Series A Preferred Shares having the right to elect
directors in such circumstances shall, call a special meeting of holders of such
Series A Preferred Shares for the election of directors. In the case of such a
written request, such special meeting shall be held within 90 days after the
delivery of such request, and, in either case, at the place and upon the notice
provided by law and in the By-laws of the Corporation; provided, that the
Corporation shall not be required to call such a special meeting if such request
is received less than 120 days before the date fixed for the next ensuing annual
or special meeting of shareholders of the Corporation. Upon the mailing of the
notice of such special meeting to the holders of such Series A Preferred Shares,
or, if no such meeting be held, then upon the mailing of the notice of the next
annual or special meeting of shareholders for the election of directors, the
number of directors of the Corporation shall, ipso facto, be increased to the
extent, but only to the extent, necessary to provide sufficient vacancies to
enable the holders of such Series A Preferred Shares to elect the two directors
hereinabove provided for, and all such vacancies shall be filled only by vote of
the holders of such Series A Preferred Shares as hereinabove provided. Whenever
the number of directors of the Corporation shall have been increased, the number
as so increased may thereafter be further increased or decreased in such manner
as may be permitted by the By-laws and without the vote of the holders of Series
A Preferred Shares, provided that no such action shall impair the right of the
holders of Series A Preferred Shares to elect and to be represented by two
directors as herein provided.
So long as the holders of Series A Preferred Shares are
entitled hereunder to voting rights, any vacancy in the Board of Directors
caused by the death or resignation of any director elected by the holders of
Series A Preferred Shares, shall, until the next meeting of shareholders for the
election of directors, in each case be filled by the remaining director elected
by the holders of Series A Preferred Shares having the right to elect directors
in such circumstances.
Upon termination of the voting rights of the holders of any
series of Series A Preferred Shares the terms of office of all persons who shall
have been elected directors of the Corporation by vote of the holders of Series
A Preferred Shares or by a director elected by such holders shall forthwith
terminate.
(c) Except as otherwise provided herein, in the Articles of
Incorporation of the Corporation or by law, the holders of Series A Preferred
Shares and the holders of Common Stock (and the holders of shares of any other
series or class entitled to vote thereon) shall vote together as one class on
all matters submitted to a vote of shareholders of the Corporation.
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<PAGE> 50
SECTION 3. Reacquired Shares. Any Series A Preferred Shares
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued Series
Preferred Stock and may be reissued as part of a new series of Series Preferred
Stock to be created by resolution or resolutions of the Board of Directors.
SECTION 4. Liquidation, Dissolution or Winding Up. In the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Corporation, the holders of Series A Preferred Shares shall be entitled to
receive the greater of (a) $100.00 per share, plus accrued dividends to the date
of distribution, whether or not earned or declared, or (b) an amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 1,000
times the aggregate amount to be distributed per share to holders of Common
Stock. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on 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,
then in each such case the amount to which holders of Series A Preferred Shares
were entitled immediately prior to such event pursuant to 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.
SECTION 5. 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, then in any such case the Series
A Preferred Shares shall at the same time be similarly exchanged or changed in
an amount per share (subject to the provision for adjustment hereinafter set
forth) equal to 1,000 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 after the Rights Declaration Date (i) declare any
dividend on 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, 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 Shares 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.
A-4
<PAGE> 51
SECTION 6. No Redemption. The Series A Preferred Shares shall
not be redeemable.
SECTION 7. Ranking. The Series A Preferred Shares shall rank
junior to all other series of the Corporation's Series Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
SECTION 8. Fractional Shares. Series A Preferred Shares may be
issued in fractions of a share 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 Shares.
A-5
<PAGE> 52
EXHIBIT B
[Form of Rights Certificate]
Certificate No. R- ___________ Rights
NOT EXERCISABLE AFTER FEBRUARY 28, 2010 OR AFTER EARLIER REDEMPTION BY
THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED
BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON
WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e)
OF SUCH AGREEMENT.]*
- ---------------
* The bracketed portion of the legend shall be inserted only if applicable and
shall replace the preceding sentence.
<PAGE> 53
SAFEGUARD SCIENTIFICS, INC.
RIGHTS CERTIFICATE
This certifies that ___________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of February 28, 2000 (the Rights
Agreement), between Safeguard Scientifics, Inc., a Pennsylvania corporation (the
Company), and ChaseMellon Shareholder Services, L.L.C., a New Jersey limited
liability company (the Rights Agent), to purchase from the Company at any time
prior to 5:00 P.M. (Philadelphia time) on February 28, 2010 at the office or
offices of the Rights Agent designated for such purpose, or its successors as
Rights Agent, one one-thousandth of a fully paid, nonassessable share of Series
A Junior Participating Preferred Stock (the Preferred Share) of the Company, at
a purchase price (the Purchase Price) of $300 per one one-thousandth of a
Preferred Share (such fraction, a Preferred Share Fraction), upon presentation
and surrender of this Rights Certificate with the Form of Election to Purchase
and related Certificate duly executed. Except as provided in Sections 11(q) and
13(e) of the Rights Agreement, the Purchase Price shall be paid, at the option
of the Company, in cash or Common Stock, of the Company (the Common Shares)
having an equivalent value. The number of Rights evidenced by this Rights
Certificate (and the number of Preferred Share Fractions that may be purchased
upon exercise thereof) set forth above, and the Purchase Price per Preferred
Share Fraction set forth above, are the number and Purchase Price as of February
28, 2000, based on the Preferred Shares as constituted at such date.
Except as otherwise provided in the Rights Agreement, upon the
occurrence of any Section 11(a)(ii) Event (as such term is defined in the Rights
Agreement), if the Rights evidenced by this Rights Certificate are beneficially
owned by (i) an Acquiring Person or Associate or Affiliate or Associate of any
Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a
transferee of any Acquiring Person (of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (iii) under
certain circumstances specified in the Rights Agreement, a transferee of a
person who, after such transfer, became an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, such Rights shall become null and void and no
holder hereof shall have any right with respect to such Rights from and after
the occurrence of any such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and
the number and kind of Preferred Shares or other securities that may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events,
including Triggering Events and a Section 11 (a) (ii) Event.
This Rights Certificate is subject to all of the terms,
covenants and restrictions of the Rights Agreement, which terms, covenants and
restrictions are hereby incorporated herein by
B-2
<PAGE> 54
reference and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent, the Company
and the holders of the Rights Certificates, which limitations of rights include
the temporary suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement. Copies of the Rights Agreement
are on file at the above-mentioned office of the Rights Agent and are also
available upon written request to the Company.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office of the Rights Agent designated for
such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Preferred Share Fractions as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered shall
have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $.001 per Right at any time prior to the earlier of the
Close of Business (as such term is defined in the Rights Agreement) on (i) the
tenth day following the Stock Acquisition Date (as such time period may be
extended pursuant to the Rights Agreement), and (ii) the Final Expiration Date.
Under certain circumstances set forth in the Rights Agreement, the decision to
redeem shall require the concurrence of a majority of the Continuing Directors.
No fractional Preferred Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of a Preferred Share, which may, as 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 Rights Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of Preferred Shares
or of any other securities of the Company (including Common Shares) that may at
any time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or, to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
B-3
<PAGE> 55
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of ____________, 19__
ATTEST SAFEGUARD SCIENTIFICS, INC.
____________________ By_______________________________
Secretary Title:
Countersigned
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By____________________
Authorized Signature
B-4
<PAGE> 56
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ________________________________________ hereby sells,
assigns and transfers unto
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ___________________ Attorney,
to transfer the within Rights Certificate on the books of the within-named
Company, with full power of substitution.
