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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-A/A
AMENDMENT NO. 1
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
THOMAS GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 72-0843540
(STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NO.)
5221 N. O'CONNOR BLVD., SUITE 500, DALLAS, TEXAS 75039
(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
IF THIS FORM RELATES TO THE REGISTRATION OF A CLASS OF SECURITIES PURSUANT
TO SECTION 12(b) OF THE EXCHANGE ACT AND IS EFFECTIVE PURSUANT TO GENERAL
INSTRUCTION A.(c), PLEASE CHECK THE FOLLOWING BOX. [ ]
IF THIS FORM RELATES TO THE REGISTRATION OF A CLASS OF SECURITIES PURSUANT
TO SECTION 12(g) OF THE EXCHANGE ACT AND IS EFFECTIVE PURSUANT TO GENERAL
INSTRUCTION A.(d), PLEASE CHECK THE FOLLOWING BOX. [X]
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
RIGHTS TO PURCHASE
COMMON STOCK
------------------
(TITLE OF CLASS)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
This Amendment No. 1 amends the Registrant's registration statement on
Form 8-A dated July 16, 1998 (the "Registration Statement") filed in connection
with the registration of the Registrant's Common Stock Purchase Rights.
This Amendment No. 1 is being filed to amend and restate Item 1 to the
Registration Statement to reflect the adoption of two amendments to the Rights
Agreement between the Registrant and Harris Trust and Savings Bank. The two
amendments were adopted primarily to:
o modify the definition of those persons that would be exempt from the
operation of the Rights Agreement;
o restrict the ability of the Board of Directors to redeem the rights
or amend the Rights Agreement after a person acquires 15% or more of
the outstanding common stock of the Registrant, except in limited
circumstances; and
o remove provisions that allowed certain actions to be taken with
respect to the Rights Agreement only by "Disinterested Directors" --
generally, those directors who are not affiliated with a person that
acquires 15% or more of the outstanding common stock of the
Registrant. Under the Rights Agreement, as amended, those actions may
be taken by the Registrant's board of directors.
ITEM 1. DESCRIPTION OF SECURITIES TO BE REGISTERED
Item 1 of the Registration Statement is hereby amended and restated to
read in its entirety as follows:
On July 9, 1998, the Board of Directors of Thomas Group, Inc. (the
"Company") declared a dividend distribution of one Right for each outstanding
share of the Company's common stock, $0.01 par value (the "Common Stock"), to
stockholders of record at the close of business on July 20, 1998. Each Right
entitles the registered holder to purchase from the Company one share of Common
Stock, par value $0.01 per share (the "Common Stock"), at a Purchase Price of
$100.00 per share, subject to adjustment. The description and terms of the
Rights are set forth in the Rights Agreement (the "Rights Agreement") between
the Company and Harris Trust and Savings Bank, as Rights Agent (the "Rights
Agent").
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. The Rights will separate from the Common Stock upon the earlier
of (1) ten (10) business days following a public announcement that a person
(other than
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Dorsey R. Gardner or his affiliates) or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of fifteen percent (15%) or more of the outstanding shares
of Common Stock (the "Stock Acquisition Date"), or (2) ten (10) business days
(or such later date as the Board of Directors shall determine) following the
commencement of a tender or exchange offer that would result in a person or
group beneficially owning fifteen percent (15%) or more of such outstanding
shares of Common Stock. The date the Rights separate is referred to as the
"Distribution Date."
Until the Distribution Date, (1) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such
Common Stock certificates, (2) new Common Stock certificates issued after July
9, 1998 will contain a notation incorporating the Rights Agreement by
reference, and (3) the surrender for transfer of any certificates for Common
Stock outstanding will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificates. Pursuant to the Rights
Agreement, the Company reserves the right to require prior to the occurrence of
a Triggering Event (as defined below) that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of Common Stock will be
issued.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on July 9, 2008, unless earlier redeemed by the
Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except in connection with shares
of Common Stock issued or sold pursuant to the exercise of stock options under
any employee plan or arrangements, or upon the exercise, conversion or exchange
of securities hereafter issued by the Company, or as otherwise determined by
the Board of Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
In the event that (1) the Company is the surviving corporation in a merger
or other business combination with an Acquiring Person (or any associate or
affiliate thereof) and its Common Stock remains outstanding and unchanged, (2)
any person shall acquire beneficial ownership of more than fifteen percent
(15%) of the outstanding shares of Common Stock (except pursuant to (A) certain
consolidations or mergers involving the Company or sales or transfers of the
combined assets, cash flow or earning power of the Company and its subsidiaries
or (B) an offer for all outstanding shares of Common Stock at a price and upon
terms and conditions which the Board of Directors determines to be in the best
interests of the Company and its stockholders) (a "Qualified Offer"), or (3)
there occurs a reclassification of securities, a recapitalization of the
Company or any of certain business combinations or other
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transactions (other than certain consolidations and mergers involving the
Company and sales or transfers of the combined assets, cash flow or earning
power of the Company and its subsidiaries) involving the Company or any of its
subsidiaries which has the effect of increasing by more than one percent (1%)
the proportionate share of any class of the outstanding equity securities of
the Company or any of its subsidiaries beneficially owned by an Acquiring
Person (or any associate or affiliate thereof), each holder of a Right (other
than the Acquiring Person and certain related parties) will thereafter have the
right to receive, upon exercise, Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to two
times the Purchase Price of the Right. Notwithstanding any of the foregoing,
following the occurrence of any of the events described in this paragraph, all
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person will be null and
void. The events described in this paragraph are referred to as "Flip-in
Events."
For example, at a Purchase Price of $100 per Right, each Right not owned
by an Acquiring Person (or by certain related parties or transferees) following
an event set forth in the preceding paragraph would entitle its holder to
purchase $200 worth of Common Stock (or other consideration, as noted above)
for $100. Assuming that the Common Stock had a per share market price of $10 at
such time, the holder of each valid Right would be entitled to purchase twenty
shares of Common Stock for $100.
In the event that, at any time following the Stock Acquisition Date, (1)
the Company shall enter into a merger or other business combination transaction
in which the Company is not the surviving corporation, (2) the Company is the
surviving corporation in a consolidation, merger or similar transaction
pursuant to which all or part of the outstanding shares of Common Stock are
changed into or exchanged for stock or other securities of any other person or
cash or any other property or (3) more than 50% of the combined assets, cash
flow or earning power of the Company and its subsidiaries is sold or
transferred (in each case other than certain consolidations with, mergers with
and into, or sales of assets, cash flow or earning power by or to subsidiaries
of the Company as specified in the Rights Agreement), each holder of a Right
(except Rights which previously have been voided as set forth above) shall
thereafter have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the Purchase Price of the
Right. The events described in this paragraph are referred to as "Flip-over
Events." Flip-in Events and Flip-over Events are referred to collectively as
"Triggering Events."
The Purchase Price payable, the number and kind of shares covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time to prevent dilution (1) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Common Stock, (2) if
holders of the Common Stock are granted certain rights, options or warrants to
subscribe for Common Stock
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or securities convertible into Common Stock at less than the current market
price of the Common Stock, or (3) upon the distribution to holders of the
Common Stock of evidences of indebtedness, cash (excluding regular quarterly
cash dividends), assets (other than dividends payable in Common Stock) or
subscription rights or warrants (other than those referred to in (2)
immediately above).
With certain exceptions, no adjustments in the Purchase Price will be
required until cumulative adjustments amount to at least one percent (1%) of
the Purchase Price. No fractional shares of Common Stock are required to be
issued and, in lieu thereof, the Company may make an adjustment in cash based
on the market price of the Common Stock on the trading date immediately prior
to the date of exercise.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of fifty percent (50%) or more
of the outstanding shares of Common Stock, the Board of Directors of the
Company may, without payment of the Purchase Price by the holder, exchange the
Rights (other than Rights owned by such person or group, which will become
void), in whole or in part, for shares of Common Stock at an exchange ratio of
one-half (1/2) the number of shares of Common Stock for which a Right is
exercisable immediately prior to the time of the Company's decision to exchange
the Rights (subject to adjustment).
At any time until the Stock Acquisition Date, the Company may redeem the
Rights in whole, but not in part, at a price of $0.001 per Right (payable in
cash, shares of Common Stock or other consideration deemed appropriate by the
Board of Directors). Immediately upon the action of the Board of Directors
ordering redemption of the Rights, the Rights will terminate and the only right
of the holders of Rights will be to receive the $0.001 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that
the Rights become exercisable for Common Stock (or other consideration) of the
Company or for common stock of an acquiring company as set forth above or in
the event that the Rights are redeemed.
Other than those provisions relating to the principal economic terms of
the Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company at any time during the period in which the
Rights are redeemable. At any time when the Rights are no longer redeemable,
the provisions of the Rights Agreement may be amended by the Board only if such
amendment does not adversely affect the interest of holders of Rights
(excluding the interest of any Acquiring Person); provided, however, that no
amendment may cause the Rights again to become redeemable.
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A copy of the Rights Agreement and copies of Amendments Number One and Two
thereto have been filed with the Securities and Exchange Commission. A copy of
the Rights Agreement, as amended, is available free of charge from the Rights
Agent. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, as
amended, which is incorporated herein by reference.
ITEM 2. EXHIBITS
Item 2 of the Registration Statement is hereby amended and restated to
read in its entirety as follows:
1 Restated Rights Agreement, dated as of July 9, 1998, reflecting amendments
made by Amendment Number One dated March 1, 1999 and Amendment Number Two
dated August 12, 1999, by and between Thomas Group, Inc. and Harris Trust
and Savings Bank, as Rights Agent, including exhibits thereto.
2 Form of Rights Certificate (attached as Exhibit 1 to the Rights Agreement
filed as Exhibit 1 hereto).
* * * * *
5
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this registration statement to
be signed on its behalf by the undersigned, thereunto duly authorized.
THOMAS GROUP, INC.
August 12, 1999 By: /s/ J. Thomas Williams
---------------------------------
Name: J. Thomas Williams
-------------------------
Title: Chief Executive Officer
-------------------------
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
1 Restated Rights Agreement, dated as of July 9, 1998,
reflecting amendments made by Amendment Number One dated
March 1, 1999 and Amendment Number Two dated August 12, 1999,
by and between Thomas Group, Inc. and Harris Trust and
Savings Bank, as Rights Agent, including exhibits thereto.
2 Form of Rights Certificate (attached as Exhibit 1 to the Rights Agreement filed as Exhibit 1
hereto).
</TABLE>
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EXHIBIT 1
THOMAS GROUP, INC.
AND
HARRIS TRUST AND SAVINGS BANK
RIGHTS AGENT
RESTATED RIGHTS AGREEMENT
DATED AS OF JULY 9, 1998
AS AMENDED BY AMENDMENT NUMBER ONE DATED MARCH 1, 1999
AND
AMENDMENT NUMBER TWO DATED AUGUST 12, 1999
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C> <C>
Section 1. Certain Definitions ........................................... 1
Section 2. Appointment of Rights Agent..................................... 7
Section 3. Issuance of Rights Certificates................................. 7
(a) Distribution Date; Rights Certificates................. 7
(b) Common Stock Certificates; Summary of Rights........... 8
(c) Legend................................................. 8
Section 4. Form of Rights Certificates..................................... 9
(a) Form; Date............................................. 9
(b) Acquiring Person Legend................................ 10
Section 5. Countersignature and Registration............................... 11
(a) Signatures............................................. 11
(b) Registration and Transfer.............................. 11
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates........ 11
(a) Procedure.............................................. 11
(b) Issuance of New Rights Certificates.................... 12
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights... 12
(a) Exercise............................................... 12
(b) Purchase Price......................................... 13
(c) Rights Agent Actions................................... 13
(d) Partial Exercise....................................... 14
(e) Termination of Acquiring Person's Rights............... 14
(f) Surrender of Rights Certificates; Identity of
Beneficial Owner....................................... 14
Section 8. Cancellation and Destruction of Rights Certificates............. 15
Section 9. Reservation and Availability of Capital Stock................... 15
(a) Reservation of Capital Stock........................... 15
(b) Listing................................................ 15
(c) Registration under the Act............................. 15
(d) Covenant Regarding Capital Stock....................... 16
(e) Transfer Taxes and Charges............................. 16
</TABLE>
(i)
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<TABLE>
<S> <C> <C>
Section 10. Common Stock Record Date.......................................... 17
Section 11. Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights.................................................. 17
(a) Certain Adjustments...................................... 17
(b) Purchase Price Adjustment--Capital Stock................. 22
(c) Purchase Price Adjustment--Cash, Assets, etc............. 22
(d) Current Market Price..................................... 23
(e) Purchase Price Adjustment Threshold...................... 24
(f) Equivalent Adjustments................................... 24
(g) Post-Adjustment Rights Issuances......................... 24
(h) Common Stock Anti-Dilution............................... 25
(i) Adjustment of Number of Rights........................... 25
(j) Rights Certificates...................................... 26
(k) Adjustment Below Par Value............................... 26
(l) Adjustment Effective as of Future Date; Exercise......... 26
(m) Tax Adjustments.......................................... 26
(n) Restriction on Certain Transactions...................... 27
(o) Restriction Against Diminishing Benefits of the Rights... 27
(p) Common Stock Adjustments................................. 27
Section 12. Certificate of Adjusted Purchase Price or Number of Shares........ 28
Section 13. Consolidation, Merger or Sale or Transfer of Assets or............
