SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Sola International Inc.
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(Exact name of registrant as specified in its charter)
Delaware 94-3189941
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(State of incorporation or organization) (I.R.S. Employer
Identification No.)
2420 South Hill Road, Suite 200,
Menlo Park, California 94025
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class to be so registered Name of each exchange on which
- --------------------------------------- each class is to be registered
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Preferred Stock Purchase Rights New York Stock Exchange
If this Form relates to the registration of a class of debt securities and
is effective upon filing pursuant to General Instruction A.(c)(1), please
check the following box. [ ]
If this Form relates to the registration of a class of debt securities and
is to become effective simultaneously with the effectiveness of a
concurrent registration statement under the Securities Act of 1933 pursuant
to General Instruction A.(c)(2), please check the following box. [ ]
Securities to be registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
Item 1. Description of Securities to be Registered.
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On August 26, 1998, the Board of Directors of Sola International
Inc. (the "Company") declared a dividend of one preferred stock purchase
right (a "Right") for each outstanding share of Common Stock, par value
$.01 per share, of the Company (the "Common Shares"), payable to the
holders of record of the Common Shares as of the close of business on
September 9, 1998. Except as set forth below, each Right, when it becomes
exercisable, entitles the registered holder to purchase from the Company
one one-thousandth of a share of a series of preferred stock, designated as
Series A Junior Participating Preferred Stock, par value $.01 per share
(the "Preferred Stock"), at a price of $150 per one one-thousandth of a
share (the "Purchase Price"), subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and BankBoston, N.A. as Rights Agent, dated
as of August 27, 1998. A copy of the Rights Agreement is attached as an
exhibit hereto and is hereby incorporated by reference. The following
summary of the Rights is qualified in its entirety by reference to the
Rights Agreement. The terms of the Preferred Stock are summarized below and
are set forth in a Certificate of Designation attached as Exhibit A to the
Rights Agreement.
Until the earliest to occur of (i) a public announcement that,
without the prior consent of the Board of Directors of the Company, a
person or group, including any affiliates or associates of such person or
group (an "Acquiring Person"), acquired, or obtained the right to acquire,
beneficial ownership of 15% or more of the outstanding Common Shares (the
"Stock Acquisition Date") or (ii) ten business days (or such later date as
the Board of Directors may determine) following the commencement or
announcement of an intention (which is not subsequently withdrawn) to make
a tender offer or exchange offer which would result in any person or group
(and related persons) having beneficial ownership of 15% or more of the
outstanding Common Shares without the prior consent of the Board of
Directors (the earliest of such dates being called the "Distribution
Date"), the Rights will be attached to all Common Share certificates and
will be evidenced by the Common Share certificates. The Rights Agreement
provides that, until the Distribution Date, the Rights will be transferred
with and only with the Common Shares. Until the Distribution Date (or
earlier redemption or expiration of the Rights), new Common Share
certificates issued after September 9, 1998 upon transfer, replacement or
new issuance of Common Shares will contain a notation incorporating the
Rights Agreement by reference. Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer of any
Common Share certificates outstanding as of September 9, 1998, even without
such a notation, will also constitute the transfer of the Rights associated
with the Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates
evidencing the Rights ("Rights Certificates") will be mailed to holders of
record of the Common Shares as of the close of business on the Distribution
Date, and the separate Rights Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on August 26, 2008, unless earlier redeemed by the
Company as described below.
The Preferred Stock purchasable upon exercise of the Rights will
be nonredeemable and junior to any other series of preferred stock the
Company may issue (unless otherwise provided in the terms of such stock).
Each share of Preferred Stock will have a preferential quarterly dividend
in an amount equal to the greater of $10.00 and 1,000 times the dividend
declared on each Common Share. In the event of liquidation, the holders of
Preferred Stock will be entitled to receive a minimum preferred liquidation
payment of $100 per share, provided that they will be entitled to an
aggregate payment per share of at least 1,000 times the aggregate payment
made per Common Share. Each share of Preferred Stock will have one thousand
votes, voting together with the Common Shares. The rights are protected by
customary anti-dilution provisions. In the event that the amount of accrued
and unpaid dividends on the shares of Preferred Stock is equivalent to at
least six full quarterly dividends, the holders of the Preferred Stock
shall have the right, voting as a class, to elect two directors in addition
to the directors elected by the holders of the Common Shares until all
dividends in default on the Preferred Stock have been paid in full and
dividends for the current dividend period declared and funds therefor set
apart.
In the event that any person becomes an Acquiring Person, each
holder of a Right generally will thereafter have the right for a 60 day
period after the later of the date of such event and the effectiveness of
an appropriate registration statement (or such other longer period set by
the Board of Directors) to receive upon exercise of the Right that number
of Common Shares (or under certain circumstances, that number of units of
one one-thousandth of a share of Preferred Stock or other securities)
having a value (immediately prior to the occurrence of a Person becoming an
Acquiring Person) of two times the Purchase Price (such right being called
the "Flip-In Right"). Notwithstanding the foregoing, following the
occurrence of a Person becoming an Acquiring Person, all Rights that are,
or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by the Acquiring Person, or any affiliate or associate
thereof will be null and void.
In the event that, at any time following the Stock Acquisition
Date, (i) the Company is acquired in a merger or other business combination
transaction or (ii) more than 50% of the Company's assets or earning power
is sold or transferred, then each holder of a Right (except Rights which
previously have been voided as set forth above) shall thereafter have the
right (the "Flip-Over Right") to receive, upon exercise, common stock of
the acquiring company having a value equal to two times the Purchase Price.
The holder of a Right will continue to have the Flip-Over Right whether or
not such holder exercises or surrenders the Flip-In Right.
The Purchase Price payable, the number of Rights and the number
of shares of Preferred Stock, Common Shares or other securities or property
issuable, upon exercise of the Rights are subject to adjustment from time
to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of the Preferred Stock, (ii)
upon the grant to holders of the Preferred Stock of certain rights or
warrants to subscribe for Preferred Stock, certain convertible securities
or securities having the same or more favorable rights, privileges and
preferences as the Preferred Stock at less than the current market price of
the Preferred Stock or (iii) upon the distribution to holders of the
Preferred Stock of evidences of indebtedness or assets (excluding regular
quarterly cash dividends out of earnings or retained earnings and dividends
payable in Preferred Stock) or of subscription rights or warrants (other
than those referred to above.)
With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional shares will be issued and, in lieu
thereof, an adjustment in cash will be made based on the market price of
the Preferred Stock on the last trading date prior to the date of exercise.
The number of outstanding Rights associated with each share of
Common Stock and the voting and economic rights of each one one-thousandth
of a share of Preferred Stock issuable upon exercise of each Right are also
subject to adjustment in the event of a stock split of the Common Stock or
a stock dividend on the Common Stock payable in Common Stock or
subdivisions, consolidations or combinations of the Common Stock occurring,
in any such case, prior to the Distribution Date.
At any time prior to the earliest to occur of (i) the close of
business on the Stock Acquisition Date or (ii) the expiration of the
Rights, the Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price"), which redemption shall be
effective upon the action of the Board of Directors of the Company.
Additionally, the Company may redeem the then outstanding Rights in whole,
but not in part, at the Redemption Price after the triggering of the
Flip-In Right and before triggering the Flip-Over Right in connection with
a merger or other business combination transaction or series of
transactions involving the Company in which all holders of Common Shares
are treated alike but not involving an Acquiring Person (or any person who
was an Acquiring Person) or its affiliates or associates. Upon the
effective date of the redemption of the Rights, the right to exercise the
Rights will terminate and the only right of the holders of Rights will be
to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a shareholder of the Company, including, without
limitation, the right to vote or to receive dividends.
Except as set forth above, the terms of the Rights may be amended
by the Board of Directors of the Company, (i) prior to the Distribution
Date in any manner, and (ii) on or after the Distribution Date to cure any
ambiguity, to correct or supplement any provision of the Rights Agreement
which may be defective or inconsistent with any other provisions, or in any
manner not adversely affecting the interests of the holders of the Rights
(including the interests of any Acquiring Person), or, subject to certain
limitations, to shorten or lengthen any time period under the Rights
Agreement.
The Rights have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire
the Company without conditioning the offer on the Rights being redeemed.
However, the Rights generally should not interfere with any merger or other
business combination approved by the Board of Directors.
The form of Rights Agreement between the Company and BankBoston,
N.A. specifying the terms of the Rights, Exhibit A thereto -- the form of
Certificate of Designation setting forth the terms of the Preferred Stock
- -- Exhibit B thereto -- the Form of Rights Certificate -- and Exhibit C
thereto -- the Summary of Rights to Purchase Preferred Stock -- are
attached hereto as Exhibit 1 and are incorporated herein by reference. The
foregoing description of the Rights is qualified by reference to the Rights
Agreement.
Item 2. Exhibits.
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1 Form of Rights Agreement (the "Rights Agreement") dated as
of August 27, 1998 between Sola International Inc. and
BankBoston, N.A. which includes, as Exhibit A thereto, the
form of Certificate of Designation specifying the terms of
the Preferred Stock and, as Exhibit B thereto, the form of
Rights Certificate and, as Exhibit C thereto, the form of
Summary of Rights to Purchase Preferred Stock. Pursuant to
the Rights Agreement, Rights Certificates will not be mailed
until a person acquires beneficial ownership of 15% or more
of the Common Shares or 10 days (or such later date as the
Board of Directors of the Company may determine) after a
person commences or announces its intention to commence an
offer if, upon consummation thereof, such person would
become an Acquiring Person (as defined in the Rights
Agreement).
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereto duly
authorized.
SOLA INTERNATIONAL INC.
By /s/ John E. Heine
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John E. Heine
President and Chief
Executive Officer
Date: August 27, 1998
<PAGE>
EXHIBIT INDEX
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Exhibit Description
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1 Form of Rights Agreement (the "Rights Agreement")
dated as of August 27, 1998 between Sola
International Inc. and BankBoston, N.A. which
includes, as Exhibit A thereto, the form of
Certificate of Designation specifying the terms of
the Preferred Stock, and, as Exhibit B thereto, the
form of Rights Certificate and, as Exhibit C thereto,
the form of Summary of Rights to Purchase Preferred
Stock. Pursuant to the Rights Agreement, Rights
Certificates will not be mailed until a person
acquires beneficial ownership of 15% or more of the
Common Shares or 10 days (or such later date as the
Board of Directors of the Company may determine)
after a person commences or announces its intention
to commence an offer if, upon consummation thereof,
such person would become an Acquiring Person (as
defined in the Rights Agreement).
EXHIBIT 1
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SOLA INTERNATIONAL INC.
and
BANKBOSTON, N.A.