Dated: _________________, 19 __
_______________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: ________________, 19__ _____________________
Signature
Signature Guaranteed:
B-5
<PAGE> 57
NOTICE
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
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<PAGE> 58
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: SAFEGUARD SCIENTIFICS, INC.:
The undersigned hereby irrevocably elects to exercise ________
Rights represented by this Rights Certificate to purchase the Preferred Shares
issuable upon the exercise of the Rights (or Common Shares or such other
securities of the Company or of any other person that may be issuable upon the
exercise of the Rights) and requests that certificates for such shares be issued
in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced
by this Rights Certificate, a new Rights Certificate for the balance 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: _____________, 19__
_________________________
Signature
Signature Guaranteed:
B-7
<PAGE> 59
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that
(1) the Rights evidenced by this Rights Certificate [ ] are [
] are not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: _____________, 19__ _________________________
Signature
Signature Guaranteed:
NOTICE
The signatures to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
B-8
<PAGE> 1
EXHIBIT 10
TRANSACTION AGREEMENT
This Agreement is made as of this 28th day of February, 2000 between
Safeguard Scientifics, Inc., a Pennsylvania corporation ("Safeguard"), and
Textron Inc., a Delaware corporation ("Textron"), with reference to the
following Preamble:
Safeguard and Textron desire to establish a strategic alliance
encompassing the rights and obligations described in this Agreement,
including without limitation, (a) the issuance and sale by Safeguard,
and the purchase by Textron of 727,273 shares (the "Purchased Shares")
of Common Stock of Safeguard, par value $.10 per share ("Common
Stock"), in a private placement under Section 4(2) of the Securities
Act of 1933, as amended (the "Securities Act"); (b) the provision of
certain consulting and other services and arrangements by Safeguard and
its network companies to Textron and companies affiliated with Textron;
and (c) the provision of certain consulting and other services and
arrangements by Textron to Safeguard and its network companies.
Capitalized terms used herein shall have the meaning ascribed thereto
in Annex A.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and conditions set forth below, the parties
hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF PURCHASED SHARES
SECTION 1.1 PURCHASE AND SALE OF PURCHASED SHARES. Subject to the terms
and conditions hereinafter set forth, at the Closing (hereinafter defined)
Safeguard shall sell to Textron and Textron shall purchase from Safeguard the
Purchased Shares for a price per share of $137.50 or an aggregate purchase price
of One Hundred Million Dollars ($100,000,000.00) (the "Purchase Price"). The
number of Purchased Shares and the purchase price per Purchased Share shall be
adjusted appropriately to reflect all stock dividends, splits, combinations and
similar transactions which affect the Common Stock with a record date after the
date hereof but prior to the Closing Date.
SECTION 1.2 CLOSING. Subject to the provisions of this Agreement, the
parties shall hold a closing (the "Closing") on the next Business Day following
the date on which the last of the conditions set forth in Article V hereof is
fulfilled or waived (such date, the "Closing Date"), at 9:00 A.M. at the offices
of Morgan, Lewis & Bockius LLP at 1701 Market Street, Philadelphia,
Pennsylvania, or at such other time or place as Textron and Safeguard may agree.
SECTION 1.3 DELIVERIES.
(a) At the Closing, Safeguard shall deliver to Textron, free
and clear of all Liens, the certificates for the Purchased Shares, registered in
the name of Textron and bearing the legend described in Section 3.10 hereof,
against payment by Textron of the Purchase Price by wire transfer of immediately
available funds to such bank account as Safeguard shall designate.
(b) At the Closing, Safeguard shall also deliver to Textron,
and Textron shall deliver to Safeguard, as applicable, the certificates and
opinion referred to in Sections 5.2 and 5.3 hereof.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
SAFEGUARD
Safeguard represents and warrants to Textron the following, except as
set forth on a disclosure schedule delivered by Safeguard concurrently with the
execution and delivery of this Agreement (the "Safeguard Schedule").
SECTION 2.1 ORGANIZATION AND POWERS. Safeguard is a corporation duly
incorporated, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. Safeguard has all requisite corporate power and
authority to carry on its business as it has been and is now and as is currently
contemplated to be conducted and to own, lease and operate the properties and
assets used in connection therewith.
SECTION 2.2 AUTHORITY; BINDING EFFECT. Safeguard has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. All necessary action, corporate
or otherwise, required to have been taken by or on behalf of Safeguard by
Applicable Law, the amended and restated Articles of Incorporation and Bylaws of
Safeguard (the "Safeguard Charter Documents") or otherwise to authorize (a) the
approval, execution and delivery on its behalf of this Agreement and (b) its
performance of its obligations under this Agreement and the consummation of the
transactions contemplated hereby, has been taken. This Agreement constitutes the
valid and binding agreement of Safeguard, enforceable against Safeguard in
accordance with its terms, except (y) as the same may be limited by applicable
bankruptcy, insolvency, moratorium or similar laws of general application
relating to or affecting creditors' rights, including, without limitation, the
effect of statutory or other laws regarding fraudulent conveyances and
preferential transfers, and (z) for the limitations imposed by general
principles of equity.
SECTION 2.3 NO CONFLICT; APPROVALS. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
will not, (a) violate or conflict with the Safeguard Charter Documents, (b)
result in a Default under any material Contract or Court Order to which
Safeguard or any of its Subsidiaries is a party or by which it is bound, or (c)
subject to the consents, approvals, orders, authorizations, filings,
declarations and registrations specified in Section 2.4 or in the Safeguard
Schedule and the approval by the New York Stock Exchange ("NYSE") of the listing
of the Purchased Shares, conflict with or result in a Default of any License or
any Applicable Law, except, in the case of clauses (b) and (c), for any such
Defaults or Liens which would not have a Safeguard Material Adverse Effect and
do not impair the ability of Safeguard to perform its obligations under this
Agreement or prevent or delay the consummation of any of the transactions
contemplated hereby.
SECTION 2.4 GOVERNMENTAL CONSENTS AND APPROVALS. Except as set forth in
the Safeguard Schedule, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will require any
notification to or License from any Governmental Authority, except (a)
notification pursuant to, and expiration or termination of the waiting period
under the HSR Act and (b) where the failure to obtain such Licenses or to make
such filings or notifications, would not prevent it from performing its
obligations under this Agreement and would not have a Safeguard Material Adverse
Effect.
SECTION 2.5 ISSUANCE OF SHARES. The issuance and sale of the Purchased
Shares have been
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duly authorized and, upon the issuance of such shares in accordance with the
provisions of this Agreement and the Plan, such shares will be validly issued
and outstanding, fully paid and nonassessable shares of Common Stock, free of
preemptive or similar rights. Based in part upon the accuracy of the
representations of Textron contained in Article III hereof, the issuance of the
Purchased Shares is exempt from registration under the Securities Act and
applicable blue sky laws.
SECTION 2.6 REGISTRATION RIGHTS. Safeguard is not under any obligation
to register any of its securities under the Securities Act except (i) as
provided in this Agreement, or (ii) pursuant to the Registration Rights
Agreement, dated June 3, 1999, between Safeguard and Credit Suisse First Boston
Corporation (the "1999 Notes Agreement").
SECTION 2.7 SEC REPORTS; 1999 FINANCIAL STATEMENTS. Safeguard has filed
all required forms, reports and documents with the SEC since January 1, 1999
(collectively, "Safeguard's SEC Reports"), including, without limitation,
Safeguard's Annual Report on Form 10-K for the year ended December 31, 1998.
Safeguard's SEC Reports have complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act. As of their
respective dates, none of Safeguard's SEC Reports, including, without
limitation, any financial statements or schedules included or incorporated by
reference therein, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated or incorporated by reference
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements (including, in each case, any notes thereto) of Safeguard
included in Safeguard's SEC Reports or in the Safeguard Schedule complied with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, were prepared in accordance with GAAP (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto) and fairly presented in all material respects
the consolidated financial position of Safeguard and its consolidated
Subsidiaries as at the respective dates thereof and the consolidated results of
their operations and their consolidated cash flows for the periods then ended.
Safeguard has heretofore delivered to Textron, in the form filed with the SEC,
all of Safeguard's SEC Reports.