Earning Power..................................................... 28
(a) Flip-over Event.......................................... 28
(b) Principal Party.......................................... 30
(c) Supplemental Agreement................................... 30
(d) Exceptions............................................... 31
Section 14. Fractional Rights and Fractional Shares........................... 31
(a) Fractional Rights........................................ 31
(b) Fractional Shares of Common Stock........................ 32
(c) Waiver of Fractional Rights and Shares................... 32
Section 15. Rights of Action.................................................. 33
Section 16. Agreement of Rights Holders....................................... 33
</TABLE>
(ii)
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<TABLE>
<S> <C> <C>
Section 17. Rights Certificate Holder Not Deemed a Stockholder................ 34
Section 18. Concerning the Rights Agent....................................... 34
(a) Compensation............................................. 34
(b) Reliance................................................. 35
Section 19. Merger or Consolidation or Change of Name of Rights Agent......... 35
(a) Successor................................................ 35
(b) Prior Countersignatures.................................. 35
Section 20. Duties of Rights Agent............................................ 36
(a) Legal Counsel............................................ 36
(b) Certification by the Company............................. 36
(c) Liability for Negligence, etc............................ 36
(d) Statements of Fact or Recitals........................... 36
(e) Agreement; Adjustments................................... 36
(f) Further Assurances....................................... 37
(g) Instructions............................................. 37
(h) Dealing in Rights........................................ 37
(i) Agents; Reasonable Care.................................. 38
(j) Expenses; Repayment Assurances........................... 38
(k) Exercise of Rights; Consultation with Company............ 38
Section 21. Change of Rights Agent............................................ 38
Section 22. Issuance of New Rights Certificates............................... 39
Section 23. Redemption and Termination........................................ 40
(a) Redemption............................................... 40
(b) Effect of Redemption; Procedure.......................... 40
Section 24. Exchange ......................................................... 41
(a) Right to Exchange........................................ 41
(b) Effect of Exchange; Procedure............................ 41
(c) Common Stock Equivalents................................. 41
(d) Insufficient Common Stock................................ 42
(e) Fractional Shares........................................ 42
Section 25. Notice of Certain Events.......................................... 42
(a) Common Stock Transactions, etc........................... 42
(b) Other Transactions....................................... 43
</TABLE>
(iii)
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<TABLE>
<S> <C> <C>
Section 26. Notices........................................................... 43
Section 27. Supplements and Amendments........................................ 44
Section 28. Successors........................................................ 45
Section 29. Determinations and Actions by the Board of Directors, etc......... 45
Section 30. Benefits of this Agreement........................................ 45
Section 31. Severability...................................................... 45
Section 32. Governing Law..................................................... 46
Section 33. Counterparts...................................................... 46
Section 34. Descriptive Headings.............................................. 46
Exhibit 1 Form of Rights Certificate........................................ 48
Exhibit 2 Letter to Stockholders............................................ 58
Exhibit 3 Form of Press Release............................................. 63
</TABLE>
(iv)
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of July 9, 1998, between Thomas Group,
Inc., a Delaware corporation (the "Company"), and Harris Trust and Savings Bank
(the "Rights Agent").
RECITALS
On July 9, 1998 (the "Rights Dividend Declaration Date"), the Board of
Directors of the Company authorized and declared a dividend distribution of one
Right for each share of Common Stock (as hereinafter defined) of the Company
outstanding at the close of business on July 20, 1998 (the "Record Date"), and
has authorized the issuance of one Right (as such number may hereafter be
adjusted pursuant to the provisions of Section 11(p) (Adjustment of Purchase
Price; Number and Kind of Shares or Number of Rights -- Common Stock
Adjustments)) for each share of Common Stock of the Company issued between the
Record Date (whether originally issued or delivered from the Company's
treasury) and the Distribution Date, each Right initially representing the
right to purchase one share of Common Stock, upon the terms and subject to the
conditions hereinafter set forth (the "Rights");
AGREEMENT
In consideration of the premises and the mutual agreements herein set
forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner (as such term is hereinafter defined) of 15% or more of the
shares of Common Stock then outstanding, but shall not include (i) the Company,
(ii) any Subsidiary of the Company, (iii) 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, (iv) any Exempt Person, or (v) any Person who becomes an Acquiring Person
solely as a result of a reduction in the number of shares of Common Stock
outstanding due to the repurchase of shares of Common Stock by the Company,
unless and until such Person shall purchase or otherwise become (as a result of
actions taken by such Person or its Affiliates or Associates) the Beneficial
Owner of additional shares of Common Stock constituting 1% or more of the then
outstanding shares of Common Stock; provided, however, that if a Person shall
become the Beneficial
<PAGE> 7
Owner of 15% or more of the Common Stock of the Company then
outstanding by reason of share repurchases by the Company and shall,
after such share repurchases by the Company, become the Beneficial
Owner of any additional Common Stock of the Company, then such Person
shall be deemed to be an "Acquiring Person," unless upon the
consummation of the acquisition of such additional shares of Common
Stock such Person does not beneficially own 15% or more of the shares
of Common Stock then outstanding. Notwithstanding the foregoing, if
the Board of Directors of the Company determines in good faith that a
Person who would otherwise be an Acquiring Person, as defined pursuant
to the foregoing provisions of this paragraph, has become such
inadvertently (including, without limitation, because (i) such Person
was unaware that it beneficially owned a percentage of Common Stock
that would otherwise cause such Person to be an Acquiring Person, or
(ii) such Person was aware of the extent of its Beneficial Ownership
of Common Stock but had no actual knowledge of the consequences of
such Beneficial Ownership under this Agreement) and without any
intention of changing or influencing control of the Company, and such
Person divests as promptly as practicable a sufficient number of
shares of Common Stock so that such Person would no longer be an
Acquiring Person as defined pursuant to the foregoing provisions of
this paragraph, then such Person shall not be deemed to be or to have
become an Acquiring Person for any purposes of this Agreement.
(b) "Act" shall mean the Securities Act of 1933, as amended
and in effect from time to time.
(c) "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii)(Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Certain Adjustments)
(d) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.
(e) "Agreement" shall mean this Rights Agreement as
originally executed or as it may from time to time be supplemented or
amended pursuant to the applicable provisions hereof.
(f) 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, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
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conversion rights, exchange rights, rights, warrants or options, or otherwise;
provided, however, that a Person shall not, for purposes of this paragraph (i),
be deemed the "Beneficial Owner" of or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by such Person or any of
such Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, or (B) securities issuable upon exercise of
Rights at any time prior to the occurrence of a Triggering Event, or (C)
securities issuable upon exercise of Rights from and after the occurrence of a
Triggering Event, which Rights were acquired by such Person or any of such
Person's Affiliates or Associates prior to the Distribution Date or pursuant to
Section 3(a) (Issuance of Rights Certificates -- Distribution Date; Rights
Certificates) or Section 22 (Issuance of New Rights Certificates) (the "Original
Rights") or pursuant to Section 11(i) (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights -- Adjustment of Number of Rights) in
connection with an adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act), including pursuant to any
agreement, arrangement or understanding, whether or not in writing; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not also then reportable by such Person on a
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), for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described in
the proviso to subparagraph (ii) of this paragraph (f)) or disposing of any
voting securities of the Company;
provided, however, that nothing in this paragraph (f) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of or to "beneficially own," any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty (40) calendar days after the date of such acquisition.
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(g) "Board" means the Board of Directors of the Company.
(h) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of Texas or
Illinois are authorized or obligated by law or executive order to
close.
(i) "Close of Business" on any given date shall mean 5:00
P.M., Dallas, Texas time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., Dallas, Texas
time, on the next succeeding Business Day.
(j) "Common Stock" shall mean the common stock, par value
$0.01 per share, of the Company, except that "Common Stock" when used
with reference to any Person other than the Company shall mean the
capital stock of such Person with the greatest voting power, or the
equity securities or other equity interest having power to control or
direct the management, of such Person.
(k) "Common Stock Equivalents" shall have the meaning set
forth in Section 11(a)(iii) (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights -- Certain Adjustments).
(l) "Company" shall mean the Person named as the "Company" in
the first paragraph of this Agreement until a successor corporation
shall have become such, or until a Principal Party shall assume, and
thereafter be liable for, all obligations and duties of the Company
hereunder, pursuant to the applicable provisions of this Agreement,
and thereafter "Company" shall mean such successor corporation or
Principal Party.
(m) "Current Market Price" shall have the meaning set forth
in Section 11(d) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Current Market Price).
(n) "Current Value" shall have the meaning set forth in
Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Certain Adjustments).
(o) "Distribution Date" shall have the meaning set forth in
Section 3(a) (Issuance of Rights Certificates -- Distribution Date;
Rights Certificates).
(p) "Exempt Person" shall mean Mr. Dorsey R. Gardner or his
Affiliates, so long as Mr. Gardner does not purchase or otherwise
become (as a result of actions taken by Mr. Gardner or his Affiliates
or Associates) the Beneficial Owner of additional shares of Common
Stock (in addition to those beneficially owned by Mr. Gardner and his
Affiliates and Associates on March 1, 1999) constituting 1% or more of
the then outstanding shares of Common Stock.
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(q) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended and in effect on the date of this Agreement.
(r) "Exchange Number" shall mean one-half of the number of
shares of Common Stock or shares or other units of other property for
which a Right is exercisable immediately prior to the time of the
action of the Board to exchange the Rights.
(s) "Expiration Date" shall have the meaning set forth in
Section 7(a) (Exercise of Rights; Purchase Price; Expiration Date of
Rights -- Exercise).
(t) "Final Expiration Date" shall mean the Close of Business
on July 9, 2008.
(u) "Flip-in Event" shall mean any event described in Section
11(a)(ii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments).
(v) "Flip-in Trigger Date" shall have the meaning set forth
in Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind
of Shares or Number of Rights -- Certain Adjustments).
(w) "Flip-over Event" shall mean any event described in
clauses (x), (y) or (z) of Section 13(a) (Consolidation, Merger or
Sale or Transfer of Assets or Earning Power -- Flip-over Event).
(x) "Original Rights" shall have the meaning set forth in
Section 1(f)(i) (Certain Definitions).
(y) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(z) "Principal Party" shall have the meaning set forth in
Section 13(b) (Consolidation, Merger or Sale or Transfer of Assets or
Earning Power -- Principal Party).
(aa) "Purchase Price" shall have the meaning set forth in
Section 4(a) (Form of Rights Certificates -- Form; Date).
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<PAGE> 11
(bb) "Qualified Offer" shall have the meaning set forth in
Section 11(a)(ii)(A).
(cc) "Record Date" shall have the meaning set forth in the
Recitals at the beginning of the Agreement.
(dd) "Redemption Date" shall have the meaning set forth in
Section 23(a) (Redemption and Termination -- Redemption).
(ee) "Redemption Price" shall have the meaning set forth in
Section 23(a) (Redemption and Termination -- Redemption).
(ff) "Rights" shall have the meaning set forth in the
Recitals at the beginning of the Agreement.
(gg) "Rights Agent" shall mean the Person named as the
"Rights Agent" in the first paragraph of this Agreement until a
successor Rights Agent shall have become such pursuant to the
applicable provisions hereof and thereafter "Rights Agent" shall mean
such successor Rights Agent. If at any time there is more than one
Person appointed by the Company as Rights Agent pursuant to the
applicable provisions of this Agreement, "Rights Agent" shall mean and
include each such Person.
(hh) "Rights Certificates" shall have the meaning set forth
in Section 3(a) (Issuance of Rights Certificates -- Distribution Date;
Rights Certificates).
(ii) "Rights Dividend Declaration Date" shall have the
meaning set forth in the RECITALS clause at the beginning of the
Agreement.
(jj) "Spread" shall have the meaning set forth in Section
11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments).
