SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
MERIDIAN DATA, INC.
(Exact name of Registrant as specified in its charter)
Delaware 77-0188708
(State of incorporation (IRS Employer Identification No.)
or organization)
5615 Scotts Valley Drive
Scotts Valley, California 95066
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None None
Securities to be registered pursuant to Section 12(g) of the Act:
Preferred Share Purchase Rights
(Title of Class)
<PAGE>
Item 1. Description of Securities to be Registered.
Effective as of August 11, 1997, pursuant to a Preferred Shares Rights
Agreement (the "Rights Agreement") between Meridian Data, Inc. (the "Company")
and Bank Boston N.A., as Rights Agent (the "Rights Agent"), the Company's Board
of Directors declared a dividend of one right (a "Right") to purchase one
one-thousandth share of the Company's Series A Participating Preferred Stock
("Series A Preferred") for each outstanding share of Common Stock, no par value
("Common Shares"), of the Company. The dividend is payable on August 25, 1997
(the "Record Date") to shareholders of record as of the close of business on
that date. Each Right entitles the registered holder to purchase from the
Company one one-thousandth of a share of Series A Preferred at an exercise price
of $30.00 (the "Purchase Price"), subject to adjustment in the event the Company
declares a dividend on the Common Stock payable in Common Stock, subdivides the
number of outstanding shares of Common Stock into a larger number of such shares
or combines the number of outstanding shares of Common Stock into a smaller
number of such shares, among other circumstances. In addition, under certain
circumstances described more fully herein, the Rights may become exercisable for
a number of Common Shares having a value equal to two times the Purchase Price
and/or Common Stock of certain acquiring companies having a value equal to two
times the Purchase Price.
The following summary of the principal terms of the Rights Agreement is a
general de- scription only and is subject to the detailed terms and conditions
of the Rights Agreement. A copy of the Rights Agreement is attached as Exhibit
99.1 to this Registration Statement and is incorporated herein by reference;
capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to them in the Rights Agreement.
Certain Anti-takeover Effects
The Rights approved by the Board are designed to protect and maximize the
value of the outstanding equity interests in the Company in the event of an
unsolicited attempt by an acquiror to take over the Company, in a manner or on
terms not approved by the Board of Directors. Takeover attempts frequently
include coercive tactics to deprive the Company's Board of Directors and its
stockholders of any real opportunity to determine the destiny of the Company.
The Rights have been declared by the Board in order to deter such tactics,
including a gradual accumulation in the open market of a 15% or greater position
to be followed by a merger or a partial or two-tier tender offer that does not
treat all shareholders equally. These tactics can operate to unfairly pressure
shareholders, force them out of their investment and deprive them of the full
value of their shares.
The Rights are not intended to prevent a takeover of the Company and
will not do so. The Rights may be redeemed by the Company at $.01 per Right
within ten days (or on such later date as may be determined by a majority of the
Board of Directors, excluding directors affiliated with an Acquiring Person)
after the accumulation of 15% or more of the Company's shares by a single
acquiror or group. Accordingly, the Rights should not interfere with any merger
or business combination approved by the Board of Directors.
However, the Rights may have the effect of rendering more difficult or
discouraging an acquisition of the Company deemed undesirable by the Board of
Directors. The Rights may cause substantial dilution to a person or group that
attempts to acquire the Company on terms or in a manner not approved by the
Company's Board of Directors, except pursuant to an offer conditioned upon the
negation, purchase or redemption of the Rights. As a result, while the Rights
may provide the Board with leverage to obtain a higher price from a potential
acquiror, they may also prevent or deter offers not approved by the Board, and
therefore deprive stockholders, without providing them with the opportunity to
vote thereon, of the benefits of offers which may be at a higher price than the
current market price of the Company's Common Stock. In addition, assuming an
active trading market in the Rights themselves does not develop, shareholders
with lesser financial means might not be able to take full economic advantage of
the Rights. Further, the implementation of a rights plan may heighten the
susceptibility of the Company to greenmail by stockholders who threaten to
acquire a sufficient equity position to pass the Rights' triggering threshold,
although the Board can respond to any such action by redeeming the Rights at
$0.01 per Right.
Issuance of the Rights does not in any way weaken the financial strength
of the Company or interfere with its business plans. The issuance of the Rights
themselves has no dilutive effect, will not affect reported earnings per share,
should not be taxable to the Company or to its stockholders, and will not change
the way in which the Company's shares are presently traded. The Company's Board
of Directors believes that the Rights represent a sound and reasonable means of
addressing the complex issues of corporate policy created by the current
takeover environment.
Rights Evidenced by Common Share Certificates
The Rights will not be exercisable until the Distribution Date (defined
below). Prior to the Distribution Date, certificates for the Rights ("Rights
Certificates") will not be sent to stockholders and the Rights will attach to
and trade only together with the Common Shares. Accordingly, Common Share
certificates outstanding on the Record Date will evidence the Rights related
thereto, and Common Share certificates issued after the Record Date but prior to
the Distribution Date will contain a notation incorporating the Rights Agreement
by reference. Until the Distribution Date (or earlier redemption or expiration
of the Rights), the surrender or transfer of any certificates for Common Shares,
even without notation or a copy of the Summary of Rights being attached thereto
(but as to certificates representing Common Shares issued after the Record Date,
only if they bear the legend required by the Rights Agreement), will also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificate.
Distribution Date
The Rights will separate from the Common Shares, Rights Certificates
will be issued and the Rights will become exercisable upon the earlier of: (i)
10 days (or such later date as may be determined by a majority of the Board of
Directors, excluding directors affiliated with the Acquiring Person, as defined
below (the "Continuing Directors")) following a public announcement that a
person or group of affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the outstanding Common Shares, or (ii) 10 days (or such later date as may be
determined by a majority of the Continuing Directors) following the commencement
of, or announcement of an intention to make, a tender offer or exchange offer
the consummation of which would result in the beneficial ownership by a person
or group of 15% or more of the outstanding Common Shares. The earlier of such
dates is referred to as the "Distribution Date."
Issuance of Rights Certificates; Expiration of Rights
As soon as practicable following the Distribution Date, separate Rights
Certificates will be mailed to holders of record of the Common Shares as of the
close of business on the Distribution Date and such separate Rights Certificates
alone will evidence the Rights from and after the Distribution Date. All Common
Shares issued prior to the Distribution Date will be issued with Rights. Common
Shares issued after the Distribution Date may be issued with Rights if such
shares are issued (i) upon the conversion of outstanding convertible debentures
or any other convertible securities issued after adoption of the Rights
Agreement or (ii) pursuant to the exercise of stock options or under employee
benefit plans or arrangements unless such issuance would result in (or create a
risk that) such options, plans or arrangements would not qualify for otherwise
available special tax treatment. Except as otherwise determined by the Board of
Directors, no other Common Shares issued after the Distribution Date will be
issued with Rights. The Rights will expire on the earliest of (i) August 11,
2007 (the "Final Expiration Date"), (ii) redemption or exchange of the Rights as
described below, or (iii) consummation of an acquisition of the Company
satisfying certain conditions by a person who acquired shares pursuant to a
Permitted Offer as described below.
Initial Exercise of the Rights
Following the Distribution Date, and until one of the further events
described below, holders of the Rights will be entitled to receive, upon
exercise and the payment of $30.00 per Right, one one-thousandth share of the
Series A Preferred, subject to adjustment in the event the Company declares a
dividend on the Common Shares payable in Common Shares, subdivides the number of
outstanding shares of Common Shares into a larger number of such shares or
combines the number of outstanding shares of Common Shares into a smaller number
of such shares, among other circumstances. In addition, under certain
circumstances described more fully herein, the Rights may become exercisable for
Common Shares having a value equal to two times the Purchase Price and/or Common
Stock of certain acquiring companies having a value equal to two times the
Purchase Price.
Right to Buy Company Common Shares
Unless the Rights are earlier redeemed, in the event that an Acquiring
Person becomes the beneficial owner of 15% or more of the Company's Common
Shares then outstanding (other than pursuant to a Permitted Offer), then proper
provision will be made so that each holder of a Right which has not theretofore
been exercised (other than Rights beneficially owned by the Acquiring Person,
which will thereafter be void) will thereafter have the right to receive, upon
exercise and payment of the Purchase Price, Common Shares having a value equal
to two times the Purchase Price. For example, if the market price of Common
Shares on the Shares Acquisition Date was $30.00, a person holding one Right
could purchase 4 Common Shares upon exercise of such Right ($60.00/15.00),
whereas he could only purchase 2 Common Shares ($60.00/$30.00) in the absence of
such Rights. Rights are not exercisable following the occurrence of an event as
described above until such time as the Rights are no longer redeemable by the
Company as set forth below.
In the event that the Company does not have sufficient Common Shares
available for all Rights to be exercised, or the Board decides that it is
necessary and not contrary to the interests of Rights holders to do so, the
Company may instead substitute cash, assets or other securities for the Common
Shares for which the Rights would have been exercisable under this provision.
Right to Buy Acquiring Company Stock
Similarly, unless the Rights are earlier redeemed, in the event that,
after the Shares Acquisition Date (as defined below), (i) the Company is
acquired in a merger or other business combination transaction, or (ii) 50% or
more of the Company's consolidated assets or earning power are sold (other than
in transactions in the ordinary course of business) (either of which event is
referred to herein as an "Acquisition"), proper provision must be made so that
each holder of a Right which has not theretofore been exercised (other than
Rights beneficially owned by the Acquiring Person, which will thereafter be
void) will thereafter have the right to receive, upon exercise, shares of Common
Stock of the acquiring company having a value equal to two times the Purchase
Price (unless the transaction satisfies certain conditions and is consummated
with a person who acquired shares pursuant to a Permitted Offer, in which case
the Rights will expire). So (assuming no satisfaction of such conditions) if for
example the market price of the acquiror's stock on the date of the Acquisition
were $15.00, a person holding one Right could purchase 8 shares of the
acquiror's Common Stock upon exercise of such Right ($60.00/$7.50), whereas he
could only purchase 4 shares of acquiror's Common Stock ($60.00/$15.00) in the
absence of such Rights.
Permitted Offer
A Permitted Offer means a tender offer for all outstanding Common Shares
that has been determined by a majority of the Continuing Directors to be
adequate and otherwise in the best interests of the Company and its
shareholders. Where the Board of Directors has determined that a tender offer
constitutes a Permitted Offer, the Rights will not become exercisable to
purchase Common Shares or shares of the acquiring company (as the case may be)
at the discounted price described above.
Exchange Provision
At any time after the acquisition by an Acquiring Person of 15% or more
of the Company's outstanding Common Shares and prior to the acquisition by such
Acquiring Person of 50% or more of the Company's outstanding Common Shares, the
Board of Directors of the Company may exchange the Rights (other than Rights
owned by the Acquiring Person), in whole or in part, at an exchange ratio of one
Common Share per Right.
