Sundog Technologies, Inc.
and
Atlas Stock Transfer Corporation
Rights Agreement
Dated as of December 22, 2000
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TABLE OF CONTENTS
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1. Certain Definitions........................................................1
2. Appointment of Rights Agent................................................6
3. Issue of Rights Certificates...............................................6
4. Form of Rights Certificates................................................8
5. Countersignature and Registration..........................................9
6. Transfer, Split-Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Certificates..........................9
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.............10
8. Cancellation and Destruction of Rights Certificates.......................12
9. Reservation and Availability of Capital Stock.............................12
10. Preferred Stock Record Date...............................................14
11. Adjustment of Purchase Price, Number of Shares or Number of Rights........14
12. Certificate of Adjusted Purchase Price or Number of Shares................22
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power......23
14. Fractional Rights and Fractional Shares...................................26
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15. Rights of Action..........................................................27
16. Agreement of Rights Holders...............................................27
17. Rights Certificate Holder Not Deemed a Shareholder........................28
18. Concerning the Rights Agent...............................................28
19. Merger or Consolidation or Change of Name of Rights Agent.................29
20. Duties of Rights Agent....................................................29
21. Change of Rights Agent....................................................32
22. Issuance of New Rights Certificates.......................................32
23. Redemption and Waiver.....................................................33
24. Exchange..................................................................34
25. Notices...................................................................35
26. Supplements and Amendments................................................36
27. Successors................................................................37
28. Benefits of this Agreement................................................37
29. Severability..............................................................37
30. Determinations and Actions by the Board of Directors, Etc.................37
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31. Governing Law.............................................................38
32. Counterparts..............................................................38
33. Descriptive Headings......................................................38
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RIGHTS AGREEMENT
This RIGHTS AGREEMENT, dated as of December 22, 2000 (the "Agreement"),
between Sundog Technologies, Inc., an Delaware corporation (the "Company"), and
Atlas Stock Transfer Corporation (the "Rights Agent").
WITNESSETH
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WHEREAS, the Board of Directors of the Company authorized and declared
a dividend of one Right for each share of Common Stock (as such terms are
hereinafter defined) of the Company outstanding on January 31, 2001 (the "Record
Date"), and has authorized the issuance of one Right with respect to each share
of Common Stock issued by the Company between the Record Date and the earliest
of the Distribution Date, the Redemption Date or the Final Expiration Date (as
such terms are hereinafter defined), with each Right initially representing the
right to purchase one one-hundredth of a share of Preferred Stock (as
hereinafter defined) having the rights, powers and preferences set forth in the
form of Amendment to the Company's Certificate of Incorporation attached hereto
as Exhibit A, upon the terms and subject to the conditions herein set forth (the
"Rights");
NOW THEREFORE, in consideration of the mutual agreements set forth
herein, the parties hereby agree as follows:
1. Certain Definitions. For purposes of this Agreement, the following
terms have the meanings indicated:
(a) "Acquiring Person" shall mean (i) any Person (as such term
is hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter, defined) of such Person, shall become
the Beneficial Owner (as such term is hereinafter defined) of 15% or more of the
shares of Common Stock then outstanding or (ii) any Person who is an Adverse
Person (as such term is hereinafter defined); provided, however, that an
Acquiring Person shall not include the Company, any Subsidiary (as such term is
hereinafter defined) of the Company or any employee benefit plan of the Company
or of any Subsidiary of the Company, or any entity holding shares of Common
Stock for or pursuant to the terms of any such plan. Notwithstanding the
foregoing, no Person shall be deemed to be an "Acquiring Person" either (i) as
the result of an acquisition of Common Stock by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of shares
Beneficially Owned by such Person to 15% or more of the Common Stock of the
Company then outstanding; provided, however, that if a Person shall become the
Beneficial Owner of 15% or more of the Common Stock then outstanding by reason
of share purchases by the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of any additional shares of Common Stock,
then such Person shall be deemed to be an "Acquiring Person," (ii) if the Board
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of Directors of the Company determines in good faith that a Person who would
otherwise be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of shares of Common Stock
so that such Person would no longer be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph (a), or (iii) if the
transaction in which a Person, together with all Affiliates and associates of
such Person, would become the Beneficial Owner of 15% or more of the shares of
Common Stock then outstanding involves the purchase of Common Stock or Preferred
Stock (or securities convertible into or exercisable for Common Stock of
Preferred Stock) directly from the Company and the Board of Directors expressly
determines, in the resolution approving such transaction, that such Person shall
not become an "Acquiring Person" as a result of the shares of Common Stock or
Preferred Stock (or securities convertible into or exercisable for Common Stock
of Preferred Stock) acquired in such transaction, provided, however, if, after
said transaction, said Person, together with all Affiliates or Associates of
said Person, shall acquire additional shares of Preferred Stock or Common Stock
(other than pursuant to rights or securities acquired in such transaction) that
cause such Person, together with the Affiliates and Associates of such Person,
to become the beneficial owners of 15% or more of the shares of Common Stock
then outstanding, then such Person shall be deemed to be an "Acquiring Person."
(b) "Act" shall mean the Securities Act of 1933, as amended.
(c) "Adverse Person" shall mean any Person declared to be an
Adverse Person by the Board of Directors of the Company upon a determination
that such Person, alone or together with its Affiliates and Associates, has, at
any time after the date of this Agreement, become the Beneficial Owner of an
amount of Common Stock which the Board of Directors determines to be substantial
(which amount shall be more than 10% of the shares of Common Stock then
outstanding) and a determination by at least a majority of the Board of
Directors who are not officers of the Company, after reasonable inquiry and
investigation, including consultation with such persons as such directors shall
deem appropriate, that (1) such beneficial ownership by such Person is intended
to cause the Company to repurchase the Common Stock beneficially owned by such
Person or to cause pressure on the Company to take action or enter into a
transaction or series of transactions intended to provide such Person with
short-term financial gain under circumstances where the Board of Directors
determines that the best long-term interests of the Company and its shareholders
would not be served by taking such action or entering into such transactions at
that time, or (2) such beneficial ownership is causing or reasonably likely to
cause a material adverse impact (including, but not limited to, impairment of
relationships with customers or impairment of the Company's ability to maintain
its competitive position) on the business or prospects of the Company.
(d) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act (as such term is hereinafter defined), as in
effect on the date of this Agreement.
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(e) "Agreement" shall mean this Rights Agreement.
(f) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to beneficially own any, securities:
(i) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the power to vote
or dispose of, including pursuant to any agreement, arrangement or
understanding, whether or not in writing;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to
acquire voting or dispositive power over (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (whether or not in
writing), or upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise; 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 or
disposing of any securities of the Company;
provided, however, that nothing in this paragraph (e) shall cause a person to be
the "Beneficial Owner" of, or to "beneficially own," (A) any securities that may
be issued on the exercise of Rights, (B) any security if the agreement,
arrangement or understanding to vote such security arises solely from a
revocable proxy or consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the applicable
rules and regulations of the Exchange Act, (C) securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange, or (D) any securities acquired by a Person engaged in
business as an underwriter of securities through such Person's participation in
good faith in a firm commitment underwriting until the expiration of 40 days
after the date of such acquisition. For all purposes of this Agreement, any
calculation of the number of shares of Common Stock outstanding at any
particular time for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the Beneficial Owner
shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act.
(g) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of Utah are
authorized or obligated by law or executive order to close.
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(h) "Close of business" on any given date shall mean 5:00
p.m., State of Utah time, on such date; provided, however, that if such date is
not a Business Day, it shall mean 5:00 p.m., State of Utah time, on the next
succeeding Business Day.
(i) "Common Stock" shall mean the Common Stock, $.001 par
value, of the Company. The term "common stock" when used with reference to any
Person other than the Company shall mean the capital stock (or equity interest)
with the greatest voting power of such other Person together with all rights and
benefits (however denominated or constituted) relating to such common stock
(including, without limitation any rights or warrants to acquire additional
shares of such common stock or other securities or assets, or to participate in
any trust for the benefit of holders of such shares, or to share in the benefits
of any agreements or other arrangements for the benefit of such holders),
whether or not such rights are yet exercisable, and together with any other
securities which are represented by the certificates for such common stock or
are transferred in connection with transfers of such common stock.
(j) "Common Stock Equivalents" shall have the meaning set
forth in Section 11(a)(iii).
(k) "Current Per Share Market Price" shall have the meaning
set forth in Section 11(d).
(l) "Current Value" shall have the meaning set forth in
Section 11(a)(iii).
(m) "Distribution Date" shall have the meaning set forth in
Section 3(a).
(n) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(o) "Final Expiration Date" shall have the meaning set forth
in Section 7(a).
(p) "Person" shall mean any individual, firm, corporation,
partnership or other entity and shall include any successor (by merger or
otherwise) of such entity.
(q) "Preferred Stock" means Series A Preferred Shares of the
Company and, to the extent that there is not a sufficient number of Series A
Preferred Shares authorized to permit the full exercise of the Rights, any other
series of Preferred Shares of the Company designated for such purpose containing
terms substantially similar to the terms of the Series A Preferred Shares.
(r) "Preferred Stock Equivalents" shall have the meaning set
forth in Section 11(b).
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(s) "Principal Party" shall have the meaning set forth in
Section 13(b).
(t) "Proposed Acquiror" shall mean any Person who has proposed
or publicly announced an intention to propose a transaction that, if
consummated, would cause a Stock Acquisition Date (other than a Stock
Acquisition Date occurring as the result of a declaration by the Company's Board
of Directors of the existence of an Adverse Person) or any Section 13 Event to
occur.
(u) "Purchase Price" shall mean the dollar amount payable upon
exercise of one Right to acquire the number of one one-hundredths of a share of
Preferred Stock or other securities or assets for which the Right is then
exercisable and shall initially be the price set forth in Section 7(b).
(v) "Record Date" shall have the meaning set forth in the
WHEREAS clause at the beginning of this Agreement.
(w) "Redemption Date" shall have the meaning set forth in
Section 7(a).
(x) "Redemption Price" shall have the meaning set forth in
Section 23(a).