(kk) "Stock Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed or amended pursuant to
Section 13(d) under the Exchange Act) by the Company or an Acquiring
Person that an Acquiring Person has become such other than pursuant to
a Qualified Offer.
(ll) "Subsidiary" shall mean, with reference to any Person,
any corporation or other entity of which an amount of voting
securities sufficient to elect at least a majority of the directors of
such corporation or entity is beneficially owned, directly or
indirectly, by such Person, or otherwise controlled by such Person.
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<PAGE> 12
(mm) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments).
(nn) "Trading Day" shall have the meaning set forth in Section
11(d)(i) (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Current Market Price).
(oo) "Triggering Event" shall mean any Flip-in Event or any
Flip-over Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution Date
also be the holders of the Common Stock) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issuance of Rights Certificates.
(a) Distribution Date; Rights Certificates. Until the earlier
of (i) the Close of Business on the tenth Business Day after the Stock
Acquisition Date (or, if the tenth Business Day after the Stock Acquisition Date
occurs before the Record Date, the Close of Business on the Record Date), or
(ii) the Close of Business on the tenth Business Day (or such later date as the
Board shall determine prior to such time as any Person becomes an Acquiring
Person) after the date that a tender or exchange offer by any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan) is first published or sent or given within the meaning of Rule 14d-2(a) of
the General Rules and Regulations under the Exchange Act, if upon consummation
thereof such Person would be the Beneficial Owner of 15% or more of the shares
of Common Stock then outstanding (the earlier of (i) and (ii) being herein
referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for the Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y) the Rights
will be transferable only in connection with the transfer of the underlying
shares of Common Stock (including a transfer to the Company, except pursuant to
the provision of Section 23 (Redemption and Termination)). As soon as
practicable after the Distribution Date, the Rights Agent will, at the expense
of the Company, send by
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<PAGE> 13
first-class, insured, postage prepaid mail, to each record holder of
the Common Stock as of the Close of Business on the Distribution Date,
at the address of such holder shown on the records of the Company, one
or more rights certificates, in substantially the form of Exhibit 1
hereto (the "Rights Certificates"), evidencing one Right for each
share of Common Stock so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of Rights per
share of Common Stock has been made pursuant to Section 11(p)
(Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Common Stock Adjustments) 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)
(Fractional Rights and Fractional Shares -Fractional Rights)) so that
Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of
and after the Distribution Date, the Rights will be evidenced solely
by such Rights Certificates.
(b) Common Stock Certificates; Summary of Rights. With respect
to certificates for the Common Stock outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced by
such certificates for the Common Stock and the registered holders of
the Common Stock shall also be the registered holders of the
associated Rights. Until the earlier of the Distribution Date or the
Expiration Date, the transfer of any certificates representing shares
of Common Stock in respect of which Rights have been issued shall also
constitute the transfer of the Rights associated with such shares of
Common Stock. On the Record Date, or as soon as practicable
thereafter, the Company will send a copy of a Summary of Rights to
Purchase Common Stock, in substantially the form of Exhibit 2 hereto
(the "Summary of Rights"), by first-class, postage-prepaid mail, to
each record holder of shares of Common Stock as of the close of
business of the Record Date, at the address of such holder shown on
the records of the Company.
(c) Legend. Rights shall be issued in respect of all
certificates for shares of Common Stock which are issued (whether
originally issued or from the Company's treasury) after the Record
Date but prior to the earliest of the (i) Distribution Date, (ii) the
Expiration Date, or (iii) the Redemption Date, or, in certain
circumstances provided in Section 22 (Issuance of New Rights
Certificates) after the Distribution Date. Certificates representing
such shares of Common Stock 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 the Rights Agreement dated
as of July 9, 1998, by and between Thomas Group, Inc. (the
"Company") and Harris Trust and Savings Bank, as Rights Agent
(the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which
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<PAGE> 14
is on file at the principal offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and will no longer be
evidenced by this certificate. The Company will mail to the holder
of this certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge promptly after receipt of a
written request therefor. Under certain circumstances set forth in
the Rights Agreement, Rights issued to, or held by, any Person who
is, was or becomes an Acquiring Person or any Affiliate or
Associate thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such Person
or by any subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend, until the
earliest of (i) the Distribution Date, (ii) the Expiration Date, and (iii) the
Redemption Date, (x) the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, (y) the
registered holders of such Common Stock shall also be the registered holders of
the associated Rights, and (z) the transfer of any of such certificates shall
also constitute the transfer of the Rights associated with such shares of
Common Stock. In the event that the Company purchases, or acquires any shares
of Common Stock after the Record Date but prior to the Distribution Date, any
rights associated with such shares of Common Stock shall be deemed canceled and
retired so that the Company shall not be entitled to exercise any Rights
associated with shares of Common Stock which are no longer outstanding.
Section 4. Form of Rights Certificates.
(a) Form; Date. The Rights Certificates (and the forms of
election to purchase and of assignment to be printed on the reverse thereof)
shall each be substantially in the form set forth in Exhibit 1 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 on which the Rights
may from time to time be listed or any securities association on whose
interdealer quotation system the Rights may be from time to time authorized for
quotation, or to conform to usage. Subject to the provisions of Section 11
(Adjustment of Purchase Price; Number and Kind of Shares or Number of Rights)
and Section 22 (Issuance of New Rights Certificates), the Rights Certificates,
whenever distributed, shall be dated as of the Record Date and on their face
shall entitle the
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<PAGE> 15
holders thereof to purchase such number of shares of Common Stock as
shall be set forth therein at the price set forth therein (such
exercise price per share is referred to herein as the "Purchase
Price"), but the amount and type of securities purchasable upon the
exercise of each Right and the Purchase Price thereof shall be subject
to adjustment as provided herein.
(b) Acquiring Person Legend. Any Rights Certificate issued
pursuant to Section 3(a) (Issuance of Rights Certificates --
Distribution Date; Rights Certificates) or Section 22 (Issuance of New
Rights Certificates) 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
is part of a plan, arrangement or understanding which has as a primary
purpose or effect avoidance of Section 7(e) (Exercise of Rights;
Purchase Price; Expiration Date of Rights -- Termination of Acquiring
Person's Rights) and any Rights Certificate issued pursuant to Section
6 (Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates), Section 11 (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights) or Section 22 (Issuance of New
Rights Certificates) 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 dated as
of July 9, 1998, by and between Thomas Group, Inc. and Harris
Trust and Savings Bank, as Rights Agent). Accordingly, this
Rights Certificate and the Rights represented hereby may
become null and void in the circumstances specified in
Section 7(e) (Exercise of Rights; Purchase Price; Expiration
Date of Rights -- Termination of Acquiring Person's Rights)
of such Agreement.
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<PAGE> 16
Section 5. Countersignature and Registration.
(a) Signatures. The Rights Certificates shall be executed on
behalf of the Company by its Chairman of the Board, its President or any Vice
President, either manually or by facsimile signature, and shall have affixed
thereto the Company's seal or a facsimile thereof which shall be attested to by
the Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be countersigned by the
Rights Agent, either manually or by facsimile signature, and shall not be valid
for any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Rights Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company with
the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights
Certificates may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(b) Registration and Transfer. Following the Distribution
Date, the Rights Agent will keep or cause to be kept, at its principal office or
offices designated as the appropriate place for surrender of Rights Certificates
upon exercise or transfer, 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) Procedure. Subject to the provisions of Section 4(b) (Form
of Rights Certificates -- Acquiring Person Legend), Section 7(e) (Exercise of
Rights; Purchase Price; Expiration Date of Rights -- Termination of Acquiring
Person's Rights) and Section 14 (Fractional Rights and Fractional Shares), at
any time after the Close of Business on the Distribution Date, and at or prior
to the Close of Business on the Expiration Date, any Rights Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the registered holder to purchase
a like number of shares of Common Stock (or, following a Triggering Event,
Common Stock, other securities, cash or other assets, as the case may be) as the
Rights Certificate or Certificates surrendered then entitle such holder (or
former holder in the case of a transfer) to purchase. Any registered holder
desiring to
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<PAGE> 17
transfer, split up, combine or exchange any Rights Certificate or Certificates
shall make such request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Certificates to be transferred, split up,
combined or exchanged at the principal office or offices 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 Section 4(b), Section 7(e) and
Section 14, 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) Issuance of New Rights Certificates. 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 reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Exercise. Subject to Section 7(e) (Exercise of Rights; Purchase
Price; Expiration Date of Rights -- Termination of Acquiring Person's Rights),
at any time after the Distribution Date, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein, including, without limitation, the restrictions on
exercisability set forth in Section 9(c) (Reservation and Availability of
Capital Stock -Registration under the Act), Section 11(a)(iii) (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights -Certain
Adjustments), Section 23(a) (Redemption and Termination -Redemption), and
Section 24(b) (Exchange -- Effect of Exchange; Procedure)), in whole or in part,
upon surrender of the Rights Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights
Agent at the principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with respect to
the total number of shares of Common Stock (or other securities, cash or other
assets, as the case may be) as to which such
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<PAGE> 18
surrendered Rights are then exercisable and an amount equal to any applicable
transfer tax, at or prior to the earliest of (i) the Final Expiration Date, (ii)
the Redemption Date, or (iii) the expiration of the Rights pursuant to Section
13(d) (Consolidation, Merger or Sale or Transfer of Assets or Earning Power --
Exceptions) (the earliest of (i), (ii) and (iii) being herein referred to as the
"Expiration Date"). The payment of the Purchase Price and the applicable
transfer tax, if any (as such amount may be reduced pursuant to Section
11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Certain Adjustments)), may be made (x) in cash, (y) by certified bank
check or bank draft payable to the order of the Company or (z) by delivery of a
certificate or certificates (with appropriate stock powers executed in blank
attached thereto) evidencing a number of shares of Common Stock equal to the
then Purchase Price divided by the closing price (as determined pursuant to
Section 11(d) (Adjustment of Purchase Price; Number and Kind of Shares or Number
of Rights -- Current Market Price)) per share of Common Stock on the Trading Day
immediately preceding the date of such exercise. In the event that the Company
is obligated to issue other securities (including Common Stock) of the Company,
pay cash and/or distribute other property pursuant to Section 11(a), 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. The Company reserves the right to require prior to the occurrence
of a Triggering Event that, upon any exercise of Rights, a number of Rights be
exercised so that only whole shares of Common Stock would be issued.
(b) Purchase Price. The Purchase Price for each share of Common Stock
pursuant to the exercise of a Right shall initially be $100.00, and shall be
subject to adjustment from time to time as provided in Section 11 (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights) and Section 13(a)
(Consolidation, Merger or Sale or Transfer of Assets or Earning Power --
Flip-over Event) and shall be payable in accordance with paragraph (a) of this
Section 7.
(c) Rights Agent Actions. Upon receipt of a Rights Certificate
representing exercisable Rights and the compliance by the holder of such Rights
Certificate with paragraph (a) of this Section 7, the Rights Agent shall,
subject to Section 20(k) (Duties of Rights Agent -- Exercise of Rights;
Consultation with Company), thereupon promptly (i) (A) requisition from any
transfer agent of the shares of Common Stock (or make available, if the Rights
Agent is the transfer agent for such shares) certificates for the total number
of shares of Common Stock 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 shares of Common Stock
issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of shares of Common Stock as are to be purchased (in which case
certificates for the shares of Common Stock represented by such receipts shall
be deposited by
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<PAGE> 19
the transfer agent with the depositary agent) and the Company will direct the
depositary agent to comply with such request, (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 (Fractional Rights and Fractional Shares), (iii)
after receipt of such certificates or depositary receipts, cause the same to be
delivered to, or upon the order of, the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, and (iv) after receipt thereof, deliver such cash, if any, to, or upon
the order of, the registered holder of such Rights Certificate.
(d) Partial Exercise. In case the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced thereby, a new
Rights Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to, or upon the
order of the registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder, subject to the provisions of
Section 14 (Fractional Rights and Fractional Shares).
(e) Termination of Acquiring Persons Rights. Notwithstanding anything
in this Agreement to the contrary, from and after the first occurrence of a
Flip-in Event, any Rights beneficially owned by (i) an Acquiring Person, or an
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which is part of a plan, arrangement or understanding which has as a primary
purpose or effect the avoidance of this Section 7(e), shall become null and void
without any further action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable efforts to ensure
that the provisions of this Section 7(e) and Section 4(b) (Form of Rights
Certificates -Acquiring Person Legend) are complied with, but shall have no
liability to any holder of Rights Certificates or other Person as a result of
its failure to make any determinations with respect to an Acquiring Person or
any of its respective Affiliates, Associates or transferees hereunder.