Rights Agent
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Rights Agreement
Dated as of August 27, 1998
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<PAGE>
Table of Contents
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Page
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Section 1. Certain Definitions.............................................1
Section 2. Appointment of Rights Agent.....................................5
Section 3. Issue of Rights Certificates....................................5
Section 4. Form of Rights Certificates.....................................8
Section 5. Countersignature and Registration...............................9
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates..................................................10
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights...11
Section 8. Cancellation and Destruction of Rights Certificates.............14
Section 9. Reservation and Availability of Preferred Stock.................15
Section 10. Preferred Stock Record Date.....................................16
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights..............................................17
Section 12. Certificate of Adjusted Purchase Price or Number of Shares......31
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.........................................................31
Section 14. Additional Covenant.............................................35
Section 15. Fractional Rights and Fractional Shares.........................35
Section 16. Rights of Action................................................37
Section 17. Agreement of Rights Holders.....................................38
Section 18. Rights Certificate Holder Not Deemed a Stockholder..............39
Section 19. Concerning the Rights Agent.....................................39
Section 20. Merger or Consolidation or Change of Name of Rights Agent.......40
Section 21. Duties of Rights Agent..........................................41
Section 22. Change of Rights Agent..........................................45
Section 23. Issuance of New Rights Certificates.............................46
Section 24. Redemption and Termination......................................47
Section 25. Notice of Certain Events........................................48
Section 26. Notices.........................................................49
Section 27. Supplements and Amendments......................................50
Section 28. Determination and Actions by the Board of Directors, etc........51
Section 29. Successors......................................................52
Section 30. Benefits of this Agreement......................................52
Section 31. Severability....................................................53
Section 32. Governing Law...................................................53
Section 33. Counterparts....................................................53
Section 34. Descriptive Headings............................................53
Exhibit A -- Form of Certificate of Designation
of Series A Junior Participating Preferred Stock
Exhibit B -- Form of Rights Certificate
Exhibit C -- Form of Summary of Rights
<PAGE>
RIGHTS AGREEMENT
This Agreement, dated as of August 27, 1998, between Sola
International Inc., a Delaware corporation (the "COMPANY"), and BankBoston,
N.A. (the "RIGHTS AGENT").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend of one preferred stock purchase right (a "RIGHT") for
each outstanding share of Common Stock, par value $.01 per share, of the
Company (the "COMMON STOCK") outstanding at the close of business on
September 9, 1998, (the "RECORD DATE"), each Right representing the right
to purchase one one-thousandth of a share of Series A Junior Participating
Preferred Stock of the Company having the rights, powers and preferences
set forth in the form of Certificate of Designation attached as Exhibit A
to this Agreement, upon the terms and subject to the conditions set forth
herein, and has further authorized and directed the issuance of one Right
with respect to each share of Common Stock that shall become outstanding
between the Record Date and the earliest of the Distribution Date, the
Redemption Date or the Expiration Date (as such terms are hereinafter
defined); provided, however, that Rights may be issued with respect to
shares of Common Stock that shall become outstanding after the Distribution
Date and prior to the earlier of the Redemption Date and the Expiration
Date in accordance with the provisions of Section 23 of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement,
the following terms have the meanings indicated:
(a) "ACQUIRING PERSON" shall mean any Person (as such term
is hereinafter defined) who or which, together with all Affiliates (as such
term is hereinafter defined) and Associates (as such term is hereinafter
defined) of such Person, without the prior approval of the Board of
Directors of the Company, shall be the Beneficial Owner of 15% or more of
the shares of Common Stock then outstanding or who was such a Beneficial
Owner at any time after the date hereof, whether or not such Person
continues to be the Beneficial Owner of 15% or more of the outstanding
shares of Common Stock, but shall not include the Company, any subsidiary
of the Company (as such term is hereinafter defined), any employee benefit
plan of the Company or any of its subsidiaries or any entity holding shares
of Common Stock organized, appointed or established by the Company or any
of its subsidiaries for or pursuant to the terms of any such plan or any
trustee or administrator of any such plan; provided, however, that no
Person shall be an Acquiring Person if within three Business Days after
such Person would (but for the operation of this proviso) otherwise have
become an Acquiring Person or, if such Person did so inadvertently, after
such Person discovers that it would otherwise have become an Acquiring
Person, if such Person both (i) notifies the Board of Directors of the
Company that such Person would (absent the operation of this proviso) have
become an Acquiring Person inadvertently and (ii) within two Business Days
after such notification, such Person divests itself of a sufficient number
of shares of Common Stock so that such Person is no longer the Beneficial
Owner of 15% or more of the outstanding shares of Common Stock.
(b) "AFFILIATE" and "ASSOCIATE" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "BENEFICIAL OWNER" of, and
shall be deemed to "BENEFICIALLY OWN," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right or obligation to
acquire (whether such right or obligation is exercisable or
effective immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange
rights, rights (other than these Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own," securities
tendered pursuant to a tender or exchange offer made by such
Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange;
or (B) the right to vote pursuant to any agreement, arrangement
or understanding (whether or not in writing); provided, however,
that a Person shall not be deemed the "Beneficial Owner" of, or
to "beneficially own," any security under this clause (B) if the
agreement, arrangement or understanding to vote such security (1)
arises solely from a revocable proxy given in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of the
Exchange Act and (2) is not also then reportable by such person
on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy
as described in clause (B) of subparagraph (ii) of this paragraph
(iii)) or disposing of any securities of the Company.
(d) "BUSINESS DAY" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the Commonwealth of
Massachusetts are authorized or obligated by law or executive order to
close.
(e) "CLOSE OF BUSINESS" on any given date shall mean 5:00
P.M., Boston time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., Boston time, on the next
succeeding Business Day.
(f) "COMMON STOCK" shall mean the Common Stock, par value
$.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
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management of such Person
or, if such Person is a subsidiary of another Person, the Person which
ultimately controls such first-mentioned Person and which has issued and
outstanding such capital stock, equity securities or equity interests.
(g) "PERSON" shall mean any individual, firm, corporation,
partnership or other entity.
(h) "PREFERRED STOCK" shall mean the Series A Junior
Participating Preferred Stock, par value $.01 per share, of the Company.
(i) "RIGHTS AGREEMENT" shall mean this Agreement, including
as it may hereafter be amended.
(j) "STOCK ACQUISITION DATE" shall mean the first date of
public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such. However, a Stock Acquisition Date shall not occur
if a Person does not become an Acquiring Person by reason of the proviso in
the definition of "Acquiring Person".
(k) A "SUBSIDIARY" of any Person shall mean any corporation
or other entity of which a majority of the voting power of the voting
equity securities or voting interests is owned, directly or indirectly, by
such Person, or which is otherwise controlled by such Person.
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, upon ten (10) days' prior
written notice to the Rights Agent. The Rights Agent shall have no duty to
supervise, and in no event be liable for, the acts or omissions of any such
co-Rights Agent. In the event the Company appoints one or more Co-Rights
Agents, the respective duties of the Rights Agents and any Co-Rights Agents
shall be as the Company shall determine.
Section 3. Issue of Rights Certificates.
(a) Until the earliest of (i) the Stock Acquisition Date or
(ii) the tenth Business Day (or such later date as may be determined by the
Board of Directors) after the date of the commencement of, or first public
announcement of the intent of any Person (other than the Company, any
subsidiary of the Company, or any employee benefit plan of the Company or
any of its subsidiaries or any trustee or administrator of any such plan in
its capacity as such) to commence (which intention to commence remains in
effect for five business days after such announcement), a tender or
exchange offer which would result in such Person becoming an Acquiring
Person (the earliest of such dates being herein referred to as the
"DISTRIBUTION DATE"), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for
Common Stock registered in the names of the holders 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 (and the right to receive certificates therefor) will be
transferable only in connection with the transfer of the underlying shares
of Common Stock (including a transfer to the Company); provided, however,
that if a tender or exchange offer is terminated prior to the occurrence of
the Distribution Date, then no Distribution Date shall occur as a result of
that tender or exchange offer. As soon as practicable after the
Distribution Date, the Rights Agent will send by first-class, insured,
postage prepaid mail, to each record holder of the Common Stock as of the
close of business on the Distribution Date, at the address of such holder
shown on the records of the Company, a certificate for Rights, in
substantially the form of Exhibit B hereto (the "RIGHTS CERTIFICATES"),
evidencing one Right for each share of Common Stock so held. As of and
after the Distribution Date, the Rights will be evidenced solely by such
Rights Certificates.
(b) With respect to certificates for the Common Stock
outstanding as of the date of this Agreement, until the Distribution Date
(or earlier redemption, expiration or termination of the Rights), 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 Distribution Date (or earlier
redemption, expiration or termination of the Rights), the surrender for
transfer of any of the certificates for the Common Stock outstanding on the
Record Date shall also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate. Upon the request of
the holder of any shares of Common Stock or, after the Distribution Date,
the holder of any Rights, the Company shall, at its expense, provide a copy
of the Summary of Rights in the form attached hereto as Exhibit C.
(c) Certificates for the Common Stock issued (or which
become outstanding) after the date of this Agreement (or as soon thereafter
as is reasonably practicable), but prior to the earlier of the Distribution
Date or the Expiration Date (as such term is hereinafter defined), shall be
deemed also to be certificates for Rights, and shall have impressed,
printed, stamped, written or otherwise affixed onto them the following
legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights Agreement
between Sola International Inc. and BankBoston, N.A., dated
as of August 27, 1998 (the "RIGHTS AGREEMENT"), the terms of
which are hereby incorporated herein by reference and a copy
of which is on file at the principal offices of Sola
International Inc. Under certain circumstances, as set forth
in the Rights Agreement, such Rights may be redeemed, may
expire, or may be evidenced by separate certificates and
will no longer be evidenced by this certificate. Sola
International Inc. will mail to the holder of this
certificate a copy of the Rights Agreement without charge
within fifteen days after receipt of a written request
therefor. Under certain circumstances, Rights issued to
Acquiring Persons (as defined in the Rights Agreement) or
certain related persons and any subsequent holder of such
Rights may become null and void.