(y) "Rights" shall have the meaning set forth in the WHEREAS
clause at the beginning of this Agreement.
(z) "Rights Certificate" shall have the meaning set forth in
Section 3(a).
(aa) "Section 11(i) Event" shall have the meaning set forth in
Section 11(i).
(ab) "Section 13 Event" shall mean any event described in
Section 13(a).
(ac) "Spread" shall have the meaning set forth in Section
11(a)(iii).
(ad) "Stock Acquisition Date" shall mean the first date of
public announcement (including, without limitation, the date a report is filed
pursuant to Section 13(d) of the Exchange Act) by the Company or an Acquiring
Person that an Acquiring Person has become an Acquiring Person.
(ae) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
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(af) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii).
(ag) "Trading Day" shall have the meaning set forth in Section
11(d).
2. Appointment of Rights Agent. The Company hereby appoints the Rights
Agent for the Company in accordance with the terms and conditions hereof, and
the Rights Agent hereby accepts such appointment. The Company may from time to
time appoint such co-Rights Agents as it may deem necessary or desirable. The
Rights Agent shall have no duty to supervise, and in no event shall be liable
for, the acts or omissions of any such co-Rights Agent.
3. Issue of Rights Certificates.
(a) Until the earlier of (i) the close of business on the
tenth day after the Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date is prior to the Record Date, the Record Date) or (ii) the close
of business on the tenth day after the date that a tender or exchange offer by
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any entity
holding shares of Common Stock for or pursuant to the terms of any such plan) is
first published or sent or given within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act, if upon consummation
thereof, such Person would be the Beneficial Owner of 15 percent or more of the
shares of Common Stock then outstanding (the earliest of (i) and (ii) being
herein referred to as the "Distribution Date"), (w) the Rights will be evidenced
by the certificates for the Common Stock registered in the names of the holders
of the Common Stock (which certificates shall also be deemed to be certificates
for Rights) and not by separate Rights Certificates, (x) the Rights and the
right to receive Rights Certificates will be transferable only in connection
with the transfer of the underlying Common Stock and any transfer of Common
Stock shall also constitute the transfer of the associated Rights represented by
the same certificate, (y) in the event the Company purchases or acquires any
Common Stock after the Record Date but prior to the Distribution Date, any
Rights associated with such acquired Common Stock shall be deemed canceled and
retired so that the Company shall not be entitled to exercise any Rights
associated with shares of Common Stock that are no longer outstanding, and (z)
in the event the Company issues any Common Stock after the Record Date but prior
to the earliest of the Distribution Date, the Redemption Date or the Final
Expiration Date, the Company shall issue one Right for each such newly issued
share of Common stock (subject to adjustment as provided in Section 11(h)) which
Right shall be evidenced by the certificate for the associated share of Common
Stock. As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested and provided
with all necessary information, send) by first-class, postage-prepaid mail, to
each record holder of shares of Common Stock as of the close of business on the
Distribution Date, at the address of such holder shown on the records of the
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Company, a Rights Certificate, in substantially the form of Exhibit B hereto (a
"Rights Certificate"), evidencing one Right for each share of Common Stock so
held, subject to adjustment as provided herein. In the event that an adjustment
in the number of Rights per share of Common Stock has been made pursuant to
Section 11(h), at the time the Rights Certificates are distributed the Company
shall make the necessary and appropriate rounding adjustments pursuant to
Section 14(a) so that Rights Certificates are distributed representing only
whole numbers of Rights and cash is paid in lieu of fractional Rights. As of and
after the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) As soon as practicable following the Record Date, the
Company will send a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form of Exhibit C (the "Summary of Rights"), by first-class,
postage-prepaid mail, to each record holder of shares of Common Stock as of the
Close of Business on the Record Date, at the address of such holder shown on the
records of the Company.
(c) All Common Stock certificates which are issued, either
upon an original issuance by the Company or upon a transfer by a holder, after
the date hereof but prior to the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date, shall have impressed on, printed
on, written on or otherwise affixed to them the following legend:
Effective January 31, 2001, this certificate also evidences
and entitles the holder hereof to certain rights set forth in
a Rights Agreement between Sundog Technologies, Inc. (the
"Company") and Atlas Stock Transfer Corporation dated as of
December 22, 2000 (the "Rights Agreement"), the terms of which
are incorporated herein by reference and a copy of which is on
file at the principal executive offices of the Company. Under
certain circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. The Company
will mail to the holder of this certificate a copy of the
Rights Agreement without charge after receipt of a written
request therefor. Under certain circumstances, Rights
beneficially owned by Acquiring Persons or their Affiliates or
Associates (as such terms are defined in the Rights
Agreement), and Rights previously owned by such Persons, may
become null and void.
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4. Form of Rights Certificates.
(a) The Rights Certificates (and the form of election to
purchase and form of assignment to be printed on the reverse thereof) shall be
substantially the same as 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 22, the Rights Certificates, whenever distributed, shall entitle the
holders thereof to purchase for the Purchase Price such number of one
one-hundredths of a share of Preferred Stock as shall be set forth therein, but
the amount and type of securities purchasable upon exercise and the Purchase
Price shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3 hereof
that represents Rights beneficially owned by (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (ii) any other Person if such
Rights formerly were beneficially owned by an Acquiring Person (or by an
Associate or Affiliate of such Acquiring Person) at a time after the Acquiring
Person became an Acquiring Person, or (iii) a transferee of Rights from an
Acquiring Person (or from any Associate or Affiliate thereof) who became a
transferee prior to or concurrently with the Acquiring Person becoming an
Acquiring Person and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person (or its Affiliate
or Associate) to holders of equity interests in such Acquiring Person (or its
Affiliate or Associate) or to any Person with whom such Acquiring Person (or its
Affiliate or Associate) has any continuing agreement, arrangement or
understanding regarding the transferred Rights, or (B) a transfer which the
Board of Directors has determined is part of a plan, arrangement or
understanding that has as a primary purpose or effect the avoidance of Section
7(e), and any Rights Certificate issued pursuant to Section 6, 7(d) or 22 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 are or were
beneficially owned by a Person who was an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such
terms are defined in the Rights Agreement). Accordingly, this
Rights Certificate and the Rights represented hereby may
become null and void in the circumstances specified in Section
7(e) of the Rights Agreement;
provided, however, that the Rights Agent shall not have any responsibility to
ascertain the existence of facts that would require the imposition of such
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legend and shall be required to impose such legend only if instructed to do so
by the Company or if a holder fails to certify upon transfer or exchange in the
space provided on the Rights Certificate that such holder is not an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
5. Countersignature and Registration. The Rights Certificates shall be
executed on behalf of the Company by its Chairman of the Board, Chief Executive
Officer, President or any Vice President, either manually or by facsimile
signature, and 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 countersigned. In case any officer of the Company who shall
have signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
Following the Distribution Date and receipt by the Rights Agent of all
relevant information, the Rights Agent will keep or cause to be kept, at its
offices designated for such purposes, books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each of the Rights Certificates and the date of
each of the Rights Certificates.
6. Transfer, Split-Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Certificates .
(a) Subject to the provisions of Sections 4(b), 7(e) and 14,
at any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the earlier of the Redemption Date or the
Final Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a like number of
shares of Preferred Stock or other securities or property as the Rights
Certificate or Certificates surrendered then entitled such holder to purchase.
Any registered holder desiring to transfer, split up, combine or exchange any
Rights Certificate or Certificates shall make such request in writing delivered
to the Rights Agent and shall surrender the Rights Certificate or Certificates
to be transferred, split up, combined or exchanged at the office of the Rights
Agent designated for such purpose. Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the transfer of
any such surrendered Rights Certificate until the registered holder shall have
completed and signed the certificate contained in the form of assignment on the
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reverse side of such Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company or the Rights Agent shall
reasonably request. Thereupon the Rights Agent shall, subject to Sections 4(b),
7(e) and 14, countersign and deliver to the person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split-up,
combination or exchange of Rights Certificates. The Rights Agent shall have no
duty or obligation to take any action under any section of this Agreement which
requires the payment by a Rights holder of applicable taxes and governmental
charges unless and until the Rights Agent is satisfied that all such taxes
and/or charges have been paid.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the Company will make and
deliver a new Rights Certificate of like tenor to the Rights Agent for delivery
to the registered holder in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) At any time after the Distribution Date and at or prior to
the earlier of (i) the Close of Business on December 1, 2010 (the "Final
Expiration Date") or (ii) the time at which the Rights are redeemed as provided
in Section 23 (the "Redemption Date"), subject to Section 7(e), the registered
holder of any Rights Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein including, without limitation, the
restrictions on exercisability set forth in Sections 9(c), 11(a)(iii)) and 23 in
whole or in part upon surrender of the Rights Certificate, with the form of
election to purchase and certificate on the reverse side thereof duly executed,
to the Rights Agent at the office of the Rights Agent designated for such
purpose, together with payment of the Purchase Price for each Right that is
exercised.
(b) The Purchase Price to be paid on exercise of each Right
shall initially be $60.00 and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below. Each Right shall
initially entitle the holder to acquire one one-hundredth of a share of
Preferred Stock upon exercise of the Right. The Purchase Price and the number of
shares of Preferred Stock or other securities or assets for which a Right is
exercisable shall be subject to adjustment as provided in Sections 11 and 13.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the shares to be purchased and
an amount equal to any applicable tax or governmental charge in cash, or by
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certified check or cashier's check payable to the order of the Company, the
Rights Agent shall, subject to Section 20(k), thereupon promptly (i) requisition
from any transfer agent of the Preferred Stock (or make available, if the Rights
Agent is the transfer agent) certificates for the number of shares of Preferred
Stock to be purchased and the Company hereby authorizes its transfer agent to
comply with all such requests, (ii) when appropriate, requisition from the
Company the amount of cash to be paid in lieu of issuance of fractional shares
in accordance with Section 14, (iii) after receipt of the certificates for
Preferred Stock 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,
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, but not limited to, debt securities) of the Company,
and/or distribute other property pursuant to Section 11, the Company covenants
that it will make all arrangements necessary so that such other securities
and/or property are available for distribution by the Rights Agent, if and when
necessary to comply with this Agreement.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Rights
Certificate or to his duly authorized assigns, subject to the provisions of
Section 6 and Section 14.