(f) Surrender of Rights Certificates; Identity of Beneficial Owner.
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
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<PAGE> 20
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 any of its agents, be delivered to the Rights Agent for cancellation
or in canceled form, or, if surrendered to the Rights Agent, shall be
canceled by it, and no Rights Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this
Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent
shall deliver all canceled Rights Certificates to the Company, or
shall, at the written request of the Company, destroy such canceled
Rights Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) Reservation of Capital Stock. The Company will use its
best efforts to reserve and keep available out of its authorized and
unissued shares of Common Stock the number of shares of Common Stock
and/or other securities that, as provided in this Agreement, including
the rights of the Company under Section 11(a)(iii) (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights --
Certain Adjustments) to otherwise fulfill its obligations, will be
sufficient to permit the exercise in full of all outstanding Rights.
(b) Listing. So long as the shares of Common Stock issuable
and deliverable upon the exercise of the Rights may be listed on any
national securities exchange or authorized for quotation on any
interdealer quotation system of any securities association, the
Company shall use its best efforts to cause, from and after such time
as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange or quoted on such system upon
official notice of issuance upon such exercise.
(c) Registration under the Act. The Company shall use its best
efforts to (i) file, as soon as practicable following the earliest
date after the first occurrence of a Flip-in Event on which the
consideration to be delivered by the Company upon exercise of the
Rights has been determined in accordance with Section 11(a)(iii)
(Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights --
15
<PAGE> 21
Certain Adjustments), or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement on an
appropriate form under the Act with respect to the securities
purchasable upon exercise of the Rights, (ii) cause such registration
statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of
the Act) until the earlier of (A) the date as of which the Rights are
no longer exercisable for such securities, and (B) the Expiration
Date. The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or "blue sky" laws
of the various states in connection with the exercisability of the
Rights. The Company may temporarily suspend, for a period of time not
to exceed ninety (90) calendar 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 that the
exercisability of the Rights has been temporarily suspended, as well
as a public announcement at such time as the suspension is no longer
in effect. In addition, if the Company shall determine that a
registration statement is required following the Distribution Date,
the Company may temporarily suspend the exercisability of the Rights
until such time as a registration statement has been declared
effective. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction if
the requisite qualification in such jurisdiction shall not have been
obtained, the exercise thereof shall not be permitted under applicable
law or a registration statement shall not have been declared
effective.
(d) Covenant Regarding Capital Stock. The Company will take
all such action as may be necessary to ensure that all shares of
Common Stock (and, following the occurrence of a Triggering Event,
Common Stock and/or other securities) delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable.
(e) Transfer Taxes and Charges. The Company will pay when due
and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the
Rights Certificates and of any certificates for a number of shares of
Common Stock (or other securities, as the case may be) upon the
exercise of Rights. The Company shall not, however, be required to pay
any transfer tax which may be payable in respect of any transfer or
delivery of Rights Certificates to a Person other than, or the
issuance or delivery of shares of Common Stock (or other securities,
as the case may be) in respect of a name other than, that of the
registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for
shares of Common Stock (or other securities, as the case may be) in a
name other than that of the registered holder upon the exercise of any
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<PAGE> 22
Rights until 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. Common Stock Record Date. Each Person in whose name any
certificate for a number of shares of Common Stock (or other securities, as the
case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of such shares of Common Stock (or
other securities, as the case may be) represented thereby on, and such
certificate shall be dated as of, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Common Stock (or
other securities, as the case may be) transfer books of the Company are closed,
such Person shall be deemed to have become the record holder of such shares
(fractional or otherwise) on, and such certificate shall be dated, the next
succeeding Business Day on which the Common Stock (or other securities, as the
case may be) transfer books of the Company are open. Prior to the exercise of
the Rights evidenced thereby, the holder of a Rights Certificate shall not be
entitled to any rights of a stockholder of the Company with respect to shares
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares 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) Certain Adjustments.
(i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Common Stock
payable in shares of Common Stock, (B) subdivide or split the
outstanding Common Stock, (C) combine the outstanding Common Stock into
a smaller number of shares, or (D) issue any shares of its capital
stock in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section 7(e) (Exercise of
Rights; Purchase Price; Expiration Date of Rights -- Termination of
Acquiring Person's Rights), the Purchase Price in effect at the time of
the record date for such dividend or of the effective date of such
subdivision, split, combination or reclassification, and the number and
kind of shares of Common Stock or capital
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<PAGE> 23
stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive, upon payment of the
aggregate adjusted Purchase Price then in effect necessary to exercise
a Right in full, the aggregate number and kind of shares of Common
Stock or capital stock, as the case may be, which, if such Right had
been exercised immediately prior to such date and at a time when the
Common Stock (or other capital stock, as the case may be) transfer
books of the Company were open, such holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
subdivision, split, combination or reclassification. If an event occurs
which would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any adjustment
required pursuant to Section 11(a)(ii).
(ii) In the event:
(A) (1) any Acquiring Person or any
Associate or Affiliate of any Acquiring Person, at any time after
the date of this Agreement, directly or indirectly, shall merge
into the Company or otherwise combine with the Company and the
Company shall be the continuing or surviving corporation of such
merger or combination and the Common Stock of the Company shall
remain outstanding and unchanged, or (2) subject to Section 23
(Redemption and Termination), 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), alone or together with
its Affiliates and Associates, shall, at any time after the
Rights Dividend Declaration Date, become an Acquiring Person,
unless the event causing such Person to become an Acquiring
Person is a Flip-over Event, or is an acquisition of shares of
Common Stock pursuant to a tender offer or an exchange offer for
all outstanding shares of Common Stock at a price and on terms
determined by the Board, prior to the public announcement of such
tender or exchange offer, after receiving advice from one or more
investment banking firms selected by the Board, to be (a) at a
price which is fair to the stockholders of the Company (taking
into account all factors which the Board deems relevant
including, without limitation, prices which could reasonably be
achieved if the Company or its assets were sold on an orderly
basis designed to realize maximum value) and (b) otherwise in the
best interests of the Company and its stockholders, other than
such Acquiring Person, its Affiliates and its Associates (a
"Qualified Offer"); or
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<PAGE> 24
(B) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any reverse
stock split), or recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or any other
transaction or series of transactions involving the Company or any of
its Subsidiaries, other than a transaction or transactions to which
the provisions of Section 13(a) (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power -- Flip-over Event) apply (whether
or not with or into or otherwise involving an Acquiring Person) which
has the effect, directly or indirectly, of increasing by more than 1%
the proportionate share of the outstanding shares of any class of
equity securities of the Company or any of its subsidiaries which is
directly or indirectly beneficially owned by any Acquiring Person or
any Associate or Affiliate of any Acquiring Person, then, promptly
following the occurrence of any such Flip-in Event (whether described
in Section 11(a)(ii)(A) or (B)), proper provision shall be made so
that each holder of a Right (except as provided below and in Section
7(e) (Exercise of Rights; Purchase Price; Expiration Date of Rights --
Termination of Acquiring Person's Rights)) shall thereafter have the
right to receive, upon exercise thereof at the then current Purchase
Price in accordance with the terms of this Agreement, in lieu of the
number of shares of Common Stock for which a Right was before that
time exercisable, such number of shares of Common Stock of the Company
as shall equal the result obtained by (x) multiplying the then current
Purchase Price by the then number of shares of Common Stock for which
a Right was exercisable immediately prior to the first occurrence of a
Flip-in Event, and (y) dividing that product (which, following such
first occurrence, shall thereafter be referred to as the "Purchase
Price" for each Right and for all purposes of this Agreement) by 50%
of the Current Market Price per share of Common Stock on the date of
such first occurrence (such number of shares being referred to as the
"Adjustment Shares").
(iii) In the event that the number of shares of Common Stock
that 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 is not sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section 11(a), the
Company shall: (A) determine the excess of (1) the value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current Value") over (2) the
Purchase Price (such excess, the "Spread"), and (B) with respect to each Right,
subject to Section 7(e)(Exercise of Rights; Purchase Price; Expiration Date of
Rights -- Termination of Acquiring Person's Rights), make adequate provision to
substitute
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<PAGE> 25
for the Adjustment Shares, upon the exercise of such Right
and payment of the applicable Purchase Price, (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 preferred stock which the Board has
deemed to have essentially the same value or economic rights
as shares of Common Stock (such securities being referred to
as "Common Stock Equivalents")), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the Current
Value (less the amount of any reduction in the Purchase
Price), where such aggregate value has been determined by the
Board based upon the advice of a nationally recognized
investment banking firm selected by the Board; provided,
however, that if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above
within thirty (30) calendar days following the first
occurrence of a Flip-in Event (the date of such Flip-in Event
being referred to herein as the "Flip-in Trigger Date"), then
the Company shall be obligated to deliver, upon the surrender
for exercise of a Right and without requiring payment of the
Purchase Price, shares of Common Stock (to the extent
available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. If the
Board shall determine in good faith that it is likely that
sufficient additional shares of Common Stock or other equity
securities could be authorized for issuance upon exercise in
full of the Rights, the thirty (30) calendar day period set
forth above may be extended to the extent necessary, but not
more than ninety (90) calendar days after the Flip-in Trigger
Date, in order that the Company may seek stockholder approval
for the authorization of such additional shares (such period,
as it may be extended, the "Substitution Period"). To the
extent that the Company determines that some action need be
taken pursuant to the first and/or second sentences of this
Section 11(a)(iii), the Company (x) shall provide, subject to
Section 7(e), 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 of
Common Stock or other equity securities 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)(iii), the value of
each Adjustment Share shall be the Current Market Price per
share of the Common Stock on the Flip-in Trigger Date and the
per share or per unit value of any Common Stock Equivalent
shall be deemed to equal the Current Market Price per share
of the Common Stock on such date.
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<PAGE> 26
(iv) If the rules of the national securities
exchange, registered as such pursuant to Section 6 of the
Exchange Act, or of the national securities association,
registered as such pursuant to Section 15A of the Exchange
Act, on which the Common Stock is principally traded or
quoted would prohibit such exchange or association from
listing or continuing to list, or from authorizing for or
continuing quotation and/or transaction reporting through an
inter-dealer quotation system, the Common Stock or other
equity securities of the Company if the Rights were to be
exercised for shares of Common Stock in accordance with
subparagraph (ii) of this Section 11(a) because such issuance
would nullify, restrict or disparately reduce the per share
voting rights of holders of Common Stock, the Company shall:
(A) determine the Spread, and (B) with respect to each Right,
make adequate provision to substitute for the Adjustment
Shares, upon payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the Purchase Price, (3) equity
securities of the Company, including, without limitation,
Common Stock Equivalents, other than securities which would
have the effect of nullifying, restricting or disparately
reducing the per share voting rights of holders of Common
Stock, (4) debt securities of the Company, (5) other assets,
or (6) any combination of the foregoing, having an aggregate
value equal to the Current Value, where such aggregate value
has been determined by the Board based upon the advice of a
recognized investment banking firm selected by the Board;
provided, however, if the Company shall not have made
adequate provision to deliver value pursuant to clause (B)
above within thirty (30) calendar days following the Flip-in
Trigger Date, then the Company shall be obligated to deliver,
upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, cash having an
aggregate value equal to the Spread. To the extent that the
Company determines that some action need be taken pursuant to
the first sentence of this Section 11(a)(iv), the Company (x)
shall provide, subject to Section 7(e) (Exercise of Rights;
Purchase Price; Expiration Date of Rights -- Termination of
Acquiring Person's Rights), that such action shall apply
uniformly to all outstanding Rights and (y) may suspend the
exercisability of the Rights, but not longer than ninety (90)
calendar days after the Flip-in Trigger Date, in order to
decide the appropriate form of distribution to be made
pursuant to such first sentence and to determine the value
thereof. In the event of any such suspension, the Company
shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended,
as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this
Section 11(a)(iv), the value of the Common Stock shall be the
Current Market Price per share of the Common Stock on the
Flip-in Trigger Date and the value of any Common Stock
Equivalent shall be deemed to have the same value as the
Common Stock on such date.