SECTION 2.8 ABSENCE OF CERTAIN CHANGES. Except as otherwise disclosed
in the Safeguard Schedule, since September 30, 1999, Safeguard and its
Subsidiaries have not been subject to, and have no knowledge of, any events or
conditions of any character that would have a Safeguard Material Adverse Effect
or impair the ability of Safeguard to perform its obligations under this
Agreement or prevent or delay the consummation of any of the transactions
contemplated hereby.
SECTION 2.9 ABSENCE OF LITIGATION; CLAIMS. There are no claims,
actions, suits, proceedings or investigations pending or, to the knowledge of
Safeguard, threatened against Safeguard or any of its Subsidiaries, or any
properties or rights of Safeguard or any of its Subsidiaries, before any
Governmental Authority or arbitrator, which, if decided adversely to Safeguard
or such Subsidiary, would have a Safeguard Material Adverse Effect or impair the
ability of Safeguard to perform its obligations under this Agreement or prevent
or delay the consummation of any of the transactions contemplated hereby, nor is
there any Court Order or judgment, decree, injunction, ruling or order of any
arbitrator outstanding against Safeguard or any of its Subsidiaries having or
which, insofar as reasonably can be foreseen, in the future would have a
Safeguard Material Adverse Effect.
SECTION 2.10 CAPITALIZATION. As of the date hereof, the authorized and
outstanding shares of capital stock of Safeguard is as shown in the Safeguard
Schedule. All outstanding shares of capital stock of Safeguard are duly
authorized and have been validly issued and are fully paid, nonassessable and
free
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of any liens or encumbrances other than any liens or encumbrances created by or
imposed upon the holders thereof. There are as of the date hereof no outstanding
obligations of Safeguard to issue or deliver or to repurchase, redeem or
otherwise acquire any Safeguard securities.
SECTION 2.11 BROKERS AND FINDERS. Neither Safeguard nor any of its
respective officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finder's fees in
connection with the transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
TEXTRON
Textron represents and warrants to Safeguard the following, except as
set forth on a disclosure schedule delivered by Textron concurrently with the
execution and delivery of this Agreement (the "Textron Schedule"):
SECTION 3.1 ORGANIZATION AND POWERS. Textron is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Textron has all requisite corporate power and authority to carry on
its business as it has been and is now being conducted and to own, lease and
operate the properties and assets used in connection therewith.
SECTION 3.2 AUTHORITY; BINDING EFFECT. Textron has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. All necessary action, corporate
or otherwise, required to have been taken by or on behalf of Textron by
Applicable Law, the amended and restated Certificate of Incorporation and Bylaws
of Textron (the "Textron Charter Documents") or otherwise to authorize (a) the
approval, execution and delivery on its behalf of this Agreement, and (b) its
performance of its obligations under this Agreement and the consummation of the
transactions contemplated hereby, has been taken. This Agreement constitutes the
valid and binding agreement of Textron, enforceable against Textron in
accordance with its terms, except (y) as the same may be limited by applicable
bankruptcy, insolvency, moratorium or similar laws of general application
relating to or affecting creditors' rights, including, without limitation, the
effect of statutory or other laws regarding fraudulent conveyances and
preferential transfers, and (z) for the limitations imposed by general
principles of equity.
SECTION 3.3 NO CONFLICT; APPROVALS. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
will not, (a) violate or conflict with the Textron Charter Documents, (b) result
in a Default under any material Contract to which Textron or any of its
Subsidiaries is a party or by which it is bound, or (c) subject to the consents,
approvals, orders, authorizations, filings, declarations and registrations
specified in Section 3.4 or in the Textron Schedule, conflict with or result in
a Default of any License or any Applicable Law, except, in the case of clauses
(b) and (c), for any such Default or Liens which would not impair the ability of
Textron to perform its obligations under this Agreement or prevent or delay the
consummation of any of the transactions contemplated hereby.
SECTION 3.4 GOVERNMENTAL CONSENTS AND APPROVALS. Except as set forth in
the Textron Schedule, neither the execution and delivery of this Agreement nor
the consummation of the Transactions contemplated hereby will require any
notification to or License from any Governmental Authority, except (a)
notification pursuant to, and expiration or termination of the waiting period
under
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the HSR Act and (b) where the failure to obtain such Licenses or to make such
filings or notifications, would not prevent it from performing its obligations
under this Agreement.
SECTION 3.5 ABSENCE OF LITIGATION; CLAIMS. There are no Court Orders or
claims, actions, suits, proceedings or investigations pending or, to the
knowledge of Textron, threatened against Textron or any of its Subsidiaries, or
any properties or rights of Textron or any of its Subsidiaries, before any
Governmental Authority or arbitrator, which, if decided adversely to Textron or
such Subsidiary, would impair the ability of Textron to perform its obligations
under this Agreement or prevent or delay the consummation of any of the
transactions contemplated hereby.
SECTION 3.6 BROKERS AND FINDERS. Neither Textron nor any of its
respective officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finder's fees in
connection with the Transactions contemplated hereby, which in either case
require a payment by Safeguard.
SECTION 3.7 PRIVATE PLACEMENT. Textron represents and warrants that it
is acquiring the Purchased Shares for its own account, as principal and not on
behalf of other persons, and for investment and not with a view to the resale or
distribution of all or any part of such Purchased Shares. Textron (a) has such
knowledge and experience in business and financial matters and such knowledge
concerning the business, operations and financial condition of Safeguard that it
is capable of evaluating the merits and risks of an investment in the Purchased
Shares, (b) fully understands the nature, scope, and duration of the limitations
on transfer contained herein and under Applicable Law and (c) can bear the
economic risk of any investment in the Purchased Shares and can afford a
complete loss of such investment. Textron has had an adequate opportunity to ask
questions and receive answers (and has asked such questions and received answers
to its satisfaction) from the officers of Safeguard concerning the business,
operations and financial condition of Safeguard. Textron has no Contract with
any other person to sell, transfer or grant participation in any of the
Purchased Shares. Textron hereby agrees that certificates representing the
Purchased Shares may bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE SECURITIES
ACT OF 1933, UNLESS, IN THE OPINION (WHICH SHALL BE IN FORM
AND SUBSTANCE SATISFACTORY TO THE ISSUER) OF COUNSEL
REASONABLY SATISFACTORY TO THE ISSUER, SUCH REGISTRATION IS
NOT REQUIRED. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO RESTRICTIONS ON TRANSFER SET FORTH IN SECTION 6.10
OF A TRANSACTION AGREEMENT, DATED FEBRUARY 28, 2000 BETWEEN
THE ISSUER AND TEXTRON, INC.
The legend set forth above shall be removed by Safeguard from any certificate
evidencing Purchased Shares (i) at such time as such Purchased Shares have been
registered under the Securities Act, or (ii) after the first anniversary of the
Closing Date upon delivery to Safeguard of an opinion by counsel, reasonably
satisfactory to Safeguard, that such Purchased Shares can be freely transferred
in a public sale without a registration statement under the Securities Act of
1933 being in effect, or (iii) when they
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become eligible for sale under Rule 144(k) under the Securities Act upon receipt
of an appropriate officers certificate of Textron as to such eligibility.
ARTICLE IV
OTHER AGREEMENTS
SECTION 4.1 REASONABLE BEST EFFORTS. Except as otherwise provided
herein, each of the parties hereto agrees to use its reasonable best efforts to
take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under Applicable Law to
consummate and make effective the transactions contemplated hereby in the most
expeditious manner practicable, including, without limitation, the satisfaction
of all conditions to the obligations of the parties to consummate the Closing as
promptly as practicable, but in no event later than March 31, 2000.