(e) Notwithstanding any other provision of this Agreement,
from and after the occurrence of a Stock Acquisition Date, any Rights
beneficially owned by (i) an Acquiring Person, or any Associate or Affiliate of
an Acquiring Person, (ii) any other Person if such Rights formerly were
beneficially owned by an Acquiring Person (or by an Associate or Affiliate of
such Acquiring Person) at a time after such Acquiring Person became an Acquiring
Person, or (iii) a transferee of Rights from an Acquiring Person (or from any
Associate or Affiliate thereof) who became a transferee prior to or concurrently
with the Acquiring Person becoming an Acquiring Person and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person (or its Affiliate or Associate) to holders of equity interests
in such Acquiring Person (or its Affiliate or Associate) or to any Person with
whom the Acquiring Person (or its Affiliate or Associate) has any continuing
agreement, arrangement or understanding regarding the transferred Rights, or (B)
a transfer which the Board of Directors has determined is part of a plan,
arrangement or understanding that has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void and any holder of
such Rights shall thereafter have no right to exercise such Rights under any
provision of this Agreement. The Company shall promptly notify the Rights Agent
of the applicability of this Section 7(e) and shall use all reasonable efforts
to ensure that the provisions of this Section 7(e) and of Section 4(b) are
complied with, but neither the Company nor the Rights Agent shall have any
liability to any holder of Rights Certificates or any other Person as a result
of the Company's failure to make any determinations with respect to an Acquiring
Person, or any of its Affiliates, Associates or transferees hereunder.
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(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) properly completed and signed the certificate contained in
the form of election to purchase set forth on the reverse side of the
surrendered Right Certificate and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company or the Rights Agent shall reasonably request.
8. Cancellation and Destruction of Rights Certificates. All Rights
Certificates surrendered for the purpose of exercise, transfer, split-up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Rights Certificates to the Company, or shall, at the written request
of the Company, destroy such cancelled Rights Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.
9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred Stock
(and, following the occurrence of a Stock Acquisition Date or a Section 13
Event, out of its authorized and unissued shares of Common Stock and/or other
securities), the number of shares of Preferred Stock (and, following the
occurrence of a Stock Acquisition Date or a Section 13 Event, Common Stock
and/or other securities) that, as provided in this Agreement, will be sufficient
to permit the exercise in full of all outstanding Rights; provided, however,
that shares issuable pursuant to Section 11(a)(ii) shall be reserved only
following the occurrence of an event described in that section.
(b) If any shares of Preferred Stock are listed on a national
securities exchange, and so long as the shares of Preferred Stock (and,
following the occurrence of a Stock Acquisition Date or a Section 13 Event,
Common Stock and/or other securities) issuable and deliverable upon the exercise
of the Rights may be listed on that exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable, all
shares reserved for such issuance to be listed on the exchange upon official
notice of issuance upon exercise.
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(c) The Company shall use its best efforts (i) to file, as
soon as practicable following a Stock Acquisition Date and the determination by
the Company in accordance with Section 11(a)(iii) of the consideration to be
delivered by the Company upon exercise of the Rights, or as soon as is required
by law following the Distribution Date, as the case may be, a registration
statement under the Act with respect to the securities purchasable upon exercise
of the Rights on an appropriate form, (ii) to cause such registration statement
to become effective as soon as practicable after such filing, and (iii) to cause
such registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities, and (B) the date
of the expiration of the Rights. The Company will also take such action as may
be appropriate under or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the Rights.
The Company may temporarily suspend the exercisability of the Rights, for a
period of time not to exceed 120 days after the date the Company first becomes
obligated to use its best efforts to file a registration statement as set forth
in clause (i) of the first sentence of this Section 9(c), in order to prepare
and file such registration statement and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. The Company
will notify the Rights Agent whenever it makes a public announcement pursuant to
Section 9(c) and will provide the Rights Agent with a copy of such announcement.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction, unless the requisite qualification
in such jurisdiction shall have been obtained and until a registration statement
has been declared effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
(and, following the occurrence of a Stock Acquisition Date or Section 13 Event,
Common Stock and/or other securities) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such shares of such shares
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable shares.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all taxes and governmental charges which may be
payable in respect of the issuance or delivery of the Rights Certificates or of
any shares of Preferred Stock or other securities upon the exercise of Rights.
The Company shall not, however, be required to pay any tax or governmental
charge which may be payable in respect of any transfer, split-up, combination or
exchange of Rights Certificates, or any issuance or delivery of certificates for
shares in a name other than that of the registered holder of the Rights
Certificate evidencing Rights surrendered for exercise, and shall not be
required to issue or deliver any certificates for shares upon the exercise of
any Rights until any such tax or governmental charge shall have been paid (any
such tax or governmental charge being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
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10. Preferred Stock Record Date. Each Person in whose name any
certificate for a number of one one-hundredths of a share of Preferred Stock (or
Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such fractional shares of Preferred Stock (or Common Stock and/or
other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes or governmental charges) was made; provided,
however, that if the date of such surrender and payment is a date upon which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares (fractional or otherwise) on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred. Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate shall not be entitled to
any rights of a shareholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, 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.
11. Adjustment of Purchase Price, Number of Shares or Number of Rights.
The Purchase Price, the number and kind of securities 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 Preferred Stock, (B) subdivide the outstanding Preferred
Stock, (C) combine the outstanding Preferred Stock into a smaller
number of shares of Preferred Stock 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), the number and kind
of shares of capital stock issuable at the time of the record date for
such dividend or of the effective date of such subdivision, combination
or reclassification, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock 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 or she would have owned upon such exercise and been entitled
to receive by virtue of such dividend, subdivision, combination or
reclassification. The adjustments provided for in this Section 11(a)(i)
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shall be made successively whenever such a dividend is declared or paid
or such a subdivision, combination or reclassification is effected. If
an event occurs which would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii).
(ii) In the event that a Stock Acquisition Date
occurs, subject to Section 23, proper provision shall be made so that
each holder of a Right, except as provided below and in Section 7(e),
shall thereafter have a right to receive, upon exercise thereof and
payment of the Purchase Price in accordance with the terms of this
Agreement, in lieu of a number of one one-hundredths of a share of
Preferred Stock, such number of shares of Common Stock as shall equal
the result obtained by dividing the then current Purchase Price by 50
percent of the Current Per Share Market Price of the Common Stock
(determined pursuant to Section 11(d)) on the Stock Acquisition Date
(such number of shares being the "Adjustment Shares").
(iii) In the event the number of shares of Common
Stock which are authorized by the Company's Certificate of
Incorporation but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights are not sufficient to permit the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company shall (A)
determine the excess of (1) the value of the Adjustment Shares issuable
upon the exercise of a Right (the "Current Value") over (2) the then
current Purchase Price (such excess, the "Spread"), and (B) with
respect to each Right, make adequate provision to substitute for the
Adjustment Shares, upon payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the applicable Purchase Price, (3) shares of
Common Stock or other equity securities of the Company (including,
without limitation, shares, or units of shares, of preferred stock that
the Board of Directors of the Company has deemed to have the same value
as shares of Common Stock ("Common Stock Equivalents")), (4) debt
securities of the Company, (5) other assets, or (6) any combination of
the foregoing, having an aggregate value equal to the Current Value,
where such aggregate value has been determined by the Board of
Directors of the Company based upon the advice of a nationally
recognized investment banking firm selected by the Board of Directors
of the Company; provided, however, if the Company shall not have made
adequate provision to deliver value pursuant to clause (B) above within
30 days following the Stock Acquisition Date, then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares of Common Stock
(to the extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread. If the Board
of Directors of the Company shall determine in good faith that it is
likely that sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the Rights, the 30-day
period set forth above may be extended to the extent necessary, but not
more than 90 days after the Stock Acquisition Date, in order that the
Company may seek shareholders approval for the authorization of such
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additional shares (such period, as it may be extended as so permitted,
the "Substitution Period"). To the extent the Company determines that
some action must be taken pursuant to the first or second sentences of
this Section 11(a)(iii), the Company (x) shall provide that such action
shall apply uniformly to all outstanding Rights other than those that
are null and void as provided in Section 7(e), and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution
Period in order to seek any authorization of additional shares and/or
to decide the appropriate form of distribution to be made pursuant to
such first sentence and to determine the value thereof. In the event of
any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the
suspension is no longer in effect (with prompt notice by the Company of
such announcements to the Rights Agent). For purposes of this Section
11(a)(iii), the value of the Common Stock shall be the Current Per
Share Market Price (as determined pursuant to Section 11(d) hereof) of
the Common Stock on the date of the Stock Acquisition Date and the
value of any Common Stock Equivalent shall be deemed to have the same
value as the Common Stock on such date.
(b) In case the Company shall at any time after the date of
this Agreement fix a record date for the issuance of rights, options or warrants
to all holders of Preferred Stock entitling them (for a period expiring within
45 calendar days after such record date) to subscribe for or purchase Preferred
Stock (or shares having the same rights, privileges and preferences as the
Preferred Stock ("Preferred Stock Equivalents")) or securities convertible into
Preferred Stock or Preferred Stock Equivalents at a price per share of Preferred
Stock or Preferred Stock Equivalent (or having a conversion price per share, if
a security convertible into Preferred Stock or Preferred Stock Equivalents) less
than the then Current Per Share Market Price of the Preferred Stock (as defined
in Section 11(d)) on such record date, the number of shares of Preferred Stock
for which each Right shall be exercisable after such record date shall
determined by multiplying the number of shares of Preferred Stock for which each
Right was exercisable 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 additional shares of Preferred Stock
and/or Preferred Stock Equivalents to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially
convertible) and the denominator 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 Preferred Stock Equivalents so to be offered (and/or
the aggregate initial conversion price of convertible securities so to be
offered) would purchase at such Current Per Share Market Price. In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the
Rights Agent and the holders of the Rights. 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
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record date is fixed; and in the event that such rights, options or warrants are
not so issued, the number of shares of Preferred Stock for which each Right
shall be exercisable shall be readjusted to be the number of shares of Preferred
Stock for which each Right would then be exercisable if such record date had not
been fixed; and to the extent such rights, options or warrants are issued but
not exercised prior to their expiration, the number of shares for which each
Right shall be exercisable shall be readjusted to be the number which would have
resulted from the adjustment provided for in this Section 11(b) if only the
rights or warrants that were exercised had been issued.