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<PAGE> 27
(b) Purchase Price Adjustment Capital Stock. In case the
Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Common Stock entitling them to subscribe
for or purchase (for a period expiring within forty-five (45) calendar
days after such record date) Common Stock, Common Stock Equivalents)
or securities convertible into Common Stock or Common Stock
Equivalents at a price per share of Common Stock (or having a
conversion price per share, if a security convertible into Common
Stock or Common Stock Equivalents) less than the Current Market Price
per share of Common Stock on such record date, the Purchase Price to
be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by
a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding on such record date, plus the number of
shares of Common Stock which the aggregate offering price of the total
number of shares of Common Stock and/or Common Stock Equivalents so to
be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such
Current Market Price, and the denominator of which shall be the number
of shares of Common Stock outstanding on such record date, plus the
number of additional shares of Common Stock and/or Common Stock
Equivalents to be offered for subscription or purchase (or into which
the convertible securities so to be offered are initially
convertible). In case such subscription price may be paid by delivery
of consideration part or all of which may be in a form other than
cash, the value of such consideration shall be as determined in good
faith by the Board, 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. Shares of Common Stock
owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed, and
in the event that such rights or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.
(c) Purchase Price Adjustment Cash, Assets, etc. In case the
Company shall fix a record date for a distribution to all holders of
Common Stock (including any such distribution made in connection with
a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular
quarterly cash dividend out of the earnings or retained earnings of
the Company), assets (other than a dividend payable in Common Stock,
but including any dividend payable in stock other than Common Stock)
or subscription rights or warrants (excluding those referred to in
Section 11(b) (Adjustment of Purchase Price; Number and Kind of Shares
or Number of Rights Purchase Price Adjustment -- Capital Stock)), the
Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall
be the Current Market Price per share of Common Stock on such record
date, less the fair market value (as determined in good
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<PAGE> 28
faith by the Board, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the cash,
assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to a share of Common Stock
and the denominator of which shall be such Current Market Price per
share of Common Stock. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such
distribution is not so made, the Purchase Price shall be adjusted to
be the Purchase Price which would have been in effect if such record
date had not been fixed.
(d) Current Market Price. For the purpose of any computation
hereunder, other than computations made pursuant to Section 11(a)(iii)
(Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Certain Adjustments) the Current Market Price per share of
Common Stock on any date shall be deemed to be the average of the
daily closing prices per share of such Common Stock for the thirty
(30) consecutive Trading Days immediately prior to such date, and for
purposes of computations made pursuant to Section 11(a)(iii) the
Current Market Price per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of such
Common Stock for the ten (10) consecutive Trading Days immediately
following such date; provided, however, that in the event that the
Current Market Price per share of the Common Stock is determined
during a period following the announcement by the issuer of such
Common Stock of (A) a dividend or distribution on such Common Stock
payable in shares of such Common Stock or securities convertible into
shares of such Common Stock (other than the Rights), or (B) any
subdivision, combination or reclassification of such Common Stock and
the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification shall not
have occurred prior to the commencement of the requisite thirty (30)
Trading Day or ten (10) Trading Day period, as set forth above, then,
and in each such case, the Current Market Price shall be properly
adjusted to take into account ex-dividend trading. The closing price
for each Trading Day shall be the last sale price, regular way, or, in
case no such sale takes place on such Trading Day, the average of the
closing bid and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the shares of Common Stock are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading or,
if the shares of Common Stock are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System ("Nasdaq") or such
other system then in use, or, if on any such date the shares of Common
Stock are not quoted by any such organization, the average of the
closing bid
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<PAGE> 29
and asked prices as furnished by a professional market maker making a
market in the Common Stock selected by the Board. If on any such date
no market maker is making a market in the Common Stock, the fair value
of such shares on such date as determined in good faith by the Board
shall be used. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the shares of Common
Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or admitted
to trading on any national securities exchange, a Business Day. If the
Common Stock is not publicly held or not so listed or traded, Current
Market Price per share shall mean the fair value per share as
determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(e) Purchase Price Adjustment Threshold. Anything herein to
the contrary notwithstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or
decrease of at least one percent (1%) in the Purchase Price; provided
however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this
Section 11 (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights) shall be made to the nearest cent or to the nearest
share of Common Stock, as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three (3)
years from the date of the transaction which mandates such adjustment,
or (ii) the Expiration Date.
(f) Equivalent Adjustments. If as a result of an adjustment
made pursuant to Section 11(a)(ii) (Adjustment of Purchase Price;
Number and Kind of Shares or Number of Rights -- Certain Adjustments)
or Section 13(a) (Consolidation Merger or Sale or Transfer of Assets
or Earning Power -- Flip-over Event) the holder of any Right
thereafter exercised shall become entitled to receive any shares of
capital stock other than Common Stock, thereafter the number of such
other shares so receivable upon exercise of any Right and the Purchase
Price thereof shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Sections
11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Common
Stock shall apply on like terms to any such other shares.
(g) Post-Adjustment Rights Issuances. All Rights originally
issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the
adjusted Purchase Price, the number of shares of Common Stock
purchasable from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
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<PAGE> 30
(h) Common Stock Anti-Dilution. Unless the Company shall have
exercised its election as provided in Section 11(i) (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights
-Adjustment of Number of Rights), upon each adjustment of the Purchase
Price as a result of the calculations made in Section 11(b)
(Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Purchase Price Adjustment -- Capital Stock) and Section
11(c) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Purchase Price Adjustment -- Cash, Assets, etc.),
each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of shares of Common Stock
(calculated to the nearest whole share) obtained by (i) multiplying
(x) the number of shares covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to
such adjustment of the Purchase Price, and (ii) dividing the product
so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) Adjustment of Number of Rights. The Company may elect on
or after the date of any adjustment of the Purchase Price to adjust
the number of Rights, in lieu of any adjustment in the number of
shares of Common Stock purchasable upon the exercise of a Right. Each
of the Rights outstanding after the adjustment in the number of Rights
shall be exercisable for the number of shares of Common Stock for
which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest
one-ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price.
The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the 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) calendar 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
(Fractional Rights and Fractional Shares) 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
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<PAGE> 31
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) Rights Certificates. Irrespective of any adjustment or
change in the Purchase Price or the number of shares of Common Stock
issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the Purchase
Price per share and the number of shares which were expressed in the
initial Rights Certificates issued hereunder.
(k) Adjustment Below Par Value. Before taking any action that
would cause an adjustment reducing the Purchase Price below the then
par or stated value, if any, of the number of shares of Common Stock
issuable upon exercise of the Rights, the Company shall take any
corporate action which is or may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue
fully paid and nonassessable such number of shares of Common Stock at
such adjusted Purchase Price.
(l) Adjustment Effective as of Future Date; Exercise. In any
case in which this Section 11 (Adjustment of Purchase Price; Number
and Kind of Shares or Number of Rights) shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right
exercised after such record date the number of shares of Common Stock
and other capital stock or securities of the Company, if any, issuable
upon such exercise over and above the number of shares of Common Stock
and other capital stock or securities of the Company, if any, issuable
upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall deliver
to such holder a due bill or other appropriate instrument evidencing
such holder's right to receive such additional shares (fractional or
otherwise) or securities upon the occurrence of the event requiring
such adjustment.
(m) Tax Adjustments. Anything in this Section 11 (Adjustment
of Purchase Price; Number and Kind of Shares or Number of Rights) to
the contrary notwithstanding, the Company shall be entitled to make
such reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the
extent that in its good faith judgment the Board shall determine to be
advisable in order that any (i) consolidation or subdivision of the
Common Stock, (ii) issuance wholly for cash of any shares of Common
Stock at less than the Current Market Price, (iii) issuance wholly for
cash of shares of Common Stock or securities which by their terms are
convertible into or exchangeable for shares of Common Stock, (iv)
stock dividends or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter
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<PAGE> 32
made by the Company to holders of its Common Stock shall not be
taxable to such stockholders.
(n) Restriction on Certain Transactions. The Company shall
not, at any time after the earlier of the Stock Acquisition Date or
the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction which complies with
Section 11(o) (Adjustment of Purchase Price; Number and Kind of Shares
or Number of Rights -- Restriction Against Diminishing Benefits of the
Rights)), (ii) merge with or into any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section
11(o)), (iii) enter into a statutory share exchange or similar
transaction with any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o)), or (iv)
sell or transfer (or permit any Subsidiary to sell or transfer), in
one transaction, or a series of related transactions, assets, cash
flow or earning power aggregating more than 50% of the assets, cash
flow or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company and/or
any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o)), if (x) at the time of or immediately
after such consolidation, merger, statutory share exchange or similar
transaction, or sale 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 (y) prior to, simultaneously
with or immediately after such consolidation, merger, statutory share
exchange or similar transaction, or sale, the stockholders of the
Person who constitutes, or would constitute, the "Principal Party" for
purposes of Section 13(a) (Consolidation, Merger or Sale or Transfer
of Assets or Earning Power -- Flip-over Event) shall have received a
distribution of Rights previously owned by such Person or any of its
Affiliates and Associates.
(o) Restriction Against Diminishing Benefits of the Rights.
The Company covenants and agrees that, after the earlier of the Stock
Acquisition Date or the Distribution Date, it will not, except as
permitted by Section 23 (Redemption and Termination) or Section 27
(Supplements and Amendments) take (or permit any Subsidiary to take)
any action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.
(p) Common Stock Adjustments. Anything in this Agreement to
the contrary notwithstanding, in the event that the Company shall at
any time after the Rights Dividend Declaration Date and prior to the
Distribution Date (i) declare a dividend on the outstanding shares of
Common Stock payable in shares of Common Stock, (ii) subdivide or
split the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares,
the number
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of Rights associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction, the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event. The adjustments provided for in this
Section 11(p) shall be made successively whenever such a dividend is declared or
paid or such subdivision, combination or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights) and Section 13
(Consolidation, Merger or Sale or Transfer of Assets or Earning Power) the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent, and with each transfer agent for the Common Stock,
a copy of such certificate, and (c) mail or cause the Rights Agent to mail a
brief summary thereof to each holder of a Rights Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 26 (Notices). The Rights Agent shall
be fully protected in relying on any such certificate and on any adjustment
therein contained, and shall not be responsible for calculating any adjustment,
nor shall it be deemed to have knowledge of such an adjustment unless and until
it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) Flip-over Event. In the event that, following the Stock
Acquisition Date, directly or indirectly, (x) the Company shall consolidate
with, or merge with and into, or enter into a statutory stock exchange or
similar transaction with, any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o)(Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights -- Restriction
Against Diminishing Benefits of the Rights)), and the Company shall not be the
continuing or surviving corporation of such consolidation, merger or statutory
share exchange or similar transaction, (y) any Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o)) shall
consolidate with, or merge with or into, or enter into a statutory stock
exchange or similar transaction with, the Company, and the Company shall be the
continuing or surviving corporation of such consolidation, merger or statutory
share exchange or similar
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transaction and, in connection with such consolidation, merger or
statutory share exchange or similar transaction, all or part of the
outstanding shares of Common Stock shall be changed into or exchanged
for stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise transfer), in one
transaction or a series of related transactions, assets, cash flow or
earning power aggregating more than 50% of the assets, cash flow or
earning power of the Company and its Subsidiaries (taken as a whole)
to any Person or Persons (other than the Company or any Subsidiary of
the Company in one or more transactions each of which complies with
Section 11(o)), then, and in each such case (except as may be
contemplated by Section 13(d) (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power -- Exceptions)), proper provision
shall be made so that: (i) each holder of a Right, except as provided
in Section 7(e) (Exercise of Rights; Purchase Price; Expiration Date
of Rights -- Termination of Acquiring Person's Rights) shall
thereafter have the right to receive, upon the exercise thereof at the
then current Purchase Price in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully paid,
nonassessable and freely tradeable shares of Common Stock of the
Principal Party, not subject to any liens, encumbrances, rights of
first refusal or other adverse claims, as shall be equal to the result
obtained by (A) multiplying the then current Purchase Price by the
number of shares of Common Stock for which a Right is exercisable
immediately prior to the first occurrence of a Flip-over Event (or, if
a Flip-in Event has occurred prior to the first occurrence of a
Flip-over Event, multiplying the number of such shares for which a
Right was exercisable immediately prior to the first occurrence of a
Flip-in Event by the Purchase Price in effect immediately prior to
such first occurrence), and (B) dividing that product (which,
following the first occurrence of a Flip-over Event, shall be referred
to as the "Purchase Price" for each Right and for all purposes of this
Agreement) by 50% of the Current Market Price per share of the Common
Stock of such Principal Party on the date of consummation of such
Flip-over Event; (ii) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such Flip-over Event, all the
obligations and duties of the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of
Section 11 (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights) shall apply only to such Principal Party following
the first occurrence of a Flip-over Event; (iv) such Principal Party
shall take such steps (including, but not limited to, the reservation
of a sufficient number of shares of its Common Stock) in connection
with the consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as
nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) (Adjustment of Purchase Price; Number
and Kind of Shares or Number of Rights -- Certain Adjustments) hereof
shall be of no effect following the first occurrence of any Flip-over
Event.