Redemption
At any time on or prior to the close of business on the earlier of (i)
the 10th day following the acquisition by an Acquiring Person (the "Share
Acquisition Date") or such later date as may be determined by a majority of the
Continuing Directors and publicly announced by the Company, or (ii) the Final
Expiration Date of the Rights, the Company may redeem the Rights in whole, but
not in part, at a price of $.01 per Right.
Adjustments to Prevent Dilution
The Purchase Price payable, the number of Rights, and the number of
Series A Preferred or Common Shares or other securities or property issuable
upon exercise of the Rights are subject to adjustment from time to time in
connection with the dilutive issuances by the Company as set forth in the Rights
Agreement. With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price.
Cash Paid Instead of Issuing Fractional Shares
No fractional portion less than integral multiples of one Common Share
will be issued upon exercise of a Right and in lieu thereof, an adjustment in
cash will be made based on the market price of the Common Shares on the last
trading date prior to the date of exercise.
No Stockholders' Rights Prior to Exercise
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company (other than any rights resulting from
such holder's ownership of Common Shares), including, without limitation, the
right to vote or to receive dividends.
Amendment of Rights Agreement
The provisions of the Rights Agreement may be supplemented or amended by
the Board of Directors in any manner prior to the close of business on the
Distribution Date without the approval of Rights holders. After the Distribution
Date, the provisions of the Rights Agreement may be amended by the Board in
order to cure any ambiguity, defect or inconsistency, to make changes which do
not adversely affect the interests of holders of Rights (excluding the interests
of any Acquiring Person), or to shorten or lengthen any time period under the
Rights Agreement; provided, however, that no amendment to adjust the time period
governing redemption shall be made at such time as the Rights are not
redeemable.
Rights and Preferences of the Series A Preferred
Series A Preferred purchasable upon exercise of the Rights will not be
redeemable. Each share of Series A Preferred will be entitled to an aggregate
dividend of 1,000 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Series A Preferred will be entitled to a minimum
preferential liquidation payment equal to the greater of (i) $1,000 per share or
(ii) 1,000 times the per share amount to be distributed to the holders of the
Common Shares. Each share of Series A Preferred will have 1,000 votes, voting
together with the Common Shares. In the event of any merger, consolidation or
other transaction in which the Common Shares are changed or exchanged, each
share of Series A Preferred will be entitled to receive 1,000 times the amount
received per Common Share. These rights are protected by customary anti-dilution
provisions.
Because of the nature of the dividend, liquidation and voting rights of
the shares of Series A Preferred, the value of the one one-thousandth interest
in a share of Series A Preferred purchasable upon exercise of each Right should
approximate the value of one Common Share.
Item 2. Exhibits.
99.1 Preferred Shares Rights Agreement, dated as of August 11,
1997 by and between Meridian Data, Inc. and Bank Boston N.A., including the
Certificate of Determination, the form of Rights Certificate and the Summary of
Rights attached thereto as Exhibits A, B and C, respectively.
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereto duly authorized.
MERIDIAN DATA, INC.
Date: August 11, 1997 By: /s/ GIANLUCA U. RATTAZZI
Gianluca U. Rattazzi
President and Chief Executive
Officer
<PAGE>
EXHIBIT INDEX
Sequential
Exhibit Page
No. Exhibit Number
_______ _________________________________________ __________
99.1 Preferred Shares Rights Agreement dated
as of August 11, 1997, by and between
Meridian Data, Inc. and Bank Boston
N.A., including the Certificate of
Determination, the form of Rights Certificate
and the Summary of Rights attached thereto
as Exhibits A, B and C, respectively. 10
<PAGE>
EXHIBIT 99.1
MERIDIAN DATA, INC.
a Delaware corporation
Preferred Shares Rights Plan
August 11, 1997
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 6
Section 3. Issuance of Rights Certificates 6
Section 4. Form of Rights Certificates 7
Section 5. Countersignature and Registration 8
Section 6. Transfer, Split Up, Combination and Exchange
of Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates 9
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights 10
Section 8. Cancellation and Destruction of Rights Certificates 12
Section 9. Reservation and Availability of Preferred Shares 12
Section 10. Preferred Shares Record Date 14
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights 14
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares 23
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power 23
Section 14. Fractional Rights and Fractional Shares 26
Section 15. Rights of Action 27
Section 16. Agreement of Rights Holders 27
Section 17. Rights Certificate Holder Not Deemed a Stockholder 28
Section 18. Concerning the Rights Agent 28
Section 19. Merger or Consolidation or Change of Name of Rights Agent 29
Section 20. Duties of Rights Agent 30
Section 21. Change of Rights Agent 32
Section 22. Issuance of New Rights Certificates 33
Section 23. Redemption 33
Section 24. Exchange 34
Section 25. Notice of Certain Events 36
Section 26. Notices 37
Section 27. Supplements and Amendments 37
Section 28. Successors 38
Section 29. Determinations and Actions by the Board of Directors, etc. 38
Section 30. Benefits of this Agreement 38
Section 31. Severability 39
Section 32. Governing Law 39
Section 33. Counterparts 39
Section 34. Descriptive Headings 39
Exhibit A - Certificate of Designation of Rights, Preferences and
Privileges of Series A Participating Preferred Stock
of Meridian Data, Inc.
Exhibit B - Form of Rights Certificate
Exhibit C - Meridian Data, Inc. Stockholder Rights Plan
<PAGE>
MERIDIAN DATA, INC.
PREFERRED SHARES RIGHTS AGREEMENT
This Preferred Shares Rights Agreement (the "Agreement") is dated as of
August 11, 1997, between MERIDIAN DATA, INC., a Delaware corporation (the
"Company"), and BANK BOSTON, N.A. (the "Rights Agent").
RECITALS
WHEREAS, the Board of Directors of the Company, on July 18, 1997 (the
"Rights Dividend Declaration Date"), authorized and declared a dividend of one
Preferred Share purchase right (a "Right") for each Common Share (as hereinafter
defined) of the Company outstanding as of the Close of Business (as hereinafter
defined) on August 25, 1997 (the "Record Date"), each Right representing the
right to purchase one one-thousandth of a share of Series A Participating
Preferred Stock (as such number may be adjusted pursuant to the provisions of
this Agreement), having the rights, preferences and privileges set forth in the
form of Certificate of Designation of Rights, Preferences and Privileges of
Series A Participating Preferred Stock attached hereto as Exhibit A, upon the
terms and subject to the conditions herein set forth, and further authorized and
directed the issuance of one Right (as such number may be adjusted pursuant to
the provisions of this Agreement) with respect to each Common Share that shall
become outstanding between the Record Date and the earlier of the Distribution
Date and the Expiration Date (as such terms are hereinafter defined), and in
certain circumstances after the Distribution Date.
NOW, THEREFORE, 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 or any employee benefit plan of the
Company or of any Subsidiary of the Company, or any entity holding Common Shares
for or pursuant to the terms of any such plan. Notwithstanding the foregoing, no
Person shall be deemed to be an Acquiring Person either (i) as the result of an
acquisition of Common Shares by the Company which, by reducing the number of
shares outstanding, increases the proportionate number of shares beneficially
owned by such Person to 15% or more of the Common Shares of the Company then
outstanding; provided, however, that if a Person shall become the Beneficial
Owner of 15% or more of the Common Shares of the Company then outstanding by
reason of share purchases by the Company and shall, after such share purchases
by the Company, become the Beneficial Owner of any additional Common Shares of
the Company, then such Person shall be deemed to be an Acquiring Person.
Notwithstanding the foregoing, if the Board of Directors of the Company, at a
time when there are Continuing Directors, (as defined below) 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 either (i) 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), or (ii) obtains the prior written approval of the Company's Board
of Directors to retain such Common Shares and/or acquire additional Common
Shares in increments of no more than 1% of the Common Shares then outstanding,
then such Person shall not be deemed to be an "Acquiring Person" for any
purposes of this Agreement.
b. "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 (the "Exchange Act"), as in effect
on the date of this Agreement.
c. A Person shall be deemed the "Beneficial Owner" of and shall be deemed to
"beneficially own" any securities:
i. which such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly, for purposes of Section 13(d) of
the Exchange Act and Rule 13d-3 thereunder (or any comparable or successor
law or regulation);
ii. which such Person or any of such Person's Affiliates or Associates has (A)
the right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed pursuant to
this Section 1(c)(ii)(A) the Beneficial Owner of, or to beneficially own,
(1) securities tendered pursuant to a tender or exchange offer made by or
on behalf of such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or exchange, or
(2) securities which a Person or any of such Person's Affiliates or
Associates may be deemed to have the right to acquire pursuant to any
merger or other acquisition agreement between the Company and such Person
(or one or more of its Affiliates or Associates) if such agreement has been
approved by the Board of Directors of the Company prior to there being an
Acquiring Person; or (B) the right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any security under
this Section 1(c)(ii)(B) if the agreement, arrangement or understanding to
vote such security (1) arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable rules and
regulations of the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
iii. which are beneficially owned, directly or indirectly, by any other Person
(or any Affiliate or Associate thereof) with which such Person or any of
such Person's Affiliates or Associates has any agreement, arrangement or
understanding, whether or not in writing (other than customary agreements
with and between underwriters and selling group members with respect to a
bona fide public offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso to
Section 1(c)(ii)(B)) or disposing of any securities of the Company;
provided, however, that in no case shall an officer or director of the
Company be deemed (x) the Beneficial Owner of any securities beneficially
owned by another officer or director of the Company solely by reason of
actions undertaken by such persons in their capacity as officers or
directors of the Company or (y) the Beneficial Owner of securities held of
record by the trustee of any employee benefit plan of the Company or any
Subsidiary of the Company for the benefit of any employee of the Company or
any Subsidiary of the Company, other than the officer or director, by
reason of any influence that such officer or director may have over the
voting of the securities held in the plan.
d."Business Day" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in California are authorized or obligated by law or
executive order to close.
e. "Close of Business" on any given date shall mean 5:00 P.M., EST, on such
date; provided, however, that if such date is not a Business Day it shall mean
5:00 P.M., EST, on the next succeeding Business Day.
f. "Common Shares" when used with reference to the Company shall mean the shares
of Common Stock of the Company, $.001 par value. "Common Shares" when used with
reference to any Person other than the Company shall mean the capital stock (or
equity interest) with the greatest voting power of such other Person or, if such
other Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.
g. "Continuing Director" shall mean (i) any member of the Board of Directors of
the Company, while a member of the 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 who was a member of
the Board prior to the date of this Agreement, or (ii) any Person who
subsequently becomes a member of the Board, while a member of the 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.