(c) (i) In case the Company shall at any time after the date
of this Agreement fix a record date for the making of a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness or
assets (other than a regular quarterly cash dividend or a dividend
payable in shares of 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 number of shares of
Preferred Stock for which each Right shall be exercisable after such
record date shall be determined by multiplying the number of shares of
Preferred Stock for which each Right was exercisable immediately prior
to such record date by a fraction, the numerator of which shall be the
then Current Per Share Market Price of the Preferred Stock (as defined
in Section 11(d)) on such record date, and the denominator of which
shall be such Current Per Share Market Price of the Preferred Stock,
less the fair market value (as determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or
warrants applicable to one share of Preferred Stock. Such adjustments
shall be made successively whenever such a record date is fixed; and in
the event that such distribution is not so made, the number of shares
of Preferred Stock for which each Right shall be exercisable shall be
readjusted to be the number of shares of Preferred Stock for which each
Right would then be exercisable if such record date had not been fixed.
(ii) In case the Company shall at any time after the
date of this Agreement fix a record date for the making of a
distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or
a dividend payable in shares of Common Stock) or subscription rights or
warrants (excluding those referred to in Section 11(h)(ii)), the number
of shares of Preferred Stock for which each Right shall be exercisable
after such record date shall be determined by multiplying the number of
shares of Preferred Stock for which each Right was exercisable
immediately prior to such record date by a fraction, the numerator of
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which shall be the then Current Per Share Market Price of the Common
Stock (as defined in Section 11(d)) on such record date, and the
denominator of which shall be such Current Per Share Market Price of
the Common Stock, less the fair market value (as determined in good
faith by the Board of Directors, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the
Rights Agent and the holders of the Rights) of the portion of the
assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one share of Common
Stock. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution is not so
made, the number of shares of Preferred Stock for which each Right
shall be exercisable shall be readjusted to be the number of shares of
Preferred Stock for which each Right would then be exercisable if such
record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the
"Current Per Share Market Price" of common stock (including Common
Stock) on any date shall be deemed to be the average of the daily
closing sale prices per share of the common stock for the 30
consecutive Trading Days (as such term is hereinafter defined)
immediately prior to but not including such date; provided, however,
that in the event the Current Per Share Market Price of 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 such common stock or securities convertible into such
common stock, or (B) any subdivision, combination or reclassification
of such common stock, and prior to the expiration of 30 Trading Days
after but not including the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the Current Per Share
Market Price shall be appropriately adjusted to take into account such
event. The closing sale price for each day shall be the last sale price
as reported by (W) the principal stock exchange on the which respective
security is traded, if the security is traded on a stock exchange, (X)
if the security is not trade on a stock exchange, the Nasdaq National
Market or Nasdaq SmallCap Market, if the security is quoted on either
such market, or (Y) if the security is not quoted on either such
market, the Nasdaq OTC Bulletin Board, if the security is quoted on
such system. If the security is not quoted on such system, the closing
sale price for each day shall be the closing bid and asked prices as
furnished by a professional market maker making a market in the common
stock selected by a majority of the Board of Directors. The term
"Trading Day" shall mean a day on which the principal national
securities exchange on which the common stock is listed or admitted to
trading is open for the transaction of business or, if the common stock
is not listed or admitted to trading on any national securities
exchange, a Business Day. If the common stock is not publicly held or
so listed or traded for the 30-day period, "Current Per Share Market
Price" shall mean the fair value per share as determined in good faith
by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
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(ii) For the purpose of any computation hereunder,
the "Current Per Share Market Price" of Preferred Stock 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 Per Share Market Price 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 Per Share Market Price"
of Preferred Stock shall be conclusively deemed to be an amount equal
to the Current Per Share Market Price of the Common Stock multiplied by
the Adjustment Number as that term is defined in Section 2 of the
Amendment to the Company's Certificate of Incorporation, as amended,
designating the Preferred Stock (initially 100). If neither the Common
Stock nor the Preferred Stock is publicly held or so listed or traded,
"Current Per Share Market Price" of Preferred Stock shall mean the fair
value per share as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
For all purposes of this Agreement, the current market price of one
one-hundredth of a share of Preferred Stock shall be equal to the
Current Per Share Market Price of one share of Preferred Stock divided
by 100.
(e) No adjustment in the Purchase Price or the number of
shares for which a Right is exercisable shall be required unless such adjustment
would require an increase or decrease of at least one percent in the Purchase
Price or the number of shares for which a Right is exercisable; 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
one-millionth of a share of Preferred Stock, as the case may be. Notwithstanding
the first sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three years from the
date of the transaction which requires such adjustment or (ii) the date of the
expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section
11(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
Preferred Stock contained in Section 11 and the provisions of Sections 7, 9, 10,
13 and 14 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 or the number of shares of Preferred
Stock for which a Right is exercisable hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
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(h) (i) In the event the Company shall, after the date of this
Agreement and prior to the Distribution Date, (A) declare a dividend on
the Common Stock payable in Common Stock, (B) subdivide the outstanding
Common Stock, (C) combine the outstanding Common Stock into a smaller
number of shares of Common Stock, or (D) issue any shares of Common
Stock in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), the number of
Rights associated with each share of Common Stock then outstanding, and
the number of Rights to be associated with each share of Common Stock
which may thereafter become outstanding prior to the Distribution Date,
shall be proportionately adjusted so that the number of Rights
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 number of
shares of Common Stock outstanding immediately prior to such event and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such event.
(ii) In the event the Company shall, after the date of
this Agreement and prior to the Distribution Date, fix a record date
for the issuance of rights, options or warrants to all holders of
Common Stock entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase Common Stock
or securities convertible into Common Stock at a price per share of
Common Stock (or having a conversion price per share, if a security
convertible into Common Stock) less than the then Current Per Share
Market Price of the Common Stock (as defined in Section 11(d)) on such
record date, the number of Rights associated with each share of Common
Stock then outstanding, and the number of Rights to be associated with
each share of Common Stock which may thereafter become outstanding
prior to the Distribution Date, shall be proportionately adjusted so
that the number of Rights associated with each share of Common Stock
after such record date shall be determined by multiplying the number of
Rights associated with each share of Common Stock immediately prior to
such record date by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on such record date plus
the number of shares of Common Stock which the aggregate offering price
of the total number of shares of Common Stock so to be offered (and/or
the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such Current Per Share Market Price
and the denominator of which shall be the number of shares of Common
Stock outstanding on such record date plus the number of additional
shares of Common Stock to be offered for subscription or purchase (or
into which the convertible securities so to be offered are initially
convertible). In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash,
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the value of such consideration shall be as determined in good faith by
the Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent and conclusive and binding for
all purposes. Common Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed. In the event that such rights, options or
warrants are not so issued, the number of Rights associated with each
share of Common Stock shall be readjusted to be the number of Rights
that would have been associated with each share of Common Stock if such
record date had not been fixed; and to the extent such rights, options
or warrants are issued but not exercised prior to their expiration, the
number of Rights associated with each share shall be readjusted to be
the number which would have resulted from the adjustment provided for
in this Section 11(h)(ii) if only the rights, options or warrants that
were exercised had been issued.
(iii) Notwithstanding the foregoing, the adjustments
provided for in this Section 11(h) shall not be made if the Company
exercises its election provided for in Section 11(i).
(i) The Company may elect on or after the date of any event
described in clauses (A) through (D) of Section 11(h)(i) or described in Section
11(h)(ii), if such event occurs before the Distribution Date (a "Section 11(h)
Event"), to adjust the Purchase Price and the number of shares of Preferred
Stock purchasable upon the exercise of a Right in substitution for any
adjustment under Section 11(h) in the number of Rights associated with each
share of Common Stock. If such election is made, (i) the number of Rights
associated with each share of Common Stock prior to the Section 11(h) Event
shall be maintained after the Section 11(h) Event, (ii) any new shares of Common
Stock issued in the Section 11(h) Event shall, as provided in Section 3(a), have
issued with it the number of Rights associated with each share of Common Stock
outstanding, and (iii) any combination of shares of Common Stock into a smaller
number of shares in the Section 11(h) Event shall result in a similar
combination of the associated Rights. The Purchase Price and the number of
Shares of Preferred Stock purchasable upon exercise of a Right after such
adjustment shall be determined by multiplying the Purchase Price and the number
of Shares of Preferred Stock purchasable upon exercise of a Right, respectively,
in effect immediately prior to such adjustment by a fraction, the numerator of
which shall be the number of Rights that would have been associated with each
share of Common Stock after the Section 11(h) Event if the Company had not
exercised its election provided for in this Section 11(i) and the denominator of
which shall be the number of Rights associated with each share of Common Stock
immediately prior to the Section 11(h) Event. To the extent the number of Rights
that would have been associated with each share of Common Stock if the Company
had not exercised its election provided for in this Section 11(i) may be
readjusted as provided in the last sentence of Section 11(h)(ii), the Purchase
Price and number of shares of Preferred Stock purchasable upon exercise of a
Right shall be similarly readjusted.
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(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredths 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 one
one-hundredth of a share and the number of one one-hundredths of a share of
Preferred Stock which were expressed in the initial Rights Certificates issued
hereunder.
(k) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price or the number of one one-hundredths of a share
of Preferred Stock for which a Right is exercisable be made effective as of a
record date for a specified event, the Company may elect to defer (with prompt
notice of such deferral to the Rights Agent) until the occurrence of such event
the issuance to the holder of any Right exercised after such record date the
number of one one-hundredths of a share of Preferred Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise over and
above the number of one one-hundredths of a share 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 and the number of one one-hundredths of a
share of Preferred Stock for which a Right is exercisable 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.