SECTION 4.2 PUBLIC ANNOUNCEMENTS. The parties hereto shall not, and
shall not permit their Representatives to, make any public announcements or
otherwise communicate with any news media with respect to this Agreement or any
of the transactions contemplated hereby without prior consultation with the
other parties as to the timing and contents of any such announcement as may be
reasonable under the circumstances; provided, that nothing contained herein
shall prevent any party from promptly making all filings with Governmental
Authorities and all disclosure as may, in its good faith judgment, be required
or advisable in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby (in which case the
disclosing party shall advise the other parties and provide them with a copy of
the proposed disclosure or filing prior to making the disclosure or filing).
SECTION 4.3 NOTIFICATION. Each party hereto shall, in the event of, or
promptly after obtaining knowledge of the occurrence or threatened occurrence
of, any fact or circumstance that would cause or constitute a breach of any of
its representations and warranties set forth herein, give notice thereof to the
other party and shall use its best efforts to prevent or promptly to remedy such
breach.
SECTION 4.4 REGULATORY AND OTHER AUTHORIZATIONS. (a) Each party hereto
agrees to use commercially reasonable efforts to comply with all legal
requirements which may be imposed on such party with respect to the transactions
contemplated hereby and to obtain all consents of Governmental Authorities and
non-governmental third parties that may be or become necessary with respect to
its respective execution and delivery of, and the performance of its respective
obligations pursuant to this Agreement, and each party will cooperate fully with
the other party in promptly seeking to obtain all such consents. Without
limitation, Textron and Safeguard shall each make an appropriate filing of a
Notification and Report Form pursuant to the HSR Act promptly, but in no event
later than 40 days after the date hereof, and shall promptly respond to any
request for additional information with respect thereto. Each such filing shall
request early termination of the waiting period imposed by the HSR Act.
(b) Notwithstanding anything else to the contrary contained in
this Agreement, neither of the parties shall have any obligation to oppose,
challenge or appeal any suit, action or proceeding by any Governmental Authority
or any order or ruling by any Governmental Authority, (i) seeking to restrain or
prohibit or restraining or prohibiting the consummation of the transactions
contemplated hereby, (ii) seeking to prohibit or limit or prohibiting or
limiting the ownership, operation or control by Textron, Safeguard or any of
their respective Subsidiaries of any portion of the business or assets of
Textron, Safeguard or any of their respective Subsidiaries or (iii) seeking to
compel or compelling Textron, Safeguard or any of their respective Subsidiaries
to dispose of, grant rights in respect of, or hold separate any portion of the
business or assets of Textron, Safeguard or any of their
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respective Subsidiaries.
ARTICLE V
CONDITIONS TO CLOSING
SECTION 5.1 CONDITIONS TO THE OBLIGATIONS OF SAFEGUARD AND TEXTRON. The
respective obligations of Safeguard and Textron to consummate the transactions
contemplated hereby are subject to the requirements that:
(a) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition shall have been issued and be in effect (i) restraining or
prohibiting the consummation transactions contemplated hereby or (ii)
prohibiting or limiting the ownership, operation or control by Textron,
Safeguard or any of their respective Subsidiaries of any portion of the business
or assets of Textron, Safeguard or any of their respective Subsidiaries, or
compelling Textron, Safeguard or any of their respective Subsidiaries to dispose
of, grant rights in respect of, or hold separate any portion of the business or
assets of Textron, Safeguard or any of their respective Subsidiaries; nor shall
any action have been taken by a Governmental Authority or any Applicable Law
shall have been enacted, entered, promulgated or enforced by any Governmental
Authority or arbitrator, which is in effect and has the effect of making the
transaction contemplated hereby illegal or otherwise prohibiting the
consummation of the transaction contemplated hereby.
(b) HSR Act. Any waiting period applicable to the consummation
of the transaction contemplated hereby under the HSR Act shall have expired or
been terminated.
(c) NYSE Listing. Approval for listing by the NYSE upon
official notice of issuance of the Purchased Shares shall have been received by
Safeguard.
SECTION 5.2 CONDITIONS TO THE OBLIGATIONS OF TEXTRON. The obligations
of Textron to consummate the transactions contemplated hereby are subject to the
further requirements that:
(a) Representations and Warranties. The representations and
warranties of Safeguard contained in this Agreement or in any other document
delivered pursuant hereto shall be true and correct in all material respects
(except to the extent that such representations and warranties are qualified by
materiality in which case, to the extent of such qualification, they shall be
true and correct in all respects) on and as of the Closing Date with the same
effect as if made on and as of the Closing Date and at the Closing Safeguard
shall have delivered to Textron a certificate to that effect.
(b) Performance of Obligations. Each of the obligations of
Safeguard to be performed on or before the Closing Date pursuant to the terms of
this Agreement shall have been duly performed in all material respects on or
before the Closing Date and at the Closing Safeguard shall have delivered to
Textron a certificate to that effect.
(c) Opinion of Counsel. Textron shall have received the
written opinion dated the Closing Date of counsel for Safeguard covering the
matters agreed to by the parties prior to the date hereof, subject to customary
qualifications and limitations.
SECTION 5.3 CONDITIONS TO THE OBLIGATIONS OF SAFEGUARD. The obligations
of Safeguard to
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consummate the transactions contemplated hereby are subject to the further
requirements that:
(a) Representations and Warranties. The representations and warranties
of Textron contained in this Agreement or in any other document delivered
pursuant hereto shall be true and correct in all material respects (except to
the extent that such representations and warranties are qualified by materiality
in which case, to the extent of such qualification, they shall be true and
correct in all respects) on and as of the Closing Date with the same effect as
if made on and as of the Closing Date and at the Closing Textron shall have
delivered to Safeguard a certificate to that effect.
(b) Performance of Obligations. Each of the obligations of Textron to
be performed on or before the Closing Date pursuant to the terms of this
Agreement shall have been duly performed in all material respects on or before
the Closing Date and at the Closing, Textron shall have delivered to Safeguard a
certificate to that effect.
ARTICLE VI
REGISTRATION RIGHTS
SECTION 6.1 CERTAIN DEFINITIONS.
(a) As used herein, the following terms shall have the
following respective meanings:
The terms "register," "registered" and "registration"
refer to a resale registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration or ordering
of the effectiveness of such registration statement.
"Registrable Shares" shall mean the Purchased Shares
and any securities issued or issuable in respect of the Purchased Shares upon
any stock split, stock dividend, distribution, reorganization, merger,
consolidation, exchange, recapitalization or other similar event occurring
following the date of this Agreement.
"Registration Expenses" shall mean all expenses,
other than Selling Expenses, incurred by Safeguard in complying with Section 6.2
hereof, including without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel and independent public accountants
for Safeguard, up to $10,000 of the fees and disbursements of not more than one
counsel to Textron, fees and expenses (including counsel fees) incurred in
connection with complying with state securities or "blue sky" laws, fees of the
National Association of Securities Dealers, Inc., transfer taxes, fees of
transfer agents and registrars, and costs of insurance.
"Selling Expenses" shall mean all underwriting
discounts, selling commissions and stock transfer taxes applicable to the
Registrable Securities registered pursuant to Sections 6.2 hereof and the costs
of any counsel retained by the holders of Registrable Securities in excess of
$5,000 and the costs of any accountants or other experts retained by or on
behalf of the holders of Registrable Securities.
SECTION 6.2 "PIGGY-BACK" REGISTRATION. If Safeguard at any time prior
to the second anniversary of this Agreement proposes to register any of its
securities under the Securities Act for sale to the public, whether for its own
account or for the account of other security holders or both (except
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with respect to (i) the first registration statement initially filed with the
SEC after the date hereof and prior to July 31, 2000, (ii) any registration
statement filed by Safeguard pursuant to its obligations under the 1999 Notes
Agreement, or (iii) any registration statement on Forms S-4, S-8 or any
successor or similar forms thereto), each such time it will give written notice
to Textron and its subsidiaries who are then holders of outstanding Registrable
Shares of its intention to do so. Upon the written request of any such holder,
received by Safeguard within fifteen (15) days after the giving of any such
notice by Safeguard, to register any of its Registrable Shares, Safeguard will,
except as provided below, cause the Registrable Shares as to which registration
shall have been so requested to be included in the securities to be covered by
the registration statement proposed to be filed by Safeguard, all to the extent
required to permit the sale or other disposition by the holder of such
Registrable Shares so registered. In the event that any registration pursuant to
this Section 6.2 shall be, in whole or in part, an underwritten public offering
of securities, the number of Registrable Shares to be included in such an
underwriting may be reduced if and to the extent that the managing underwriter
shall be of the opinion that such inclusion would adversely affect the marketing
of the securities to be sold therein. Any exclusion of Registrable Shares shall
be made pro rata among holders of Registrable Shares and other holders of
Safeguard equity securities seeking to include such securities in such
registration statement. In no event shall Safeguard have any obligation to
reduce the number of shares being sold by Safeguard in the offering.