With respect to such certificates containing the foregoing legend, until
the Distribution Date, the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such certificates
alone, and the surrender for transfer of any of such certificates shall
also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate. If the Company purchases or otherwise
acquires shares of Common Stock prior to the Distribution Date, any Rights
associated with such Common Stock shall be deemed canceled and retired so
that the Company shall not be entitled to exercise any Right associated
with the shares of Common Stock which are no longer outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to
purchase shares and of assignment to be printed on the reverse thereof)
shall each be substantially in the form set forth in Exhibit B hereto and
may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem
appropriate 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 to conform to usage. Subject to the provisions of Section 11 and Section
23 hereof, the Rights Certificates, whenever distributed, on their face
shall entitle the holders thereof to purchase such number of one
one-thousandths of a share of Preferred Stock as shall be set forth therein
at the price per share set forth therein (the "PURCHASE PRICE"), but the
number of such shares, the type of securities purchasable upon the exercise
of each Right and the Purchase Price thereof shall be subject to adjustment
as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a)
or Section 23 hereof that represents Rights beneficially owned by an
Acquiring Person or any Associate or Affiliate thereof and any Rights
Certificate issued at any time upon the transfer of any Rights to such an
Acquiring Person or any Associate or Affiliate thereof or to any nominee of
such Acquiring Person, Associate or Affiliate, and any Rights Certificate
issued pursuant to Section 6 or Section 11 upon transfer, exchange,
replacement or adjustment of any other Rights Certificate referred to in
this sentence, shall contain the following legend:
The Rights represented by this Rights Certificate were
issued to a Person who was an Acquiring Person or an
Affiliate or an Associate of an Acquiring Person (as such
terms are defined in the Rights Agreement). Accordingly,
this Rights Certificate and the Rights represented hereby
are null and void.
The provisions of Section 7(e) of this Rights Agreement shall be operative
whether or not the foregoing legend is contained on any such Rights
Certificate.
Section 5. Countersignature and Registration. The Rights
Certificates shall be executed on behalf of the Company by its Chairman of
the Board, the President, or any Vice President, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The
Rights Certificates shall be manually countersigned by the Rights Agent and
shall not be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Rights Certificates
shall cease to be such officer of the Company before countersignature by
the Rights Agent and issuance and delivery by the Company, such Rights
Certificates, nevertheless, may be countersigned by the Rights Agent, and
issued and delivered by the Company with the same force and effect as
though the person who signed such Rights Certificates had not ceased to be
such officer of the Company; and any Rights Certificates may be signed on
behalf of the Company by any person who, at the actual date of the
execution of such Rights Certificate, shall be a proper officer of the
Company to sign such Rights Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at one of its offices, books for registration and
transfer of the Rights Certificates issued hereunder. Such books shall show
the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the
Rights Certificates and the certificate number and the date of each of the
Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
Subject to the provisions of Section 4(b), Section 7(e) and Section 15
hereof, at any time after the Close of Business on the Distribution Date,
and at or prior to the Close of Business on the Expiration Date, any Rights
Certificate or Certificates may be transferred, split up, combined or
exchanged for another Rights Certificate or Rights Certificates, entitling
the registered holder to purchase a like number of one one-thousandths of a
share of Preferred Stock (or other securities, as the case may be) as the
Rights Certificate or Rights Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate shall make such request in
writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Rights Certificates to be transferred, split up, combined or
exchanged at the principal office of the Rights Agent. Thereupon the Rights
Agent shall 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.
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) The registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein)
in whole or in part at any time after the Distribution Date upon
presentation of the Rights Certificate, with the appropriate form of
election to purchase on the reverse side thereof duly executed, to the
Rights Agent at the principal office of the Rights Agent, together with
payment of the Purchase Price for each one one-thousandth of a share of
Preferred Stock (or such other number of shares or other securities) as to
which the Rights are exercised, at or prior to the earlier of (i) the close
of business on August 26, 2008 (the "FINAL EXPIRATION DATE"), or (ii) the
time at which the Rights are redeemed as provided in Section 24 hereof
(such earlier time being herein referred to as the "EXPIRATION DATE").
Notwithstanding any other provision of this Agreement, any Person who prior
to the Distribution Date becomes a record holder of shares of Common Stock
may exercise all of the rights of a registered holder of a Rights
Certificate with respect to the Rights associated with such shares of
Common Stock in accordance with and subject to the provisions of this
Agreement, including the provisions of Sections 4(b), 6 and 7(e) hereof, as
of the date such Person becomes a record holder of shares of Common Stock.
(b) Subject to the terms and conditions set forth herein,
when exercisable, each Right shall represent the right to purchase one
one-thousandth of a share of Preferred Stock. The Purchase Price for each
one one-thousandth of a share of Preferred Stock pursuant to the exercise
of a Right shall initially be $150, shall be subject to adjustment from
time to time as provided in Sections 11 and 13 hereof and shall be payable
in lawful money of the United States of America in accordance with
paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the appropriate form of election to purchase duly
executed, accompanied by payment of the Purchase Price for the shares (or
other securities or property) to be purchased and an amount equal to any
applicable transfer tax (as determined by the Rights Agent) in cash, or by
certified check or bank draft payable to the order of the Company, the
Rights Agent shall, subject to Section 21(k), thereupon promptly (i) (A)
requisition from any transfer agent of the shares of Preferred Stock (or
make available, if the Rights Agent is the transfer agent) certificates for
the number of shares of Preferred Stock to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company, in its sole discretion, shall have elected
to deposit the shares of Preferred Stock issuable upon exercise of the
Rights hereunder into a depositary, requisition from the depositary agent
depositary receipts representing such number of one one-thousandth of a
share of Preferred Stock as are to be purchased (in which case certificates
for the shares of Preferred Stock represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company
will direct the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash, if any, to be
paid in lieu of issuance of fractional shares in accordance with Section
l5, (iii) promptly after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or
names as may be designated by such holder and (iv) when appropriate, after
receipt promptly deliver such cash to or upon the order of the registered
holder of such Rights Certificate. In the event that the Company is
obligated to issue other securities (including Common Stock) of the
Company, and/or distribute other property pursuant to Section 11(a), the
Company will make all arrangements necessary so that such other securities
and/or property are available for distribution by the Rights Agent, if and
when appropriate. In addition, in the case of an exercise of the Rights by
a holder pursuant to Section 11(a)(ii), the Rights Agent shall return such
Rights Certificate to the registered holder thereof after imprinting,
stamping or otherwise indicating thereon that the rights represented by
such Rights Certificate no longer include the rights provided by Section
11(a)(ii) of the Rights Agreement and if less than all the Rights
represented by such Rights Certificate were so exercised, the Rights Agent
shall indicate on the Rights Certificate the number of Rights represented
thereby which continue to include the rights provided by Section 11(a)(ii).
(d) In case the registered holder of any Rights Certificate
shall exercise (except pursuant to Section 11(a)(ii)) 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 the registered holder of such Rights
Certificate or to his duly authorized assigns, subject to the provisions of
Section l5 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the time an Acquiring Person first becomes such,
any Rights beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any Affiliate or Associate thereof) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an Acquiring
Person (or of any Affiliate or Associate thereof) 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 a
continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors of the
Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this Section
7(e), shall become null and void without any further action and no holder
of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. The
Company shall use all reasonable efforts to insure that the provisions of
this Section 7(e) and Section 4(b) hereof are complied with, but shall have
no liability to any holder of Right Certificates or other Person as a
result of its failure to make any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7 unless
the certificate contained in the appropriate form of election to purchase
set forth on the reverse side of the Rights Certificate surrendered for
such exercise shall have been completed and signed by the registered holder
thereof and the Company shall have been provided with 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 such purpose and
cancellation or, if surrendered to the Rights Agent for such purpose, 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
Rights Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Rights Certificates, and in
such case shall deliver a certificate of destruction thereof to the
Company.
Section 9. Reservation and Availability of Preferred Stock. The
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued shares of Preferred Stock, or
any authorized and issued shares of Preferred Stock held in its treasury,
the number of shares of Preferred Stock that will be sufficient to permit
the exercise in full of all outstanding Rights and, after the occurrence of
an event specified in Section 11, shall so reserve and keep available a
sufficient number of shares of Preferred Stock (and/or other securities)
which may be required to permit the exercise in full of the Rights pursuant
to this Agreement.
So long as the shares of Preferred Stock (and, after the
occurrence of an event specified in Section 11, any other securities)
issuable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from
and after such time as the Rights become exercisable, all shares (or other
securities) reserved for such issuance to be listed on such exchange upon
official notice of issuance upon such exercise.
The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock,
Common Stock and/or other securities delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such shares or other
securities (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares or
securities.
The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Rights
Certificates or of any certificates for shares of Preferred Stock, Common
Stock and/or other securities 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 in respect of the issuance or delivery of the shares
of Preferred Stock, Common Stock and/or other securities in 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 Preferred Stock, Common Stock and/or other securities in a name
other than that of the registered holder upon the exercise of any 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.
The Company shall use its best efforts to (i) file, as soon as
practicable following the Distribution Date, a registration statement under
the Securities Act of 1933 (the "ACT"), with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause
such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Act) until the date of the expiration of the rights provided by Section
11(a)(ii). The Company will also take such action as may be appropriate
under the blue sky laws of the various states.
Section 10. Preferred Stock Record Date. Each person in whose
name any certificate for shares of Preferred Stock (or Common Stock and/or
other securities) is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the shares of
Preferred Stock (or Common Stock and/or other securities) represented
thereby on, and such certificate shall be dated, the date upon which the
Rights Certificate evidencing such Rights was duly presented and payment of
the Purchase Price (and any applicable transfer taxes) was made; provided,
however, that if the date of such presentation and payment is a date upon
which the Preferred Stock (or Common Stock and/or other securities)
transfer books of the Company are closed, such person shall be deemed to
have become the record holder of such shares on, and such certificate shall
be dated, the next succeeding Business Day on which the Preferred Stock (or
Common Stock and/or other securities) 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) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the
Preferred Stock payable in shares or fractional units of shares
of Preferred Stock, (B) subdivide the outstanding Preferred
Stock, (C) combine the outstanding Preferred Stock into a smaller
number of shares or (D) issue any shares of its capital stock in
a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a) and Section
7(e) hereof, the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number of
units of one one-thousandths of a share of Preferred Stock and
the number and kind of shares of capital stock issuable on such
date upon exercise of a Right, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall
be entitled to receive the aggregate number of units of one
one-thousandths of a share of Preferred Stock and the number and
kind of shares of capital stock and other securities which, if
such Right had been exercised immediately prior to such date and
at a time when the Preferred Stock transfer books of the Company
were open, he would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no
event shall the consideration to be paid upon exercise of one
Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of one Right.
If an event occurs which would require an adjustment under both
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 any Person, alone or together with
its Affiliates and Associates, shall become an Acquiring Person,
then proper provision shall be made so that each holder of a
Right, except as provided in Section 7(e) hereof, shall, for a
period of 60 days (or such other longer period as may be
established by action of a majority of the Board of Directors)
after the later of the occurrence of any such event and the
effective date of an appropriate registration statement pursuant
to Section 9, have a right to receive, upon exercise thereof at
the then current Purchase Price in accordance with the terms of
this Agreement, such number of shares of Common Stock (or, in the
discretion of the Board, one one-thousandths of shares of the
Preferred Stock) as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then number of
one one-thousandths of a share of Preferred Stock for which a
Right is exercisable immediately prior to the first occurrence of
such event and dividing that product by (y) 50% of the current
per share market price of the Company's Common Stock (determined
pursuant to Section 11(d)) on the date of such first occurrence
(such number of shares being referred to as the "NUMBER OF
ADJUSTMENT SHARES").