(l) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment the Board of
Directors shall determine to be advisable in order that any consolidation or
subdivision of the Preferred Stock, issuance wholly for cash of any Preferred
Stock at less than the current market price, issuance wholly for cash of
Preferred Stock or securities which by their terms are convertible into or
exchangeable for shares of Preferred Stock, dividends on Preferred Stock payable
in Preferred Stock or issuance of rights, options or warrants referred to in
Section 11(b), hereafter made by the Company to holders of its Preferred Stock
shall not be taxable to such shareholders or shall reduce the taxes payable by
such shareholders.
(m) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or Section 26,
take (or permit any Subsidiary to take) any action, including any merger,
consolidation or sale of assets if at the time such action is taken or
immediately thereafter it is reasonably foreseeable that such action will
diminish substantially or otherwise eliminate the benefits intended to be
afforded by the Rights.
12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13, the Company
shall promptly (a) prepare a certificate setting forth such adjustment and a
brief statement of the facts and computations accounting for such adjustment,
(b) 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
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summary thereof to each holder of Rights in accordance with Section 25. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained and shall have no duty with respect to and
shall not be deemed to have knowledge of any adjustment unless and until it
shall have received such a certificate.
13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, following the Distribution Date,
directly or indirectly,
(i) the Company shall consolidate with, or merge with
and into, any other Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(m)) and the Company shall not
be the continuing or surviving corporation of such consolidation or
merger,
(ii) any Person shall acquire shares of Common Stock
of the Company in a share exchange,
(iii) any Person (other than a Subsidiary of the
Company in a transaction that complies with Section 11(m)) shall
consolidate with the Company, or merge with and into the Company and
the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding Common Stock shall be changed
into or exchanged for stock or other securities of any other Person or
cash or any other property, or
(iv) the Company shall sell or otherwise transfer (or
one or more of its Subsidiaries shall sell or otherwise transfer), in
one or more transactions, assets or earning power aggregating 50
percent or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person other than the Company or
one or more of its wholly owned Subsidiaries in a transaction that
complies with Section 11(m),
then, and in each such case, proper provision shall be made so that (A) each
holder of a Right (except as otherwise provided in Section 7(e)) shall
thereafter have the right to receive, upon the exercise thereof and payment of
the Purchase Price in accordance with the terms of this Agreement, such number
of validly authorized and issued, fully paid, nonassessable and freely tradeable
shares of common stock of the Principal Party (as hereinafter defined) not
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by dividing the then current
Purchase Price by 50 percent of the Current Per Share Market Price of the common
stock of the Principal Party (determined pursuant to Section 11(d)) on the date
of consummation of the Section 13 Event, (B) the Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this Agreement, (C)
the term "Company" shall thereafter be deemed to refer to the Principal Party,
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it being specifically intended that the provisions of Section 11 shall apply to
the Principal Party only following the first occurrence of a Section 13 Event,
and (D) the 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) in connection with such consummation as may be
necessary to ensure that the provisions of this Agreement shall thereafter be
applicable, as nearly as reasonably may be, in relation to the common stock
thereafter deliverable upon the exercise of the Rights. The provisions of
Section 11(a)(ii) shall be of no effect following the first occurrence of an
event described in Section 13.
(b) The term "Principal Party" shall mean
(i) in the case of any transaction described in
clause (i), (ii) or (iii) of Section 13(a), the Person that is the
issuer of any securities into which shares of Common Stock of the
Company are converted in such merger or consolidation, or for which
shares of Common Stock are exchanged in such share exchange, and if no
securities are so issued, the Person that is the other party to such
merger, consolidation or share exchange or, if there is more than one
such Person, the Person the common stock of which has the highest
aggregate Current Per Share Market Price (determined pursuant to
Section 11(d)); and
(ii) in the case of any transaction described in
clause (iv) of Section 13(a), the Person that is the party receiving
the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions; or, if each Person that
is a party to such transaction or transactions receives the same
portion of the assets or earning power transferred pursuant to such
transaction or transactions or if the Person receiving the largest
portion of the assets or earning power cannot be determined, whichever
Person the common stock of which has the highest aggregate current
market price (determined pursuant to Section 11(d));
provided, however, that, 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 or such Person is not a corporation, then
(A) if such Person is a direct or indirect Subsidiary of one other Person which
has common stock so registered, "Principal Party" shall refer to such other
Person, (B) if such Person is a direct or indirect Subsidiary of another Person
but is not a direct or indirect Subsidiary of another Person which has common
stock so registered, "Principal Party" shall refer to the ultimate parent entity
of such first-mentioned Person, (C) if such Person is directly or indirectly
controlled by more than one Person, and one or more of such other persons has
common stock so registered, "Principal Party" shall refer to whichever of such
Persons that is the issuer of common stock so registered having the highest
aggregate current market price (determined pursuant to Section 11(d)), and (D)
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if such Person is directly or indirectly controlled by more than one Person, and
none of such other Persons have common stock so registered, "Principal Party"
shall refer to whichever ultimate parent entity is the corporation having the
greatest shareholders' equity or, if no such ultimate parent entity is a
corporation, shall refer to whichever ultimate parent entity is the entity
having the greatest net assets.
(c) The Company shall not enter into any transaction described
in this Section 13 if at the time of such transaction there are any rights,
warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights. In addition, the Company shall not consummate any such transaction
unless the Principal Party shall have a sufficient number of authorized shares
of common stock which have not been issued or reserved for issuance to permit
the exercise in full of the Rights in accordance with this Section 13 and unless
prior thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the terms
set forth in this Section 13 and further providing that, as soon as practicable
after execution of such agreement, the Principal Party will
(i) prepare and file a registration statement under
the Act with respect to the securities purchasable upon exercise of the
Rights on an appropriate form, and will use its best efforts to cause
such registration statement to (A) become effective as soon as
practicable after such filing, (B) remain effective (with a prospectus
at all times meeting the requirements of the Act) until the Final
Expiration Date and, as soon as practicable following the execution of
such agreement, take such action as may be required to ensure that any
acquisition of such shares of common stock upon the exercise of the
Rights complies with any applicable state security or "blue sky" laws;
and
(ii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates
which comply in all respects with the requirements for registration on
Form 10 under the Exchange Act.
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Articles or Certificate of Incorporation or
Bylaws or other instrument governing its corporate affairs, which provision
would have the effect of (i) causing such Principal Party to issue, in
connection with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, shares of common stock of such Principal Party
at less than the then Current Per Share Market Price (determined pursuant to
Section 11(d)) or securities exercisable for, or convertible into, shares of
common stock of such Principal Party at less than the then Current Per Share
Market Price (other than to holders of Rights pursuant to this Section 13) or
(ii) providing for any special payment, tax or similar provisions in connection
with the issuance of the shares of common stock of such Principal Party pursuant
to the provisions of Section 13; then, in such event, the Company shall not
consummate any such transaction unless prior thereto the Company and such
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Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
(e) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the Stock Acquisition
Date, the Rights which have not theretofore been exercised shall thereafter
become exercisable in the manner described in Section 13. The provisions of
Section 11(a)(ii) shall be of no effect following the first occurrence of a
Section 13 Event.
14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of
the Rights Certificates with regard to which such fractional Right would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for any
day shall be the last sale price, or, in case no such sale takes place on such
day, the average of the high bid and low asked prices in the over-the-counter
market, as reported by Nasdaq or such other system then in use or, if on any
such date the Rights are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Rights selected by the Board of Directors of the Company. If on
any such date no such market maker is making a market in the Rights, the fair
value of the Rights on such date as determined in good faith by the Board of
Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one one-hundredth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-hundredths of a share of Preferred Stock
the Company shall pay to the registered holders of Rights Certificates at the
time such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one one-hundredth of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value of
one one-hundredth of a share of Preferred Stock shall be one one-hundredth of
the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of
such exercise.
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(c) Following the occurrence of a Stock Acquisition Date or
Section 13 Event, the Company shall not be required to issue fractions of shares
of Common Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of fractional shares of
Common Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of current market value of one share of
Common Stock. For purposes of this Section 14(c), the current market value of
one share of Common Stock shall be the closing price of one share of Common
Stock (as determined pursuant to Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above).
15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18, 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 Right Certificate (or, prior to
the Distribution Date, of Common Stock), without the consent of the Rights Agent
or of the holder of any other Right Certificate (or, prior to the Distribution
Date, of 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 will be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations of any Person subject to this Agreement.
16. Agreement of Rights Holders. Every holder of a Right, by accepting
the same, consents and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates fully executed;
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(c) subject to Sections 6 and 7(f), the Company and the Rights
Agent may deem and treat the Person in whose name the Rights Certificate (or,
prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right 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), shall be
affected by any notice to the contrary; and
(d) Notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree, judgment or ruling issued by a
court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation; provided,
however, the Company must use its best efforts to have any such order, decree,
judgment or ruling lifted or otherwise overturned as soon as possible.
17. Rights Certificate Holder Not Deemed a Shareholder. No holder, as
such, of any Rights Certificate shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of the number of one one-hundredths of a
share of Preferred Stock or any other securities of the Company which may at any
time be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in Section 23(c)), or
to receive dividends or subscription rights, or otherwise, until the Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.
18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the preparation, delivery, administration,
execution and any amendment 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, judgment,
fine, penalty, claim, demand, settlement costs or expense incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, as
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determined by a court of competent jurisdiction, for any action taken, suffered
or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including without limitation the costs and
expenses of defending against any claim of liability.
(b) The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it in
connection with its acceptance and administration of this Agreement in reliance
upon any Rights Certificate or certificate for shares of Common Stock or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons, or otherwise upon the advice of counsel as set
forth in Section 20.
19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any Person into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the stock
transfer business of the Rights Agent or any successor rights agent, shall be
the successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such Person would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Rights Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
20. Duties of Rights Agent.The Rights Agent undertakes only 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:
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(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the written advice or opinion of such
counsel shall be full and complete authorization and protection to the Rights
Agent as to any action taken, suffered or omitted by it in good faith and in
accordance with such written advice or opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking, omitting to take
or suffering any action hereunder (including, without limitation, the identity
of any Acquiring Person and the determination of Current Per Share Market
Price), such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively provided and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization and protection to the Rights Agent for any action
taken, omitted to be taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Rights Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not or be under any responsibility
in respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming null and void pursuant to Section 7(e) hereof) or
any adjustment in the terms of the Rights (including the manner, method or
amount thereof) provided for in this Agreement or the ascertaining of the
existence of facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Rights Certificates after actual
notice that such change or adjustment is required); 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 Right Certificate or as to whether
any shares of Preferred Stock or Common Stock will, when issued, be validly
authorized and issued, fully paid and nonassessable.