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<PAGE> 35
(b) Principal Party. "Principal Party" shall mean
(i) in the case of any transaction described in clause (x)
or (y) of the first sentence of Section 13(a) (Consolidation, Merger
or Sale or Transfer of Assets or Earning Power -- Flip-over Event),
the Person that is the issuer of any securities into which shares of
Common Stock of the Company are converted in such consolidation,
merger or statutory share exchange or similar transaction, and if no
securities are so issued, the Person that is the other party to such
consolidation, merger or statutory share exchange or similar
transaction, and
(ii) in the case of any transaction described in clause
(z) of the first sentence of Section 13(a) (Consolidation, Merger or
Sale or Transfer of Assets or Earning Power -- Flip-over Event), the
Person that is the party receiving the greatest portion of the
assets, cash flow or earning power transferred pursuant to such
transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of
such Person is not at such time and has not been continuously over the
preceding twelve (12) month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of
another Person the Common Stock of which is and has been so
registered, "Principal Party" shall refer to such other Person; and
(2) in case such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Stocks of two or more of which are
and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the total outstanding
Common Stock having the greatest aggregate market value.
(c) Supplemental Agreement. The Company shall not consummate
a Flip-over Event unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock which have not been
issued or reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 13 (Consolidation, Merger or
Sale or Transfer of Assets or Earning Power) and unless prior thereto
the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing for the terms
set forth in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of such
Flip-over Event, the Principal Party will
(i) prepare and file a registration statement under the
Act, with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A) become effective
as soon as practicable after such filing and (B) remain effective
(with a prospectus at all times meeting the requirements of the Act)
until the Expiration Date;
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(ii) take such all such other action as may be
necessary to enable the Principal Party to issue the
securities purchasable upon exercise of the Rights, including
but not limited to the registration or qualification of such
securities under all requisite securities laws of
jurisdictions of the various states and the listing of such
securities on such exchanges and trading markets as may be
necessary or appropriate; and
(iii) will deliver to holders of the Rights
historical financial statements for the Principal Party and
each of its Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange
Act.
The provisions of this Section 13 (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power) shall similarly apply to
successive consolidation, mergers or statutory share exchanges or
similar transactions or sales or other transfers. In the event that a
Flip-over Event shall occur at any time after the occurrence of a
Flip-in Event, the Rights which have not theretofore been exercised
shall thereafter become exercisable in the manner described in Section
13(a) (Consolidation, Merger or Sale or Transfer of Assets or Earning
Power -- Flip-over Event).
(d) Exceptions. Notwithstanding anything in this Agreement to
the contrary, Section 13 (Consolidation, Merger or Sale or Transfer of
Assets or Earning Power) shall not be applicable to a transaction
described in subparagraphs (x) and (y) of Section 13(a)
(Consolidation, Merger or Sale or Transfer of Assets or Earning Power
-- Flip-over Event) if (i) such transaction is consummated with a
Person or Persons who acquired shares of Common Stock pursuant to a
tender offer or exchange offer for all outstanding shares of Common
Stock that is a Qualified Offer (or a wholly-owned subsidiary of any
such Person or Persons), (ii) the price per share of Common Stock
offered in such transaction is not less than the price per share of
Common Stock paid to all holders of shares of Common Stock whose
shares were purchased pursuant to such tender or exchange offer and
(iii) the form of consideration being offered in such transaction is
the same as the form of consideration paid to all holders of shares of
Common Stock whose shares were purchased pursuant to such tender offer
or exchange offer. Upon consummation of any such transaction
contemplated by this Section 13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) Fractional Rights. The Company shall not be required to
issue fractions of Rights, except prior to the Distribution Date as
provided in Section 11(p) (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights -Common Stock Adjustments), or to
distribute Rights Certificates which evidence
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fractional Rights. In lieu of such fractional Rights, there shall be
paid to the registered holders of the Rights Certificates with regard
to which such fractional Rights would otherwise be issuable, an amount
in cash equal to the same fraction of the current market value of a
whole Right. For purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for
the Trading Day immediately prior to the date on which such fractional
Rights would have been otherwise issuable. The closing price of the
Rights for any Trading Day shall be the last sale price, regular way,
or, in case no such sale takes place on such Trading Day, the average
of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Rights are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the
Rights are listed or admitted to trading, or if the Rights are not
listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid
and low asked prices in the over-the-counter market as reported by
Nasdaq or such other system then in use or, if on any such date the
Rights are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market
maker making a market in the Rights selected by the Board. If on any
such date no such market maker is making a market in the Rights, the
fair value of the Rights on such date as determined in good faith by
the Board shall be used.
(b) Fractional Shares of Common Stock. Following the
occurrence of a Triggering Event, the Company shall not be required to
issue fractions of shares of Common Stock upon exercise of the Rights
or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the
Company may pay to the registered holders of Rights Certificates at
the time such Rights are exercised as herein provided an amount in
cash equal to the same fraction of the current market value of one (1)
share of Common Stock. For purposes of this Section 14(c), the current
market value of one share of Common Stock shall be the closing price
of one share of Common Stock (as determined pursuant to Section
11(d)(i) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -Current Market Price)) for the Trading Day
immediately prior to the date of such exercise.
(c) Waiver of Fractional Rights and Shares. 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, except as permitted by this Section 14
(Fractional Rights and Fractional Shares).
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Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Stock); and any registered holder of any Rights Certificate (or,
prior to the Distribution Date, of the Common Stock), without the consent of
the Rights Agent or of the holder of any other Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), 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
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement.
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 Common Stock;
(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;
(c) subject to Section 6(a) (Transfer, Split Up, Combination
and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates -- Procedure) and Section 7(f) (Exercise of Rights; Purchase Price;
Expiration Date of Rights -- Surrender of Rights Certificates; Identity of
Beneficial Owner), the Company and the Rights Agent may deem and treat the
person in whose name a Rights Certificate (or, prior to the Distribution Date,
the associated Common Stock 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 Stock
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent, subject to
the last sentence of Section 7(e) (Exercise of Rights; Purchase Price;
Expiration Date of Rights -- Termination of Acquiring Person's Rights), shall be
required to be affected by any notice to the contrary; and
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<PAGE> 39
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
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 number of shares of
Common Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any 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 (Notice of
Certain Events)), 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) Compensation. The Company shall 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
agrees to indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted to be
done 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. The indemnity provided for herein shall survive
the expiration of the Rights, the termination of this Agreement, and the
resignation or removal of the Rights Agent. The costs and expenses of enforcing
this right of indemnification shall also be paid by the Company.
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<PAGE> 40
(b) Reliance. The Rights Agent may conclusively rely upon and
shall be protected and shall incur no liability for or in respect of any action
taken, suffered or omitted to be taken by it in connection with its
administration of this Agreement in reliance upon any Rights Certificate or
certificate for Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
(c) Notwithstanding anything in this Agreement to the
contrary, in no event shall the Rights Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Rights Agent has been advised of the likelihood of
such loss or damage and regardless of the form of the action.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent.
(a) Successor. 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, stock transfer or other shareholder services
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto;
provided, however, that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 (Change of Rights
Agent). 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 a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) Prior Countersignatures. 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
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<PAGE> 41
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, and no implied duties or obligations shall be read into this
Agreement against the Rights Agent, by all of which the Company and the holders
of Rights Certificates, by their acceptance thereof, shall be bound:
(a) Legal Counsel. Before the Rights Agent acts or refrains from
acting, the Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted to be taken by it in good faith and in accordance with such opinion.
(b) Certification by the Company. Whenever in the performance of its
duties under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter (including, without limitation, the identity
of any Acquiring Person and the determination of Current Market Price) be proved
or established by the Company prior to taking 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 the Chairman of the Board, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company and 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) Liability for Negligence, etc. The Rights Agent shall be liable
hereunder only for its own negligence, bad faith or willful misconduct.
(d) Statements of Fact or Recitals. The Rights Agent shall not be
liable for or by reason of any of the statements of fact or recitals contained
in this Agreement or in the Rights Certificates or be required to verify the
same (except as to its countersignature on such Rights Certificates), but all
such statements and recitals are and shall be deemed to have been made by the
Company only.
(e) Agreement; Adjustments. 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); nor shall it be responsible for any breach by the Company of
any covenant or condition contained in
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<PAGE> 42
this Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment required under the provisions of
Section 11 (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights) or Section 13 (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power) or responsible for the manner,
method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Rights Certificates
after actual notice of any such adjustment); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock to be
issued pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Common Stock will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) Further Assurances. The Company 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) Instructions. The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance of its
duties hereunder from the Chairman of the Board, the President, any
Vice President, the Secretary, any Assistant Secretary, the Treasurer
or any Assistant Treasurer of the Company and to apply to such persons
for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken by it in
good faith in accordance with the instructions of any such officer.
Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in
writing any action proposed to be taken or omitted by the Rights Agent
under this Rights Agreement and the date on 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 ten 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) Dealing in Rights. 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
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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) Agents; Reasonable Care. 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, however,
reasonable care was exercised in the selection and continued employment thereof.
(j) Expenses; Repayment Assurances. 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) Exercise of Rights; Consultation with Company. 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 of
transfer without first consulting with the Company.
(l) The Rights Agent shall not be required to take notice or be
deemed to have notice of any fact, event or determination (including, without
limitation, any dates or events defined in this Agreement or the designation of
any Person as an Acquiring Person, Affiliate or Associate) under this Agreement
unless and until the Rights Agent shall be specifically notified in writing by
the Company of such fact, event or determination.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) calendar days' notice in writing mailed to the Company, and to
the transfer agent of the Common Stock, by registered or certified mail, and,
at the expense of the Company, 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) calendar days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to the transfer
agent of the Common Stock, by registered or certified mail, and to the holders
of the Rights Certificates by first-class mail. If the Rights Agent shall
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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) calendar days after giving
notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then 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) 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 stock transfer or corporate trust powers, is subject to
supervision or examination by federal or state authority and either has or is
an Affiliate of an entity that has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $50,000,000 or (b) an
Affiliate of a corporation described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Stock,
and mail a notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this Section 21
(Change of Rights Agent), 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 the Board 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 shares of Common Stock following the Distribution
Date and prior to the redemption or expiration of the Rights, the Company (a)
shall, with respect to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon
the exercise, conversion or exchange of securities hereafter issued by the
Company, in either case outstanding as of the Distribution Date, and (b) may,
in any other case, if deemed necessary or appropriate by the Board, issue
Rights Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided,
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<PAGE> 45
however, that (i) no such Rights Certificate shall be issued if, and to the
extent that, the Company shall be advised by counsel that such issuance would
create a significant risk of material, adverse tax consequences to the Company
or the Person to whom such Rights Certificate would be issued, and (ii) no such
Rights Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) Redemption. The Company may, at its option, at any time prior
to the earlier of (i) the Stock Acquisition Date, or (ii) the Final Expiration
Date, redeem (the date of such redemption being referred to herein as the
"Redemption Date") all but not less than all of the then outstanding Rights at a
redemption price of $0.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"). The redemption of the Rights by the
Company may be made effective at such time, on such basis and with such
conditions as the Board in its sole discretion may establish. The Company may,
at its option, pay the Redemption Price in cash, shares of Common Stock (based
on the Current Market Price of the Common Stock at the time of redemption) or
any other form of consideration deemed appropriate by the Board.
(b) Effect of Redemption; Procedure. Immediately upon the action
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 for each Right so held. Promptly after the action of the Board 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
notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made.
Amounts payable shall be rounded down to the nearest $0.01.
Section 24. Exchange.
(a) Right to Exchange. The Company may, at its option, at any time
and from time to time after the first occurrence of a Flip-in Event, exchange
all or part of the
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<PAGE> 46
then outstanding and exercisable Rights (other than Rights which have
become void as provided in Section 7(e) (Exercise of Rights; Purchase
Price; Expiration Date of Rights -- Termination of Acquiring Person's
Rights)) for the Exchange Number of shares of Common Stock or shares
or units of other equity securities (if authorized to be issued by the
Certificate of Incorporation) which the Board has determined to be a
Common Stock Equivalent, units of other property or any combination
thereof as determined by the Board. Notwithstanding the foregoing, the
Company 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 shares of Common Stock for or
pursuant to any such plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more
of the shares of Common Stock then outstanding. The exchange of the
Rights by the Company may be made effective at such time, on such
basis and with such conditions as the Board in its sole discretion may
establish.