(iii) In the event that there shall not be sufficient
authorized but unissued shares of Common Stock to permit the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), then, in the event the Rights become so
exercisable, notwithstanding any other provision of this
Agreement, to the extent necessary and permitted by applicable
law and any agreements in effect on the date hereof to which it
is a party, each Right shall thereafter represent the right to
receive, upon exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, a number of (or
fractions of) shares of Common Stock (up to the maximum number of
shares of Common Stock which may permissibly be issued) equal to
the number of Adjustment Shares or a number of one
one-thousandths of shares of Preferred Stock equal to the number
of Adjustment Shares or a number of shares, or units of shares,
of preferred stock equal to the number of Adjustment Shares where
the Board of Directors of the Company shall have deemed such
shares or units to have at least the same or more favorable
rights, privileges and preferences as the Preferred Stock (an
"EQUIVALENT PREFERRED STOCK") or a combination of Preferred Stock
and/or Common Stock and/or equivalent preferred stock having the
requisite value as determined by the Board of Directors to be
equal to the number of Adjustment Shares; provided, however, if
there are unavailable sufficient shares of Preferred Stock and/or
Common Stock and/or equivalent preferred stock, then the Company
shall take all such action as may be necessary to authorize
additional shares of Preferred Stock and/or equivalent preferred
stock and/or shares of Common Stock for issuance upon exercise of
the Rights, including the calling of or meeting of stockholders;
and provided, further, that if the Company is unable to cause
sufficient shares of Preferred Stock and/or equivalent preferred
stock and/or shares of Common Stock to be available for issuance
upon exercise in full of the Rights, then each Right shall
thereafter represent the right to receive the Adjusted Number of
Preferred Shares upon exercise at the Adjusted Purchase Price (as
such terms are hereinafter defined.) As used herein, the term
"ADJUSTED NUMBER OF PREFERRED SHARES" shall be equal to that
number of one one-thousandths of a share of Preferred Stock
(and/or shares or units of equivalent preferred stock and/or
shares of Common Stock) equal to the product of (x) the number of
Adjustment Shares and (y) a fraction, the numerator of which is
the number of one one-thousandths of a share of Preferred Stock
(and/or shares or units of equivalent preferred stock and/or
shares of Common Stock) available for issuance upon exercise of
the Rights and the denominator of which is the aggregate number
of Adjustment Shares otherwise issuable upon exercise in full of
all Rights (assuming there were sufficient shares of Common Stock
available) (such fraction being referred to as the "PRORATION
FACTOR"). The "ADJUSTED PURCHASE PRICE" shall mean the product of
the Purchase Price and the Proration Factor. The Board of
Directors may, but shall not be required to, establish procedures
to allocate the right to receive Preferred Stock, equivalent
preferred stock and shares of Common Stock upon exercise of the
Rights among holders of Rights.
(b) If the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Stock entitling
them (for a period expiring within 45 calendar days after such record date)
to subscribe for or purchase Preferred Stock (or equivalent preferred stock
or securities convertible into Preferred Stock or equivalent preferred
stock) at a price per share of Preferred Stock or per share of equivalent
preferred stock (or having a conversion price per share, if a security
convertible into Preferred Stock or equivalent preferred stock) less than
the current market price (as defined in Section 11(d)) per share of
Preferred Stock on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares of
Preferred Stock and/or equivalent preferred stock to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price and the denominator of
which shall be the number of shares of Preferred Stock outstanding on such
record date, plus the number of additional shares of Preferred Stock and/or
equivalent preferred stock to be offered for subscription or purchase (or
into which the convertible securities so to be offered are initially
convertible); provided, however, that in no event shall the consideration
to be paid upon exercise of one Right be less than the aggregate par value
of the shares of capital stock of the Company issuable upon exercise of one
Right. In case such subscription price may be paid in a consideration part
or all of which shall be in a form other than cash, the value of such
consideration shall be determined reasonably and with good faith to the
holders of Rights by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent
and shall be binding on the Rights Agent. Shares of Preferred Stock owned
by or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed; and in the event that
such rights or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) If the Company shall fix a record date for the making of
a distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness, cash
(other than a regular quarterly cash dividend out of the earnings or
retained earnings of the Company), assets (other than a dividend payable in
Preferred Stock, but including any dividend payable in stock other than
Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b)), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator
of which shall be the current market price (as defined in Section 11(d))
per share of Preferred Stock on such record date, less the fair market
value (as determined reasonably and with good faith to the holders of
Rights by the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such subscription
rights or warrants distributable in respect of one share of Preferred Stock
and the denominator of which shall be current market price per share of the
Preferred Stock; provided, however, that in no event shall the
consideration to be paid upon exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable
upon exercise of one Right. 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 again be adjusted to
be the Purchase Price which would be in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation hereunder, other
than in 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 30 consecutive Trading Days
(as such term is hereinafter defined) immediately prior to such date;
provided, however, that in the event that the current per share market
price 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 or (B) any
subdivision, combination or reclassification of such Common Stock, and
prior to the expiration of 30 Trading Days after the ex-dividend date for
such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the "current
market price" shall be properly adjusted to take into account ex-dividend
trading. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed
on the principal national securities exchange on which the shares of Common
Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange,
the last quoted 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 and asked prices as furnished by a professional market
maker making a market in the Common Stock selected by the Board of
Directors of the Company. If on any such date no market maker is making a
market in the Common Stock, the fair value of such shares on such date as
determined reasonably and with good faith by the Board of Directors of the
Company shall be used and shall be binding on the Rights Agent. 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 determined reasonably and with good faith to the holders of
Rights by the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent.
(ii) For the purpose of any computation hereunder, the
"CURRENT MARKET PRICE" per share (or one one-thousandths of a share) of
Preferred Stock or any other security shall be determined in the same
manner as set forth above for the Common Stock in clause (i) of this
Section 11(d) (other than the last sentence thereof). If the current market
price per share (or one one-thousandths of a share) of Preferred Stock
cannot be determined in the manner provided above or if the Preferred Stock
is not publicly held or listed or traded in a manner described in clause
(i) of this Section 11(d), the "current market price" per share of
Preferred Stock shall be conclusively deemed to be an amount equal to 1,000
(as such number may be appropriately adjusted for such events as stock
splits, stock dividends and recapitalizations with respect to the Common
Stock occurring after the date of this Agreement) multiplied by the current
market price per share of the Common Stock and the "current market price"
per one one-thousandths of a share of Preferred Stock shall be equal to the
current market price per share of the Common Stock (as appropriately
adjusted). If neither the Common Stock nor the Preferred Stock is publicly
held or so listed or traded, "current market price" per share shall mean
the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all
purposes.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in the Purchase Price;
provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest ten-thousandth of a
share of Common Stock or other share or one ten-millionth of a share of
Preferred Stock (or any other security), as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i)
three years from the date of the transaction which mandates such adjustment
or (ii) the Expiration Date.
(f) If as a result of any provision of Section 11(a) or
Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Preferred Stock, thereafter the number of such other shares so receivable
upon exercise of any Right 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 shares contained in Section 11(a) through
(c), inclusive, and the provisions of Sections 7, 9, 10, 13 and 15 hereof
with respect to the Preferred Stock shall apply on like terms to any such
other shares.
(g) All Rights originally issued by the Company subsequent
to any adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of shares of
Preferred Stock purchasable from time to time hereunder upon exercise of
the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Section 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of one one-thousandths of a share of Preferred Stock
(calculated to the nearest one-millionth) obtained by (i) multiplying (x)
the number of one one-thousandths of a share of Preferred Stock covered by
a Right immediately prior to this adjustment by (y) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price and (ii)
dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of shares of Preferred Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding
after the adjustment in the number of Rights shall be exercisable for the
number of one one-thousandths of a share of Preferred Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right held
of record prior to such adjustment of the number of Rights shall become
that number of Rights (calculated to the nearest ten-thousandth) obtained
by dividing the Purchase Price in effect immediately prior to adjustment of
the Purchase Price by the Purchase Price in effect immediately after
adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of
the adjustment to be made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least 10 days later than the
date of the public announcement. If Rights Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 15 hereof, the
additional Rights to which such holders shall be entitled as a result of
such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for
the Rights Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall
be entitled after such adjustment. Rights Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for
herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-thousandth of a share of Preferred 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) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then stated or par value, if any, of
the shares of Preferred Stock, Common Stock or other securities issuable
upon exercise of the Rights, the Company shall take any corporate action
which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable shares
of Preferred Stock, Common Stock or other securities at such adjusted
Purchase Price.
(l) In any case in which this Section 11 shall require that
an adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the occurrence
of such event the issuing to the holder of any Right exercised after such
record date the shares of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and
above the shares of Preferred Stock and other capital stock or securities
of the Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares
upon the occurrence of the event requiring such adjustment.
(m) Anything to the contrary in this Section 11
notwithstanding, the Company, by action of a majority of the Board of
Directors, shall be entitled to make such reductions in the Purchase Price,
in addition to those adjustments expressly required by this Section 11, as
and to the extent that it in its sole discretion shall determine to be
advisable in order that any consolidation or subdivision of the Preferred
Stock, issuance wholly for cash of any shares of Preferred Stock at less
than the current market price, issuance wholly for cash of shares of
Preferred Stock or securities which by their terms are convertible into or
exchangeable for shares of Preferred Stock, stock dividends or issuance of
rights, options or warrants referred to hereinabove in this Section 11,
hereafter made by the Company to holders of its Preferred Stock shall not
be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at
any time after the Distribution Date, (i) consolidate with any other Person
(other than a subsidiary of the Company in a transaction which does not
violate Section 11(o) hereof), (ii) merge with or into any other Person
(other than a subsidiary of the Company in a transaction which does not
violate Section 11(o) hereof), or (iii) sell or transfer (or permit any
subsidiary to sell or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company and/or any of
its subsidiaries in one or more transactions each of which does not violate
Section 11(o) hereof), if (x) at the time of or immediately after such
consolidation, merger, sale or transfer there are any charter or by-law
provisions or any rights, warrants or other instruments or securities
outstanding or agreements in effect or other actions taken, which would
materially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately
after such consolidation, merger or sale, the stockholders of the Person
who constitutes, or would constitute, the "Principal Party" for purposes of
Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates.