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(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Secretary or the Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken, omitted to be taken or
suffered by it in good faith in accordance with instructions of any such officer
or for any delay in acting while waiting for those instructions. Any application
by the 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 to
be taken by the Rights Agent under this Agreement and the date on or after which
such action shall be taken or such omission shall be effective. The Rights Agent
shall not be liable for any action taken or suffered by, or omission of, the
Rights Agent in accordance with a proposal included in any such application on
or after the date specified in such application (which date shall not be less
than five Business Days after the date any such officer of the Company actually
receives such application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to be
taken, suffered or omitted.
(h) The Rights Agent and any shareholder, affiliate, director,
officer, or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
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 Person.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company or any other Person
resulting from any such act, default, neglect or misconduct, absent negligence,
bad faith or willful misconduct 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 its believes that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
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(k) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
21. Change of Rights Agent. The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon 30
days notice in writing mailed to the Company and to each transfer agent of the
Common Stock and Preferred Stock by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon 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 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) a Person organized and doing
business under the laws of the United States or of any State of the United
States, in good standing, which is authorized under such laws to exercise stock
transfer powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million or (b) an affiliate or
subsidiary of a corporation described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock and
Preferred Stock, and mail a notice thereof in writing to the registered holders
of the Rights Certificates. Failure to give any notice provided for in this
Section 21, 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.
22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
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<PAGE>
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Rights Certificates made in accordance with
the provisions of this Agreement. In addition, in connection with the issuance
or sale of Common Stock of the Company following the Distribution Date and prior
to the Final Expiration Date, the Company (a) shall, with respect to Common
Stock of the Company 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 issued by the Company prior to the Distribution Date, and
(b) may, in any other case, if deemed necessary or appropriate by the Board of
Directors, issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) no
such Rights Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
23. Redemption and Waiver.
(a) The Board of Directors of the Company may at its option,
at any time prior to the earliest of (i) the Close of Business on the tenth day
following a Stock Acquisition Date (or, if the Stock Acquisition Date shall have
occurred prior to the Record Date, the close of business on the tenth day
following the Record Date), (ii) a determination by the Board of Directors that
any Person is an Adverse Person, or (iii) the Close of Business on the Final
Expiration Date, (A) redeem all but not less than all the then outstanding
Rights at a redemption price of $.001 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"), or (B) waive application of Section 11(a)(ii) with respect
to the respective event(s) described in (i), (ii) or (iii) above.
Notwithstanding anything contained in this Agreement to the contrary, the Rights
shall not be exercisable as provided in Section 11(a)(ii) until such time as the
Company's right of redemption hereunder has expired.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights (or at such later time as
shall be specified in the resolution taking such action), 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. Promptly after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give notice
of such redemption to the holders of the then outstanding Rights and the Rights
Agent by mailing such notice to all such holders at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the shares of Common
Stock. Any notice which is mailed in the manner herein provided shall be deemed
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<PAGE>
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. The Company may, at its option, pay the Redemption Price in cash,
shares of Common Stock (based on the Current Per Share Market Price, as defined
in Section 11(d), of the Common Stock at the time of redemption) or any other
form of consideration deemed appropriate by the Board of Directors.
(c) In case the Company shall propose (a) to pay any dividend
payable in stock of any class to the holders of its Preferred Stock or Common
Stock or to make any other distribution to the holders of its Preferred Stock or
Common Stock (other than a regular quarterly cash dividend), (b) to offer to the
holders of its Preferred Stock or Common Stock rights or warrants to subscribe
for or to purchase any additional shares of Preferred Stock or Common Stock or
shares of stock of any class or any other securities, (c) to effect any
reclassification of its Preferred Stock or Common Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Preferred Stock or Common Stock), (d) to effect any consolidation, merger or
share exchange into or with any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(m)), (e) 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 related transactions, of 50 percent
or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section
11(m)), or (f) 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, to the extent feasible and in accordance with Section 25, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend or distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, exchange, sale,
transfer, liquidation, dissolution, or winding up is to take place and the date
of participation therein by the holders of the Preferred Stock or Common Stock
if any such date is to be fixed, and such notice shall be so given in the case
of any action covered by clause (a) or (b) above at least 20 days prior to the
record date for determining holders of the Preferred Stock or Common 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 Preferred Stock or Common Stock
whichever shall be the earlier.
In case a Stock Acquisition Date shall occur, the Company shall as soon
as practicable thereafter give to the Rights Agent and to each holder of a
Rights Certificate, in accordance with Section 25, 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).
24. Exchange.
(a) The Board of Directors of the Company may, at its option,
at any time and from time to time after a Stock Acquisition Date, exchange all
or part of the then outstanding and exercisable Rights (which shall not include
Rights that have become null and void pursuant to the provisions of Section
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<PAGE>
7(e)) for shares of Common Stock or Common Stock Equivalents, or any combination
thereof, at an exchange ratio of one share of Common Stock, or such number of
Common Stock Equivalents or units representing fractions thereof as would be
deemed to have the same value as one share of Common Stock, per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio").
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to subsection (a) of
this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of shares of Common Stock
and/or Common Stock Equivalents equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange (with prompt notice thereof to the Rights Agent);
provided, however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Company promptly shall mail a
notice of any such exchange to the Rights Agent and to all of the holders of
such Rights at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the shares of Common
Stock and/or Common Stock Equivalents for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number of Rights (other
than Rights which have become null and void pursuant to the provisions of
Section 7(e)) held by each holder of Rights.
(c) In the event that the number of shares of Common Stock
which are authorized by the Company's Certificate of Incorporation as amended
but not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights are not sufficient to permit an exchange of Rights as
contemplated in accordance with this Section 24, the Company may, at its option,
take all such action as may be necessary to authorize additional shares of
Common Stock for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock, the
company shall pay to the registered holders of Rights with regard to which such
fractional shares of Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the value of a whole share of Common Stock. For
purposes of this Section 24, the value of a whole share of Common Stock shall be
the closing price (as determined pursuant to the second sentence of Section
11(d)(i) for the Trading Day immediately prior to the date of exchange pursuant
to this Section 24, and the value of any Common Stock Equivalent shall be deemed
to have the same value as the Common Stock on such date.
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<PAGE>
25. 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:
Sundog Technologies, Inc.
10542 South Jordan Gateway, Suite 200
South Jordan, UT 84095
Attention: Corporate Secretary
Facsimile: (801) 501-0701
Copy to: Bryan T. Allen
Stoel Rives LLP
201 South Main Street, Suite 1100
Salt Lake City, Utah 84111
Facsimile: (801) 578-6999
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
Atlas Stock Transfer Corporation
5899 South State Street
Salt Lake City, Utah 84107
Facsimile: (801) 262-0907
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.
26. Supplements and Amendments. Prior to the Distribution Date, the
Company and the Rights Agent shall, if the Board of Directors of the Company so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing shares of Common Stock.
From and after the Distribution Date, the Company and the Rights Agent shall, if
the Board of Directors of the Company so directs, supplement or amend this
Agreement without the approval of any holders of Right Certificates in order (i)
to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder, 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 interest of the
holders of Rights Certificates (other than an Acquiring Person or an Affiliate
or Associate of any such Person); provided, however, this Agreement may not be
36
<PAGE>
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 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 26 and
provided that such amendment or supplement does not change or increase the
Rights Agent's duties, liabilities or obligations without the consent of the
Rights Agent (which consent will not be unreasonably withheld), the Rights Agent
shall execute such supplement or amendment. Prior to Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the interests
of the holders of shares of Common Stock.
27. 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.
28. 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).
29. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms, provisions
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; provided,
however, that notwithstanding anything in this Agreement to the contrary, if any
such term, provision, covenant or restriction is held by such court or authority
to be invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23(a) shall be reinstated and shall
not expire until the Close of Business on the tenth day following the date of
such determination by the Board of Directors of the Company.
30. Determinations 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 of Directors of the Company or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement. All such actions, calculations,
37
<PAGE>
interpretations and determinations (including, for purposes of clause (b) below,
all omissions with respect to the foregoing) which are done or made by the Board
of Directors of the Company in good faith, shall (a) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other parties, and (b) not subject the Board of Directors of the Company to any
liability to the holders of the Rights.
31. Governing Law. This Agreement and each Rights Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made and performed
entirely within such State.
32. 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.
33. 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 attested, all as of the day and year first above written.
Sundog Technologies, Inc.
By
------------------------------
Alan Rudd
Its: President
Atlas Stock Transfer Corporation
By
------------------------------
Its
------------------------------
38
<PAGE>
EXHIBIT A
FORM OF
CERTIFICATE OF AMENDMENT
OF
SUNDOG TECHNOLOGIES, INC.
ESTABLISHING
SERIES A PREFERRED SHARES
1. The name of the Corporation is Sundog Technologies, Inc.
2. Article Four of the Corporation's Certificate of Incorporation is
amended to add a new Section D, which shall read in its entirety as follows:
D. Series A Preferred Stock.
(1) Designation and Amount. The shares of such series shall be
designated as "Series A Preferred Shares" and the number of shares
constituting such series shall be 500,000.
(2) Dividends and Distributions.
(i) The holders of shares of Series A Preferred Shares shall
be entitled to receive, when and as declared by the Board of
Directors, out of funds legally available for the purpose,
dividends in an amount per share equal to 100 (the "Adjustment
Number") multiplied by the aggregate per share amount of all
cash dividends, and the Adjustment Number multiplied by the
aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable
in Common Stock or a subdivision of the outstanding Common
Stock (by reclassification or otherwise), declared on the
Common Stock of the Corporation (the "Common Stock") after the
first issuance of any share or fraction of a share of Series A
Preferred Shares.