Notwithstanding the foregoing provisions, Safeguard may withdraw any
registration statement referred to in this Section 6.2 without thereby incurring
any liability to the holders of Registrable Shares if the Board of Directors of
Safeguard determines that such registration is not in the best interests of
Safeguard. There shall be no limit to the number of registrations of Registrable
Shares which may be effected under this Section 6.2.
SECTION 6.3 REGISTRATION PROCEDURES. If and whenever Safeguard is
required by the provisions of Section 6.2 to use its best efforts to effect the
registration of any Registrable Shares under the Securities Act, Safeguard will,
as expeditiously as possible:
(a) furnish to each seller of Registrable Shares in such
offering and to each underwriter such number of copies of the registration
statement and the prospectus included therein (including each preliminary
prospectus) as such persons reasonably may request in order to facilitate the
public sale or other disposition of the Registrable Shares covered by such
registration statement;
(b) use its best efforts to register or qualify the
Registrable Shares covered by such registration statement under the securities
or "blue sky" laws of such jurisdictions as the sellers of Registrable Shares in
such offering or, in the case of an underwritten public offering, the managing
underwriter reasonably shall request; provided, however, that Safeguard shall
not for any such purpose be required to qualify generally to transact business
as a foreign corporation in any jurisdiction where it is not so qualified or to
consent to general service of process in any such jurisdiction;
(c) use its best efforts to list the Registrable Shares
covered by such registration statement with any securities exchange or market on
which the securities of Safeguard, if applicable, is then listed or quoted;
(d) Furnish to each selling holder of Registrable Shares a
copy of all documents filed with and all correspondence from or to the SEC in
connection with any such registration; and
(e) immediately notify each seller of Registrable Shares in
such offering and each underwriter under such registration statement, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event of which Safeguard has knowledge
as a result of which the prospectus contained in such registration statement, as
then in effect,
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contains an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing.
SECTION 6.4 EXPENSES. All Registration Expenses shall be borne by
Safeguard whether or not the registration statement has become effective. All
Selling Expenses shall be borne by the participating sellers in proportion to
the number of shares sold by each, or by such participating sellers other than
Safeguard (except to the extent Safeguard shall be a seller) as they may agree.
SECTION 6.5 INDEMNIFICATION AND CONTRIBUTION.
(a) In the event of a registration of any of the Registrable
Shares under the Securities Act pursuant to Section 6.2, Safeguard will
indemnify and hold harmless each seller of such Registrable Shares thereunder,
each underwriter of such Registrable Shares thereunder and each other person, if
any, who controls such seller or underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such seller, underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such Registrable Shares were
registered under the Securities Act pursuant to Section 6.2, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each such seller, each
such underwriter and each such controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that Safeguard will not be liable in any such case if and to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished in writing by such seller, such
underwriter or such controlling person specifically for use in such registration
statement or prospectus.
(b) In the event of a registration of any of the Registrable
Shares under the Securities Act pursuant to Section 6.2, each seller of such
Registrable Shares thereunder, severally and not jointly, will indemnify and
hold harmless Safeguard, each person, if any, who controls Safeguard within the
meaning of the Securities Act, each officer of Safeguard who signs the
registration statement, each director of Safeguard, each underwriter and each
person who controls any underwriter within the meaning of the Securities Act,
against all losses, claims, damages or liabilities, joint or several, to which
Safeguard or such officer, director, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement under which such Registrable Shares
were registered under the Securities Act pursuant to Section 6.2, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse
Safeguard and each such officer, director, underwriter and controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that such seller will be liable hereunder in any such case
if, and only to the extent that, any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
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statement of a material fact or omission or alleged omission of a material fact
made in reliance upon and in conformity with information pertaining to such
seller, as such, furnished in writing to Safeguard by such seller specifically
for use in such registration statement or prospectus; and provided further,
however, that the liability of each seller hereunder shall be limited to the
proportion of any such loss, claim, damage, liability or expense which is equal
to the proportion that the public offering price of the shares sold by such
seller under such registration statement bears to the total public offering
price of all securities sold thereunder, but not in any event to exceed the net
proceeds received by such seller from the sale of Registrable Shares covered by
such registration statement.
(c) Promptly after receipt by an indemnified party hereunder
of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission to notify the
indemnifying party shall not relieve it from any liability which it may have to
such indemnified party other than under this Section 6.5 and shall only relieve
it from any liability which it may have to such indemnified party under this
Section 6.5 if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel reasonably
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 6.5 for any legal expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation and of liaison with counsel so selected;
provided, however, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be reasonable defenses available to it
which are different from or additional to those available to the indemnifying
party or if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, the indemnified party
shall have the right to select one separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred.
(d) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i) any
indemnified party exercising rights under the Agreement, or any controlling
person of any such holder, makes a claim for indemnification pursuant to this
Section 6.5 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 6.5 provides
for indemnification in such case, (ii) contribution under the Securities Act may
be required on the part of any such selling holder or any such controlling
person in circumstances for which indemnification is provided under this Section
6.5, or (iii) if the indemnification provided for by this Section 6.5 is
insufficient to hold harmless an indemnified party, other than by reason of the
exceptions provided therein; then, and in each such case, Safeguard and such
holder will contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (after contribution from others) (x) in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and the indemnified party on the other or (y) if the
allocation provided by clause (x) above is not permitted by applicable law, or
provides a lesser sum to the indemnified party than the amount hereinafter
calculated, in such proportion as is appropriate to reflect not only the
relative fault referred to in clause (x) above but also the relative benefits
received by the indemnifying party and the indemnified
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<PAGE> 12
party from the offering of the securities (taking into account the portion of
the proceeds of the offering received by each such party) and, in each case,
taking into account the statements or omissions which resulted in such losses,
claims, damages or liabilities and any other relevant equitable considerations.
No person will be required to contribute any amount in excess of the proceeds
received by such person in respect of all such Registrable Shares offered and
sold by it pursuant to such registration statement and no person or entity
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) will be entitled to contribution from any person or entity
who was not guilty of such fraudulent misrepresentation.
SECTION 6.6 CHANGES IN COMMON STOCK; SUCCESSOR.
(a) If, and as often as, there is any change in the Common
Stock by way of a stock split, stock dividend, combination or reclassification,
or through a merger, consolidation, reorganization or recapitalization, or by
any other means, appropriate adjustment shall be made in the provisions hereof
so that the rights and privileges granted hereby shall continue with respect to
the Common Stock as so changed.
(b) If Safeguard consolidates or merges into or with, another
person or sells, assigns, conveys, transfers, leases or otherwise disposes of
all or a majority of its assets to any person or group, or any person or group
consolidates with, or merges into or with, Safeguard, each holder of Registrable
Shares shall, as a condition to the relevant transaction involving such person,
group or successor in business, be granted by such person, group or successor in
business (each a "Successor"), equivalent rights to the rights granted in
hereunder.