The Company shall not consummate any such consolidation, merger, sale or
transfer unless prior thereto the Company and such other Person shall have
executed and delivered to the Rights Agent a certificate certifying
compliance with this Section 11(n).
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 24 or
Section 27 hereof, take (or permit any subsidiary to take) any action the
purpose of which is to, or if at the time such action is taken it is
reasonably foreseeable that the effect of such action is to, materially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after the
date of this Agreement and prior to the Distribution Date (i) declare or
pay a dividend on the outstanding shares of Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine
or consolidate the outstanding Common Stock into a smaller number of
shares, or (iv) issue any shares of its capital stock in a reclassification
of the outstanding Common Stock, then in any such case, the number of
Rights associated with each share of Common Stock then outstanding, or
issued or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated
with each share of Common Stock following any such event shall equal the
result obtained by multiplying the number of Rights associated with each
share of Common Stock immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event. The
adjustments provided for in this Section 11(p) shall be made successively
whenever such a dividend is declared or paid or such a subdivision,
combination, consolidation or reclassification is effected.
(q) The exercise of Rights under Section 11(a)(ii) shall
only result in the loss of rights under Section 11(a)(ii) to the extent so
exercised and shall not otherwise affect the rights represented by the
Rights under this Rights Agreement, including the rights represented by
Section 13.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall (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 Preferred Stock and the Common Stock a copy of such
certificate and (c) mail a brief summary thereof to each holder of a Rights
Certificate in accordance with Section 26 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment
therein contained and shall not be deemed to have knowledge of such
adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power.
(a) In the event that, on or following the Stock Acquisition
Date, directly or indirectly, (x) the Company shall consolidate with, or
merge with and into, any other Person, (y) any Person shall consolidate
with the Company, or merge with and into the Company and the Company shall
be the continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the 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 all holders of shares of
Common Stock are not treated alike or following the merger or consolidation
the holders of Common Stock immediately prior to the transaction do not
hold in the same proportion all of the voting power of the corporation
surviving the transaction, or (z) the Company shall sell, mortgage or
otherwise transfer (or one or more of its subsidiaries shall sell, mortgage
or otherwise transfer), in one or more transactions, assets or earning
power aggregating more than 50% of the assets or earning power of the
Company and its subsidiaries (taken as a whole) to any other Person, then,
and in each such case, proper provision shall be made so that (i) each
holder of a Right shall have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the terms of
this Agreement, such number of shares of freely tradable Common Stock of
the Principal Party (as hereinafter defined), free and clear of liens,
rights of call or first refusal, encumbrances or other adverse claims, as
shall be equal to the result obtained by (1) multiplying the then current
Purchase Price by the number of one one-thousandths of a share of Preferred
Stock for which a Right is then exercisable and dividing that product by
(2) 50% of the current market price per share of the Common Stock of such
Principal Party (determined pursuant to Section 11(d) hereof) on the date
of consummation of such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue
of such consolidation, merger sale or transfer, all the obligations and
duties of the Company pursuant to this Agreement; (iii) the term "Company"
shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall apply
to such Principal Party; and (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient
number of shares of its Common Stock in accordance with Section 9 hereof)
in connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter deliverable
upon the exercise of the Rights.
(b) "PRINCIPAL PARTY" shall mean
(i) in the case of any transaction described in (x) or
(y) of the first sentence of this Section 13, the Person that is the issuer
of any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so
issued, the Person that is the other party to the merger or consolidation
(including, if applicable, the Company if it is the surviving corporation);
and
(ii) in the case of any transaction described in (z) of
the first sentence in this Section 13, the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect subsidiary or Affiliate of another Person,
"Principal Party" shall refer to such other Person; (2) in case such Person
is a subsidiary, directly or indirectly, or Affiliate 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 Common Stock having the greatest aggregate market value;
and (3) in case such Person is owned, directly or indirectly, by a joint
venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in (1) and (2) above
shall apply to each of the chains of ownership having an interest in such
joint venture as if such party were a "Subsidiary" of both or all of such
joint venturers and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as their direct
or indirect interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless prior thereto the Company and each
Principal Party and each other Person who may become a Principal Party as a
result of such consolidation, merger, sale or transfer shall have a
sufficient number of shares of its authorized Common Stock which have not
been issued or reserved for issuance in order to permit the exercise in
full of the Rights in accordance with this Section 13 and shall have
executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section
13 and further providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer of assets mentioned in paragraph
(a) of this Section 13, the Principal Party at its own expense 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, will use its
best efforts to cause such registration statement to become
effective as soon as practicable after such filing and will use
its best efforts to cause such registration statement to remain
effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date;
(ii) use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the Rights
under the blue sky laws of such jurisdictions as may be necessary
or appropriate; and
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates which comply in all material respects with the
requirements for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. The rights under
this Section 13 shall be in addition to the rights to exercise Rights and
adjustments under Section 11(a)(ii) and shall survive any exercise
thereunder.
Section 14. Additional Covenant. Notwithstanding any other
provision of this Agreement, no adjustment to the Purchase Price, the
number of shares (or fractions of a share) of Preferred Stock, Common Stock
or other securities for which a Right is exercisable or the number of
Rights outstanding or any similar adjustment shall be made or be effective
if such adjustment would have the effect of reducing or limiting the
benefits the holders of the Rights would have had absent such adjustment,
including, without limitation, the benefits under Section 11(a)(ii) and
Section 13, unless the terms of this Agreement are amended so as to
preserve such benefits.
Section 15. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Rights Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to
the same fraction of the current market value of a whole Right. For the
purposes of this Section 15(a), the current market value of a whole Right
shall be the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been otherwise
issuable. The closing price of the Rights for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted to trading on
the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Rights are listed or
admitted to trading, or if the Rights are not listed or admitted to trading
on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in
use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Rights selected by
the Board of Directors of the Company. If on any such date no such market
maker is making a market in the Rights the fair value of the Rights on such
date as determined reasonably and with good faith to the holders of Rights
by the Board of Directors of the Company shall be used and shall be binding
on the Rights Agent.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral
multiples of one one-thousandth of a share of Preferred Stock) upon
exercise of the Rights or to distribute certificates which evidence
fractional shares of Preferred Stock (other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock). In
lieu of fractional shares of Preferred Stock that are not integral
multiples of one one-thousandth of a share of Preferred Stock, the Company
may pay to the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one one-thousandth of a share of
Preferred Stock. For purposes of this Section 15(b), the current market
value of one one-thousandth of a share of Preferred Stock shall be one
one-thousandth of the closing price of a share of Preferred Stock (as
determined pursuant to of Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) Following the occurrence of one of the transactions or
events specified in Section 11 giving rise to the right to receive one
one-thousandth of a share of Preferred Stock, Common Stock, or other
securities upon the exercise of a Right, 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 units of one one-thousandth of a share of
Preferred Stock or fractional shares of any such other securities, the
Company may pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of a unit or share of such
securities, as the case may be. For purposes of this Section 15(c), the
current market value of any such unit or share shall be the closing price
of a share of Common Stock (as determined pursuant to Section 11(d)(ii)
hereof) for the Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right (except as provided above).
Section 16. Rights of Action. All rights of action in respect of
this Agreement (other than rights of action given to the Rights Agent under
Section 19 hereof) 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 own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company
to enforce, or otherwise act in respect of, his right to exercise the
Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, 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. Holders of Rights shall be entitled to recover
the reasonable costs and expenses, including attorneys' fees, incurred by
them in any action to enforce the provisions of this Agreement in which
they successfully prosecute their claims.
Section 17. 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 of the Rights Agent, duly endorsed or accompanied
by a proper instrument of transfer;
(c) subject to Section 6 and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in whose name a
Rights Certificate (or, prior to the Distribution Date, the associated
Common 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) hereof, shall be affected by
any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability
to any holder of a Right or a beneficial interest in a Right or other
Person as a result of its inability to perform any of its obligations under
this Agreement by reason of any preliminary or permanent injunction or
other order, decree 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 shall not
have sought or otherwise cooperated in obtaining such order, decree or
ruling and must use its best efforts to have any such order, decree or
ruling lifted or otherwise overturned as soon as possible.
Section 18. 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 shares of
Preferred Stock, 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 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions thereof.
Section 19. Concerning the Rights Agent. The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered
by it hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and disbursements and other
disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, damage, claim, or expense, incurred
without gross negligence, bad faith or willful misconduct on the part of
the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement,
including the costs and expenses (including reasonable attorney's fees and
expenses) of defending against any claim of liability arising therefrom,
directly or indirectly. The indemnity provided for in this Section 19 shall
survive the expiration of the Rights and the termination of this Agreement.
The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Rights Certificate or certificate for 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.
Section 20. Merger or Consolidation or Change of Name of Rights
Agent. Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 22 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Rights Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent
may countersign such Rights Certificates either in the name of the
predecessor 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.
In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates
shall not have been countersigned, the Rights Agent may countersign such
Rights Certificates either in its prior name or in its changed name; and in
all such cases such Rights Certificates shall have the full force provided
in the Rights Certificates and in this Agreement.
Section 21. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following
terms and conditions, by all of which the Company and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel selected
by it (who may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection to the
Rights Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any
Acquiring Person) 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
Treasurer, any Assistant Treasurer, the Secretary or any Assistant
Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in
the Rights Certificates (except as to the fact that it has countersigned
the Rights Certificates) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the
Company only.
(e) The Rights Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect
of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any Rights
becoming null and void pursuant to Section 7(e) hereof or for any breach by
the Company of any covenant or condition contained in this Agreement or in
any Rights Certificate; nor shall it be responsible for any adjustment
required under the provisions of Sections 11 or 13 hereof or responsible
for the manner, method or amount of any such adjustment or the ascertaining
of the existence of facts that would require any such adjustment (except
with respect to the exercise of Rights evidenced by Rights Certificates
after actual notice of any such adjustment); nor shall it be responsible
for any determination by the Board of Directors of the Company of the
current market value of the Rights or Preferred Stock or Common Stock
pursuant to the provisions of Section 15 hereof; 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 Preferred Stock or Common
Stock to be issued pursuant to this Agreement or any Rights Certificate or
as to whether any shares of Preferred Stock (or fractional shares thereof)
or Common Stock will, when so issued, be validly authorized and issued,
fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged
and delivered all such further and other acts, instruments and assurances
as may reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder
and certificates delivered pursuant to any provision hereof from the
Chairman of the Board, the President, any Vice President, or the Secretary
of the Company, and is authorized to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer. 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 with respect to its duties or obligations under this
Agreement and the date on and/or after which such action taken or omitted
in accordance with a proposal included in any such application on or after
the date specified therein (which date shall not be less than three
Business Days after the date any such officer actually receives such
application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking or omitting any such action, the
Rights Agent has received written instructions from the Company in response
to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for
any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights Agent shall
not be answerable or accountable for any act, omission, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company
or to the holders of the Rights resulting from any such act, omission,
default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights if there shall be reasonable grounds for believing
that repayment of such funds or adequate indemnification against such risk
or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate attached to
the form of assignment or form of election to purchase, as the case may be,
has either not been completed or indicates an affirmative response to
clause 1 and/or 2 thereof, the Rights Agent shall not take any further
action with respect to such requested exercise of transfer without first
consulting with the Company.