(ii) The Corporation shall declare a dividend or distribution
on the Series A Preferred Shares as provided in subparagraph
2(i) at the same time that it declares a dividend or
distribution on the Common Stock (other than a dividend
payable in Common Stock).
A-1
<PAGE>
(iii) Dividends shall not be cumulative. Unpaid dividends
shall not bear interest. Dividends paid on the Series A
Preferred Shares in an amount less than the total amount of
such dividends at the time accrued and payable on such shares
shall be allocated pro rata on a share-by-share basis among
all such Series A Preferred Shares at the time outstanding.
(3) Voting Rights. The holders of Series A Preferred Shares shall
have the following voting rights:
(i) Each Series A Preferred Share shall entitle the holder
thereof to the number of votes equal to the Adjustment Number
then in effect on all matters submitted to a vote of the
shareholders of the Corporation.
(ii) Except as otherwise provided herein or by law, the
holders of Series A Preferred Shares and the holders of Common
Stock shall vote together as one class on all matters
submitted to a vote of shareholders of the Corporation.
(4) Certain Restrictions.
(i) Whenever dividends or distributions payable on the Series
A Preferred Shares as provided in subparagraph 2 have not been
declared or paid for any fiscal year, until all such dividends
and distributions for such fiscal year on Series A Preferred
Shares outstanding shall have been declared and paid in full,
the Corporation shall not in such fiscal year:
(a) declare or pay dividends on or make any other
distributions on any shares of stock ranking junior
or on a parity (either as to dividends or upon
liquidation, dissolution or winding up) to the Series
A Preferred Shares except dividends paid ratably on
the Series A Preferred Shares and all such parity
stock on which dividends are payable in proportion to
the total amounts to which the holders of all such
shares are then entitled and, dividends or
distributions payable in Common Stock;
(b) purchase or otherwise acquire for consideration
any Series A Preferred Shares or any shares of stock
ranking on a parity with the Series A Preferred
Shares, except in accordance with a purchase offer
made in writing or by publication (as determined by
the Board of Directors) to all holders of such shares
upon such terms as the Board of Directors, after
consideration of the respective dividend rates and
A-2
<PAGE>
other relative rights and preferences of the
respective series and classes, shall determine in
good faith will result in fair and equitable
treatment among the respective series or classes.
(ii) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration
any shares of stock of the Corporation unless the Corporation
could, under subparagraph 4(i), purchase or otherwise acquire
such shares at such time and in such manner.
(5) Restriction on Issuance of Shares; Reacquired Shares. The
Corporation shall not issue any Series A Preferred Shares except upon
exercise of rights (the "Rights") issued pursuant to the Rights
Agreement dated as of December 22, 2000, between the Corporation and
Atlas Stock Transfer Corporation, (the "Rights Agreement"), a copy of
which is on file with the secretary of the Corporation at its principal
executive office and shall be made available to shareholders of record
without charge upon written request. Any Series A Preferred Shares
purchased or otherwise acquired by the Corporation in any manner
whatsoever may be restored to the status of authorized but unissued
shares after the acquisition thereof. All such shares shall upon any
such restoration become authorized but unissued shares of Preferred
Shares and may be reissued as part of a new series of Preferred Shares
to be created by the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
(6) Liquidation, Dissolution or Winding Up.
(i) Upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Corporation, no distribution shall be
made to the holders of shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Shares unless, prior thereto,
the holders of shares of Series A Preferred Shares shall have
received the Adjustment Number multiplied by the per share
amount to be distributed to holders of Common Stock, plus an
amount equal to declared and unpaid dividends and
distributions thereon to the date of such payment (the "Series
A Liquidation Preference"). Following the payment of the full
amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series
A Preferred Shares.
(ii) In the event that there are not sufficient assets
available to permit payment in full of the Series A
Liquidation Preference and the liquidation preferences of all
other series of Preferred Shares, if any, which rank senior to
or on a parity with the Series A Preferred Shares, then assets
shall be distributed first to holders of any series of
Preferred Shares ranking senior to the Series A Preferred
A-3
<PAGE>
Shares to the extent of their liquidation preferences and such
remaining assets shall be distributed ratably to the holders
of Series A Preferred Shares and such parity shares in
proportion to their respective liquidation preferences.
(7) Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in
which the Common Stock is exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the
Series A Preferred Shares shall at the same time be similarly exchanged
or changed in an amount per share equal to the Adjustment Number
multiplied by the aggregate amount of stock, securities, cash and/or
any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is changed or exchanged.
(8) Anti-Dilution Adjustments to Adjustment Number. In the event the
Corporation shall at any time after January 31, 2001 (the "Rights
Declaration Date") (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the Adjustment Number for all purposes
of this Article 2 shall be adjusted by multiplying the Adjustment
Number then in effect by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event. In the
event the Corporation shall at any time after the Rights Declaration
Date, fix a record date for the issuance of rights, options or warrants
to all holders of Common Stock entitling them (for a period expiring
within 45 calendar days after such record date) to subscribe for or
purchase Common Stock or securities convertible into Common Stock at a
price per Common Stock (or having a conversion price per share, if a
security convertible into Common Stock) less than the then Current Per
Share Market Price of the Common Stock (as defined in Section 11(d) of
the Rights Agreement) on such record date, then in each such case the
Adjustment Number for all purposes of this Article 2 shall be adjusted
by multiplying the Adjustment Number then in effect by, a fraction, the
numerator of which shall be the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of
Common Stock to be offered for subscription or purchase (or into which
the convertible securities so to be offered are initially convertible)
and the denominator of which shall be the number of shares of Common
Stock outstanding on such record date plus the number of shares of
Common Stock which the aggregate offering price of the total number of
shares of Common Stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would
A-4
<PAGE>
purchase at such Current Per Share Market Price (as defined in Section
11(d) of the Rights Agreement). In case such subscription price may be
paid in a consideration part or all of which shall be in a form other
than cash, the value of such consideration shall be as determined in
good faith by the Board of Directors. Common Stock owned by or held for
the account of the Corporation 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. In the event that
such rights, options or warrants are not so issued, the Adjustment
Number shall be readjusted as if such record date had not been fixed;
and to the extent such rights, options or warrants are issued but not
exercised prior to their expiration, the Adjustment Number shall be
readjusted to be the number which would have resulted from the
adjustment provided for in this paragraph 8 if only the rights, options
or warrants that were exercised had been issued.
(9) No Redemption. The Series A Preferred Shares shall not be
redeemable at the option of the Corporation or any holder thereof.
Notwithstanding the foregoing sentence, the Corporation may acquire
Series A Preferred Shares in any other manner permitted by law.
(10) Amendment. Subsequent to the Distribution Date (as defined in
the Rights Agreement) these Certificate of Incorporation shall not be
further amended in any manner which would materially alter or change
the preferences, limitations and relative rights of the Series A
Preferred Shares so as to affect them adversely without the affirmative
vote of the holders of a majority of the outstanding Series A Preferred
shares, voting separately as a class.
(11) Fractional Shares. Series A Preferred Shares may be issued in
fractions of a share in integral multiples of one one-hundredth of a
share, which shall entitle the holder, in proportion to such holders
fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other
rights of holders of Series A Preferred Shares.
3. The amendment was adopted on December 20, 2000.
4. Shareholder action was not required to adopt the amendment. The
amendment was adopted by the board of directors without shareholder action.
A-5
<PAGE>
5. Person to contact about this filing:
Bryan Allen
Stoel Rives LLP
201 South Main Street, Suite 1100
Salt Lake City, Utah 84111
(801) 578-6908
Dated: December 20, 2000
Sundog Technologies, Inc.
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
A-6
<PAGE>
EXHIBIT B
---------
[Form of Rights Certificate]
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER DECEMBER 1, 2010 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY
ACQUIRING PERSONS OR THEIR RESPECTIVE AFFILIATES OR ASSOCIATES (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY RIGHTS PREVIOUSLY
OWNED BY SUCH PERSONS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED
BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON
WHO WAS AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e)
OF THE RIGHTS AGREEMENT.]1
Rights Certificate
---------------
This certifies that ____________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of December 22, 2000 (the "Rights Agreement") between Sundog
Technologies, Inc., an Delaware corporation (the "Company"), and Atlas Stock
Transfer Corporation (the "Rights Agent"), to purchase from the Company at any
time prior to 5 p.m., New York time, on December 1, 2010 (the "Final Expiration
Date") at the office or offices of the Rights Agent designated for such purpose,
one one-hundredth of a fully paid and nonassessable share of Series A Preferred
------------------
(1) The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
B-1
<PAGE>
Shares (the "Preferred Stock") of the Company, at a purchase price of $60.00
(the "Purchase Price"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate duly
executed. The Purchase Price may be paid in cash or by certified check or
cashier's check payable to the order of the Company. The number of Rights
evidenced by this Rights Certificate, the number of one one-hundredths of a
share of Preferred Stock which may be purchased upon exercise hereof, and the
Purchase Price per Right set forth above are the number of Rights, the number of
one one-hundredths of a share and the Purchase Price as of January 31, 2001,
based on the Preferred Stock and Common Stock as constituted at such date.
Upon the occurrence of a Stock Acquisition Date (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or any Affiliate
or Associate of such Acquiring Person (as such terms are defined in the Rights
Agreement), (ii) any other person if such Rights formerly were beneficially
owned by such Acquiring Person (or by an Associate or Affiliate thereof) at a
time after such Acquiring Person, became an Acquiring Person, or (iii) under
certain circumstances specified in the Rights Agreement, a transferee of Rights
from such Acquiring Person (or from any Associate or Affiliate thereof) who
became a transferee prior to or concurrently with such Acquiring Person becoming
an Acquiring Person, such Rights shall become null and void and no holder hereof
shall have any right with respect to such Rights from and after the occurrence
of such an event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities or property which may
be obtained upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events,
including a Stock Acquisition Date or a Section 13 Event (as such terms are
defined in the Rights Agreement).