SECTION 6.7 RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the SEC which may at any time
permit the sale of Registrable Shares to the public without registration,
Safeguard agrees to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the SEC in a timely
manner all reports and other documents required of Safeguard under the
Securities Act and the Exchange Act; and
(c) furnish to each holder of Registrable Shares forthwith
upon request a written statement by Safeguard as to its compliance with the
reporting requirements of such Rule 144 and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of Safeguard,
and such other reports and documents so filed by Safeguard as such holder may
reasonably request in availing itself of any rule or regulation of the SEC
allowing such holder to sell any Registrable Shares without registration.
SECTION 6.8 "MARKET STAND-OFF" AGREEMENT. Any holder of Registrable
Shares agrees, if requested by Safeguard or an underwriter of such registered
public offering, not to sell or otherwise transfer or dispose of any Common
Stock (or other securities) of Safeguard held by such holder other than
Registrable Shares included in the registration during a period of up to 90 days
following the effective date of the registration statement of Safeguard filed
under the Securities Act, provided that all other persons selling securities in
such underwritten public offering and all executive officers and directors of
Safeguard shall enter into similar agreements. Such agreement shall be in
writing in the form satisfactory to Safeguard and such underwriter, and may be
included in the underwriting agreement. Safeguard may impose stop-transfer
instructions with respect to the securities subject to the foregoing
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<PAGE> 13
restriction until the end of the required stand-off period.
SECTION 6.9 TRANSFERABILITY OF REGISTRATION RIGHTS. Registration rights
conferred herein on the holders of Registrable Shares shall inure to the benefit
only of Textron and its Subsidiaries.
SECTION 6.10 TRANSFER RESTRICTIONS. Notwithstanding any registration of
Registrable Shares, Textron agrees not to sell or transfer any Purchased Shares
to any person or entity, other than subsidiaries who agree to be bound to this
Section 6.10, for a period of one year from the Closing Date.
ARTICLE VII
STRATEGIC ALLIANCE ARRANGEMENTS
SECTION 7.1 CONSULTATION AND OTHER SERVICES TO BE PROVIDED BY
SAFEGUARD.
(a) On no less than a quarterly basis, representatives of
Safeguard and its network companies shall meet with representatives of Textron's
business units to discuss trends and developments in information technology and
e-commerce based on Safeguard's general knowledge of the marketplace and of the
specific activities of companies in the Safeguard network. The Safeguard
representatives shall include an appropriate mix of high level business
personnel and individuals with specific industry and technology know-how.
(b) Safeguard shall, on a regular basis, make specific
recommendations to Textron regarding information technology and e-commerce
products and services that Textron should adopt. Such products shall include
products and services offered by companies in the Safeguard network. Textron
shall have no obligation to adopt such products or services. Safeguard shall
recommend to its network companies that they offer Textron the opportunity to
act as a beta site for new products and services. Textron shall have no
obligations to act as a beta site.
(c) Safeguard shall offer Textron coordinated access to the
products and services of Safeguard's network companies and use reasonable
efforts to secure most favored nations pricing and terms where appropriate.
Textron shall enter into a separate agreement with each applicable entity
regarding the terms and conditions of the delivery of such products and
services. Textron shall have no obligation to license or otherwise acquire the
right to use any such product or service.
(d) Safeguard shall invite Textron representatives to
participate on appropriate Safeguard and Safeguard network advisory
councils/boards.
(e) The services provided by Safeguard pursuant to this
Section 7.1 shall be provided free of charge to Textron. Each party shall bear
its own out-of-pocket expenses incurred in connection therewith.
SECTION 7.2 CONSULTATION AND OTHER SERVICES TO BE PROVIDED BY TEXTRON.
(a) Textron shall meet on a quarterly basis with Safeguard and
provide Safeguard with information regarding Textron's technology and
infrastructure in order to (i) enable Safeguard to assess Textron's information
technology and e-commerce needs and (ii) enable Safeguard to assess the general
needs of the industries in which Textron conducts business.
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(b) Textron shall invite Safeguard representatives to
participate in Textron IM Council meetings and other appropriate Textron
sponsored meetings and conferences relating to e-commerce.
(c) Textron will discuss with Safeguard and, as appropriate,
give Safeguard and its network companies the opportunity to bid on, all major
new IT and e-commerce, e-communications, and e-Software services requirements.
Textron will have no obligation to accept any bid.
(d) The services provided by Textron pursuant to this Section
7.2 shall be provided free of charge to Safeguard. Each party shall bear its own
out-of-pocket expenses incurred in connection therewith.
SECTION 7.3 ADVISORY BOARD. The parties shall establish an advisory
board that shall meet on a quarterly basis to assess and evaluate the strategic
alliance between the parties and to oversee the services requested and provided
by a party under this Article VII and the appropriate compensation arrangements
related thereto. Each party shall designate at least one senior corporate
officer to represent the party on such advisory board and such other persons as
the party may elect. The advisory board will explore the possibility of the
parties jointly developing technologies and services and licensing or providing
the resulting technologies and services to third parties. Each party shall bear
its own expenses in connection with the foregoing.
SECTION 7.4 CONFIDENTIALITY.
(a) Confidential Information. For the purposes of this
Agreement, the term "Confidential Information" means any information disclosed
in connection with the transaction contemplated by this Agreement by either
party (the "Disclosing Party") to the other (the "Receiving Party") in any
manner and all tangible embodiments of such information. Confidential
Information shall not include any information that: (a) is or becomes publicly
known through no fault of the Receiving Party; (b) is developed independently by
the Receiving Party; (c) is known by the Receiving Party when disclosed if the
Disclosing Party does not then have a duty to maintain its confidentiality; or
(d) is rightfully obtained by the Receiving Party from a third party who does
not owe the Disclosing Party a duty to preserve its confidentiality. Without
limiting the generality of the foregoing, all information provided to the
Receiving Party by the Disclosing Party regarding the Disclosing Party's
business operations shall be deemed to be Confidential Information.
(b) Permitted Purposes. "Permitted Purpose" means the specific
purpose for which the Disclosing Party disclosed particular Confidential
Information to the Receiving Party. The Receiving Party shall use Confidential
Information solely for Permitted Purposes.
(c) Nondisclosure Obligation. From the time that Confidential
Information is disclosed by the Disclosing Party until the time that such
Confidential Information becomes publicly known through no fault of the
Receiving Party, the Receiving Party shall not disclose Confidential Information
to any person other than those who are subject to a nondisclosure obligation
comparable in scope to this Agreement and who have a need to know such
Confidential Information for a Permitted Purpose. Notwithstanding anything to
the contrary herein, a Receiving Party may disclose Confidential Information to
the extent required by a court or other governmental authority.
(d) This Section 7.4 shall survive for ten years after the
later of the (i) termination or expiration of Article VII, or (ii) the
termination of this Agreement pursuant to Section 8.1.
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<PAGE> 15
SECTION 7.5 TERM AND TERMINATION OF ARTICLE VII. Article VII of this
Agreement shall become effective on the Closing Date and remain in effect until
the fifth anniversary of the Closing Date unless terminated sooner pursuant to
this Section 7.5. Article VII of this Agreement may be terminated (a)
immediately by either party upon written notice upon a material breach by the
other party of its obligations under this Agreement, or (b) on the sixtieth day
after written notice of termination by either party; provided, however, this
Agreement may not be terminated pursuant to Section 7.5(b) hereof by either
party before the one-year anniversary of the date hereof. The termination of
this Article VII shall have no effect on any other agreements between Textron
and its respective Affiliates and Safeguard and its respective Affiliates.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 TERMINATION. This Agreement may be terminated (by written
notice by the terminating party to the other parties) and the transactions
contemplated hereby may be abandoned at any time prior to the Closing Date:
(a) By mutual written consent of each of Safeguard and
Textron;
(b) By either Safeguard or Textron if the Closing shall not
have occurred on or before April 30, 2000 (the "Termination Date"); provided,
however, that the right to terminate this Agreement under this Section 8.1(b)
shall not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of the
Closing to occur on or before the Termination Date;
(c) By either Safeguard or Textron if a Governmental Authority
or arbitrator shall have issued an order, decree or ruling or taken any other
action (which order, decree or ruling the parties shall use their commercially
reasonable efforts to lift), in each case permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated hereby, and such order,
decree, ruling or other action shall have become final and nonappealable; or
(d) By Safeguard if Textron shall have breached, or failed to
comply with, in any material respect any of its obligations under this Agreement
or any representation or warranty made by Textron shall have been incorrect in
any material respect when made or shall have since ceased to be true and correct
in any material respect, and such breach, failure or misrepresentation is not
cured within 30 days after notice thereof and such breaches, failures or
misrepresentations, individually or in the aggregate, result or would reasonably
be expected to impair the ability of Textron to perform its obligations under
this Agreement, and by Textron if Safeguard shall have breached, or failed to
comply with, in any material respect any of its obligations under this Agreement
or any representation or warranty made by Safeguard shall have been incorrect in
any material respect when made or shall have since ceased to be true and correct
in any material respect, and such breach, failure or misrepresentation is not
cured within 30 days after notice thereof and such breaches, failures or
misrepresentations, individually or in the aggregate, result or would reasonably
be expected to result in a Safeguard Material Adverse Effect.