Section 22. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Stock and Preferred Stock by registered
or certified mail, and, subsequent to the Distribution Date, to holders of
the Rights Certificates by first-class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be,
and to each transfer agent of the Common Stock and Preferred Stock by
registered or certified mail, and, subsequent to the Distribution Date, to
the holders of the Rights Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Rights Certificate (who shall, with such
notice, submit his Rights Certificate for inspection by the Company), then
the registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a
court, shall be a corporation organized and doing business under the laws
of the United States or of any state, in good standing, which is authorized
under such laws to exercise corporate trust powers and is subject to
supervision or examination by federal or state authority and which has at
the time of its appointment as Rights Agent a combined capital and surplus
of at least $50,000,000. 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 Right 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
Preferred Stock, and, if such appointment occurs after the Distribution
Date, mail a notice thereof in writing to the registered holders of the
Rights Certificates. Failure to give any notice provided for in this
Section 22, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 23. Issuance of New Rights Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary,
the Company may, at its option, issue new Rights Certificates evidencing
Rights in such form as may be approved by its Board of Directors to reflect
any adjustment or change in the Purchase Price per share and the number or
kind or class of shares or other securities or property purchasable under
the Rights Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale of Common
Stock following the Distribution Date and prior to the Expiration Date, the
Company 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,
notes or debentures issued by the Company prior to the Distribution Date,
issue Right Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that (i) the
Company shall not be obligated to issue any such Right Certificate if, and
to the extent that, the Company shall be advised by counsel that such
issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Right Certificate
shall be issued, and (ii) no Right Certificate shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof.
Section 24. Redemption and Termination.
(a) (i) The Board of Directors of the Company may, at its
option, at any time prior to 5:00 P.M., California time, on the earlier of
(x) the Stock Acquisition Date or (y) the Final Expiration Date, redeem all
but not less than all of the then outstanding Rights at the redemption
price of $.01 per Right, 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").
(ii) In addition, a majority of the Board of Directors
of the Company may, at its option, at any time following the Stock
Acquisition Date, but prior to any event described in clause (x), (y), or
(z) of Section 13(a) hereof, redeem all but not less than all of the then
outstanding Rights at the Redemption Price (x) in connection with any such
event in which all holders of shares of Common Stock are treated alike and
not involving an Acquiring Person or an Affiliate or Associate of an
Acquiring Person or any Person in which the Acquiring Person or an
Affiliate or Associate of an Acquiring Person has an interest, or any other
Person acting directly or indirectly on behalf of or in concert with any
such Acquiring Person, Associate or Affiliate (other than involvement by an
Acquiring Person, Affiliate, Associate or such other Person solely as a
holder of shares of Common Stock (of the Company) being treated like all
other such holders) or (y) following the occurrence of an event set forth
in, and the expiration of any period during which the holder of Rights may
exercise the rights under, Section 11(a)(ii) if and for as long as the
Acquiring Person is not thereafter the Beneficial Owner of securities
representing ten percent or more of the voting power of all securities of
the Company generally entitled to vote for the election of directors of the
Company.
(b) Immediately upon the date for redemption set forth (or
determined in the manner specified) in a resolution of the Board of
Directors of the Company ordering the redemption of the Rights, evidence of
which shall have been filed with the Rights Agent and without any further
action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be
to receive the Redemption Price. Within ten days after the action of the
Board of Directors ordering any such redemption of the Rights, the Company
shall give notice of such redemption to the Rights Agent and the holders of
the then outstanding Rights by mailing such notice to the Rights Agent and
to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the Transfer Agent for the Common Stock. Any notice
which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption
Price will be made.
Section 25. Notice of Certain Events. In case the Company at any
time on or after the Distribution Date shall propose (a) to pay any
dividend payable in stock of any class to the holders of Preferred Stock or
to make any other distribution to the holders of Preferred Stock (other
than a regular quarterly cash dividend out of earnings or retained earnings
of the Company) or (b) to offer to the holders of Preferred Stock rights or
warrants to subscribe for or to purchase any additional shares of Preferred
Stock or shares of stock of any class or any other securities, rights or
options, or (c) to effect any reclassification of its Preferred Stock
(other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (d) to effect any consolidation
or merger into or with, or to effect any sale or other transfer (or to
permit one or more of its subsidiaries to effect any sale or other
transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Company and its subsidiaries (taken as a whole) to,
any other Person, or (e) to effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company shall give to each
holder of a Rights Certificate, in accordance with Section 26 hereof, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Preferred Stock, if
any such date is to be fixed, and such notice shall be so given in the case
of any action covered by clause (a) or (b) above at least 20 days prior to
the record date for determining holders of the shares of Preferred Stock
for purposes of such action, and in the case of any such other action, at
least 20 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 Preferred
Stock whichever shall be the earlier.
In case any of the events set forth in Section 11(a)(ii) of this
Agreement shall occur, then, in any such case, the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such
event, which shall specify the event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Rights Certificate to or on the Company shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
Sola International Inc.
2420 Sand Hill Road
Suite 200
Menlo Park, California 94025
Attention: President
Subject to the provisions of Section 22, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
BankBoston, N.A.
c/o Boston Equiserve Limited Partnership
150 Royall Street
Canton, MA 02021
Attention: Client Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall
be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 27. Supplements and Amendments. Prior to the Distribution
Date, the Company may from time to time supplement or amend any provision
of this Agreement in any respect without the approval of any holders of
certificates representing Common Stock and the Rights. From and after the
Distribution Date, the Company may from time to time supplement or amend
this Agreement without the approval of any holders of Right Certificates in
order (i) to cure any ambiguity, (ii) to correct or supplement any
provision contained herein which may be defective or inconsistent with any
other provisions herein, (iii) to shorten or lengthen any time period
hereunder or (iv) to change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable and which shall
not adversely affect the interests of the holders of Rights Certificates
(other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person); provided, however, that this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (iii) of this
sentence, (A) a time period relating to when the Rights may be redeemed at
such time as the Rights are not then redeemable, or (B) any other time
period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights.
Upon the delivery of a certificate from an appropriate officer of the
Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent shall
execute such supplement or amendment, provided that such supplement or
amendment does not adversely affect the rights or obligations of the Rights
Agent under Section 19 or Section 21 of this Agreement and such amendment
or supplement shall be effective regardless of whether or when executed by
the Rights Agent. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the
holders of shares of Common Stock.
Section 28. Determination and Actions by the Board of Directors,
etc.. The Board of Directors of the Company shall have the exclusive power
and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board, or 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, without
limitation, a determination to redeem or not redeem the Rights or to amend
the Agreement and whether any proposed amendment adversely affects the
interests of the holders of Right Certificates). For all purposes of this
Agreement, any calculation of the number of shares of Common Stock or other
securities outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common
Stock or any other securities 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 as in effect on
the date of this 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 Right Certificates and all
other parties, and (y) not subject the Board to any liability to the
holders of the Right Certificates or holders of shares of Common Stock.
Section 29. 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 30. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the
Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, 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, 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, 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.
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 to be made and to be performed entirely within such
State.
Section 33. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and their respective corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.
SOLA INTERNATIONAL INC.
By /s/ John E. Heine
----------------------------------
Name: John E. Heine
Title: President and Chief
Executive Officer
BANKBOSTON, N.A.
By /s/ Carol Mulvey-Eori
----------------------------------
Name: Carol Mulvey-Eori
Title: Administration Manager
EXHIBIT A
---------
SOLA INTERNATIONAL INC.
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES A JUNIOR PARTICIPATING
PREFERRED STOCK
(Pursuant to Section 151
of the General Corporation Law of the State of Delaware)
We, John E. Heine, President and Chief Executive Officer, and
Steven M. Neil, Executive Vice President-Finance, Chief Financial Officer,
Secretary and Treasurer of Sola International Inc., a corporation organized
and existing under the General Corporation Law of the State of Delaware
(the "Company"), in accordance with the provisions of Section 103 thereof,
do hereby certify:
That pursuant to the authority conferred upon the Board of
Directors by the Company's Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation") and Section 151(g) of
the General Corporation Law of the State of Delaware, the Board of
Directors on August 26, 1998, adopted the following resolution creating a
series of 500,000 shares of Preferred Stock designated as Series A Junior
Participating Preferred Stock:
WHEREAS, the Certificate of Incorporation provides that the
Company is authorized to issue 5,000,000 shares of preferred stock, none of
which are outstanding, now therefore it is:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Company by Article FOURTH of the Certificate of
Incorporation and Section 151(g) of the General Corporation Law of the
State of Delaware, a series of Preferred Stock of the Company be, and it
hereby is, created out of the authorized but unissued shares of the capital
stock of the Company, such series to be designated Series A Junior
Participating Preferred Stock (the "Participating Preferred Stock"), to
consist of five hundred thousand (500,000) shares, par value $.01 per
share, of which the preferences and relative and other rights, and the
qualifications, limitations or restrictions thereof, shall be as follows:
1. Future Increase or Decrease. Subject to paragraph 4(e) of this
resolution, the number of shares of said series may at any time or from
time to time be increased or decreased by the Board of Directors
notwithstanding that shares of such series may be outstanding at such time
of increase or decrease.
A-1
<PAGE>
2. Dividend Rate.
(a) The holders of shares of Participating Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of each November, February, May
and August in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a
share of Participating Preferred Stock, in an amount per share (rounded to
the nearest cent) equal to the greater of (a) $10.00 or (b) 1,000 times the
aggregate per share amount of all cash dividends and 1,000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock, par value
$.01 per share, of the Company (the "Common Stock") since the immediately
preceding Quarterly Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Participating Preferred Stock.
(b) On or after the first issuance of any share or
fractional share of Participating Preferred Stock, no dividend on Common
Stock shall be declared unless concurrently therewith a dividend or
distribution is declared on the Participating Preferred Stock as provided
in paragraph (a) above; and the declaration of any such dividend on the
Common Stock shall be expressly conditioned upon payment or declaration of
and provision for a dividend on the Participating Preferred Stock as above
provided. In the event no dividend or distribution shall have been declared
on the Common Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $10.00 per share on the Participating Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of
Participating Preferred Stock, unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of
holders of shares of Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. The Board of Directors may fix a record
date for the determination of holders of shares of Participating Preferred
Stock entitled to receive payment of a dividend distribution declared
thereon, which record date shall be no more than 30 days prior to the date
fixed for the payment thereof.