This Rights Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement, which terms, provisions, and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the Rights
and the limitations on the rights, obligations, duties, and immunities hereunder
of the Rights Agent, the Company, and the holders of the Rights Certificates,
which limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in the
Rights Agreement. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available upon written
request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate or Rights Certificates
of like tenor and date evidencing Rights entitling the holder to purchase a like
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aggregate number of one one-hundredths of a share of Preferred Stock as the
Rights evidenced by the Rights Certificate or Rights Certificates surrendered
shall have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Rights certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $.001 per Right (and certain rights evidenced hereby may be waived) at
any time prior to the earlier of (i) the close of business on the tenth day
following the Stock Acquisition Date (as such period, may be extended pursuant
to the Rights Agreement) and (ii) the Final Expiration Date.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredths of a share of Preferred Stock, which
may, at the election of the Company be evidenced by depository receipts), but in
lieu thereof a cash payment will be made as provided in the Rights Agreement.
No holder of this Rights certificate, as such, shall be entitled to
vote, receive dividends, or be deemed for any purpose the holder of shares 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 shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
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<PAGE>
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of , 2000.
---------
ATTEST: Sundog Technologies, Inc.
--------------------------- -------------------------
Secretary Title:
Countersigned:
By
-------------------------
Authorized Signature
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<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights certificate.)
FOR VALUE RECEIVED
-----------------------------------------------------
hereby sells, assigns, and transfers unto
---------------------------------------
--------------------------------------------------------------------------------
(Please print name and address of transferee)
this Rights Certificate, together with all right, title, and interest therein,
and does hereby irrevocably constitute and appoint ____________________,
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated , 2000.
-------------
--------------------------------------------
Signature
Signature Guaranteed:
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate ___ is ___ is not being sold, assigned, and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement);
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<PAGE>
(2) after due inquiry and to the best knowledge of the undersigned, it
___ did ___ did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was, or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: , 2000. ------------------------------------------
-------------- Signature
Signature Guaranteed:
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<PAGE>
NOTICE
------
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
TO: ________________
The undersigned hereby irrevocably elects to exercise ____________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person which may be issuable upon the
exercise of the Rights) and requests that certificates for such shares be issued
in the name of and delivered to:
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
Please insert social security
or other identifying number:
--------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
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<PAGE>
Please insert social security
or other identifying number:
--------------------------------------------------
Dated , 2000.
-------------
--------------------------------------------------
Signature
Signature Guaranteed:
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<PAGE>
Certificate
-----------
The undersigned hereby certifies by checking the, appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate ___ are ___ are not
being exercised by or on behalf of a Person is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
___ did ___ did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was, or became Acquiring Person or an Affiliate or Associate
of an Acquiring Person.
Dated: , 2000. ---------------------------------------------
------------ Signature
Signature Guaranteed:
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<PAGE>
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
Effective as of January 31, 2001, the Board of Directors of Sundog
Technologies, Inc. (the "Company") declared a dividend of one Right for each
outstanding share of Common Stock of the Company to shareholders of record at
the close of business on January 31, 2001. Each Right entitles the registered
holder to purchase from the Company one one-hundredth of a share of Series A
Preferred Shares (the "Preferred Shares") at a Purchase Price of $60.00, subject
to adjustment. The description and terms of the Rights are set forth in a
Shareholder Rights Agreement (the "Rights Agreement") between the Company and
Atlas Stock Transfer Corporation, as Rights Agent.
Initially, the Rights will be attached to the certificates representing
outstanding shares of Common Stock, and no separate Rights Certificates will be
distributed. The Rights will separate from the Common Stock, and a Distribution
Date will occur, upon the earlier of (i) subject to certain exceptions, ten days
following a public announcement that a person or group of affiliated or
associated persons has acquired, or obtained the right to acquire from
shareholders, beneficial ownership of 15 percent or more of the outstanding
Common Stock or the Board of Directors of the Company shall declare any person
to be an Adverse Person (as described below) (each, an "Acquiring Person") or
(ii) ten days following the commencement of a tender offer or exchange offer
that would result in a person or group beneficially owning 15 percent or more of
such outstanding Common Stock, as such periods may be extended pursuant to the
Rights Agreement.
An Adverse Person is any person declared to be an Adverse Person by the
Board of Directors upon a determination that such person, alone or together with
its affiliates and associates, has become the beneficial owner of an amount of
Common Stock which the Board of Directors determines to be substantial (which
amount shall be more than 10% of the Common Stock then outstanding) and a
determination by at least a majority of the Board of Directors who are not
officers of the Company, after reasonable inquiry and investigation, including
consultation with such persons as such directors shall deem appropriate, that
(i) such beneficial ownership by such person is intended to cause the Company to
repurchase the Common Stock beneficially owned by such person or to cause
pressure on the Company to take action or enter into a transaction or series of
transactions intended to provide such person with short-term financial gain
under circumstances where the Board of Directors determines that the best
long-term interests of the Company and its shareholders would not be served by
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<PAGE>
taking such action or entering into such transactions or series of transactions
at that time or (ii) such beneficial ownership is causing or reasonably likely
to cause a material adverse impact (including, but not limited to, impairment of
relationships with customers or impairment of the Company's ability to maintain
its competitive position) on the business or prospects of the Company.
Until the Distribution Date, (i) the Rights will be evidenced by and
will be transferred with and only with such Common Stock certificates, (ii) new
Common Stock certificates issued after January 31, 2001, will contain a legend
incorporating the Rights Agreement by reference, and (iii) the surrender for
transfer of any certificate for Common Stock will also constitute the transfer
of the Rights associated with the Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on December 1, 2010, unless earlier redeemed by
the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date, and thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only Common Stock issued prior to the time the Rights
become exercisable or issued upon exercise or conversion of rights, warrants,
options or convertible securities issued prior to the time the Rights become
exercisable will be issued with Rights.
In the event that any person becomes an Acquiring Person, subject to
the Company's rights of waiver and redemption, each holder of a Right shall
thereafter have the right to receive, upon exercise, in lieu of Preferred
Shares, Common Stock of the Company (or, in certain circumstances, cash,
property or other securities of the Company) having a market value equal to two
times the exercise price of the Right (a "Flip-In Conversion"). However, Rights
are not exercisable as described in this paragraph until such time as the Rights
are no longer redeemable by the Company as described below and the Flip-In
Conversion is no longer subject to waiver by the Board as described below.
Notwithstanding any of the foregoing, if any person becomes an Acquiring Person
all Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by an Acquiring Person will become null and
void.
For example, at an exercise price of $60 per Right, each Right not
owned by the Acquiring Person (or by certain related parties or transferees)
following the event set forth in the preceding paragraph would entitle its
holder to purchase $120 worth of Common Stock (or other consideration, as noted
above) for $60. Assuming that the Common Stock had a per share value of $10 at
such time, the holder of each valid Right would be entitled to purchase twelve
shares of Common Stock for $60.
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<PAGE>
In the event that, at any time following the Distribution Date, (i) the
Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation or in which the Common Stock
are exchanged for stock or other securities or property, or (ii) 50 percent or
more of the Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights which previously have been voided as set forth
above) shall thereafter have the right to receive, upon exercise, common stock
of the acquiring company having a value equal to two times the exercise price of
the Right.
The Purchase Price payable, and the number of one one-hundredths of a
share of Preferred Shares or other securities or property issuable upon exercise
of the Rights are subject to adjustment from time to time to prevent dilution
(i) in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Shares or the Common Stock, (ii) if holders
of the Preferred Shares are granted certain rights or warrants to subscribe for
Preferred Shares or convertible securities at less than the current market price
of the Preferred Shares, (iii) if holders of Common Stock are granted certain
rights or warrants to subscribe for Common Stock or convertible securities at
less than the current market price of the Common Stock, or (iv) upon the
distribution to holders of Preferred Shares or Common Stock of evidences of
indebtedness or assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price or the
number of Preferred Shares issuable upon exercise of a Right will be required
until cumulative adjustments would require an increase or decrease of at least 1
percent. No fractional Preferred Shares will be issued (other than fractions
which are integral multiples of one one-hundredth of a share of Preferred
Shares) and, in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading date prior to the date
of exercise.
At any time until a determination that any person is an Adverse Person
or ten days (or longer if extended pursuant to the terms of the Rights
Agreement) after a person otherwise becomes an Acquiring Person, the Company may
(i) redeem the Rights in whole, but not in part, at a price of $.001 per Right
(payable in cash, Common Stock or other consideration), appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof, or (ii) waive the respective Flip-In Conversion.
Immediately upon the action of the Board of Directors ordering redemption of the
Rights, the Rights will terminate and the only right of the holders of Rights
will be to receive the $.001 redemption price.
At any time after a person becomes an Acquiring Person, the Board of
Directors of the Company may exchange the Rights (other than Rights owned by
such person or group which become void), in whole or in part, at an exchange
ratio of one share of Common Stock, or one one-hundredth of a share of Preferred
Shares (or of a share of a class or series of the Company's preferred stock
having equivalent rights, preferences and privileges), per Right (subject to
adjustment).
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<PAGE>
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.
The Preferred Shares will be non-redeemable. The Preferred Shares may
rank on a lower priority in respect of the preference as to dividends and the
distribution of assets with other classes or series of the Company's preferred
shares. Each Preferred Share will be entitled to an aggregate of 100 times the
cash and non-cash (payable in kind) dividends and distributions (other than
dividends and distributions payable in Common Shares) declared on the Company's
Common Stock. In the event of liquidation, the holders of Preferred Shares will
be entitled to receive a liquidation payment in an amount equal to 100 times the
payment made per Common Share, plus an amount equal to declared and unpaid
dividends and distributions thereon. In the event of any merger, consolidation
or other transaction in which Common Stock is exchanged, each Preferred Share
will be entitled to receive 100 times the amount received per share of Common
Stock. The dividend and liquidation rights of the Preferred Stock are protected
by antidilution provisions. Each Preferred Share will be entitled to 100 votes
(subject to certain adjustments) on all matters submitted to the shareholders.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an exhibit to a Current Report on Form 8-K dated January
15, 2001. A copy of the Rights Agreement is available free of charge from the
Rights Agent. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is incorporated herein by reference.
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