SECTION 8.2 EFFECT OF TERMINATION. If this Agreement is terminated as
permitted by Section 8.1, such termination shall be without liability of any
party (or any Affiliate or representative of such party) to any other party,
except that if such termination shall result from the (i) failure of any party
to
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<PAGE> 16
this Agreement to fulfill a condition to the performance of the obligations of
the other parties that is within the control of such party, (ii) failure of any
party to this Agreement to perform a covenant or agreement contained in this
Agreement, or (iii) breach by any party to this Agreement of any representation
or warranty contained in this Agreement made as of the date of this Agreement,
such party shall be fully liable for any and all damages incurred or suffered by
any other party as a result of such failure or breach. The provisions of Section
4.2 shall survive any termination of this Agreement pursuant to Section 8.1.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior written and oral and all contemporaneous oral agreements and
understandings with respect to the subject matter hereof. This Agreement may not
be amended except by an instrument in writing signed by the parties hereto. In
the event of a conflict between any term of this Agreement and information
contained in Textron Schedule or the Safeguard Schedule, the terms included in
this Agreement shall govern.
SECTION 9.2 WAIVER. At any time before the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party to any such
extension or waiver shall be valid only as against such party and only if set
forth in an instrument in writing signed by such party.
SECTION 9.3 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
in person, by telecopy, or by registered or certified mail (postage prepaid,
return receipt requested) or by overnight courier service to the respective
parties as follows:
if to Safeguard:
Safeguard Scientifics, Inc.
800 The Safeguard Building
735 Devon Park Drive
Wayne, PA 19087
Telecopy: (610) 293-0601
Attention: General Counsel
with a copy to:
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
Telecopy: (215) 963-5299
Attention: N. Jeffrey Klauder, Esquire
if to Textron:
Textron Inc.
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<PAGE> 17
40 Westminster Street
Providence, RI 02903
Telecopy: (401) 457-2418
Attention: Executive Vice President and General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Beacon Street
31st Floor
Boston, MA 02108-3194
Telecopy: (617) 573-4822
Attention: Louis A. Goodman, Esquire
or to such other address as the party to whom notice is given may have
previously furnished to the others in writing in the manner set forth above. Any
notice or communication delivered in person shall be deemed effective on
delivery. Any notice or communication sent by telecopy shall be deemed effective
on the first business day at the place of which such notice or communication is
received following the day on which such notice or communication was sent. Any
notice or communication sent by registered or certified mail shall be deemed
effective on the fifth business day at the place from which such notice or
communication was mailed following the day in which such notice or communication
was mailed.
SECTION 9.4 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York regardless of the
laws that might otherwise govern under principles of conflicts of laws
applicable thereto. The parties waive all right to trial by jury in any action,
suit or proceeding to enforce or defend any rights or remedies under this
Agreement.
SECTION 9.5 DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 9.6 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 9.7 EXPENSES. Except as otherwise provided herein, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
SECTION 9.8 BINDING EFFECT; ASSIGNMENT. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, executors, legal representatives and successors. This Agreement may not
be assigned by any party hereto without the prior written consent of the other
parties.
SECTION 9.9 SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid or
unenforceable in any jurisdiction, the remainder hereof, and the application of
such provision to such person or circumstance in any other jurisdiction or to
other persons or circumstances in any jurisdiction, shall not be affected
thereby, and to this end the provisions of this Agreement shall be severable.
SECTION 9.10 LEGAL FEES AND COSTS. If any party hereto institutes any
action or proceeding,
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whether before a court or arbitrator, to enforce any provision of this
Agreement, the prevailing party therein shall be entitled to received from the
losing party reasonable attorneys' fees and costs incurred in such action or
proceeding, whether or not such action or proceeding is prosecuted to judgment.
SECTION 9.11 FURTHER ASSURANCES. After Closing, the parties shall
execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, such instruments and shall take such other action as may be necessary
or advisable to carry out their obligations under this Agreement and under any
exhibit, document, certificate or other instrument delivered pursuant to this
Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized on the day and
year first above written.
SAFEGUARD SCIENTIFICS, INC.
By:_________________________________
Name:
Title
TEXTRON INC.
By:_________________________________
Name:
Title
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<PAGE> 19
ANNEX A
DEFINITIONS
The following terms, as used in this Agreement, have the following
meanings:
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such other Person
"Applicable Law" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, directive, judgment, decree
or other requirement of any Governmental Authority applicable to such Person or
any of its Affiliates or any of their respective properties, assets or
Representatives (in connection with such Representative's activities on behalf
of such Person or any of its Affiliates).
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to close.
"Contracts" means all contracts, agreements, undertakings, leases,
licenses, commitments, sales and purchase orders and other instruments of any
kind, whether written or oral.
"Court Order" means any judgment, decree, injunction, order or ruling
of any Governmental Authority that is binding on any person or its property
under Applicable Law.
"Default" means (1) a violation, breach of or default under any
Contract, License, Court Order or Applicable Law, (2) the occurrence of an event
that with the passage of time or the giving of notice or both would constitute a
violation, breach of or default under any Contract, License, Court Order or
Applicable Law, or (3) the occurrence of an event that with or without the
passage of time or the giving of notice or both would give rise to a right of
termination, renegotiation or acceleration under any Contract or License.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means U.S. generally accepted accounting principles consistently
applied.
"Governmental Authority" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization,
commission, tribunal or organization or any regulatory, administrative or other
agency, or any political or other subdivision, department or branch of any of
the foregoing.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Lien" means, with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance or other adverse claim of
any kind in respect of such property or asset.
"Licenses" means licenses, franchises, permits, certificates,
approvals, easements, rights and other authorizations.
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"Litigation" means any lawsuit, action, arbitration, administrative or
other proceeding, criminal prosecution or governmental investigation or inquiry
involving or affecting the named Person, to which the named Person is a party or
by which it or any of such businesses, assets or liabilities may be bound or
affected.
"Person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust or other entity or
organization, including a Governmental Authority.
"Safeguard Material Adverse Effect" means any fact, condition, event,
development or occurrence which, individually or when taken together with all
other such facts, conditions, events, developments or occurrences, could
reasonably be expected to have a material adverse effect on the financial
condition, operating results or business of Safeguard and its Subsidiaries,
taken as a whole.
"SEC" means the U.S. Securities and Exchange Commission.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other Persons
performing similar functions are at the time directly or indirectly owned by
such Person.
2
<PAGE> 1
Exhibit 99.1
NEWS RELEASE
[SAFEGUARD SCIENTIFICS, INC. LETTERHEAD]
FOR IMMEDIATE RELEASE
MEDIA CONTACT: INVESTOR RELATIONS:
Adam Castellani Mona Zeehandelaar
Alexander Ogilvy PR Worldwide Safeguard Scientifics
404-881-2329 610-293-0600
[email protected]
SAFEGUARD ANNOUNCES 1999 FOURTH QUARTER AND YEAR-END RESULTS
WAYNE, PA, FEBRUARY 24, 2000 -- Safeguard Scientifics, Inc. (NYSE:SFE), a
leading Internet company, today announced its operating results for the fourth
quarter and year-ended December 31, 1999.