(b) Effect of Exchange; Procedure. Immediately upon the
action of the Company ordering the exchange of any Rights pursuant to
paragraph (a) of this Section 24, evidence of which shall have been
filed with the Rights Agent and without any further action and without
any notice, the right to exercise such Rights will terminate and the
only right thereafter of a holder of such Rights shall be to receive
that number of shares of Common Stock, Common Stock Equivalents or
units of other property equal to the number of such Rights held by
such holder multiplied by the Exchange Number. Promptly after the
action of the Company ordering the exchange of the Rights, the Company
shall (i) file evidence of such action with the Rights Agent, (ii)
give public notice of such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the
validity of such exchange, and (iii) mail notice of such exchange to
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 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 as provided in
Section 7(e) (Exercise of Rights; Purchase Price; Expiration Date of
Rights -- Termination of Acquiring Person's Rights)) held by each
holder of Rights.
(c) Common Stock Equivalents. In any exchange pursuant to
this Section 24, the Company, at its option, may substitute Common
Stock Equivalents for Common Stock exchangeable for Rights, at the
initial rate of one share of Common Stock Equivalent for each share of
Common Stock, as appropriately adjusted to reflect adjustments in the
voting rights of the Common Stock pursuant to the Company's
Certificate of Incorporation, so that the share of Common Stock
Equivalent delivered in
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<PAGE> 47
lieu of each share of Common Stock shall have the same voting rights
as one share of Common Stock.
(d) Insufficient Common Stock. In the event that the number
of shares of Common Stock which are authorized by the Company's
Certificate of Incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights is not
sufficient to permit any exchange of Rights in accordance with this
Section 24, or other equity securities are not authorized by the
Certificate of Incorporation the Company may, at its option, take all
such action as may be necessary to authorize additional shares of
Common Stock or other equity securities for issuance upon such
exchange.
(e) Fractional Shares. Upon the action of the Company
ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24, the Company shall not be required to issue fractions of
shares or to distribute certificates which evidence fractional shares.
In lieu of such fractional shares, the Company may pay to the
registered holders of the Rights Certificates with regard to which
such fractional shares would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of one share of
Common Stock. For purposes of this Section 24, the current market
value of one share of Common Stock shall be the closing price of one
share of Common Stock (as determined pursuant to Section 11(d)(i)
(Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Current Market Price)) for the Trading Day immediately prior
to the date of exchange pursuant to this Section 24, and the value of
any Common Stock Equivalent shall be deemed to have the same current
market value as the Common Stock on such date.
Section 25. Notice of Certain Events.
(a) Common Stock Transactions, etc. In case the Company shall
propose, at any time after the Distribution Date, (i) to declare or
pay any dividend payable in stock of any class to the holders of
Common Stock or to make any other distribution to the holders of
Common Stock (other than a regular quarterly cash dividend out of
earnings or retained earnings of the Company); (ii) to offer to the
holders of Common Stock rights or warrants to subscribe for or to
purchase any additional shares of Common Stock or shares of stock of
any class or any other securities, rights or options; (iii) to effect
any reclassification of its Common Stock (other than a
reclassification involving only the subdivision of outstanding shares
of Common Stock); (iv) to effect any consolidation with, merger into
or with, or statutory share exchange or similar transaction with, any
other Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o) (Adjustment of Purchase Price;
Number and Kind of Shares or Number of Rights -- Restriction against
Diminishing Benefits of the Rights)), or to effect any sale or other
transfer (or to permit one or more of its
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<PAGE> 48
Subsidiaries to effect any sale or other transfer), in one transaction or a
series of related transactions, of more than 50% of the assets, cash flow or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(o)); (v) to
effect the liquidation, dissolution or winding up of the Company, or (vi) to
effect a subdivision, combination or consolidation of the shares of Common Stock
(by reclassification or otherwise than by payment of dividends in Common Stock),
then, in each such case, the Company shall give to each holder of a Rights
Certificate, to the extent feasible and in accordance with Section 26 (Notices),
a notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the date
on which such reclassification, consolidation, merger, statutory share exchange
or similar transaction, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
shares of Common Stock, if any such date is to be fixed, and such notice shall
be so given in the case of any action covered by clause (i) or (ii) above at
least twenty (20) calendar days prior to the record date for determining holders
of the shares of Common Stock for purposes of such action, and in the case of
any such other action, at least twenty (20) calendar days prior to the date of
the taking of such proposed action or the date of participation therein by the
holders of the shares of Common Stock, whichever shall be the earlier.
(b) Other Transactions. In case any of the events set forth
in Section 11(a)(ii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments) shall occur, then, in any such case,
(i) the Company shall as soon as practicable thereafter give to each holder of a
Rights Certificate, to the extent feasible and in accordance with Section 26
(Notices), a notice of the occurrence of such event, which shall specify the
event and the consequences of the event to holders of Rights under Section
11(a)(ii), and (ii) all references in the preceding paragraph to Common Stock
shall be deemed thereafter to refer to, if appropriate, other securities.
Section 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
telecopier (with receipt confirmed) or by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent) as
follows:
Thomas Group, Inc.
5221 N. O'Connor Boulevard
Suite 500
Irving, Texas 75039-3714
Attention: General Counsel
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<PAGE> 49
Subject to the provisions of Section 21 (Change of Rights Agent), 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 sent by
registered or certified mail and shall be deemed given upon receipt, addressed
(until another address is filed in writing with the Company) as follows:
Harris Trust and Savings Bank
1601 Elm Street, Suite 2320
Dallas, Texas 75201
Attention: Mark Asbury
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) 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. For so long as the Rights are
redeemable, and subject to the following provisions of this Section 27, the
Company may, and the Rights Agent shall, if the Company so directs, supplement
or amend any provision of this Agreement without the approval of any holders of
certificates representing shares of Common Stock or, on and after the
Distribution Date, any holders of Rights Certificates. At any time when the
Rights are no longer redeemable, and subject to the penultimate sentence of
this Section 27, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Rights Certificates; provided, however, that no such supplement or amendment
may (i) adversely affect the interests of the holders of Rights Certificates,
or, prior to the Distribution Date, the holders of Common Stock (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person), (ii)
cause this Agreement again to become amendable other than in accordance with
this sentence, or (iii) cause the Rights again to become redeemable. Upon the
delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the
terms of this Section 27, the Rights Agent shall execute such supplement or
amendment. Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment shall be made which changes the Redemption
Price, the Final Expiration Date, the Purchase Price, or the number of shares
of Common Stock for which a right is exercisable; provided, however, that at
any time prior to (i) a Stock Acquisition Date or (ii) 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 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
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<PAGE> 50
General Rules and Regulations under the Exchange Act, if upon consummation
thereof, such Person would be the Beneficial Owner of 15% or more of the shares
of Common Stock then outstanding, the Board may amend this Agreement to
increase the Purchase Price or extend the Final Expiration Date. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock. Notwithstanding
anything in this Agreement to the contrary, no supplement or amendment that
changes the rights and duties of the Rights Agent under this Agreement will be
effective against the Rights Agent without the execution of such supplement or
amendment by the Rights Agent.
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 shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common
Stock of which any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act. The Board shall have the exclusive power
and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or
not redeem the Rights or to amend 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 in good faith, shall (x) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights and all other
parties, and (y) not subject the Board 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, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
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,
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<PAGE> 51
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 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 (Redemption and Termination) shall be reinstated and shall
not expire until the Close of Business on the tenth Business Day following the
date of such determination by the Board.
Section 32. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts
made and to be performed entirely within such State, except as to the rights
and obligations of the Rights Agent, which shall be governed by and construed
in accordance with the laws of the State of Illinois.
Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
Attest: THOMAS GROUP, INC.
By: /s/ Roger A. Crabb By: /s/ J. Thomas Williams
------------------------------- -----------------------------------
Roger A. Crabb J. Thomas Williams
General Counsel and Secretary President
HARRIS TRUST AND SAVINGS BANK,
as Rights Agent
By: /s/ Jill Wessell By: /s/ Mark Asbury
------------------------------- -----------------------------------
Jill Wessell Mark Asbury
Vice President Vice President
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<PAGE> 53
EXHIBIT 1
[FORM OF RIGHTS CERTIFICATE]
Certificate No. R ______ ______ Rights
NOT EXERCISABLE AFTER JULY 9, 2008 OR EARLIER IF REDEEMED BY THE THOMAS GROUP,
INC. ("THE CORPORATION"). THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE CORPORATION, AT $0.001 PER RIGHT ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT DATED AS OF JULY 9, 1998, BY AND
BETWEEN THE CORPORATION AND HARRIS TRUST AND SAVINGS BANK, AS RIGHTS AGENT (THE
"RIGHTS AGREEMENT"). UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY
AN ACQUIRING PERSON (AS SUCH TERM IS 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) (EXERCISE
OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS -- TERMINATION OF
ACQUIRING PERSON'S RIGHTS) OF SUCH AGREEMENT.](1)
RIGHTS CERTIFICATE
THOMAS GROUP, INC.
This certifies that __________________________________________________,
or its, his or her 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 July
9, 1998 (the "Rights Agreement"), between Thomas Group, Inc., a Delaware
corporation (the "Corporation"), and Harris Trust and Savings Bank (the "Rights
Agent"), to purchase from the Corporation at any time prior to 5:00 P.M.
(Dallas, Texas time) on July 9, 2008 at the office or offices of the Rights
Agent designated for such purpose, or its successors as
- ---------------------------
(1) The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
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<PAGE> 54
Rights Agent, one fully paid, nonassessable share of Common Stock (the "Common
Stock") of the Corporation, at a purchase price of $100.00 per 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 Purchase Price shall be paid, at the election of the holder, in cash or
shares of Common Stock of the Company having an equivalent value. The number of
Rights evidenced by this Rights Certificate (and the number of shares which may
be purchased upon exercise thereof) set forth above, and the Purchase Price per
share set forth above, are the number and Purchase Price as of _______________,
_____, based on the Common Stock as constituted at such date. The Corporation
reserves the right to require prior to the occurrence of a Triggering Event (as
such term is defined in the Rights Agreement) that upon any exercise of Rights,
a number of Rights be exercised so that only whole shares of Common Stock would
be issued.
Upon the occurrence of a Flip-in Event (as such term is defined in the
Rights Agreement), if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate or
any such Person (as such terms are defined in the Rights Agreement), (ii) a
transferee of an Acquiring Person or its Associate or Affiliate who becomes a
transferee after such Acquiring Person or its Associate or Affiliate becomes
such, or (iii) under certain circumstances specified in the Rights Agreement, a
transferee of an Acquiring Person or its Associate or Affiliate who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such,
such Rights shall become null and void and no holder hereof shall have any
right with respect to such Rights from and after the occurrence of such Flip-in
Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Common Stock 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,
including Triggering Events (as such term is defined in the Rights Agreement).
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 Corporation and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Rights Agent.
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<PAGE> 55
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent
designated for such purpose, may be exchanged for another Rights Certificate or
Rights Certificates of like tenor and date evidencing Rights entitling the
holder to purchase a like aggregate number of shares of Common Stock 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 for which this Rights Certificate is not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Corporation at its
option at a redemption price of $0.001 per Right at any time prior to the
earlier of (a) the Stock Acquisition Date (as such term is defined in the
Rights Agreement) or (b) the Final Expiration Date (as such term is defined in
the Rights Agreement) and (ii) may be exchanged in whole or in part for shares
of Common Stock, other property or any combination thereof.
In addition, the Rights may be exchanged, in whole or in part, for
shares of the Common Stock, or shares of common stock equivalents of the
Corporation having essentially the same value or economic rights as such
shares. Immediately upon the action of the Board of Directors of the
Corporation authorizing any such exchange, and without any further action or
any notice, the Rights (other than Rights which are not subject to such
exchange) will terminate and the Rights will only enable holders to receive the
shares issuable upon such exchange.
No fractional shares of Common Stock will be issued upon the exercise
of any Right or Rights evidenced hereby, but a cash payment may be made in lieu
thereof, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Common
Stock or of any other securities of the Corporation 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 Corporation or any right to vote for the
election of directors or upon any matter submitted to stockholders of the
Corporation 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 of the Corporation (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.
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<PAGE> 56
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
* * * * *
51
<PAGE> 57
WITNESS the facsimile signature of the proper officers of the
Corporation and its corporate seal.
Dated as of _________________
ATTEST: THOMAS GROUP, INC.
By:
- ---------------------------------- ----------------------------
Secretary Title:
---------------------
Countersigned:
RIGHTS AGENT
By:
------------------------------
Authorized Signature
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[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
Corporation, with full power of substitution.
Dated:
------------------------- ------------------------------------------
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate |_| is |_| is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
|_| did |_| did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
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<PAGE> 59
Dated:
--------------------- -------------------------------------------
Signature
Signature Guaranteed:
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<PAGE> 60
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
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FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: THOMAS GROUP, INC.