3. Dissolution, Liquidation and Winding Up. In the event of any
voluntary or involuntary dissolution, liquidation or winding up of the
affairs of the Company (hereinafter referred to as a "Liquidation"), the
holders of Participating Preferred Stock shall receive at least $100.00 per
share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such
payment, provided that the holders of shares of Participating Preferred
Stock shall be entitled to receive at least an aggregate amount per share
equal to 1,000 times the aggregate amount to be distributed per share to
holders of Common Stock (the "Participating Preferred Liquidation
Preference").
4. Voting Rights. The holders of shares of Participating
Preferred Stock shall have the following voting rights:
(a) Each share of Participating Preferred Stock shall
entitle the holder thereof to one thousand (1,000) votes on all matters
submitted to a vote of the stockholders of the Company.
(b) Except as otherwise provided herein, or by law, the
Certificate of Incorporation or the Amended and Restated By-laws of the
Company (the "By-laws"), the holders of shares of Participating Preferred
Stock and the holders of shares of Common Stock shall vote together as one
class on all matters submitted to a vote of stockholders of the Company.
(c) If and whenever dividends on the Participating Preferred
Stock shall be in arrears in an amount equal to six quarterly dividend
payments, then and in such event the holders of the Participating Preferred
Stock, voting separately as a class (subject to the provisions of
subparagraph (d) below), shall be entitled at the next annual meeting of
the stockholders or at any special meeting to elect two (2) directors. Each
share of Participating Preferred Stock shall be entitled to one vote, and
holders of fractional shares shall have the right to a fractional vote.
Upon election, such directors shall become additional directors of the
Company and the authorized number of directors of the Company shall
thereupon be automatically increased by such number of directors. Such
right of the holders of Participating Preferred Stock to elect directors
may be exercised until all dividends in default on the Participating
Preferred Stock shall have been paid in full, and dividends for the current
dividend period declared and funds therefor set apart, and when so paid and
set apart, the right of the holders of Participating Preferred Stock to
elect such number of directors shall cease, the term of such directors
shall thereupon terminate, and the authorized number of directors of the
Company shall thereupon return to the number of authorized directors
otherwise in effect, but subject
A-2
<PAGE>
always to the same provisions for the
vesting of such special voting rights in the case of any such future
dividend default or defaults. The fact that dividends have been paid and
set apart as required by the preceding sentence shall be evidenced by a
certificate executed by the President and the Chief Financial Officer of
the Company and delivered to the Board of Directors. The directors so
elected by holders of Participating Preferred Stock shall serve until the
certificate described in the preceding sentence shall have been delivered
to the Board of Directors or until their respective successors shall be
elected or appointed and qualify.
At any time when such special voting rights have been so vested
in the holders of the Participating Preferred Stock, the Secretary of the
Company may, and upon the written request of the holders of record of 10%
or more of the number of shares of the Participating Preferred Stock then
outstanding addressed to such Secretary at the principal office of the
Company in the State of California, shall call a special meeting of the
holders of the Participating Preferred Stock for the election of the
directors to be elected by them as hereinabove provided, to be held in the
case of such written request within forty (40) days after delivery of such
request, and in either case to be held at the place and upon the notice
provided by law and in the By-laws of the Company for the holding of
meetings of stockholders; provided, however, that the Secretary shall not
be required to call such a special meeting (i) if any such request is
received less than ninety (90) days before the date fixed for the next
ensuing annual or special meeting of stockholders or (ii) if at the time
any such request is received, the holders of Participating Preferred Stock
are not entitled to elect such directors by reason of the occurrence of an
event specified in the third sentence of subparagraph (d) below.
(d) If, at any time when the holders of Participating
Preferred Stock are entitled to elect directors pursuant to the foregoing
provisions of this paragraph 4, the holders of any one or more additional
series of Preferred Stock are entitled to elect directors by reason of any
default or event specified in the Certificate of Incorporation, as in
effect at the time of the certificate of designation for such series, and
if the terms for such other additional series so permit, the voting rights
of the two or more series then entitled to vote shall be combined (with
each series having a number of votes proportional to the aggregate
liquidation preference of its outstanding shares). In such case, the
holders of Participating Preferred Stock and of all such other series then
entitled so to vote, voting as a class, shall elect such directors. If the
holders of any such other series have elected such directors prior to the
happening of the default or event permitting the holders of Participating
Preferred Stock to elect directors, or prior to a written request for the
holding of a special meeting being received by the Secretary of the Company
from the holders of not less than 10% of the then outstanding shares of
Participating Preferred Stock, then such directors so previously elected
will be deemed to have been elected by and on behalf of the holders of
Participating Preferred Stock as well as such other series, without
prejudice to the right of the holders of Participating Preferred Stock to
vote for
A-3
<PAGE>
directors if such previously elected directors shall resign, cease
to serve or fail to stand for reelection while the holders of Participating
Preferred Stock are entitled to vote. If the holders of any such other
series are entitled to elect in excess of two (2) directors, the
Participating Preferred Stock shall not participate in the election of more
than two (2) such directors, and those directors whose terms first expire
shall be deemed to be the directors elected by the holders of Participating
Preferred Stock; provided that, if at the expiration of such terms the
holders of Participating Preferred Stock are entitled to vote in the
election of directors pursuant to the provisions of this paragraph 4, then
the Secretary of the Company shall call a meeting (which meeting may be the
annual meeting or special meeting of stockholders referred to in
subparagraph (c)) of holders of Participating Preferred Stock for the
purpose of electing replacement directors (in accordance with the
provisions of this paragraph 4) to be held on or prior to the time of
expiration of the expiring terms referred to above.
(e) Except as otherwise set forth herein or required by law,
the Certificate of Incorporation or the By-laws, holders of Participating
Preferred Stock shall have no special voting rights and their consent shall
not be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for the taking of any
corporate action. No consent of the holders of outstanding shares of
Participating Preferred Stock at any time outstanding shall be required in
order to permit the Board of Directors to: (i) increase the number of
authorized shares of Participating Preferred Stock or to decrease such
number to a number not below the sum of the number of shares of
Participating Preferred Stock then outstanding and the number of shares
with respect to which there are outstanding rights to purchase; or (ii) to
issue Preferred Stock which is senior to the Participating Preferred Stock,
junior to the Participating Preferred Stock or on a parity with the
Participating Preferred Stock.
5. Redemption. The shares of Participating Preferred Stock shall
not be redeemable.
6. Conversion Rights. The Participating Preferred Stock is
not convertible into Common Stock or any other security of the Company.
A-5
<PAGE>
IN WITNESS WHEREOF, the undersigned President and Chief Executive
Officer and Secretary of the Company each declares under penalty or perjury
the truth, to the best of his knowledge, of this Certificate of
Designation, Preferences and Rights of Series A Junior Participating
Preferred Stock.
Executed this 27th day of August, 1998 in Menlo Park, California
By:
-------------------------------------
John E. Heine,
President and Chief Executive Officer
Attest:
- -------------------------
Steven M. Neil, Secretary
A-6
EXHIBIT B
---------
Form of Right Certificate
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER AUGUST 26, 2008, OR EARLIER IF
REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.01 PER RIGHT ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO,
OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF
(AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN
RELATED PERSONS, WHETHER CURRENTLY HELD BY OR ON
BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER,
SHALL BECOME NULL AND VOID.
Right Certificate
SOLA INTERNATIONAL INC.
This certifies that ___________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the Rights Agreement, dated as of August 27, 1998 (the "RIGHTS
AGREEMENT"), between Sola International Inc., a Delaware corporation (the
"COMPANY"), and BankBoston, N.A. (the "RIGHTS AGENT"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to 5:00 P.M., Boston time, on August 26,
2008, unless the Rights evidenced hereby shall have been previously
redeemed by the Company, at the principal office or offices of the Rights
Agent designated for such purpose, or at the office of its successor as
Rights Agent, one one-thousandth of a fully paid non-assessable share of
Series A Junior Participating Preferred Stock, $.01 par value per share
(the "PREFERRED STOCK"), of the Company, at a purchase price of $150 per
one one-thousandth of a share of Preferred Stock (the "PURCHASE PRICE"),
upon presentation
B-1
<PAGE>
and surrender of this Right Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this
Right Certificate (and the number of one one-thousandths of a share of
Preferred Stock which may be purchased upon exercise hereof) set forth
above, and the Purchase Price set forth above, are the number and Purchase
Price as of _____________, ____, based on the Preferred Stock as
constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the
number of one one-thousandths of a share of Preferred Stock or other
securities which may be purchased upon the exercise of the Rights evidenced
by this Right Certificate are subject to modification and adjustment upon
the happening of certain events.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of
the Right Certificates. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the principal office or
offices of the Rights Agent and are available upon written request.
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal office of the Rights Agent, may be
exchanged for another Right Certificate or Right Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Preferred Stock or other securities as the
Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate
shall be exercised (other than pursuant to Section 11(a)(ii) of the Rights
Agreement) in part, the holder shall be entitled to receive upon surrender
hereof another Right Certificate or Right Certificates for the number of
whole Rights not exercised. If this Right Certificate shall be exercised in
whole or in part pursuant to Section 11(a)(ii) of the Rights Agreement, the
holder shall be entitled to receive this Right Certificate duly marked to
indicate that such exercise has occurred as set forth in the Rights
Agreement.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option
at a redemption price of $.01 per Right.
The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights. In lieu
of such fractional Rights, there shall be paid to the registered holders of
the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash as provided in the Rights
Agreement.
B-2
<PAGE>
The Company will not be required to issue fractions of Preferred
Stock (other than fractions which are one one-thousandths or integral
multiples of one one-thousandth of a share of Preferred Stock) upon exercise
of the Rights or to distribute certificates which evidence fractional
Preferred Stock (other than fractions which are one one-thousandths or
integral multiples of one one-thousandth of a share of Preferred Stock). In
lieu of fractional shares of Preferred Stock other than fractions that are
multiples of one one-thousandth of a share of Preferred Stock, the Company
will pay to the registered holders of Right Certificates at the time such
Rights are exercised an amount in cash as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Preferred
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such,
any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or other distributions or to exercise any preemptive or
subscription rights, or otherwise, until the Right or Rights evidenced by
this Right Certificate shall have been exercised as provided in the Rights
Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
B-3
<PAGE>
WITNESS the signature of the proper officers of the Company and
its corporate seal. Dated as of _________, ______.
[SEAL]
ATTEST: SOLA INTERNATIONAL INC.