h. "Distribution Date" shall mean the earlier of (i) the Close of Business on
the tenth day (or such later date as may be determined by action of a majority
of Continuing Directors then in office) after the Shares Acquisition Date (or,
if the tenth day after the Shares Acquisition Date occurs before the Record
Date, the Close of Business on the Record Date) or (ii) the Close of Business on
the tenth day (or such later date as may be determined by action of a majority
of Continuing Directors then in office) after the date that a tender or exchange
offer by any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company, or any
Person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan) is first published or sent or given
within the meaning of Rule 14d-2(a) of the General Rules and Regulations under
the Exchange Act, if, assuming the successful consummation thereof, such Person
would be the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding, subject to Section 1(a).
i. "Equivalent Shares" shall mean Preferred Shares and any other class or series
of capital stock of the Company which is entitled to participate in dividends
and other distributions, including distributions upon the liquidation,
dissolution or winding up of the Company, on a proportional basis with the
Common Shares. In calculating the number of any class or series of Equivalent
Shares for purposes of Section 11 of this Rights Agreement, the number of
shares, or fractions of a share, of such class or series of capital stock that
is entitled to the same dividend or distribution as a whole Common Share shall
be deemed to be one share.
j. "Expiration Date" shall mean the earliest of (i) the Close of Business on the
Final Expiration Date, (ii) the Redemption Date, (iii) the time at which the
Board of Directors orders the exchange of the Rights as provided in Section 24
hereof or (iv) the consummation of a transaction contemplated by Section 13(d)
hereof.
k. "Final Expiration Date" shall mean August 11, 2007.
l. "Permitted Offer" shall mean a tender offer for all outstanding Common Shares
made in the manner prescribed by Section 14(d) of the Exchange Act and the rules
and regulations promulgated thereunder; provided, however, that such tender
offer occurs at a time when Continuing Directors are in office and a majority of
the Continuing Directors then in office has determined that the offer is both
adequate and otherwise in the best interests of the Company and its stockholders
(taking into account all factors that such Continuing Directors deem relevant).
m. "Person" shall mean any individual, firm, corporation or other entity, and
shall include any successor (by merger or otherwise) of such entity.
n. "Preferred Shares" shall mean shares of Series A Participating Preferred
Stock of the Company.
o. "Purchase Price" shall have the meaning set forth in Section 4(a) hereof.
p. "Record Date" shall have the meaning set forth in the recitals at the
beginning of this Agreement.
q. "Redemption Date" shall mean the time at which the Board of Directors of the
Company orders redemption of the Rights as provided in Section 23 hereof.
r. "Redemption Price" shall have the meaning set forth in Section 23(a) hereof.
s. "Rights Dividend Declaration Date" shall have the meaning set forth in the
the recitals at the beginning of this Agreement.
t. "Section 13 Event" shall mean any event described in clause (i), (ii) or
(iii) of Section 13(a) hereof.
u. "Shares 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;
provided that, if such person is determined not to have become an Acquiring
Person pursuant to Section 1(a)(ii) hereof, then no Shares Acquisition Date
shall be deemed to have occurred.
v. "Subsidiary" of any Person shall mean any corporation or other entity of
which an amount of voting securities sufficient to elect a majority of the
directors or Persons having similar authority of such corporation or other
entity is beneficially owned, directly or indirectly, by such Person, or any
corporation or other entity otherwise controlled by such Person.
w. "Total Exercise Price" shall have the meaning set forth in Section 4(a)
hereof.
x. "Trading Day" shall have the meaning set forth in Section 11(d) hereof.
y. A "Triggering Event" shall be deemed to have occurred upon any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or any Subsidiary of the Company, or any entity holding Common
Shares for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becoming an Acquiring Person.
Section II. Appointment of Rights Agent. The Company hereby appoints the Rights
Agent to act as agent for the Company and the holders of the Rights (who, in
accordance with Section 3 hereof, shall prior to the Distribution Date also be
the holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable upon ten (10) days prior written notice to the Rights Agent. The
Rights Agent shall have no duty to supervise, and shall in no event be liable
for the acts or omissions of any such co-Rights Agent.
Section 3. Issuance of Rights Certificates.
a. Until the Distribution Date, (i) the Rights will be evidenced (subject to the
provisions of Sections 3(b) and 3(c) hereof) by the certificates for Common
Shares registered in the names of the holders thereof (which certificates shall
also be deemed to be Rights Certificates) and not by separate Rights
Certificates and (ii) the right to receive Rights Certificates will be
transferable only in connection with the transfer of Common Shares. Until the
earlier of the Distribution Date or the Expiration Date, the surrender for
transfer of such certificates for Common Shares shall also constitute the
surrender for transfer of the Rights associated with the Common Shares
represented thereby. As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will, if requested,
send) by first-class, postage-prepaid mail, to each record holder of Common
Shares as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Rights Certificate, in
substantially the form of Exhibit B hereto (a "Rights Certificate"), evidencing
one Right for each Common Share so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of Rights per Common Share
has been made pursuant to Section 11(a)(i), Section 11(i) or Section 11(p)
hereof, then 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 the Distribution Date, the Rights will be evidenced solely by such
Rights Certificates and may be transferred by the transfer of the Rights
Certificates as permitted hereby, separately and apart from any transfer of one
or more Common Shares, and the holders of such Rights Certificates as listed in
the records of the Company or any transfer agent or registrar for the Rights
shall be the record holders thereof.
b. On the Record Date or as soon as practicable thereafter, the Company will
send a copy of a Summary of Rights in substantially the form of Exhibit C hereto
(the "Summary of Rights"), by first-class, postage-prepaid mail, to each record
holder of Common Shares as of the close of business on the Record Date, at the
address of such holder shown on the records of the Company.
c. Unless the Board of Directors by resolution adopted at or before the time of
the issuance (including pursuant to the exercise of rights under the Company's
benefit plans) of any Common Shares specifies to the contrary, Rights shall be
issued in respect of all Common Shares that are issued after the Record Date but
prior to the earlier of the Distribution Date or the Expiration Date or, in
certain circumstances provided in Section 22 hereof, after the Distribution
Date. Certificates representing such Common Shares shall also be deemed to be
certificates for Rights, and shall bear the following legend:
This certificate also evidences and entitles the holder hereof to certain
rights as set forth in a Rights Agreement between Meridian Data, Inc. and
Bank Boston, N.A. as the Rights Agent, dated as of August 11, 1997 (the
"Rights Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive offices
of Meridian Data, Inc. Under certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate. Meridian Data, Inc.
will mail to the holder of this certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or held
by, any Person who is, was or becomes an Acquiring Person or any Affiliate
or Associate thereof (as such terms are defined in the Rights Agreement),
whether currently held by or on behalf of such Person or by any subsequent
holder, may become null and void.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for transfer of any such
certificate shall also constitute the transfer of the Rights associated with the
Common Shares represented thereby. In the event that the Company purchases or
acquires any Common Shares after the Record Date but prior to the Distribution
Date, any Rights associated with such Common Shares shall be deemed canceled and
retired so that the Company shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer outstanding.
Section 4. Form of Rights Certificates.
a. The Rights Certificates (and the forms of election to purchase Common Shares
and of assignment to be printed on the reverse thereof) shall be substantially
in the form of Exhibit 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 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 or a national market system, on which the Rights may from
time to time be listed or included, or to conform to usage. Subject to the
provisions of Section 11 and Section 22 hereof, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date (or in the case of
Rights issued with respect to Common Shares issued by the Company after the
Record Date, as of the date of issuance of such Common Shares) and on their face
shall entitle the holders thereof to purchase such number of one-thousandths of
a Preferred Share as shall be set forth therein at the price set forth therein
(such exercise price per one one-thousandth of a Preferred Share being
hereinafter referred to as the "Purchase Price" and the aggregate exercise price
of all Preferred Shares issuable upon exercise of one Right being hereinafter
referred to as the "Total Exercise Price"), but the number and type of
securities purchasable upon the exercise of each Right and the Purchase Price
shall be subject to adjustment as provided herein.
b. Any Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof
that represents Rights beneficially owned by: (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such or (iii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom such Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect avoidance
of Section 7(e) hereof, and any Rights Certificate issued pursuant to Section 6
or Section 11 hereof upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the Rights represented
hereby may become null and void in the circumstances specified in Section
7(e) of the Rights Agreement.
Section 5. Countersignature and Registration.
a. The Rights Certificates shall be executed on behalf of the Company by its
Chairman of the Board, its Chief Executive Officer, its President or any Vice
President, either manually or by facsimile signature, and by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile signature,
and shall have affixed thereto the Company's seal (if any) or a facsimile
thereof. The Rights Certificates shall be manually countersigned by the Rights
Agent and shall not be valid for any purpose unless countersigned. In case any
officer of the Company who shall have signed any of the Rights Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Rights Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the person who signed
such Rights Certificates had not ceased to be such officer of the Company; and
any Rights Certificate may be signed on behalf of the Company by any person who,
at the actual date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate, although at the
date of the execution of this Rights Agreement any such person was not such an
officer.
b. Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at its office designated for such purposes, books for registration and
transfer of the Rights Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights Certificates and
the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates.
a. Subject to the provisions of Sections 7(e), 14 and 24 hereof, at any time
after the Close of Business on the Distribution Date, and at or prior to the
Close of Business on the Expiration Date, any Rights Certificate or Rights
Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Rights Certificates, entitling the registered holder to
purchase a like number of one-thousandths of a Preferred Share (or, following a
Triggering Event, other securities, cash or other assets, as the case may be) as
the Rights Certificate or Rights Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Rights Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Rights Certificates to be transferred, split up, combined
or exchanged at the office of the Rights Agent designated for such purpose.
Neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Sections 7(e), 14 and 24 hereof, countersign and deliver
to the person entitled thereto a Rights Certificate or Rights Certificates, as
the case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights
Certificates.
b. Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will make and deliver a new
Rights Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Rights Certificate so lost, stolen, destroyed
or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
a. Subject to Sections 7(e), 23(b) and 24(b) hereof, the registered holder of
any Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Rights Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at the office of the Rights Agent designated for such purpose, together
with payment of the Purchase Price for each one-thousandth of a Preferred Share
as to which the Rights are exercised, at or prior to the Expiration Date.
b. The Purchase Price for each one-thousandth of a Preferred Share issuable
pursuant to the exercise of a Right shall initially be Thirty Dollars ($30.00),
shall be subject to adjustment from time to time as provided in Sections 11 and
13 hereof and shall be payable in lawful money of the United States of America
in accordance with paragraph (c) below.
c. Upon receipt of a Rights Certificate representing exercisable Rights, with
the form of election to purchase duly executed, accompanied by payment of the
Purchase Price for the number of one-thousandths of a Preferred Share (or other
securities or property, as the case may be) to be purchased and an amount equal
to any applicable transfer tax required to be paid by the holder of such Rights
Certificate in accordance with Section 9 hereof in cash, or by certified check
or cashier's check payable to the order of the Company, the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition from any
transfer agent of the Preferred Shares (or make available, if the Rights Agent
is the transfer agent for the Preferred Shares) a certificate or certificates
for the number of one-thousandths of a Preferred Share to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests or (B) if the Company shall have elected to deposit the total number of
one-thousandths of a Preferred Share issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent of
depositary receipts representing such number of one-thousandths of a Preferred
Share 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 hereby directs the depositary agent
to comply with such request, (ii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such certificates or
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) when appropriate, after receipt
thereof, deliver such cash to or upon the order of the registered holder of such
Rights Certificate. The payment of the Purchase Price (as such amount may be
reduced (including to zero) pursuant to Section 11(a)(iv) hereof) may be made in
cash or by certified bank check or bank draft payable to the order of the
Company. In the event that the Company is obligated to issue other securities of
the Company, pay cash and/or distribute other property pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate.
d. In case the registered holder of any Rights Certificate shall exercise less
than all the Rights evidenced thereby, a new Rights Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Rights Certificate or to his or
her duly authorized assigns, subject to the provisions of Section 14 hereof.
e. Notwithstanding anything in this Agreement to the contrary, from and after
the first occurrence of a Triggering Event or a Section 13 Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such (a "Post Transferee"), (iii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e) (a "Prior Transferee") or (iv) any subsequent
transferee receiving transferred Rights from a Post Transferee or a Prior
Transferee, either directly or through one or more intermediate transferees,
shall become null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company shall use all
reasonable efforts to insure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but shall have no liability to any holder
of Rights Certificates or to any other Person as a result of its failure to make
any determinations with respect to an Acquiring Person or any of such Acquiring
Person's Affiliates, Associates or transferees hereunder.
f. Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All Rights
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, 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 Preferred Shares.
a. The Company covenants and agrees that it will use its best efforts to cause
to be reserved and kept available out of and to the extent of its authorized and
unissued shares of Preferred Stock not reserved for another purpose (and,
following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities), the number of
Preferred Shares (and, following the occurrence of the Triggering Event, Common
Stock and/or other securities) that will be sufficient to permit the exercise in
full of all outstanding Rights.
b. If the Company shall hereafter list any of its Preferred Shares on a national
securities exchange, then so long as the Preferred Shares (and, following the
occurrence of a Triggering Event, Common Shares and/or other securities)
issuable and deliverable upon exercise of the Rights may be listed on such
exchange, the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable (but only to the extent that it is
reasonably likely that the Rights will be exercised), all shares reserved for
such issuance to be listed on such exchange upon official notice of issuance
upon such exercise.
c. The Company shall use its best efforts to (i) file, as soon as practicable
following the earliest date after the first occurrence of a Triggering Event in
which the consideration to be delivered by the Company upon exercise of the
Rights has been determined in accordance with Section 11(a)(iv) hereof, or as
soon as is required by law following the Distribution Date, as the case may be,
a registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the securities purchasable upon exercise of
the Rights on an appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities and
(B) the date of expiration of the Rights. The Company may temporarily suspend,
for a period not to exceed ninety (90) days after the date set forth in clause
(i) of the first sentence of this Section 9(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, and notify the Rights Agent, that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement and
notification to the Rights Agent at such time as the suspension is no longer in
effect. The Company will also take such action as may be appropriate under, or
to ensure compliance with, the securities or "blue sky" laws of the various
states in connection with the exercisability of the Rights. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction, unless the requisite qualification in such jurisdiction
shall have been obtained, or an exemption therefrom shall be available, and
until a registration statement has been declared effective.
d. The Company covenants and agrees that it will take all such action as may be
necessary to ensure that all Preferred Shares delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such Preferred Shares
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable shares.
e. The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the original issuance or delivery of the Rights
Certificates or of any Preferred Shares upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Rights Certificates to a person other
than, or the issuance or delivery of certificates or depositary receipts for the
Preferred Shares in a name other than that of, the registered holder of the
Rights Certificate evidencing Rights surrendered for exercise or to issue or to
deliver any certificates or depositary receipts for Preferred Shares upon the
exercise of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Rights Certificate at the time of surrender)
or until it has been established to the Company's satisfaction that no such tax
is due.
Section 10. Preferred Shares Record Date. Each person in whose name any
certificate for a number of one-thousandths of a Preferred Share is issued upon
the exercise of Rights shall for all purposes be deemed to have become the
holder of record of Preferred Shares represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
multiplied by the number of one-thousandths of a Preferred Share with respect to
which the Rights have been exercised (and any applicable transfer taxes) was
made; provided, however, that if the date of such surrender and payment is a
date upon which the Preferred Shares transfer books of the Company are closed,
such person shall be deemed to have become the record holder of such shares on,
and such certificate shall be dated, the next succeeding Business Day on which
the Preferred Shares transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Rights Certificate
shall not be entitled to any rights of a holder of Preferred Shares for which
the Rights shall be exercisable, including, without limitation, the right to
vote, to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights.
The Purchase Price, the number and kind of shares or other property covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
a. i. In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Common Shares payable in Common
Shares, (B) subdivide the outstanding Common Shares, (C) combine the
outstanding Common Shares (by reverse stock split or otherwise) into a
smaller number of Common Shares, or (D) issue any shares of its capital
stock in a reclassification of the Common Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), then, in each such
event, except as otherwise provided in this Section 11(a) and Section 7(e)
hereof: (1) each of the Rights outstanding at the time of the record date
for such dividend or the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted to that number of Rights
(calculated to the nearest one ten-thousandth (1/10,000) of a Right) equal
to a fraction (the "Exchange Ratio"), the numerator of which shall be the
total number of Common Shares or shares of capital stock issued in such
reclassification of the Common Shares outstanding immediately following
such time and the denominator of which shall be the total number of Common
Shares outstanding immediately prior to such time, and the number of Rights
that shall thereafter be issued with respect to each Common Share or share
of such other capital stock that shall become outstanding thereafter prior
to the Distribution Date shall be equal to the total number of outstanding
Rights immediately after such event (as adjusted pursuant to this clause
(1)) divided by the total number of outstanding Common Shares or shares of
such other capital stock immediately after such event (subject to further
adjustment pursuant to the provisions of this Agreement); (2) 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 shall
be adjusted so that the Purchase Price thereafter shall equal the result
obtained by dividing the Purchase Price in effect immediately prior to such
time by the Exchange Ratio; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable
upon exercise of such Right; and (3) the number of Common Shares or shares
of such other capital stock issuable upon the exercise of each Right shall
remain unchanged immediately after such event, but, in the event of a
reclassification, the kind of shares issuable upon the exercise of each
Right immediately after such reclassification shall be adjusted to be the
kind of shares of such other capital stock issued in such reclassification,
rather than Common Shares. 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.Subject to Section 24 of this Agreement, in the event a Triggering Event
shall have occurred, then promptly following such Triggering 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 for each
Right, upon exercise thereof in accordance with the terms of this Agreement
and payment of the then-current Total Exercise Price, in lieu of a number
of one-thousandths of a Preferred Share, such number of Common Shares of
the Company as shall equal the result obtained by multiplying the
then-current Purchase Price by the then number of one-thousandths of a
Preferred Share for which a Right was exercisable (or would have been
exercisable if the Distribution Date had occurred) immediately prior to the
first occurrence of a Triggering Event, and dividing that product by 50% of
the current per share market price (determined pursuant to Section 11(d)
hereof) for Common Shares on the date of occurrence of the Triggering Event
(such number of shares being hereinafter referred to as the "Adjustment
Shares").
iii. The right to buy Common Shares of the Company pursuant to Section
11(a)(ii) hereof shall not arise as a result of any Person becoming an
Acquiring Person through an acquisition of Common Shares pursuant to a
Permitted Offer.
iv. In lieu of issuing Common Shares in accordance with Section 11(a)(ii)
hereof, the Company may, if the Board of Directors determines that such
action is necessary or appropriate and not contrary to the interest of
holders of Rights (and, in the event that the number of Common Shares which
are authorized by the Company's Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise
of the Rights are not sufficient to permit the exercise in full of the
Rights, or if any necessary regulatory approval for such issuance has not
been obtained by the Company), the Company shall: (A) determine the excess
of (1) the value of the Common Shares issuable upon the exercise of a Right
(the "Current Value") over (2) the Purchase Price (such excess, the
"Spread") and (B) with respect to each Right, make adequate provision to
substitute for such Common Shares, upon exercise of the Rights, (1) cash,
(2) a reduction in the Purchase Price, (3) other equity securities of the
Company (including, without limitation, shares or units of shares of any
series of preferred stock which the Board of Directors of the Company has
deemed to have the same value as Common Shares (such shares or units of
shares of preferred stock are herein called "common stock equivalents")),
except to the extent that the Company has not obtained any necessary
stockholder or regulatory approval for such issuance, (4) debt securities
of the Company, except to the extent that the Company has not obtained any
necessary stockholder or regulatory approval for such issuance, (5) other
assets or (6) any combination of the foregoing, having an aggregate value
equal to the Current Value, where such aggregate value has been determined
by the Board of Directors of the Company based upon 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 first occurrence of
a Triggering Event and (y) the date on which the Company's right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y)
being referred to herein as the "Section 11(a)(ii) Trigger Date"), then the
Company shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, Common Shares
(to the extent available), except to the extent that the Company has not
obtained any necessary stockholder or regulatory approval for such
issuance, and then, if necessary, cash, which shares and/or cash have an
aggregate value equal to the Spread. If the Board of Directors of the
Company shall determine in good faith that it is likely that sufficient
additional Common Shares could be authorized for issuance upon exercise in
full of the Rights or that any necessary regulatory approval for such
issuance will be obtained, the thirty (30) day period set forth above may
be extended to the extent necessary, but not more than ninety (90) days
after the Section 11(a)(ii) Trigger Date, in order that the Company may
seek stockholder approval for the authorization of such additional shares
or take action to obtain such regulatory approval (such period, as it may
be extended, the "Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the first and/or
second sentences of this Section 11(a)(iv), the Company (x) shall provide,
subject to Section 7(e) hereof, that such action shall apply uniformly to
all outstanding Rights and (y) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to seek any
authorization of additional shares, to take any action to obtain any
required regulatory approval and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine
the value thereof. In the event of any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. For purposes of this Section
11(a)(iv), the value of the Common Shares shall be the current per share
market price (as determined pursuant to Section 11(d) hereof) of the Common
Shares on the Section 11(a)(ii) Trigger Date and the value of any "common
stock equivalent" shall be deemed to have the same value as the Common
Shares on such date.