The undersigned hereby irrevocably elects to exercise _______________
Rights represented by this Rights Certificate to purchase the shares of Common
Stock issuable upon the exercise of the Rights (or such other securities of the
Corporation or of any other person which may be issuable upon the exercise of
the Rights) and requests that certificates for such shares be issued in the
name of and delivered to:
Please insert social security or
other identifying number
- -------------------------------------------------------------------------------
(PLEASE PRINT NAME AND ADDRESS)
- -------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security or
other identifying number
- -------------------------------------------------------------------------------
(PLEASE PRINT NAME AND ADDRESS)
- --------------------------------------------------------------------------------
Dated:
--------------------- -------------------------------------------
Signature
Signature Guaranteed:
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CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate |_| are |_| are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated:
-------------------- ---------------------------------------------
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
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EXHIBIT 2
[Letter to Stockholders]
July __, 1998
Dear Thomas Group Stockholder:
On July 9, 1998, your Board of Directors adopted a Stockholder Rights
Plan designed to prevent a potential acquiror from gaining control of the
Company without fairly compensating all of the Company's stockholders.
The Rights will initially trade with shares of the Company's Common
Stock and will have no impact on the way in which the Company's shares are
traded. There are no separate certificates or market for the Rights.
The Rights will not become exercisable and trade separately from the
Common Stock until the earlier of (i) ten business days after a public
announcement that a person has acquired 15% or more of the Common Stock of the
Company or (ii) ten business days (or any later date determined by the
Company's Board of Directors) after a person makes a tender or exchange offer
for 15% or more of the Company's Common Stock.
Many other public companies have adopted similar plans, indicating
widespread agreement that such plans can help Directors deflect coercive and
inadequate offers.
A summary of the terms of the Rights is included with this letter.
Sincerely,
J. Thomas Williams
President
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SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On July 9, 1998, the Board of Directors of Thomas Group, Inc. (the
"Company") declared a dividend distribution of one Right for each outstanding
share of the Company's common stock, $0.01 par value (the "Common Stock"), to
stockholders of record at the close of business on July 20, 1998. Each Right
entitles the registered holder to purchase from the Company one share of Common
Stock, par value $0.01 per share (the "Common Stock"), at a Purchase Price of
$100.00 per share, subject to adjustment. The description and terms of the
Rights are set forth in the Rights Agreement (the "Rights Agreement") between
the Company and Harris Trust and Savings Bank, as Rights Agent (the "Rights
Agent").
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. The Rights will separate from the Common
Stock upon the earlier of (i) ten (10) business days following a public
announcement that a person (other than Dorsey R. Gardner or his affiliates) or
group of affiliated or associated persons (an "Acquiring Person") has acquired,
or obtained the right to acquire, beneficial ownership of fifteen percent (15%)
or more of the outstanding shares of Common Stock (the "Stock Acquisition
Date"), or (ii) ten (10) business days (or such later date as the Board of
Directors shall determine) following the commencement of a tender or exchange
offer that would result in a person or group beneficially owning fifteen
percent (15%) or more of such outstanding shares of Common Stock. The date the
Rights separate is referred to as the "Distribution Date."
Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such
Common Stock certificates, (ii) new Common Stock certificates issued after July
9, 1998 will contain a notation incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any certificates for Common
Stock outstanding will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificates. Pursuant to the Rights
Agreement, the Company reserves the right to require prior to the occurrence of
a Triggering Event (as defined below) that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of Common Stock will be
issued.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on July 9, 2008, unless earlier redeemed by the
Company as described below.
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As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights.Except in connection with shares
of Common Stock issued or sold pursuant to the exercise of stock options under
any employee plan or arrangements, or upon the exercise, conversion or exchange
of securities hereafter issued by the Company, or as otherwise determined by
the Board of Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
In the event that (i) the Company is the surviving corporation in a
merger or other business combination with an Acquiring Person (or any associate
or affiliate thereof) and its Common Stock remains outstanding and unchanged,
(ii) any person shall acquire beneficial ownership of more than fifteen percent
(15%) of the outstanding shares of Common Stock (except pursuant to (A) certain
consolidations or mergers involving the Company or sales or transfers of the
combined assets, cash flow or earning power of the Company and its subsidiaries
or (B) an offer for all outstanding shares of Common Stock at a price and upon
terms and conditions which the Board of Directors determines to be in the best
interests of the Company and its stockholders) (a "Qualified Offer"), or (iii)
there occurs a reclassification of securities, a recapitalization of the
Company or any of certain business combinations or other transactions (other
than certain consolidations and mergers involving the Company and sales or
transfers of the combined assets, cash flow or earning power of the Company and
its subsidiaries) involving the Company or any of its subsidiaries which has
the effect of increasing by more than one percent (1%) the proportionate share
of any class of the outstanding equity securities of the Company or any of its
subsidiaries beneficially owned by an Acquiring Person (or any associate or
affiliate thereof), each holder of a Right (other than the Acquiring Person and
certain related parties) will thereafter have the right to receive, upon
exercise, Common Stock (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to two times the Purchase Price
of the Right. Notwithstanding any of the foregoing, following the occurrence of
any of the events described in this paragraph, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were, beneficially
owned by any Acquiring Person will be null and void. The events described in
this paragraph are referred to as "Flip-in Events."
For example, at a Purchase Price of $100 per Right, each Right not
owned by an Acquiring Person (or by certain related parties or transferees)
following an event set forth in the preceding paragraph would entitle its
holder to purchase $200 worth of Common Stock (or other consideration, as noted
above) for $100. Assuming that the Common Stock had a per share market price of
$10 at such time, the holder of each valid Right would be entitled to purchase
twenty shares of Common Stock for $100.
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In the event that, at any time following the Stock Acquisition Date,
(i) the Company shall enter into a merger or other business combination
transaction in which the Company is not the surviving corporation, (ii) the
Company is the surviving corporation in a consolidation, merger or similar
transaction pursuant to which all or part of the outstanding shares of Common
Stock are changed into or exchanged for stock or other securities of any other
person or cash or any other property or (iii) more than 50% of the combined
assets, cash flow or earning power of the Company and its subsidiaries is sold
or transferred (in each case other than certain consolidations with, mergers
with and into, or sales of assets, cash flow or earning power by or to
subsidiaries of the Company as specified in the Rights Agreement), each holder
of a Right (except Rights which previously have been voided as set forth above)
shall thereafter have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the Purchase Price of the
Right. The events described in this paragraph are referred to as "Flip-over
Events." Flip-in Events and Flip-over Events are referred to collectively as
"Triggering Events."
The Purchase Price payable, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Common Stock, (ii) if
holders of the Common Stock are granted certain rights, options or warrants to
subscribe for Common Stock or securities convertible into Common Stock at less
than the current market price of the Common Stock, or (iii) upon the
distribution to holders of the Common Stock of evidences of indebtedness, cash
(excluding regular quarterly cash dividends), assets (other than dividends
payable in Common Stock) or subscription rights or warrants (other than those
referred to in (ii) immediately above).
With certain exceptions, no adjustments in the Purchase Price will be
required until cumulative adjustments amount to at least one percent (1%) of
the Purchase Price. No fractional shares of Common Stock are required to be
issued and, in lieu thereof, the Company may make an adjustment in cash based
on the market price of the Common Stock on the trading date immediately prior
to the date of exercise.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of fifty percent (50%) or more
of the outstanding shares of Common Stock, the Board of Directors of the
Company may, without payment of the Purchase Price by the holder, exchange the
Rights (other than Rights owned by such person or group, which will become
void), in whole or in part, for shares of Common Stock at an exchange ratio of
one-half (1/2) the number of shares of Common Stock for which a Right is
exercisable immediately prior to the time of the Company's decision to exchange
the Rights (subject to adjustment).
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At any time until the Stock Acquisition Date, the Company may redeem
the Rights in whole, but not in part, at a price of $0.001 per Right (payable
in cash, shares of Common Stock or other consideration deemed appropriate by
the Board of Directors). Immediately upon the action of the Board of Directors
ordering redemption of the Rights, the Rights will terminate and the only right
of the holders of Rights will be to receive the $0.001 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that
the Rights become exercisable for Common Stock (or other consideration) of the
Company or for common stock of an acquiring company as set forth above or in
the event that the Rights are redeemed.
Other than those provisions relating to the principal economic terms
of the Rights, any of the provisions of the Rights Agreement may be amended by
the Board of Directors of the Company at any time during the period in which
the Rights are redeemable. At any time when the Rights are no longer
redeemable, the provisions of the Rights Agreement may be amended by the Board
only if such amendment does not adversely affect the interest of holders of
Rights (excluding the interest of any Acquiring Person); provided, however,
that no amendment may cause the Rights again to become redeemable.
A copy of the Rights Agreement and copies of Amendments Number One and
Two thereto have been filed with the Securities and Exchange Commission. A copy
of the Rights Agreement, as amended, is available free of charge from the
Rights Agent. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
as amended, which is incorporated herein by reference.
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EXHIBIT 3
FORM OF PRESS RELEASE
Contact: Darwin Patrick, VP Finance
(972) 443-1164
[email protected]
THOMAS GROUP, INC. ADOPTS STOCKHOLDER RIGHTS PLAN
DALLAS, Texas, July 9, 1998-Thomas Group, Inc. [Nasdaq: TGIS] (the "Company")
today announced that its Board of Directors has adopted a Stockholder Rights
Plan (the "Plan").
The Plan is designed to protect the Company from unfair or coercive takeover
attempts and to prevent a potential acquiror from gaining control of the
Company without fairly compensating all of the Company's stockholders.
The Plan creates a dividend of one right for each outstanding share of the
Company's Common Stock. The rights are represented by and initially traded with
the Company's Common Stock. There are no separate certificates or market for
the rights.
The rights do not become exercisable or trade separately from the Common Stock
unless one or both of the following conditions are met: a public announcement
that a person has acquired 15% or more of the Common Stock of the Company, or a
tender or exchange offer is made for 15% or more of the Common Stock of the
Company.
Under certain circumstances the rights entitle the holders to buy the Company's
stock at a 50% discount. In the event that (1) the Company is the surviving
corporation in a merger or other business combination with an entity that owns
15% or more of the Company's outstanding stock; (2) any person shall acquire
beneficial ownership of 15% of the Company's outstanding stock; or (3) there is
any type of recapitalization of the Company that results in an increase by more
than 1% the proportionate share of equity securities of the Company owned by a
person who owns 15% or more of the Company's outstanding stock (unless such
acquisition is made pursuant to a tender or exchange offer for all outstanding
shares of the Company, upon terms and conditions determined by the Board of
Directors of the Company to be in the best interest of the Company and its
stockholders (a "Qualified Offer")), each right holder will have the option to
buy $200.00 in value of the Common Stock of the Company for the $100.00
purchase price of the right. Following the occurrence of the events set forth
above, all rights that are or, under certain circumstances, were, beneficially
owned by the acquiror will be null and void.
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Under certain circumstances the rights entitle the holders to buy shares of the
acquiror's Common Stock at a 50% discount. In the event that, at any time after
a person has acquired 15% or more of the Company's Common Stock, (1) the
Company enters is acquired in a merger or business combination transaction in
which the Company is not the surviving corporation (other than a merger
consummated pursuant to a Qualified Offer); (2) the Company is the surviving
corporation in a transaction in which all or part of the Common Stock is
exchanged for cash, property or securities of any other person; or (3) more
than 50% of the assets, cash flow or earning power of is sold, each right
holder will have the option to purchase $200.00 in value of the stock of the
acquiring company for the $100.00 purchase price of the right.
The rights may be redeemed by the Company for $0.001 per right at any time
until 10 business days following the first public announcement of the
acquisition of beneficial ownership of 15% of the Company's Common Stock.
The distribution of the rights will be made to stockholders of record as of
July 20, 1998. Stockholders of record will receive a separate mailing
describing the Plan and a copy of the Plan containing all the provisions of the
new rights will be filed with the Securities and Exchange Commission by July
16, 1998. The Company's Plan is similar to those adopted by many other
companies.
***
Thomas Group, Inc. is an international, publicly-traded company (TGIS)
providing solutions to significantly improve many business processes for major
corporate clients. Thomas Group's Resultants work on-site with client companies
to analyze operations, and to develop and implement speed-based improvement
strategies. Thomas Group has offices in Dallas, Detroit, Frankfurt, and
Singapore. For additional information on Thomas Group, Inc. please visit the
company on the World Wide Web at www.thomasgroup.com.
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