Attest:
By By
---------------------------------- -----------------------------
Name: Name:
Title: Title:
Countersigned:
BANKBOSTON, N.A.
By
---------------------------------
Authorized Signatory
Name:
Title:
B-4
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED __________________________________________________ hereby
sells, assigns and transfers unto ________________________________________
- ------------------------------------------------------------------------
(Please print name and address of transferee)
- ----------------------------------------------------------------------------
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _________ Attorney, to
transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated: ____________, _____
---------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank, savings association, credit
union or trust company having an office or correspondent in the United
States or other eligible guarantor institution which is a participant in a
signature guarantee medallion program.
- -----------------------------------------------------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by
this Right Certificate are not being sold, assigned or transferred by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement) and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned did not acquire the Rights evidenced by this Right Certificate
from any Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement).
Dated:
-----------, ------
--------------------------------------
Signature
B-5
<PAGE>
- -----------------------------------------------------------------------------
Form of Reverse Side of Right Certificate
(--continued)
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder desires
to exercise Rights represented by the Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise ________
Rights represented by this Right Certificate to purchase the shares of
Preferred Stock, Common Stock or such other securities issuable upon the
exercise of such Rights.
The undersigned requests that certificates for such shares of
Preferred Stock, Common Stock or other securities be issued in the name of:
Please insert social security
or other identifying number ________________________________________________
- ------------------------------------------------------------------------
(Please print name and address of transferee)
- -----------------------------------------------------------------------------
The Right Certificate indicating the balances, if any, of such Rights which
may still be exercised pursuant to each of Section 11(a)(ii) and Section 13
of the Rights Agreement shall be returned to the undersigned unless such
person requests that the Right Certificate be registered in the name of and
delivered to:
Please insert social security
or other identifying number ________________________________________________
- -----------------------------------------------------------------------------
(Please print name and address of transferee)
- -----------------------------------------------------------------------------
Dated: _________, ____
---------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank, savings association, credit
union or trust company having an office or correspondent in the United
States or other eligible guarantor institution which is a participant in a
signature guarantee medallion program.
B-6
<PAGE>
Form of Reverse Side of Right Certificate -- continued.
- -----------------------------------------------------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by
this Right Certificate are not being exercised by or on behalf of a Person
who is or was an Acquiring Person or an Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement) and (2) after due inquiry
and to the best knowledge of the undersigned, the undersigned did not
acquire the Rights evidenced by this Right Certificate from any Person who
is or was an Acquiring Person or an Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement).
Dated: _________, ____
---------------------------
Signature
- -----------------------------------------------------------------------------
NOTICE
------
The signature on the foregoing Forms of Assignment and Election
and certificates must conform to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or
any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the Beneficial Owner
of the Rights evidenced by this Right Certificate to be an Acquiring Person
or an Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement) and such Assignment or Election to Purchase will not be
honored.
B-7
EXHIBIT C
---------
August 27, 1998
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS DEFINED IN THE
RIGHTS AGREEMENT) AND CERTAIN RELATED PERSONS, WHETHER CURRENTLY HELD BY OR
ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, SHALL BECOME NULL AND
VOID.
The Board of Directors of Sola International Inc., a Delaware
corporation (the "COMPANY"), declared a dividend of one preferred stock
purchase right (a "RIGHT") for each outstanding share of Common Stock, par
value $.01 per share (the "COMMON STOCK"), of the Company. The dividend is
payable to the stockholders of record at the close of business on September
9, 1998 (the "RECORD DATE"), and with respect to Common Stock issued
thereafter until the Distribution Date (as hereinafter defined) and, in
certain circumstances, with respect to Common Stock issued after the
Distribution Date. Except as set forth below, each Right, when it becomes
exercisable, entitles the registered holder to purchase from the Company
one one-thousandth of a share of Series A Junior Participating Preferred
Stock, par value $.01 per share (the "PREFERRED STOCK"), at a price of $150
per one one-thousandth of a share of Preferred Stock (the "PURCHASE
PRICE"), subject to adjustment. The description and terms of the Rights are
set forth in a Rights Agreement, dated as of August 27, 1998 (the "RIGHTS
AGREEMENT"), between the Company and BankBoston, N.A. (the "RIGHTS AGENT").
The Rights are attached to all certificates representing
outstanding shares of Common Stock, and no separate Right Certificates (as
hereinafter defined) have been
C-1
<PAGE>
distributed. The Rights will separate from
the Common Stock on the earliest to occur of (i) the first date of public
announcement that, without the prior consent of the Board of Directors of
the Company, a person or group of affiliated or associated persons has
acquired beneficial ownership of 15% or more of the outstanding Common
Stock; or (ii) ten (10) business days (or such later date as the Board of
Directors of the Company may determine) following the commencement of, or
announcement of an intention to commence, a tender offer or exchange offer
the consummation of which would result in a person or group of affiliated
or associated persons becoming an Acquiring Person (as hereinafter defined)
(the earliest of such dates being called the "DISTRIBUTION DATE"). A person
or group whose acquisition of Common Stock causes a Distribution Date
pursuant to clause (i) above is an "ACQUIRING PERSON". The first date of
public announcement that a person or group has become an Acquiring Person
is the "STOCK ACQUISITION Date".
The Rights Agreement provides that until the Distribution Date
the Rights will be transferred with and only with the Common Stock
certificates. Until the Distribution Date (or earlier redemption or
expiration of the Rights), new Common Stock certificates issued after the
Record Date upon the transfer of shares or new issuance of the Common Stock
will contain a notation incorporating the Rights Agreement by reference.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), the surrender for transfer of any certificates for Common Stock
outstanding as of the Record Date, even without such notation, will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("RIGHT
CERTIFICATES") will be mailed to holders of record of the Common Stock as of
the close of business on the Distribution Date (and to each initial record
holder of shares of Common Stock issued after the Distribution Date), and
such separate Right Certificates alone will evidence the Rights.
C-2
<PAGE>
The Rights are not exercisable until the Distribution Date and
will expire on August 26, 2008, unless earlier redeemed by the Company as
described below.
In the event that any person becomes an Acquiring Person, each
holder of a Right will have (subject to the terms of the Rights Agreement)
the right (the "FLIP-IN RIGHT") to receive upon exercise the number of
shares of Common Stock, or, in the discretion of the Board of Directors of
the Company, the number of one one-thousandths of a share of Preferred
Stock (or, in certain circumstances, other securities of the Company)
having a value (immediately prior to such triggering event) equal to two
times the Purchase Price. Notwithstanding the foregoing, following the
occurrence of the event described above, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were, beneficially
owned by any Acquiring Person or any affiliate or associate thereof will be
null and void.
In the event that, at any time following the Stock Acquisition
Date, (i) the Company is acquired in a merger or other business combination
transaction or (ii) more than 50% of the Company's assets or earning power
is sold or transferred, then each holder of a Right (except Rights which
previously have been voided as set forth above) shall thereafter have the
right (the "FLIP-OVER RIGHT") to receive, upon exercise, common stock of
the acquiring company having a value equal to two times the Purchase Price.
The holder of a Right will continue to have the Flip-Over Right whether or
not such holder exercises or surrenders the Flip-In Right.
The Purchase Price payable, and the number of one-thousandths of
a share of Preferred Stock or other securities issuable, upon exercise of
the Rights are subject to adjustment from time to time to prevent dilution
(i) in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) upon the grant to holders of
the Preferred Stock of certain rights or warrants to subscribe for or
purchase
C-3
<PAGE>
Preferred Stock at a price, or securities convertible into
Preferred Stock with a conversion price, less than the then current market
price of the Preferred Stock or (iii) upon the distribution to holders of
the Preferred Stock of evidences of indebtedness or assets (excluding
regular quarterly cash dividends) or of subscription rights or warrants
(other than those referred to above).
The Purchase Price is also subject to adjustment in the event of
a stock split of the Common Stock, or a stock dividend on the Common Stock
payable in Common Stock, or subdivisions, consolidations or combinations of
the Common Stock occurring, in any such case, prior to the Distribution
Date.
With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional one-thousandths of a share of
Preferred Stock will be issued, and in lieu thereof, an adjustment in cash
will be made based on the market price of the Common Stock on the last
trading day prior to the date of exercise.
Preferred Stock purchasable upon exercise of the Rights will not
be redeemable and junior to any other series of preferred stock the Company
may issue (unless otherwise provided in the terms of such stock). Each
share of Preferred Stock will be entitled to a minimum preferential
quarterly dividend payment of $10.00 per share but, if greater, will be
entitled to an aggregate dividend per share of 1,000 times the dividend
declared per share of Common Stock. In the event of liquidation, the
holders of the Preferred Stock will be entitled to a minimum preferential
liquidation payment of $100.00, provided that they will be entitled to an
aggregate payment per share of at least 1,000 times the aggregate payment
made per share of Common Stock. Each share of Preferred Stock will have one
thousand votes, voting together with the Common Stock. These rights are
protected by customary antidilution provisions. In the event that the
C-4
<PAGE>
amount of accrued and unpaid dividends on the Preferred Stock is equivalent
to at least six full quarterly dividends, the holders of the Preferred
Stock shall have the right, voting as a class, to elect two directors in
addition to the directors elected by the holders of the Common Stock until
all dividends in default on the Preferred Stock have been paid in full and
dividends for the current dividend period declared and funds therefor set
apart.
At any time prior to the earlier to occur of (i) a person
becoming an Acquiring Person or (ii) the expiration of the Rights, the
Company may redeem the Rights in whole, but not in part, at a price of $.01
per Right (the "REDEMPTION PRICE"), which redemption shall be effective
upon the action of the Board of Directors of the Company. Additionally, the
Company may redeem the then outstanding Rights in whole, but not in part,
at the Redemption Price after the triggering of the Flip-In Right and
before triggering the Flip-Over Right in connection with a merger or other
business combination transaction or series of transactions involving the
Company in which all holders of Common Stock are treated alike but not
involving an Acquiring Person (or any person who was an Acquiring Person)
or its affiliates or associates. Upon the effective date of the redemption
of the Rights, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the 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 of the
Company, stockholders may, depending upon the circumstances, recognize
taxable income should the Rights become exercisable or upon the occurrence
of certain events thereafter.
Except as set forth above, the terms of the Rights may be amended
by the Board of Directors of the Company (i) prior to the Distribution Date
in any manner, and
C-5
<PAGE>
(ii) on or after the Distribution Date to cure any
ambiguity, to correct or supplement any provision of the Rights Agreement
which may be defective or inconsistent with any other provisions, or in any
manner not adversely affecting the interests of the holders of the Rights.
This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights
Agreement. A copy of the Rights Agreement is available free of charge from
the Company.
C-6