b. In case the Company shall, at any time after the date of this Agreement, fix
a record date for the issuance of rights, options or warrants to all holders of
Common Shares or of any class or series of Equivalent Shares entitling such
holders (for a period expiring within forty-five (45) calendar days after such
record date) to subscribe for or purchase Common Shares or Equivalent Shares or
securities convertible into Common Shares or Equivalent Shares at a price per
share (or having a conversion price per share, if a security convertible into
Common Shares or Equivalent Shares) less than the then current per share market
price of the Common Shares or Equivalent Shares (as defined in Section 11(d)) on
such record date, then, in each such case, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of Common Shares and Equivalent Shares (if any)
outstanding on such record date, plus the number of Common Shares or Equivalent
Shares, as the case may be, which the aggregate offering price of the total
number of Common Shares or Equivalent Shares, as the case may be, so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price, and
the denominator of which shall be the number of Common Shares and Equivalent
Shares (if any) outstanding on such record date, plus the number of additional
Common Shares or Equivalent Shares, as the case may be, to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be paid
in a consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. Common Shares and Equivalent Shares owned by or held for
the account of the Company shall not be deemed outstanding for the purpose of
any such computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights, options or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
c. In case the Company shall, at any time after the date of this Agreement, fix
a record date for the making of a distribution to all holders of the Common
Shares or of any class or series of Equivalent Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend, if any, or a dividend
payable in Common Shares) or subscription rights, options or warrants (excluding
those referred to in Section 11(b)), then, in each such case, the Purchase Price
to be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the current market price (as determined pursuant
to Section 11(d) hereof) of a Common Share or an Equivalent Share on such record
date, less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to a Common Share or Equivalent Share, as the case may be, and the
denominator of which shall be such current market price (as determined pursuant
to Section 11(d) hereof) of a Common Share or Equivalent Share on such record
date. Such adjustments shall be made successively whenever such a record date is
fixed, and in the event that such distribution is not so made, the Purchase
Price shall be adjusted to be the Purchase Price which would have been in effect
if such record date had not been fixed.
d. For the purpose of any computation hereunder, other than computations made
pursuant to Section 11(a)(iv) hereof, the "current per share market price" of
any security (a "Security" for the purpose of this Section 11(d)) on any date
shall be deemed to be the average of the daily closing prices per share of such
Security for the thirty (30) consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date, and for purposes of
computations made pursuant to Section 11(a)(iv) hereof, the "current per share
market price" of any Security on any date shall be deemed to be the average of
the daily closing prices per share of such Security for the ten (10) consecutive
Trading Days immediately prior to such date; provided, however, that in the
event that the current per share market price of the Security is determined
during a period following the announcement by the issuer of such Security of (i)
a dividend or distribution on such Security payable in shares of such Security
or securities convertible into such shares or (ii) any subdivision, combination
or reclassification of such Security, and prior to the expiration of the
requisite thirty (30) Trading Day or ten (10) Trading Day period, after the
ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the
current per share market price shall be appropriately adjusted to reflect the
current market price per share equivalent of such Security. The closing price
for each day shall be 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 Security is 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 Security is listed or
admitted to trading or, if the Security is not listed or admitted to trading on
any national securities exchange, the last sale price or, if such last sale
price is not reported, 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 Quotations ("Nasdaq") System or such other system then
in use, or, if on any such date the Security is 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 Security 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.
The term "Trading Day" shall mean a day on which the principal national
securities exchange on which the Security is listed or admitted to trading is
open for the transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange, a Business Day. If the
Common Shares are not publicly held or so listed or traded, "current per share
market price" shall mean the fair value per share as determined in good faith by
the Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for all
purposes.
e. Anything herein to the contrary notwithstanding, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth of a Common Share or other share or one
hundred-thousandth of a Preferred Share, as the case may be. Notwithstanding the
first sentence of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three (3) years from the date of
the transaction which requires such adjustment or (ii) the Expiration Date.
f. If as a result of an adjustment made pursuant to Section 11(a) or 13(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock other than Preferred Shares, thereafter the
number of such other shares so receivable upon exercise of any Right and if
required, the Purchase Price thereof, shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Shares contained in Sections 11(a), (b),
(c), (e), (h), (i), (j), (k), (l) and (m), and the provisions of Sections 7, 9,
10, 13 and 14 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 one-thousandths of a Preferred Share
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
h. Unless the Company shall have exercised its election as provided in Section
11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b), 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 Shares (calculated to
the nearest one hundred-thousandth of a share) obtained by (i) multiplying (x)
the number of Preferred Shares covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
i. The Company may elect on or after the date of any adjustment of the Purchase
Price as a result of the calculations made in Section 11(b) to adjust the number
of Rights, in substitution for any adjustment in the number of Preferred Shares
purchasable upon the exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable for the number of
one-thousandths of a Preferred Share 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 hundred-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Rights Certificates have been issued, shall be at least ten (10) days
later than the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
j. Irrespective of any adjustment or change in the Purchase Price or the number
of Preferred Shares issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per one one-thousandth of a Preferred Share and the number of
one-thousandths of a Preferred Share which were expressed in the initial Rights
Certificates issued hereunder.
k. Before taking any action that would cause an adjustment reducing the Purchase
Price below the par or stated value, if any, of the number of one-thousandths of
a Preferred Share issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue as fully paid and
nonassessable shares such number of one-thousandths of a Preferred Share at such
adjusted Purchase Price.
l. In any case in which this Section 11 shall require that an adjustment in the
Purchase Price be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuing to the
holder of any Right exercised after such record date of the number of
one-thousandths of a Preferred Share and other capital stock or securities of
the Company, if any, issuable upon such exercise over and above the number of
one-thousandths of a Preferred Share and other capital stock or securities of
the Company, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however, that the Company
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares (fractional or
otherwise) upon the occurrence of the event requiring such adjustment.
m. Anything in this Section 11 to the contrary notwithstanding, prior to the
Distribution Date, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall determine
to be advisable in order that any (i) consolidation or subdivision of the
Preferred or Common Shares, (ii) issuance wholly for cash of any Preferred or
Common Shares at less than the current market price, (iii) issuance wholly for
cash of Preferred or Common Shares or securities which by their terms are
convertible into or exchangeable for Preferred or Common Shares, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Preferred or Common
Shares shall not be taxable to such stockholders.
n. The Company covenants and agrees that it shall not, at any time after the
Distribution Date, effect or permit to occur any Triggering Event or Section 13
Event, if (i) at the time or immediately after such Triggering Event or Section
13 Event there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights or (ii)
prior to, simultaneously with or immediately after such Section 13 Event, the
stockholders of the Person who constitutes, or would constitute, the "Principal
Party" for purposes of Section 13(b) 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 Sections 23, 24 or 27 hereof, take (or permit to be
taken) any action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or otherwise eliminate
the benefits intended to be afforded by the Rights.
p. Anything in this Agreement to the contrary notwithstanding, in the event the
Company shall at any time after the date of this Agreement (A) declare a
dividend on the Preferred Shares payable in Preferred Shares, (B) subdivide the
outstanding Preferred Shares, (C) combine the outstanding Preferred Shares (by
reverse stock split or otherwise) into a smaller number of Preferred 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),
then, in each such event, except as otherwise provided in this Section 11 and
Section 7(e) hereof: (1) each of the Rights outstanding at the time of the
record date for such dividend or the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted to that number
of Rights (calculated to the nearest one ten-thousandth (1/10,000) of a Right)
equal to a fraction (the "Exchange Fraction"), the numerator of which shall be
the total number of Preferred Shares or shares of capital stock issued in such
reclassification of the Preferred Shares outstanding immediately following such
time and the denominator of which shall be the total number of Preferred Shares
outstanding immediately prior to such time, and the number of Rights that shall
thereafter be issued with respect to each Common Share or share of other capital
stock that shall be issued in a reclassification of the Common Shares prior to
the Distribution Date shall be equal to the total number of outstanding Rights
immediately after such event (as adjusted pursuant to this clause (1)) divided
by the total number of outstanding Common Shares or shares of such other capital
stock immediately after such event (subject to further adjustment pursuant to
the provisions of this Agreement); (2) 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 shall be adjusted so that the
Purchase Price thereafter shall equal the result obtained by dividing the
Purchase Price in effect immediately prior to such time by the Exchange
Fraction; provided, however, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of such Right; and
(3) the number of one-thousandths of a Preferred Share or share of such other
capital stock issuable upon the exercise of each Right shall remain unchanged
immediately after such event, but, in the event of a reclassification, the kind
of shares issuable upon the exercise of each Right immediately after such
reclassification shall be adjusted to be the kind of shares of such other
capital stock issued in such reclassification, rather than Preferred Shares.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever
an adjustment is made as provided in Sections 11 and 13 hereof, the Company
shall promptly (a) prepare a certificate setting forth such adjustment and a
brief statement of the facts accounting for such adjustment, (b) file with the
Rights Agent and with each transfer agent for the Preferred Shares a copy of
such certificate and (c) mail a brief summary thereof to each holder of a Rights
Certificate in accordance with Section 26 hereof. Notwithstanding the foregoing
sentence, the failure of the Company to make such certification or give such
notice shall not affect the validity of such adjustment or the force or effect
of the requirement for such adjustment. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment contained
therein and shall not be deemed to have knowledge of such adjustment unless and
until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power
a. In the event that, following the Shares Acquisition Date, directly or
indirectly:
i. the Company shall consolidate with, or merge with and into, any other
Person (other than a Subsidiary of the Company in a transaction the
principal purpose of which is to change the state of incorporation of the
Company or which complies with Section 11(o) hereof);
ii.any Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(o) hereof) shall consolidate with the Company, or
merge with and into the Company and the Company shall be the continuing or
surviving corporation of such consolidation or merger; or
iii. the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to
any other Person or Persons (other than the Company or one or more of its
wholly owned Subsidiaries in one or more transactions, each of which
complies with Section 11(o) hereof),
then, and in each such case, proper provision shall be made so that
1) each holder of a Right (except as otherwise provided herein) shall
thereafter have the right to receive, upon the exercise thereof in
accordance with the terms of this Agreement, such number of validly
authorized and issued, fully paid and nonassessable Common Shares of the
Principal Party (as hereinafter defined), free of any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be equal to the
result obtained by (1) multiplying the then current Purchase Price by the
number of one-thousandths of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a Section 13 Event
(or, if a Triggering Event has occurred prior to the first occurrence of a
Section 13 Event, multiplying the number of such one-thousandths of a
Preferred Share for which a Right was exercisable immediately prior to the
first occurrence of a Triggering 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 "Total Exercise Price" for each Right and for all
purposes of this Agreement) by 50% of the current per share market price
(determined pursuant to Section 11(d) hereof) of the Common Shares of such
Principal Party on the date of consummation of such Section 13 Event;
2) 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;
3) 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;
4) such Principal Party shall take such steps (including, but not limited
to, the reservation of a sufficient number of its Common Shares) in
connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its Common
Shares thereafter deliverable upon the exercise of the Rights.
b. "Principal Party" shall mean, in the case of any transaction described in
clause (i), (ii) or (iii) of Section 13(a), the Person or Acquiring Person
referred to therein (or such Person's or Acquiring Person's successor,
including, if applicable, the Company, if it is the surviving corporation),
provided, however, that in any such case, (i) if such Person is a direct or
indirect Subsidiary of another Person, "Principal Party" shall refer to such
other Person and (ii) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, "Principal Party" shall refer to whichever
of such Persons is the issuer of the Common Shares having the greatest aggregate
value, and provided, further, that for purposes of transactions described in
clause (iii) hereof, "Principal Party" shall refer to that Person receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions.
c. If, for any reason, the Rights cannot be exercised for Common Shares of such
Principal Party as provided in Section 13(a), then each holder of Rights shall
have the right to exchange its Rights for cash from such Principal Party in an
amount equal to the number of Common Shares that it would otherwise be entitled
to purchase times 50% of the current per share market price, as determined
pursuant to Section 11(d) hereof, of such Common Shares of such Principal Party.