Net income for the fourth quarter of 1999 was $78.5 million, or $2.09 a
share (diluted), compared with $39.8 million, or $1.18 a share (diluted) in the
same period last year. Net income for the year ended December 31, 1999, was
$123.5 million, or $3.47 a share (diluted), compared with $110.1 million, or
$3.22 a share (diluted) in 1998. The 1999 net income included a gain of $112.4
million (net of tax) related to the issuance of common stock by Internet Capital
Group in its third quarter initial public offering ($23.0 million) and fourth
quarter secondary offering ($89.4 million). The 1998 income included $126.3
million (net of tax) of other income from the merger of Coherent Communications
and Tellabs, Inc., net of subsequent adjustments on the Tellabs holdings.
Revenue for the fourth quarter of 1999 was $737.1 million compared with
$625.0 million for the same period in 1998. Revenue for the year ended December
31, 1999, was $3.0 billion, compared with $2.3 billion in 1998. The increased
revenue reflects higher sales at CompuCom, resulting from its acquisition of
ENTEX's Technology Acquisition Services Division (TASD), which closed on May 11,
1999.
Pete Musser, chairman and CEO, commented, "Safeguard has sustained
1999's accelerated pace into the first quarter of 2000. We are very pleased with
the continued high level of shareholder participation in the Safeguard
Subscription Programs, which have created approximately $1 billion in
shareholder value through the past four IPOs. We have continued to grow in every
direction; we welcomed Walter Buckley, president and CEO of Internet Capital
Group, to our Board of Directors; delivered exciting news about our partnership
with Textron; and continued to build our management team with the addition of
four new officers."
SAFEGUARD HIGHLIGHTS
- - eMerge Interactive (Nasdaq: EMRG) raised $92.4 million in its IPO,
which priced at $15 on February 3, 2000, and is currently trading over
$40. Safeguard shareholders subscribed to 96% of the eMerge Interactive
shares offered to them through the Safeguard Subscription Program.
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- - Opus360 Corporation filed a registration statement with the Securities
and Exchange Commission for the initial public offering of its common
stock. The Safeguard Subscription Program record date is December 16,
1999. J.P. Morgan is the lead underwriter, joined by Robertson
Stephens, Bear Stearns and e*offering.
- - Textron Inc. (NYSE: TXT) agreed to purchase $100,000,000 of Safeguard
common stock which is expected to close in the first quarter. The
agreement also provides that Safeguard and Textron intend to work
together to offer consulting services to each other and explore a
variety of potential strategic relationships with each other. This
should allow Safeguard to leverage its extended network of over 200
Internet-related companies to help Textron develop and implement an
e-commerce strategy. aligne and Cambridge Technology Partners have
begun initial review of Textron's operations.
- - Safeguard announced the appointment of Walter W. Buckley, III,
president and CEO of Internet Capital Group, to its Board of Directors.
- - Safeguard also announced the appointment of four vice presidents to its
management team -- Jon Costello, vice president; Garrett Melby, vice
president in the software and e-business group; Steve Zodtner, vice
president of development and operations; and Dorie Culp, vice president
of human resources.
Harry Wallaesa, president and COO, added, "We ended 1999 on a high note
and are moving forward aggressively in 2000. Our pipeline of high-quality
acquisition candidates in our three focus areas of software, communications, and
e-services continues to grow rapidly."
PARTNER COMPANY HIGHLIGHTS
- - Safeguard acquired the remaining 20% of aligne incorporated, bringing
its total ownership interest to 100%. aligne has assisted several of
Safeguard's partner companies including CompuCom and Tangram. The
company is also leading the Textron strategic relationship.
- - Since the beginning of 2000, four new partner companies have joined
Safeguard's network. These include AgWeb.com, Inc., a
business-to-business commerce and content site serving the agricultural
marketplace; TechSpace, a New York-based "one-stop-shop" for
entrepreneurs that offers technologically advanced full-service office
environments and associated services to early and expansion stage
Internet-centric companies; fob.com, Inc., a provider of the
Internet-based vertical purchasing hub model; and NexTone
Communications, a provider of systems solutions for convergent
value-added services using broadband Internet access technology.
- - Internet Capital Group (Nasdaq: ICGE) completed a stock split 2-for-1
in December 1999. The company completed a secondary public offering of
6.9 million shares of its common stock at $108 per share and issued
$475 million 5-1/2% convertible subordinated notes due 2004, raising a
total of $1.2 billion.
-MORE-
<PAGE> 3
- - US Interactive (Nasdaq:USIT) announced it entered into a definitive
merger agreement to acquire SoftPlus, Inc., a privately-held, leading
e-solutions company based in Cupertino, CA. The acquisition of SoftPlus
will enable US Interactive to offer the Global 2000 innovative,
end-to-end (e2e) solutions to extend their businesses from behind the
Web to beyond the Web.
- - SOTAS, Inc., acquired S3net, Inc. of Germantown, Md., a leading
provider of innovative products that manage bandwidth based on quality,
reconcile inter-company billing, manage fraudulent usage of voice and
data networks, and improve network operating efficiency for
telecommunications customers worldwide.
- - iMedium announced the formation of a strategic alliance with Xceed,
Inc., (Nasdaq: XCED), an interactive architect and solutions builder.
Under this alliance, Xceed will be able to offer its clients iMedium's
See!Commerce(TM) technology for use on their Web sites. Xceed will also
serve as iMedium's representative with regard to certain marketing and
promotional initiatives.
ABOUT SAFEGUARD (WWW.SAFEGUARD.COM)
Safeguard is a leader in incubating and operating premier companies in
the Internet infrastructure market with a focus on three sectors: software,
communications and e-services. We intend to continue to develop and operate the
premier network of Internet infrastructure companies to offer solutions,
seamless connectivity, and e-services to businesses engaged in electronic
commerce.
FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, including, among others, those statements
containing the words "believes," "anticipates," "estimates," "expects" and words
of similar import. Such statements involve a number of risks and uncertainties.
The following factors, among others, could cause actual results to differ
materially from those described in these forward-looking statements: the company
and its partner companies may be unable to complete the pending transactions
described in this release due to changes in market conditions or failure to
obtain required shareholder or regulatory approvals; and the company may be
unable to fulfill its continuing strategy of acquiring interests in additional
successful partner companies on favorable terms.
# # #
NOTE TO EDITORS: Safeguard is a service mark of Safeguard Scientifics, Inc.
<PAGE> 4
SAFEGUARD SCIENTIFICS, INC.
COMPARATIVE FINANCIAL DATA
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Quarter Ended Year Ended
December 31, December 31,
----------------------- ----------------------------
1999 1998 1999 1998
-------- -------- ---------- ----------
(000s omitted, except per share data)
<S> <C> <C> <C> <C>
Total revenue $737,138 $624,951 $2,953,270 $2,287,092
Gains on issuance of stock by
partner companies $139,957 $ 1,124 $ 175,662 $ 3,782
Other income, net $ 29,497 $ 75,046 $ 107,290 $ 189,883
Net income $ 78,548 $ 39,795 $ 123,526 $ 110,123
Income per share
Basic $ 2.26 $ 1.26 $ 3.66 $ 3.46
Diluted $ 2.09 $ 1.18 $ 3.47 $ 3.22
Average common shares outstanding
Basic 34,816 31,575 33,711 31,833
Diluted 38,492 34,372 36,970 34,914
</TABLE>
Diluted income per share calculations adjust net income for the dilutive effect
of public company common stock equivalents and convertible securities. The
Company's convertible subordinated notes were dilutive for all periods presented
above.