If, for any reason, the foregoing formulation cannot be applied to determine the
cash amount into which the Rights are exchangeable, then the Board of Directors,
based upon the advice of one or more nationally recognized investment banking
firms, and based upon the total value of the Company, shall determine such
amount reasonably and with good faith to the holders of Rights. Any such
determination shall be final and binding on the Rights Agent.
d. Notwithstanding anything in this Agreement to the contrary, Section 13 shall
not be applicable to a transaction described in clauses (i) and (ii) of Section
13(a) if: (i) such transaction is consummated with a Person or Persons who
acquired Common Shares pursuant to a Permitted Offer (or a wholly-owned
Subsidiary of any such Person or Persons); (ii) the price per share of Common
Shares offered in such transaction is not less than the price per share of
Common Shares paid to all holders of Common Shares whose shares were purchased
pursuant to such Permitted Offer; and (iii) the form of consideration being
offered to the remaining holders of Common Shares pursuant to such transaction
is the same form as the form of consideration paid pursuant to such Permitted
Offer. Upon consummation of any such transaction contemplated by this Section
13(d), all Rights hereunder shall expire.
e. The Company shall not consummate any Section 13 Event unless the Principal
Party shall have a sufficient number of authorized 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 issuer shall have executed and delivered to the Rights Agent a
supplemental agreement confirming that such Principal Party shall, upon
consummation of such Section 13 Event, assume this Agreement in accordance with
Sections 13(a) and (b) hereof, that all rights of first refusal or preemptive
rights in respect of the issuance of Common Shares of such Principal Party upon
exercise of outstanding Rights have been waived, that there are no rights,
warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights and that such transaction shall not result in a default by such Principal
Party under this Agreement, and further providing that, as soon as practicable
after the date of such Section 13 Event, such Principal Party will:
i. prepare and file a registration statement under the Securities Act with
respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, use its best efforts to cause such
registration statement to become effective as soon as practicable after
such filing and use its best efforts to cause such registration statement
to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date, and
similarly comply with applicable state securities laws;
ii. use its best efforts to list (or continue the listing of) the Rights
and the securities purchasable upon exercise of the Rights on a national
securities exchange or to meet the eligibility requirements for quotation
on the Nasdaq National Market; and
iii. deliver to holders of the Rights historical financial statements for
such Principal Party which comply in all respects with the requirements for
registration on Form 10 (or any successor form) under the Exchange Act.
In the event that at any time after the occurrence of a Triggering Event
some or all of the Rights shall not have been exercised at the time of a
transaction described in this Section 13, the Rights which have not theretofore
been exercised shall thereafter be exercisable in the manner described in
Section 13(a) (without taking into account any prior adjustment required by
Section 11(a)(ii)).
f. The provisions of this Section 13 shall similarly apply to successive mergers
or consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares.
a. The Company shall not be required to issue fractions of Rights or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable, as determined pursuant to the second sentence of
Section 11(d) hereof.
b. The Company shall not be required to issue fractions of Preferred Shares
(other than fractions that are integral multiples of one one-thousandth of a
Preferred Share) upon exercise of the Rights or to distribute certificates which
evidence fractional Preferred Shares (other than fractions that are integral
multiples of one one-thousandth of a Preferred Share). In lieu of fractional
Preferred Shares that are not integral multiples of one one-thousandth of a
Preferred Share, the Company shall pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of a Common
Share. For purposes of this Section 14(b), the current market value of a Common
Share shall be the closing price of a Common Share (as determined pursuant to
the second sentence of Section 11(d) hereof) for the Trading Day immediately
prior to the date of such exercise.
c. The holder of a Right by the acceptance of the Right expressly waives his
or her right to receive any fractional Rights or any fractional shares upon
exercise of a Right.
Section 15. Rights of Action. All rights of action in respect of this Agreement,
excepting the rights of action given to the Rights Agent under Section 18
hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Rights Certificate (or, prior
to the Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his or her own behalf and for
his or her own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
his or her right to exercise the Rights evidenced by such Rights Certificate in
the manner provided in such Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this
Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right, by accepting
the same, consents and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
a. prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of the Common Shares;
b. after the Distribution Date, the Rights Certificates are transferable only on
the registry books of the Rights Agent if surrendered at the principal office or
offices of the Rights Agent designated for such purposes, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates fully executed; and
c. subject to Sections 6(a) and 7(f) hereof, the Company and the Rights Agent
may deem and treat the person in whose name the Rights Certificate (or, prior to
the Distribution Date, the associated Common Shares certificate) is registered
as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Shares certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No holder, as
such, of any Rights Certificate shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Rights Certificate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent.
a. The Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement and the exercise
and performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability or
expense, incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the Rights Agent
in connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of liability in
the premises. Anything in this Agreement to the contrary notwithstanding, in no
event shall the Rights Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Rights Agent has been advised of the likelihood of such
loss or damage and regardless of the form of the action.
b. The Rights Agent shall be protected and shall incur no liability for, or in
respect of any action taken, suffered or omitted by it in connection with, its
administration of this Agreement in reliance upon any Rights Certificate or
certificate for the Preferred Shares or 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, or otherwise upon the advice of counsel as set forth in
Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
a. Any corporation into which the Rights Agent or any successor Rights Agent may
be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the corporate
trust 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 corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
b. In case at any time the name of the Rights Agent shall be changed and at such
time any of the Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
a. The Rights Agent may consult with legal counsel (who may be legal counsel for
the Company), and the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
b. Whenever in the performance of its duties under this Agreement the Rights
Agent shall deem it necessary or desirable that any fact or matter (including,
without limitation, the identity of any Acquiring Person and the determination
of "current per share market price") be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Chief Financial Officer, the Secretary or any Assistant
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
c. The Rights Agent shall be liable hereunder to the Company and any other
Person only for its own gross negligence, bad faith or willful misconduct.
d. The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
e. The Rights Agent shall not be under any responsibility in respect of the
validity of this Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the validity or execution
of any Rights Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Rights Certificate; nor shall it be responsible for
any change in the exercisability of the Rights or any adjustment in the terms of
the Rights (including the manner, method or amount thereof) provided for in
Sections 3, 11, 13, 23 or 24, or the ascertaining of the existence of facts that
would require any such change or adjustment (except with respect to the exercise
of Rights evidenced by Rights Certificates after receipt by the Rights Agent of
a certificate furnished pursuant to Section 12 describing such change or
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
Preferred Shares to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any Preferred Shares will, when issued, be validly
authorized and issued, fully paid and nonassessable.
f. The Company agrees that it will perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such further and
other acts, instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
g. The Rights Agent is hereby authorized and directed to accept instructions
with respect to the performance of its duties hereunder from any one of the
Chairman of the Board, the Chief Executive Officer, the President, any Vice
President, the Chief Financial Officer, the Secretary or any Assistant Secretary
of the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered by it in good faith in accordance with instructions of any such officer
or for any delay in acting while waiting for those instructions. Any application
by the Rights Agent for written instructions from the Company may, at the option
of the Rights Agent, set forth in writing any action proposed to be taken or
omitted by the Rights Agent under this Rights Agreement and the date on and/or
after which such action shall be taken or such omission shall be effective. The
Rights Agent shall not be liable for any action taken by, or omission of, the
Rights Agent in accordance with a proposal included in any such application on
or after the date specified in such application (which date shall not be less
than five (5) Business Days after the date any officer of the Company actually
receives such application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to be
taken or omitted.
h. The Rights Agent and any stockholder, director, officer or employee of the
Rights Agent may buy, sell or deal in any of the Rights or other securities of
the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.
i. The Rights Agent may execute and exercise any of the rights or powers hereby
vested in it or perform any duty hereunder either itself or by or through its
attorneys or agents, and the Rights Agent shall not be answerable or accountable
for any act, default, neglect or misconduct of any such attorneys or agents or
for any loss to the Company resulting from any such act, default, neglect or
misconduct, provided reasonable care was exercised in the selection and
continued employment thereof.
j. No provision of this Agreement shall require the Rights Agent to expend or
risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
k. If, with respect to any Rights Certificate surrendered to the Rights Agent
for exercise or transfer, the certificate attached to the form of assignment or
form of election to purchase, as the case may be, has either not been completed
or indicates an affirmative response to clause 1 and/or 2 thereof, the Rights
Agent shall not take any further action with respect to such requested exercise
or transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon
thirty (30) days' notice in writing mailed to the Company and to each transfer
agent of the Preferred Shares and the Common 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' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Preferred Shares
and the Common Shares by 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 or her Rights
Certificate for inspection by the Company), then the registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States or of any state of the United
States, in good standing, which is authorized under such laws to exercise
corporate trust or stockholder services powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Preferred
Shares and the Common Shares, and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Rights Certificates made in accordance with
the provisions of this Agreement. In addition, in connection with the issuance
or sale of Common Shares following the Distribution Date and prior to the
redemption or expiration of the Rights, the Company (a) shall, with respect to
Common Shares so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement or upon the exercise, conversion or
exchange of the convertible subordinated debentures of the Company outstanding
at the date hereof or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights Certificate
shall be issued and this sentence shall be null and void ab initio if, and to
the extent that, such issuance or this sentence would create a significant risk
of or result in material adverse tax consequences to the Company or the Person
to whom such Rights Certificate would be issued or would create a significant
risk of or result in such options' or employee plans' or arrangements' failing
to qualify for otherwise available special tax treatment and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption.
a. The Company may, at its option and with the approval of the Board of
Directors, at any time prior to the Close of Business on the earlier of (i) the
tenth day following the Shares Acquisition Date or such later date as may be
determined by action of a majority of Continuing Directors then in office and
publicly announced by the Company or (ii) the Final Expiration Date, redeem all
but not less than all the then outstanding Rights at a redemption price of $0.01
per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price being
herein referred to as the "Redemption Price") and the Company may, at its
option, pay the Redemption Price either in Common Shares (based on the current
per share market price thereof (as determined pursuant to Section 11(d) hereof)
at the time of redemption) or cash. Such redemption of the Rights by the Company
may be made effective at such time, on such basis and with such conditions as
the Board of Directors in its sole discretion may establish; provided, however,
if the Board of Directors of the Company authorizes redemption of the Rights on
or after the time a Person becomes an Acquiring Person, then there must be
Continuing Directors then in office and such authorization shall require the
concurrence of a majority of such Continuing Directors.
b. Immediately upon the action of the Board of Directors of the Company ordering
the redemption of the Rights, evidence of which shall have been filed with the
Rights Agent, and without any further action and without any notice, the right
to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption; provided, however, that the
failure to give or any defect in, any such notice shall not effect the validity
of such redemption. Within ten (10) days after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give notice
of such redemption to the Rights Agent and the holders of the then outstanding
Rights by mailing such notice to all such holders at their last addresses as
they appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Shares. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23 or in Section 24 hereof, and
other than in connection with the purchase of Common Shares prior to the
Distribution Date.
Section 24. Exchange.
a. Subject to applicable laws, rules and regulations, and subject to subsection
(c) below, the Company may, at its option, by majority vote of the Board of
Directors and a majority vote of the Continuing Directors, at any time after the
occurrence of a Triggering Event, exchange all or part of the then outstanding
and exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 7(e) hereof) for Common Shares at an
exchange ratio of 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 "Ratio of
Exchange"). Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or any such Subsidiary, or any entity holding Common Shares for or pursuant to
the terms of any such plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding.
b. Immediately upon the action of the Board of Directors ordering the exchange
of any Rights pursuant to subsection (a) of this Section 24 and without any
further action and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights shall be to
receive that number of Common Shares equal to the number of such Rights held by
such holder multiplied by the Ratio of Exchange. The Company shall give public
notice of any such exchange; provided, however, that the failure to give, or any
defect in, such notice shall not affect the validity of such exchange. The
Company shall mail a notice of any such exchange to all of the holders of such
Rights at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the Common Shares for
Rights will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void pursuant
to the provisions of Section 7(e) hereof) held by each holder of Rights.
c. In the event that there shall not be sufficient Common Shares issued but not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with Section 24(a), the Company shall either take
such action as may be necessary to authorize additional Common Shares for
issuance upon exchange of the Rights or alternatively, at the option of a
majority of the Board of Directors, with respect to each Right (i) pay cash in
an amount equal to the Current Value (as hereinafter defined), in lieu of
issuing Common Shares in exchange therefor, or (ii) issue debt or equity
securities or a combination thereof, having a value equal to the Current Value,
in lieu of issuing Common Shares in exchange for each such Right, where the
value of such securities shall be determined by a nationally recognized
investment banking firm selected by the Board of Directors by majority vote of
the Board of Directors, or (iii) deliver any combination of cash, property,
Common Shares and/or other securities having a value equal to the Current Value
in exchange for each Right. For purposes of this Section 24(c) only, the Current
Value shall mean the product of the current per share market price of Common
Shares (determined pursuant to Section 11(d) on the date of the occurrence of
the event described above in subparagraph (a)) multiplied by the number of
Common Shares for which the Right otherwise would be exchangeable if there were
sufficient shares available. To the extent that the Company determines that some
action need be taken pursuant to clauses (i), (ii) or (iii) of this Section
24(c), the Board of Directors may temporarily suspend the exercisability of the
Rights for a period of up to sixty (60) days following the date on which the
event described in Section 24(a) shall have occurred, in order to seek any
authorization of additional Common Shares and/or to decide the appropriate form
of distribution to be made pursuant to the above provision and to determine the
value thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended.
d. The Company shall not be required to issue fractions of Common Shares or to
distribute certificates 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 per share market value of a whole Common Share (as determined pursuant
to the second sentence of Section 11(d) hereof).
e. The Company may, at its option, by majority vote of the Board of Directors,
at any time before any Person has become an Acquiring Person, exchange all or
part of the then outstanding Rights for rights of substantially equivalent
value, as determined reasonably and with good faith by the Board of Directors,
based upon the advice of one or more nationally recognized investment banking
firms.
f. Immediately upon the action of the Board of Directors ordering the exchange
of any Rights pursuant to subsection (e) of this Section 24 and without any
further action and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights shall be to
receive that number of rights in exchange therefor as has been determined by the
Board of Directors in accordance with subsection (e) above. The Company shall
give public notice of any such exchange; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange. The Company shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry
books of the transfer agent for the Common Shares of the Company. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Rights will be effected.
Section 25. Notice of Certain Events.
a. In case the Company shall propose to effect or permit to occur any Triggering
Event described in Section 11(a)(ii)(A) or 11(a)(ii)(B) or a Section 13 Event,
the Company shall give notice thereof to each holder of Rights in accordance
with Section 26 hereof at least twenty (20) days prior to occurrence of such
Triggering Event or such Section 13 Event.
b. In case any Triggering Event or Section 13 Event shall occur, then, in any
such case, the Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, in accordance with Section 26 hereof, a notice
of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Sections 11(a)(ii) and 13
hereof.
Section 26. Notices. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Rights Certificate to
or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
MERIDIAN DATA, INC.
5615 Scotts Valley Drive
Scotts Valley, CA 95066
Attention: Gianluca U. Rattazzi
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Rights Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
Bank Boston, N.A.
c/o Boston EquiServe
P.O. Box 8040
Boston, MA 02266
Attention: Katherine S. Anderson
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 shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. Prior to the Distribution Date, the
Company may supplement or amend this Agreement in any respect (including an
increase or decrease in the stock ownership percentage at which a Beneficial
Owner of Common Shares outstanding becomes an Acquiring Person) without the
approval of any holders of Rights and the Rights Agent shall, if the Company so
directs, execute such supplement or amendment. From and after the Distribution
Date, the Company and the Rights Agent may from time to time supplement or amend
this Agreement without the approval of any holders of Rights in order to (i)
cure any ambiguity, (ii) correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, (iii)
shorten or lengthen any time period hereunder (which lengthening or shortening,
following the first occurrence of an event set forth in the proviso to Section
23(a) hereof, shall be effective only if there are Continuing Directors and
shall require the concurrence of a majority of such Continuing Directors) or
(iv) to change or supplement the provisions hereunder in any manner that the
Company may deem necessary or desirable and that shall not adversely affect the
interests of the holders of Rights (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person); provided, this Agreement may not
be supplemented or amended to lengthen, pursuant to clause (iii) of this
sentence, (A) a time period relating to when the Rights may be redeemed at such
time as the Rights are not then redeemable or (B) any other time period unless
such lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Company that states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Shares.
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 (and, where specifically provided for herein,
the Continuing Directors) shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board, or the Company (or, where specifically provided for
herein, the Continuing Directors), or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board (or, where
specifically provided for herein, by the Continuing Directors) in good faith,
shall (x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights Certificates and all other parties and (y) not subject the
Board or the Continuing Directors to any liability to the holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, the 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 registered holders of the Rights
Certificates (and, prior to the Distribution Date, the Common Shares).
Section 31. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and 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.
Section 32. Governing Law. This Agreement and each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
"COMPANY" Meridian Data, Inc.
By: /s/ GIANLUCA U. RATTAZZI
Name: Gianluca U. Rattazzi
Title: President and CEO
"RIGHTS AGENT" BANK BOSTON, N.A.
By: /s/ KATHERINE S. ANDERSON
Name: Katherine S. Anderson
Title: Director of Client Services
<PAGE>
EXHIBIT A
CERTIFICATE OF DESIGNATION OF RIGHTS, PREFERENCES
AND PRIVILEGES OF
SERIES A PARTICIPATING PREFERRED STOCK
OF MERIDIAN DATA, INC.
The undersigned, Gianluca Rattazzi and Robert D. Brownell do hereby certify:
1. That they are the duly elected and acting Chief Executive Officer and
Assistant Secretary, respectively, of Meridian Data, Inc., a Delaware
corporation (the "Corporation").
2. That pursuant to the authority conferred upon the Board of Directors
by the Certificate of Incorporation of the Corporation, the Board of Directors
on July 18, 1997 adopted the following resolution creating a series of 30,000
shares of Preferred Stock designated as Series A Participating Preferred Stock:
"RESOLVED: That pursuant to the authority vested in the Board of
Directors of the corporation by the Certificate of Incorporation, the Board of
Directors does hereby provide for the issue of a series of Preferred Stock of
the Corporation, to be designated "Series A Participating Preferred Stock,"
initially consisting of 30,000 shares and to the extent that the designations,
powers, preferences and relative and other special rights and the
qualifications, limitations and restrictions of the Series A Participating
Preferred Stock are not stated and expressed in the Certificate of
Incorporation, does hereby fix and herein state and express such designations,
powers, preferences and relative and other special rights and the
qualifications, limitations and restrictions thereof, as follows (all terms used
herein which are defined in the Certificate of Incorporation shall be deemed to
have the meanings provided therein):
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Participating Preferred Stock," and the number of shares
constituting such series shall be 30,000.
Section 2. Dividends and Distributions.
(a) Subject to the prior and superior right of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Participating Preferred Stock shall be entitled to
receive when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the last day
of September, December, March and June in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Participating Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to, 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
kind) of all non-cash dividends or other distributions other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock of
the Corporation (the "Common Stock") since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series A
Participating Preferred Stock. In the event the Corporation shall at any time
after July 18, 1997 (the "Rights Declaration Date") (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount to which holders of shares
of Series A Participating Preferred Stock were entitled immediately prior to
such event under the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(b) The Corporation shall declare a dividend or distribution on
the Series A Participating Preferred Stock as provided in paragraph (a) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock).
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
A Participating Preferred Stock, unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of issue of
such shares, or unless the date of issue is a Quarterly Dividend Payment Date or
is a date after the record date for the determination of holders of shares of
Series A Participating Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Participating Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Participating Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 30 days prior to the date fixed for the
payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Participating
Preferred Stock shall have the following voting rights:
a. Subject to the provision for adjustment hereinafter set forth, each
share of Series A Participating Preferred Stock shall entitle the
holder thereof to 1,000 votes on all matters submitted to a vote of
the stockholders of the Corporation. In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each
such case the number of votes per share to which holders of shares of
Series A Participating Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by a
fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
b. Except as otherwise provided herein or by law, the holders of
shares of Series A Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
c. Except as required by law, holders of Series A Participating
Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
(a) The Corporation shall not declare any dividend on, make any
distribution on, or redeem or purchase or otherwise acquire for consideration
any shares of Common Stock after the first issuance of a share or fraction of a
share of Series A Participating Preferred Stock unless concurrently therewith it
shall declare a dividend on the Series A Participating Preferred Stock as
required by Section 2 hereof.
(b) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Participating Preferred Stock as provided
in Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not
A) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares
of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Participating Preferred
Stock;
B) declare or pay dividends on, make any other distributions on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with Series A Participating
Preferred Stock, except dividends paid ratably on the Series A
Participating Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts
to which the holders of all such shares are then entitled;
C) redeem or purchase or otherwise acquire for consideration shares of
any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A
Participating Preferred Stock, provided that the Corporation may at
any time redeem, purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Participating Preferred
Stock;
D) purchase or otherwise acquire for consideration any shares of
Series A Participating Preferred Stock, or any shares of stock ranking
on a parity with the Series A Participating Preferred Stock, except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares
upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in
good faith will result in fair and equitable treatment among the
respective series or classes.
(c) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Participating Preferred
Stock 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
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
Section 6. Liquidation, Dissolution or Winding Up.
(a) Upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Corporation, no distribution shall be made to the holders
of shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Participating Preferred Stock unless,
prior thereto, the holders of shares of Series A Participating Preferred Stock
shall have received $1,000.00 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment (the "Series A Liquidation Preference"). Following the payment
of the full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A Participating
Preferred Stock unless, prior thereto, the holders of shares of Common Stock
shall have received an amount per share (the "Common Adjustment") equal to the
quotient obtained by dividing (i) the Series A Liquidation Preference by (ii)
1,000 (as appropriately adjusted as set forth in subparagraph (C) below to
reflect such events as stock splits, stock dividends and recapitalization with
respect to the Common Stock) (such number in clause (ii), the "Adjustment
Number"). Following the payment of the full amount of the Series A Liquidation
Preference and the Common Adjustment in respect of all outstanding shares of
Series A Participating Preferred Stock and Common Stock, respectively, holders
of Series A Participating Preferred Stock and holders of shares of Common Stock
shall receive their ratable and proportionate share of the remaining assets to
be distributed in the ratio of the Adjustment Number to 1 with respect to such
Preferred Stock and Common Stock, on a per share basis, respectively.
(b) In the event, however, that there are not sufficient assets
available to permit payment in full to the Series A Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if any,
which rank on a parity with the Series A Participating Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock.
(c) 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 Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to such event
shall be adjusted by multiplying such Adjustment 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.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Participating Preferred Stock 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 Common Stock, or (iii) combine the
outstanding 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 Participating Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Participating Preferred Stock
shall not be redeemable.
Section 9. Ranking. The Series A Participating Preferred Stock shall rank
junior to all other series of the Corporation's Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
Section 10. Amendment. The Restated Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preference or special rights of the Series A
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the outstanding shares
of Series A Participating Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. Series A Participating Preferred Stock 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 Participating Preferred Stock.
RESOLVED FURTHER, that the President or any Vice President and the
Secretary or any Assistant Secretary of this corporation be, and they hereby
are, authorized and directed to prepare and file a Certificate of Designation of
Rights, Preferences and Privileges in accordance with the foregoing resolution
and the provisions of Delaware law and to take such actions as they may deem
necessary or appropriate to carry out the intent of the foregoing resolution."
3. That the authorized number of shares of Preferred Stock of the Corporation is
5,000,000 and that no such Preferred Stock has been issued.
We further declare under penalty of perjury that the matters set forth
in the foregoing Certificate of Designation are true and correct of our own
knowledge.
Executed at Scotts Valley, California on August ___, 1997.
/s/ GIANLUCA U. RATTAZZI
Gianluca Rattazzi, President and Chief Executive Officer
/s/ ROBERT D. BROWNELL
Robert D. Brownell, Assistant Secretary
<PAGE>
EXHIBIT B
FORM OF RIGHTS CERTIFICATE
Certificate No. R- _____ Rights
NOT EXERCISABLE AFTER AUGUST 11, 2007 EARLIER IF TERMINATED BY THE COMPANY OR IF
THE COMPANY EXCHANGES THE RIGHTS PURSUANT TO THE RIGHTS AGREEMENT. THE RIGHTS
ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.01 PER RIGHT ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(E) OF SUCH
RIGHTS AGREEMENT.]*
* The portion of the legend in bracket shall be inserted only if applicable and
shall replace the preceding sentence.
RIGHTS CERTIFICATE
MERIDIAN DATA, INC.
This certifies that ______________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement dated as of August 11, 1997 (the "Rights Agreement"),
between Meridian Data, Inc., a Delaware corporation (the "Company"), and Bank
Boston, N.A. (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M., California time, on August 11, 2007 at the office of the
Rights Agent designated for such purpose, or at the office of its successor as
Rights Agent, one one-thousandth of a fully paid non-assessable share of Series
A Participating Preferred Stock, no par value, (the "Preferred Shares"), of the
Company, at a purchase price of $30.00 per one-thousandth of a Preferred Share
(the "Purchase Price"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate duly
executed. The number of Rights evidenced by this Rights Certificate (and the
number of one-thousandths of a Preferred Share which may be purchased upon
exercise hereof) set forth above are the number and Purchase Price as of August
11, 1997, based on the Preferred Shares as constituted at such date. As provided
in the Rights Agreement, the Purchase Price and the number and kind of Common
Shares or other securities which may be purchased upon the exercise of the
Rights evidenced by this Rights Certificate are subject to modification and
adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Rights Certificates,
which limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in the
Rights Agreement. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned office of the Rights
Agent.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Rights Certificate (i) may be redeemed by the Company, at its
option, at a redemption price of $0.01 per Right or (ii) may be exchanged by the
Company in whole or in part for Common Shares, substantially equivalent rights
or other consideration as determined by the Company.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office of the Rights Agent designated for
such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate amount of securities as the Rights evidenced by the
Rights Certificate or Rights Certificates surrendered shall have entitled such
holder to purchase. If this Rights Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of whole Rights not exercised.
No fractional portion of less than one one-thousandth of a
Preferred Share will be issued upon the exercise of any Right or Rights
evidenced hereby but in lieu thereof a cash payment will be made, as provided in
the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled
to vote or receive dividends or be deemed for any purpose the holder of the
Preferred Shares or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ___________, 19__.
ATTEST: Meridian Data, Inc.
__________________________ By:________________________________
Mario M. Rosati, Secretary Gianluca Rattazzi, Director and
Chief Executive Officer
Countersigned:
____________________________________
as Rights Agent
By:_________________________________
Authorized Signature
<PAGE>
Form of Reverse Side of Rights Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate)
FOR VALUE RECEIVED_________________________________ hereby sells, assigns and
transfers unto__________________________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint __________________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated: _______________, 19__
_________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person, or an Affiliate or Associate of any such Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, 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 any such Person.
Dated: _______________, 19__
_____________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
<PAGE>
Form of Reverse Side of Rights Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Rights Certificate)
To: _____________________
The undersigned hereby irrevocably elects to exercise
_________________________ Rights represented by this Rights Certificate to
purchase the number of one-thousandths of a Preferred Share issuable upon the
exercise of such Rights and requests that certificates for such number of
one-thousandths of a Preferred Share issued in the name of:
Please insert social security
or other identifying number
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address)
Dated: ___________________ , 19__
_______________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Person (as such terms are defined in the
Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, 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 any such Person.
Dated: _______________, 19__
________________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
<PAGE>
Form of Reverse Side of Rights Certificate -- continued
NOTICE
The signature in the foregoing Forms of Assignment and Election
must conform to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT C
MERIDIAN DATA, INC.
PREFERRED SHARES RIGHTS PLAN
Summary of Rights
Distribution and
Transfer of Rights;
Rights Certificate: The Board of Directors has declared a dividend of one
Right for each share of Meridian Data, Inc. Common Stock
outstanding. Prior to the Distribution Date referred to
below, the Rights will be evidenced by and trade with
the certificates for the Common Stock. After the
Distribution Date, Meridian Data, Inc. (the "Company")
will mail Rights certificates to the Company's
stockholders and the Rights will become transferable
apart from the Common Stock.
Distribution Date: Rights will separate from the Common Stock and become
exercisable following the tenth day (or such later date
as may be determined by a majority of the Directors not
affiliated with the acquiring person or group (the
"Continuing Directors")) after a person or group
(a) acquires beneficial ownership of 15% or more of the
Company's Common Stock or (b) announces a tender or
exchange offer, the consummation of which would result
in ownership by a person or group of 15% or more of the
Company's Common Stock.
Preferred Stock
Purchasable Upon
Exercise of Rights: After the Distribution Date, each Right will entitle the
holder to purchase, for $30.00 a fraction of a share of
the Company's Preferred Stock with economic terms
similar to that of one share of the Company's Common
Stock.
Flip-In: If an acquiror (an "Acquiring Person") obtains 15% or
more of the Company's Common Stock (other than pursuant
to a tender offer deemed adequate and in the best
interests of the Company and its stockholders by
the Board of Directors (a "Permitted Offer")), then each
Right (other than Rights owned by an Acquiring Person or
its affiliates) will entitle the holder thereof to
purchase, for the exercise price, a number of shares of
the Company's Common Stock having a then current market
value of twice the exercise price.
Flip-Over: If, after the Shares Acquisition Date (defined below),
(a) the Company merges into another entity, (b)
an acquiring entity merges into the Company or (c) the
Company sells more than 50% of the Company's assets or
earning power, then each Right (other than Rights owned
by an Acquiring Person or its affiliates) will entitle
the holder thereof to purchase, for the exercise price,
a number of shares of Common Stock of the person
engaging in the transaction having a then current market
value of twice the exercise price (unless the
transaction satisfies certain conditions and is
consummated with a person who acquired shares pursuant
to a Permitted Offer, in which case the Rights will
expire).
Exchange Provision: At any time after a person or group (a) acquires
beneficial ownership of 15% or more of the Company's
Common Stock or (b) announces a tender or exchange
offer, the consummation of which would result in
ownership by a person or group of 15% or more of the
Company's Common Stock and prior to the acquisition by
the Acquiring Person of 50% or more of the outstanding
Common Stock, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by the
Acquiring Person or its affiliates), in whole or in
part, at an exchange ratio of one Common Share per Right
(subject to adjustment).
Redemption of
the Rights: Rights will be redeemable at the Company's option for
$0.01 per Right at any time on or prior to the tenth day
(or such later date as may be determined by a majority
of the Continuing Directors) after public announcement
that a person has acquired beneficial ownership of 15%
or more of the Company's Common Stock (the "Shares
Acquisition Date").
Expiration of
the Rights: The Rights expire on the earliest of (a) August 11,
2007, (b) exchange or redemption of the Rights as
described above, or (c) consummation of a merger or
consolidation resulting in expiration of the Rights as
described above.
Amendment of
Terms of Rights: The terms of the Rights and the Rights Agreement may be
amended in any respect without the consent of the Rights
holders on or prior to the Distribution Date;
thereafter, the terms of the Rights and the Rights
Agreement may be amended without the consent of the
Rights holders in order to cure any ambiguities or to
make changes which do not adversely affect the interests
of Rights holders (other than the Acquiring Person).
Voting Rights: Rights will not have any voting rights.
Anti-Dilution
Provisions: Rights will have the benefit of certain customary
anti-dilution provisions.
Taxes: The Rights distribution should not be taxable for
federal income tax purposes. However, following an event
which renders the Rights exercisable or upon redemption
of the Rights, stockholders may recognize taxable
income.
The foregoing is a summary of certain principal terms of the Stockholder Rights
Plan only and is qualified in its entirety by reference to the detailed terms of
the Rights Agreement dated as of August 11, 1997, between the Company and the
Rights Agent.
